UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q/A
                                 Amendment No. 1


      [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
           Exchange Act of 1934

                 For the quarterly period ended March 31, 2002

                                          or


      [ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
           Exchange Act of 1934





                                                           I.R.S.
                       Registrant, State of               Employer
 Commission             Incorporation,                 Identification
 File Number        Address and Telephone Number           Number
--------------  --------------------------------       -------------

   1-7297       Nicor Inc.                             36-2855175
                (An Illinois Corporation)
                1844 Ferry Road
                Naperville, Illinois 60563-9600
                (630) 305-9500



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes [X]* No [ ]


Shares of common stock, par value $2.50, outstanding at August 8, 2002, were
43,996,043.

*The company's new independent public accountant, Deloitte & Touche LLP, was
unable to complete the review of the condensed unaudited 2002 financial
statements included herein, as required by Rule 10-01(d) of Regulation S-X
promulgated under the Securities Act of 1934, due to uncertainties surrounding
the current review of the gas distribution segment's performance-based rate plan
referred to in the Subsequent Events note beginning on page 11.




<PAGE>


Nicor Inc.                                                   Page i
--------------------------------------------------------------------------
Table of Contents

Part I - Financial Information

   Item 1. Financial Statements (Unaudited) ..................... 1

         Consolidated Statements of Operations:
           Three months ended
           March 31, 2002 and 2001 .............................. 2

         Consolidated Statements of Cash Flows:
           Three months ended
           March 31, 2002 and 2001 .............................. 3

         Consolidated Balance Sheets:
           March 31, 2002 and 2001, and
           December 31, 2001 .................................... 4

         Notes to the Consolidated Financial Statements ......... 5

   Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations ..................14

   Item 3. Quantitative and Qualitative Disclosures
           about Market Risk ....................................22


Part II - Other Information

   Item 1. Legal Proceedings ....................................22

   Item 5. Other Information ....................................22

   Item 6. Exhibits and Reports on Form 8-K .....................22

         Signature ..............................................23

         Exhibit Index ..........................................24


Glossary

Degree day...The extent to which the daily average temperature falls below
             65 degrees Fahrenheit. Normal weather for Nicor Gas' service
             territory is about 6,000 degree days.
ICC..........Illinois Commerce Commission, the agency that regulates
             investor-owned Illinois utilities.
Mcf, Bcf ....Thousand cubic feet, billion cubic feet.
PBR..........Performance-based rate, a regulatory plan that provides economic
             incentives based on natural gas cost performance.
TEU..........Twenty-foot equivalent unit, a measure of volume in containerized
             shipping equal to one 20-foot-long container.


<PAGE>


Nicor Inc.                                                   Page 1
--------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION

Explanatory Statement

The Registrant hereby amends its Quarterly Report on Form 10-Q for the quarter
ended March 31, 2002 for errors subsequently discovered. The company's
independent public accountant, Deloitte & Touche LLP, have concurred with
Nicor's conclusion to restate its first quarter 2002 financial statements. The
company has determined that the first quarter financial statements should
include a $4.3 million pretax charge relating to adjustments at Nicor Energy,
LLC, a 50 percent owned retail energy marketing joint venture, and defer a $2.3
million pretax gain relating to the early termination of an interest rate
hedging instrument. Both of these items reduced other income and had no impact
on operating income.

Item 1    Financial Statements

The company's new independent public accountant, Deloitte & Touche LLP, was
unable to complete the review of the condensed unaudited 2002 financial
statements included herein, as required by Rule 10-01(d) of Regulation S-X
promulgated under the Securities Act of 1934, because of uncertainties
surrounding the current review of the gas distribution segment's
performance-based rate plan referred to in the Subsequent Events note beginning
on page 11. The company will file an amendment to this Quarterly Report on Form
10-Q for the quarter ended March 31, 2002, as soon as practicable after the
required review is completed.

Except as set forth above, the following condensed unaudited financial
statements of Nicor Inc. (Nicor) have been prepared by the company pursuant to
the rules and regulations of the Securities and Exchange Commission (SEC).
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted pursuant to SEC rules and
regulations. The condensed financial statements should be read in conjunction
with the financial statements and the notes thereto included in the company's
latest Annual Report on Form 10-K.

The information furnished reflects, in the opinion of the company, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair statement of the results for the interim periods presented. Results for the
interim periods presented are not necessarily indicative of the results to be
expected for the full fiscal year due to seasonal and other factors.

Nicor Inc.                                                   Page 2
--------------------------------------------------------------------

Consolidated Statements of Operations (Unaudited)
(millions, except per share data)

                                                     Three months ended
                                                          March 31
                                                    ---------------------
                                                     Restated
                                                       2002        2001
                                                     --------    --------

Operating revenues                                   $  617.0    $1,473.7
                                                     --------    --------

Operating expenses
   Cost of gas                                          347.6     1,174.6
   Operating and maintenance                            105.4       101.4
   Depreciation                                          60.8        58.6
   Taxes, other than income taxes                        41.4        71.1
   Other                                                   .2           -
                                                     --------    --------
                                                        555.4     1,405.7
                                                     --------    --------

Operating income                                         61.6        68.0

Other income (expense), net                                .4         4.6
                                                     --------    --------

Income before interest expense and income taxes          62.0        72.6

Interest expense, net of amounts capitalized              9.7        14.3
                                                     --------    --------

Income before income taxes                               52.3        58.3

Income taxes                                             16.8        19.5
                                                     --------    --------

Net income                                               35.5        38.8

Dividends on preferred stock                               .1          .1
                                                     --------    --------

Earnings applicable to common stock                  $   35.4    $   38.7
                                                     ========    ========

Average shares of common stock outstanding
   Basic                                                 44.3        45.4
   Diluted                                               44.5        45.6

Earnings per average share of common stock
   Basic                                             $    .80    $    .85
   Diluted                                                .80         .85

Dividends declared per share of common stock         $    .46    $    .44


The accompanying notes are an integral part of these statements.




Nicor Inc.                                                   Page 3
--------------------------------------------------------------------

Consolidated Statements of Cash Flows (Unaudited)
(millions)

                                                         Three months ended
                                                              March 31
                                                       --------------------
                                                       Restated
                                                         2002        2001
                                                       --------    --------
Operating activities
   Net income                                          $   35.5    $   38.8
   Adjustments to reconcile net income to net cash flow
     provided from operating activities:
      Depreciation                                         60.8        58.6
      Deferred income tax expense                          11.4        10.8
      Changes in:
        Receivables, less allowances                       (2.5)      (48.4)
        Gas in storage                                      3.6        20.3
        Deferred/accrued gas costs                        (41.0)      177.9
        Accounts payable                                  (61.6)     (208.3)
        Temporary LIFO liquidation                        115.0       125.7
        Prepaid pension costs                              (3.2)       (8.4)
      Other                                                19.8         9.7
                                                       --------    --------
   Net cash flow provided from operating activities       137.8       176.7
                                                       --------    --------

Investing activities
   Capital expenditures                                   (48.1)      (27.8)
   Net decrease (increase) in short-term investments        5.5        (4.6)
   Loans to joint ventures                                (10.4)       (1.2)
   Other                                                    4.5          .8
                                                       --------    --------
   Net cash flow used for investing activities            (48.5)      (32.8)
                                                       --------    --------

Financing activities
   Net proceeds from issuing long-term debt                   -        74.1
   Disbursements to retire long-term debt                     -       (50.0)
   Short-term borrowings (repayments), net                (60.0)     (151.0)
   Dividends paid                                         (19.6)      (19.0)
   Disbursements to reacquire stock                       (11.4)       (4.9)
   Other                                                    3.3          .1
                                                       --------    --------
   Net cash flow used for financing activities            (87.7)     (150.7)
                                                       --------    --------

Net increase (decrease) in cash and cash equivalents        1.6        (6.8)

Cash and cash equivalents, beginning of period             10.7        55.8
                                                       --------    --------

Cash and cash equivalents, end of period               $   12.3    $   49.0
                                                       ========    ========



The accompanying notes are an integral part of these statements.



Nicor Inc.                                                         Page 4
---------------------------------------------------------------------------
Consolidated Balance Sheets (Unaudited)
(millions)

                                         Restated
                                         March 31    December 31    March 31
                                           2002         2001          2001
                                         --------    -----------    --------
               Assets
Current assets
   Cash and cash equivalents             $   12.3    $      10.7    $   49.0
   Short-term investments, at cost which
    approximates market                      28.7           34.2        47.6
   Receivables, less allowances of $10.7,
    $12.3 and $21.7, respectively           357.1          354.6       707.2
   Notes receivable - joint ventures         41.6           31.2         2.4
   Gas in storage                            25.0           28.6        11.5
   Deferred income taxes                     33.7           33.9        60.2
   Other                                     22.8           24.7        15.7
                                         --------    -----------    --------
                                            521.2          517.9       893.6
                                         --------    -----------    --------
Property, plant and equipment, at cost
   Gas distribution                       3,455.4        3,425.6     3,314.5
   Shipping                                 310.9          304.6       284.4
   Other                                      3.3            2.8         1.9
                                         --------    -----------    --------
                                          3,769.6        3,733.0     3,600.8
   Less accumulated depreciation          2,017.5        1,964.4     1,902.9
                                         --------    -----------    --------
                                          1,752.1        1,768.6     1,697.9
                                         --------    -----------    --------

Prepaid pension costs                       167.5          164.3       151.0
Other assets                                120.0          124.0        89.5
                                         --------    -----------    --------
                                         $2,560.8    $   2,574.8    $2,832.0
                                         ========    ===========    ========
     Liabilities and Capitalization

Current liabilities
   Long-term obligations due
      within one year                    $      -    $         -    $   75.0
   Short-term borrowings                    217.0          277.0       291.0
   Accounts payable                         334.3          395.9       398.3
   Temporary LIFO liquidation               115.0              -       125.7
   Accrued gas costs                         58.9           99.9       128.7
   Accrued mercury-related costs              6.3            7.0        61.0
   Other                                     50.1           46.6        93.1
                                         --------    -----------    --------
                                            781.6          826.4     1,172.8
                                         --------    -----------    --------
Deferred credits and other liabilities
   Deferred income taxes                    340.9          328.8       300.3
   Regulatory income tax liability           65.4           66.3        69.4
   Unamortized investment tax credit         38.5           39.0        40.6
   Accrued mercury-related costs             27.3           30.0           -
   Other                                    118.9          104.2       100.6
                                         --------    -----------    --------
                                            591.0          568.3       510.9
                                         --------    -----------    --------
Capitalization
   Long-term debt                           445.8          446.4       421.4
   Preferred stock                            6.1            6.1         6.3
   Common equity
    Common stock                            110.6          111.0       113.4
    Retained earnings                       624.6          616.9       608.4
    Unearned compensation                     (.4)             -           -
    Other comprehensive income                1.5            (.3)       (1.2)
                                         --------    -----------    --------
                                          1,188.2        1,180.1     1,148.3
                                         --------    -----------    --------
                                         $2,560.8    $   2,574.8    $2,832.0
                                         ========    ===========    ========


The accompanying notes are an integral part of these statements.





<PAGE>


Nicor Inc.                                                   Page 5
---------------------------------------------------------------------------
Notes to the Consolidated Financial Statements (Unaudited)

The following notes should be read in conjunction with the financial statement
notes included in the Nicor Inc. (Nicor) 2001 Annual Report on Form 10-K.

ACCOUNTING POLICIES

Depreciation.  Depreciation for the gas distribution segment is calculated
using a straight-line method for the calendar year.  For interim periods, gas
distribution segment depreciation is allocated based on gas deliveries.

Gas in storage. The gas distribution segment's inventory is carried at cost on a
last-in, first-out (LIFO) method on a calendar-year basis. For interim periods,
the difference between current replacement cost and the LIFO cost for quantities
of gas temporarily withdrawn from storage is recorded in cost of gas and in
current liabilities as a temporary LIFO liquidation.

Reclassifications.  Certain reclassifications have been made to conform the
prior years' financial statements to the current year's presentation.

FIRST QUARTER RESTATEMENT

The company has restated and reduced its first quarter 2002 results to correct
for $4.3 million of pretax charges related to Nicor Energy and to defer a
previously recognized $2.3 million pretax gain related to the termination of an
interest rate hedging instrument. These restatements had the following effect on
the first quarter of 2002 (in millions):
                                         As
                                     Previously       As
                                     Reported      Restated
                                     ----------    --------
     Income before income taxes        $58.9         $52.3
     Net income                         39.9          35.5
     Earnings per average
       share of common stock:
          Basic                        $ .90         $ .80
          Diluted                        .90           .80




Nicor Inc.                                                         Page 6
---------------------------------------------------------------------------
Notes to the Consolidated Financial Statements (Unaudited) (continued)

BUSINESS SEGMENT INFORMATION

Financial data by business segment is presented below (in millions):

                                            Three months
                                                ended
                                               March 31
                                        --------------------
                                           2002       2001
                                        ---------   --------
Operating revenues
   Gas distribution                     $   519.5   $1,346.5
   Shipping                                  59.8       58.7
   Other energy ventures                     42.3       93.4
   Corporate and eliminations                (4.6)     (24.9)
                                        ---------   --------
                                        $   617.0   $1,473.7
                                        =========   ========

Operating income (loss)
   Gas distribution                     $    57.8   $   64.6
   Shipping                                   3.2        3.3
   Other energy ventures                      1.1         .9
   Corporate and eliminations                 (.5)       (.8)
                                        ---------   --------
                                        $    61.6   $   68.0
                                        =========   ========

Other energy venture operating revenues included $3.5 million and $24.2 million
in the 2002 and 2001 periods, respectively, from intercompany natural gas sales
to Nicor Gas.

PERFORMANCE-BASED RATE PLAN

On January 1, 2000, Nicor Gas' performance-based rate (PBR) plan for natural gas
costs went into effect. Under the PBR plan, Nicor Gas' total gas supply costs
are compared to a market-sensitive benchmark.  Savings and losses relative to
the benchmark are shared equally with customers.  Pursuant to the requirements
of Illinois law, the plan is currently under Illinois Commerce Commission (ICC)
review.

Results of the company's PBR plan are determined annually. On an interim basis,
the company records an estimate of results attributable to the period. Nicor
recorded $2.9 million of estimated PBR plan results as operating revenue in the
first quarter of 2002 compared to $2.5 million in the first quarter of 2001. The
$2.9 million of estimated PBR plan results included $3.8 million related to the
2002 plan year, and a negative adjustment of $.9 million related to the 2001
plan year.

Subsequent to March 31, 2002, Nicor Gas reversed the $3.8 million of estimated
PBR results recorded in the first quarter of 2002 due to circumstances more
fully described in the Subsequent Events note beginning on page 11.









Nicor Inc.                                                 Page 7
-------------------------------------------------------------------

Notes to the Consolidated Financial Statements (Unaudited)(continued)

OTHER INCOME (EXPENSE)

Other income (expense), net consists primarily of results of unconsolidated
equity method investments and gains from property sales and is as follows (in
millions):

                                      Three months
                                        ended
                                       March 31
                                  -------------------
                                    2002       2001
                                  --------   --------
Equity investment income (loss)
   Nicor Energy                   $   (5.2)  $    1.7
   All other                            .6         .2
Gain on sale of properties             4.3         .3
Interest income                         .9        2.5
Other                                  (.2)       (.1)
                                  --------   --------
                                       0.4        4.6
                                  ========   ========



COMPREHENSIVE INCOME

Other comprehensive income (loss) includes unrealized gains and losses from
derivative financial instruments accounted for as cash flow hedges.

Total comprehensive income (loss) consisted of the following (in millions):

                                         Three months
                                            ended
                                           March 31
                                     -------------------
                                       2002       2001
                                     --------   --------

   Net income                        $   35.5   $   38.8
   Other comprehensive income
      (loss), net of tax                  1.7       (1.1)
                                     --------   --------
                                     $   37.2   $   37.7
                                     ========   ========

LONG-TERM DEBT

In April 2002, Nicor Gas issued $50 million of 3 percent unsecured notes due in
2003 to be used for general corporate purposes.

RELATED PARTY TRANSACTIONS

At March 31, 2002, Nicor had $31.7 million of short-term notes receivable at
market interest rates due from Horizon Pipeline, a 50/50 joint venture between
Nicor and Natural Gas Pipeline Company of America. The notes cover a portion of
the initial construction costs of the pipeline. In May 2002, Horizon Pipeline
financed the project with partnership equity and non-recourse third party
long-term debt and repaid the short-term loans. The pipeline capacity is nearly
fully subscribed under 10-year agreements, with Nicor Gas having contracted for
approximately 80 percent of the 380 MMcf per day initial capacity. This
transaction has been approved by the ICC.

Nicor Inc.                                                   Page 8
-----------------------------------------------------------------------------
Notes to the Consolidated Financial Statements (Unaudited) (continued)

At March 31, 2002, Nicor had $9.9 million of short-term notes receivable at
market interest rates due from Nicor Energy, a 50/50 joint venture with Dynegy
Inc. Nicor also guarantees up to $15 million of the joint venture's borrowings
under a line of credit, and up to $30 million of Nicor Energy's accounts payable
and performance commitments. As of March 31, 2002 Nicor had guaranteed $14.3
million under the line of credit.

CONTINGENCIES

This section should be read in conjunction with the Subsequent Events note that
begins on page 11.

Mercury program. Nicor Gas has incurred, and expects to continue to incur,
significant costs related to its historical use of mercury in various kinds of
company equipment. Prior to 1961, gas regulators containing small quantities of
mercury were installed in homes. These gas regulators reduce the pressure of
natural gas flow from the service line to the inside of the home. During the
third quarter of 2000, the company learned that in certain instances some
mercury was spilled or left in residences.

As a result, in September 2000, Nicor Gas was named as a defendant in a civil
lawsuit (the "Attorney General's Lawsuit") brought by the Illinois Attorney
General and the State's Attorneys of Cook, DuPage and Will Counties, Illinois,
seeking, among other things, to compel the company to inspect and clean up all
homes and other sites that may have been affected by mercury from company
equipment. The Circuit Court of Cook County hearing this action entered two
preliminary injunctions requiring Nicor Gas, among other things, to conduct
inspections and, where necessary, to clean up mercury, to pay for relocating
residents until cleanup is completed, and to pay for medical screening of
potentially affected persons. Potentially affected homes are being inspected
using mercury vapor analyzers. Nicor Gas has called on every such home, although
it still has been unable to gain entry to some homes. Approximately 1,070 homes
have been found to have traces of mercury requiring cleanup.

On October 10, 2001 Nicor Gas entered into a settlement agreement with respect
to the Attorney General's Lawsuit, and on the same date the Circuit Court of
Cook County entered an order approving the settlement. Under the settlement,
Nicor Gas is paying a total of approximately $2.25 million over a 5-year period.
Of this amount, $.4 million will be used to reimburse the plaintiffs for their
costs and the balance will be used to fund environmental programs. In addition,
Nicor Gas will continue for a period of five years to provide medical screening
to persons who may have been exposed to mercury from Nicor Gas equipment.

Nicor Gas was also the subject of an Administrative Order, and an amendment
thereto, issued during the third quarter of 2000 by the U.S. Environmental
Protection Agency (EPA) pursuant to Section 106 of the Comprehensive
Environmental Response, Compensation and Liabilities Act. The order required the
company, among other things, to develop and implement work plans to address
mercury spills at recycling centers where mercury regulators may have been
taken, at company facilities where regulators and mercury may have been
temporarily stored and at commercial/industrial sites where mercury-containing
equipment may have been used in metering facilities. Pursuant to the injunctions
and the EPA order, Nicor Gas has completed the work described above for all
affected recycling centers, commercial/industrial sites and company facilities.
On July 12, 2001, Nicor Gas received a Notice of Completion letter from the EPA
regarding the work performed under the Section 106 order.

In addition to the matters described above, Nicor Gas has been named a defendant
in several private lawsuits, all in the Circuit Courts of Cook and DuPage
Counties, claiming a variety of unquantified

Nicor Inc.                                                           Page 9
-----------------------------------------------------------------------------
Notes to the Consolidated Financial Statements (Unaudited) (continued)

damages (including bodily injury, property and punitive damages) allegedly
caused by mercury-containing regulators. One of the lawsuits in the Circuit
Court of Cook County involves five previous class actions that have been
consolidated before a single judge. On October 10, 2001, Nicor Gas entered into
an agreement to settle the class action litigation. Under the terms of that
agreement, Nicor Gas will pay a total of approximately $1.85 million, will
continue for a period of five years to provide medical screening to persons
exposed to mercury from its equipment, and will use its best efforts to replace
any remaining inside residential mercury regulators within four years. The class
action settlement permitted class members to "opt out" of the settlement and
pursue their claims individually. On February 7, 2002, the Circuit Court of Cook
County entered a final order approving the class action settlement. The "opt
out" period has ended and approximately 160 households have opted out of class.

Nicor Gas charged $148 million to other operating expense in the third quarter
of 2000 for estimated obligations related to the previously described work and
for legal defense costs. A $9 million adjustment lowered the mercury-related
reserve and reduced other operating expense in the third quarter of 2001. The
adjustment reflected more recent experience which indicated a lower number of
homes expected to be found with traces of mercury requiring cleanup and a lower
average cleanup and repair cost. Through March 31, 2002, the company has
incurred $105.4 million in associated costs, leaving a $33.6 million estimated
liability. The remaining liability represents management's best estimate of
future costs, including potential liabilities relating to remaining lawsuits,
based on an evaluation of currently available information. Actual costs may vary
from this estimate. The company will continue to reassess its estimated
obligation and will record any necessary adjustment, which could be material to
operating results in the period recorded.

The company has certain insurance policies, has notified its insurers, and is
vigorously pursuing recovery of mercury-related costs pursuant to its insurance
coverage. In January 2001, the company filed suit in the Circuit Court of Cook
County against certain of its insurance carriers for a declaration that the
company's mercury-related losses are covered, and for the recovery of those
losses. Nicor Gas is also pursuing certain insurance recoveries through
arbitration. In addition, some of the removals of mercury- containing regulators
were conducted by independent contractors working for the company. In November
2000, the company filed suit in the Circuit Court of Cook County seeking
indemnification and contribution from these contractors. Through March 31, 2002,
Nicor Gas has recovered, net of related expenses, $2.8 million from certain
insurance carriers of the company and its independent contractors. These
recoveries have been recorded as a reduction to other operating expense. At this
stage, it is not possible to estimate the likelihood of additional recoveries
from insurance carriers or other third parties related to the mercury spills,
and Nicor Gas has not recorded any such amounts as assets in its financial
statements.

Nicor Gas will not seek recovery of the costs associated with these mercury
spills from its customers, and any proceeds from insurance carriers or third
parties will be retained by the company to offset costs incurred.

It is management's opinion, taking into account the above information and
uncertainties, including currently available information concerning the
company's existing and potential obligations, insurance coverage, possible
recoveries from third parties and available financial resources, that costs
associated with the mercury spills will not have a material adverse effect on
the liquidity or financial position of the company.


Nicor Inc.                                                  Page 10
-----------------------------------------------------------------------------
Notes to the Consolidated Financial Statements (Unaudited) (continued)

Manufactured gas plant sites. Gas manufacturing plants were used in the early to
mid 1900's to produce natural gas from coal, producing a coal tar byproduct.
Current environmental laws may require the cleanup of coal tar at certain former
manufactured gas plant sites.

To date, Nicor Gas has identified about 40 properties for which it may, in part,
be responsible. The majority of these properties are not presently owned by the
company. Information regarding preliminary site reviews has been presented to
the Illinois Environmental Protection Agency. More detailed investigations and
remedial activities are either in progress or planned at many of these sites.
The results of continued testing and analysis should determine to what extent
additional remediation is necessary and may provide a basis for estimating any
additional future costs which, based on industry experience, could be
significant. In accordance with ICC authorization, the company has been
recovering these costs from its customers.

In December 1995, Nicor Gas filed suit in the Circuit Court of Cook County
against certain insurance carriers seeking recovery of environmental cleanup
costs of certain former manufactured gas plant sites. Nicor Gas reached a
settlement with one of the insurance carriers, and in February 2000, the court
dismissed the company's case on summary judgment motions by certain other
defendants. The company filed an appeal in March 2000. In May of 2001, Nicor Gas
reached a recovery settlement with certain insurance carriers who were involved
in this appeal. Management cannot predict the outcome of the lawsuit against the
remaining insurance carriers. Recoveries are refunded to the company's
customers.

In December 2001, a putative class action lawsuit was filed against Exelon
Corporation, Commonwealth Edison Company and Nicor Gas in the Circuit Court of
Cook County alleging, among other things, that the proposed residential cleanup
of a manufactured gas plant site in Oak Park, Illinois was inadequate. The
lawsuit claims that houses might have to be razed or removed and asks that
residents be compensated for the alleged loss in the value of their homes and
other monetary damages. An amended complaint adding additional plaintiffs and,
as defendants, the Village of Oak Park and the Oak Park Park District, was filed
in April 2002. Management cannot predict the outcome of this litigation or the
company's potential exposure thereto and has not recorded a liability associated
with this contingency.

In April 2002 Nicor Gas was named as a defendant, together with Commonwealth
Edison Company, in a lawsuit brought by the Metropolitan Water Reclamation
District of Greater Chicago (the MWRD) under the Comprehensive Environmental
Response, Compensation and Liability Act seeking the recovery of past and future
remediation costs and a declaration of the level of cleanup for a former
manufactured gas plant site in Skokie, Illinois now owned by the MWRD. The suit
was filed in federal court in Chicago and the company has filed responsive
pleadings. Management cannot predict the outcome of this litigation or the
company's potential exposure thereto and has not recorded a liability associated
with this contingency.

Since costs and recoveries relating to the cleanup of these manufactured gas
plant sites are passed directly through to customers in accordance with ICC
regulations, the final disposition of these matters is not expected to have a
material impact on the company's financial condition or results of operations.

Other.  The company is involved in legal or administrative proceedings before
various courts and agencies with respect to rates, taxes and other matters.
Although unable to determine the outcome of these other contingencies,
management believes that appropriate accruals have been recorded.  Final
disposition of these matters is not expected to have a material impact on the
company's financial condition or results of operations.


Nicor Inc.                                                  Page 11
-------------------------------------------------------------------

Notes to the Consolidated Financial Statements (Unaudited) (continued)

SUBSEQUENT EVENTS

The following contingencies of Nicor are in various stages of investigation or
disposition. Although the company is unable to estimate the amount of loss
reasonably possible in addition to the amount already recognized, if any, it is
possible that the resolution of these contingencies, either individually or in
aggregate, will require the company to restate prior period financial results or
take charges against or reductions in future earnings. It is the opinion of
management that the resolution of these contingencies, either individually or in
aggregate, could be material to earnings in a particular period. It is the
opinion of management that the resolution of these contingencies, either
individually or in aggregate, is not expected to have a material adverse impact
on Nicor's liquidity or financial condition.

Nicor Energy. In the second quarter 2002, the company recorded a $2.3 million
charge resulting from a year-end independent audit of Nicor Energy, a 50 percent
owned retail energy marketing joint venture. As a result of this, in the second
quarter, the owners of the venture and new Nicor Energy management commenced a
review of Nicor Energy's business strategy, accounting practices, controls and
financial results. The review process identified irregularities in accounting
and additional accounting errors and adjustments. As a result of these
adjustments for the year-to-date period ending June 30, 2002, Nicor's share of
Nicor Energy's losses totaled $10.9 million pretax, including some error
corrections related to 2001 that the company does not believe would be
considered material. It is unknown at this time whether additional adjustments
will be required, although the review of financial results through June 30, 2002
is substantially complete.

At June 30, 2002, Nicor held a $1.3 million short-term note receivable from
Nicor Energy at market interest rates and had outstanding guarantees of $14
million related to the joint ventures' borrowings under a line of credit and
$4.4 million related to accounts payable. Nicor's maximum exposure under its
guarantee commitments on behalf of Nicor Energy is $15 million related to the
line of credit and $29 million related to payables and other commitments. In
addition, Dynegy has asked Nicor to guarantee up to $24 million of Nicor Energy
accounts payable for gas and electric purchases from Dynegy, and Nicor has not
acted on this request. While it is reasonably possible that Nicor will be
required to make payments under the guarantees, Nicor cannot estimate the
amount, and no liability has been recorded. Nicor had a negative $4.8 million
equity investment in Nicor Energy at June 30, 2002.

In April 2002, Nicor and Dynegy Inc. renegotiated their joint venture agreement
extending the original agreement, which would have expired in mid-2002, by five
years. Nicor Energy is dependent on the financial support of both equity
investors, and Dynegy is the joint venture's primary energy supplier. If either
equity investor fails to continue its backing of the joint venture, the effect
on Nicor Energy could cause Nicor to make payments under the guarantees noted
above.

As a result of the adjustments, review process and other matters referred to
above, Nicor is currently evaluating alternatives to its continued involvement
with Nicor Energy. The outcome of this evaluation cannot be reasonably
estimated, although it is possible that the company may need to make some
payment under its guarantees.

Performance-Based Rate Plan. In the second quarter 2002 there have been
allegations that the company acted improperly in connection with the PBR plan,
and the ICC has advised the company that it is reviewing these allegations. On
June 27, 2002 the Citizens Utility Board (CUB) filed a motion to reopen the
record in the ICC's proceedings to review the PBR plan. As a result of the
motion to reopen, Nicor Gas, the Cook County State's Attorney's Office, the
Staff of the ICC and CUB entered into a stipulation

Nicor Inc.                                                      Page 12
----------------------------------------------------------------------------
Notes to the Consolidated Financial Statements (Unaudited) (continued)

providing for additional discovery. The Illinois Attorney General's Office has
also intervened in this matter. A status hearing has been set for September 4,
2002 to assess the status of discovery and to consider the need for additional
discovery. In addition, the Illinois Attorney General's Office issued Civil
Investigation Demands (CIDs) to the CUB and the ICC Staff. The CIDs ordered that
CUB and the ICC Staff produce all documents relating to any claims that Nicor
Gas may have presented, or caused to be presented, false information related to
its PBR plan. Other governmental agencies may be reviewing these allegations.
The company has committed to cooperate fully in the review of the PBR plan. In
response to these allegations, the Nicor Board of Directors has appointed a
special committee of independent, non-management directors to conduct an inquiry
into issues surrounding natural gas purchases, sales, transportation, storage
and such other matters as may come to the attention of the special committee in
the course of its investigation. This inquiry includes a review of transactions
with third parties, including the purchase of weather insurance, and
transactions with affiliates.

In the second quarter 2002, the company reversed the $3.8 million of pretax
earnings estimated and recorded in the first quarter relating to the company's
PBR plan. The reversal was recorded due to the uncertainties described above and
the resultant inability to reasonably estimate the probability of the PBR plan's
continuation for 2002 and beyond. The company is unable to predict the outcome
of the review of the PBR plan or the company's potential exposure thereto and
has not recorded a liability associated with this contingency.

On July 22, 2002, a purported class action was filed against Nicor Gas and Nicor
in the Circuit Court of Cook County, Illinois, on behalf of all customers of
Nicor Gas who at any time from January 2000 through the present were subject to
Nicor Gas's PBR plan. The plaintiff alleges claims for breach of contract,
unjust enrichment and violation of the Illinois Consumer Fraud and Deceptive
Practices Act, and that the class sustained damages as a result of Nicor Gas
improperly enriching itself by manipulating the benchmark under the PBR. The
class is seeking compensatory damages, prejudgment and postjudgment interest,
and disgorgement of all profits. Nicor is unable to predict the outcome of this
litigation or Nicor's potential exposure related thereto and has not recorded a
liability associated with this contingency.

SEC Inquiry. Following Nicor's issuance of a press release on July 18, 2002
that included comments concerning Nicor Energy and the PBR plan, the staff
of the Securities and Exchange Commission informed Nicor that it is conducting
an informal inquiry.

Securities Class Actions. Also following Nicor's issuance of the press release
concerning Nicor Energy and the PBR plan three purported class actions brought
against Nicor, Thomas Fisher (Chairman, President and CEO) and Kathleen Halloran
(Executive Vice President Finance and Administration), on behalf of all persons
or entities who purchased Nicor common stock in the open market during a
specified period ending in July 2002. The actions were brought in the United
States District Court for the Northern District of Illinois, Eastern Division.
The plaintiffs allege that the defendants violated sec. 10(b) and sec. 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Plaintiffs allege
that during the class period defendants misrepresented Nicor's historical
financial condition and results of operations and its future prospects. In
addition, various newswire services have reported that additional class actions
have been filed against Nicor, although Nicor has not been served with
complaints in any such additional actions. The class is seeking compensatory
damages, prejudgment interest, attorneys' fees and costs and other equitable
relief. Nicor is unable to predict the outcome of this litigation or Nicor's
potential exposure related thereto and has not recorded a liability associated
with this contingency.


Nicor Inc.                                                  Page 13
----------------------------------------------------------------------------
Notes to the Consolidated Financial Statements (Unaudited) (concluded)

Hub Services. Pursuant to a Federal Energy Regulatory Commission (FERC) Order,
Nicor Gas was issued a limited jurisdiction blanket certificate authorizing
Nicor Gas to provide interstate transportation services, including storage
services (Interstate Hub Services). FERC regulates the terms and conditions, as
well as rates, for interstate services. A periodic rate case was recently filed
with FERC. In the course of this proceeding, Nicor Gas determined that refunds
are due customers who purchased certain Hub Services. Accordingly, in the second
quarter Nicor accrued and will be refunding service fees plus interest in the
amount of approximately $.5 million to customers of Hub Services and is
investigating to determine whether any additional refunds or other charges are
appropriate. Nicor Gas also offers certain interruptible transportation and
storage service pursuant to tariffs on file with the ICC, which regulates such
intrastate services. Nicor Gas is investigating to determine whether refunds or
charges are appropriate related to its provision of such ICC jurisdictional
services. Nicor Gas cannot estimate the amount of any such additional refunds
and has not recorded a liability associated with this contingency.

Mercury Program. Subsequent to March 31, 2002, Nicor Gas reached an agreement
with an insurance carrier wherein Nicor Gas will recover approximately $20
million, net of related costs, for mercury related expenses which will be
included in the company's results of operations for the third quarter of 2002.

Fixed Bill Service. On July 17, 2002, a purported class action was filed in
Circuit Court of Cook County, Illinois against Nicor Energy Services Company
(Nicor Services) and Nicor Gas alleging violation of the Illinois Consumer and
Deceptive Practices Fraud Act by Nicor Services and Nicor Gas relating to the
Fixed Bill Service offered by Nicor Services and a conspiracy claim against
Nicor Gas arising out of marketing efforts by Nicor Services. The Fixed Bill
program is a service that is offered to Nicor Gas residential customers which
allows the customer to pay twelve equal monthly amounts for their annual gas
service based upon the gas use profile of their home. The class is seeking
compensatory damages, prejudgment and postjudgment interest, punitive damages,
attorneys' fees and other equitable relief. Nicor is unable to predict the
outcome of this litigation or Nicor's potential exposure related thereto. Nicor
cannot estimate and has not recorded a liability associated with this
contingency.





Nicor Inc.                                                        Page 14
----------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations

The following discussion should be read in conjunction with the Management's
Discussion and Analysis section of the Nicor Inc. (Nicor) 2001 Annual Report on
Form 10-K.

SUMMARY

Nicor's first quarter 2002 diluted earnings per common share was $.80 compared
to $.85 in the first quarter 2001. Net income for the 2002 quarter decreased to
$35.5 million compared with $38.8 million a year ago. Lower net interest expense
and increased property sale gains were more than offset by a decline in
operating income in the gas distribution segment and lower equity investment
results from Nicor Energy LLC (Nicor Energy). Per share results were favorably
affected by the company's common stock repurchase program.

Operating income. Operating income (loss) by major business segment is presented
below (in millions):

                                        Three months
                                           ended
                                          March 31
                                    -------------------
                                      2002       2001
                                    --------   --------
   Gas distribution                 $   57.8   $   64.6
   Shipping                              3.2        3.3
   Other energy ventures                 1.1         .9
   Corporate and eliminations            (.5)       (.8)
                                    --------   --------
                                    $   61.6   $   68.0
                                    ========   ========

The following summarizes operating income comparisons for major business
segments:

o  Gas distribution operating income decreased from $64.6 million in the first
   quarter of 2001 to $57.8 million in 2002. The negative effect of warmer
   weather on year-to-year operating results was partially offset by the impact
   of weather protection benefits recorded in the current year. In addition,
   higher operating expenses due primarily to smaller pension credits, higher
   health care costs, and increased depreciation negatively impacted this year's
   results.

o  Containerized shipping operating income was about flat compared to a year
   ago. The positive effect of higher volumes shipped was offset by lower
   average rates resulting from soft economic conditions in the U.S. and
   Caribbean region.

o  Operating income from Nicor's other energy ventures reflects improved results
   at Nicor Enerchange, a wholesale natural gas marketing business, and at Nicor
   Services, a retail energy-related products and services business. Lower
   operating results at Nicor's energy system design and construction business,
   Nicor Solutions, partially offset these improvements.

Other income. Other income decreased to $.4 million in the first quarter of 2002
from $4.6 million a year ago due to lower equity investment results at Nicor
Energy and less interest income offset partially by increased property sale
gains. Results at Nicor Energy include a $2.7 million charge resulting from a
year-end 2001 independent audit.




Nicor Inc.                                                       Page 15
---------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (continued)

Interest expense. Interest expense for the three-month period decreased $4.6
million to $9.7 million in 2002 due to lower average borrowing levels and
interest rates. Reduced gas procurement costs contributed to the lower borrowing
levels.

Income taxes. The company's effective income tax rate decreased for the
three-month period due to the completion of an income tax audit in the first
quarter of 2002.

RESULTS OF OPERATIONS

The following discussion summarizes the major items impacting Nicor's results of
operations.

Operating revenues. Operating revenues by major business segment are presented
below (in millions):

                                         Three months
                                             ended
                                           March 31
                                      -------------------
                                        2002       2001
                                      --------   --------
   Gas distribution                   $  519.5   $1,346.5
   Shipping                               59.8       58.7
   Other energy ventures                  42.3       93.4
   Corporate and eliminations             (4.6)     (24.9)
                                      --------   --------
                                      $  617.0   $1,473.7
                                      ========   ========

Gas distribution revenues declined significantly in the first quarter of 2002
compared with a year ago due primarily to lower natural gas prices, which are
passed directly through to customers without markup. First quarter 2002 shipping
revenues reflect a small increase in volumes shipped compared to a year ago.
While the shipping industry continues to be affected by the current economic
slowdown, some improvement in Caribbean tourism appears to be occurring. The
decrease in revenues for other energy ventures was due primarily to the impact
of lower natural gas prices on Nicor Enerchange. The elimination of natural gas
sales from Nicor Enerchange to Nicor Gas is reflected in corporate and
eliminations.

Gas distribution margin. Gas distribution margin, defined as operating revenues
less cost of gas and revenue taxes, which are both passed directly through to
customers without markup, decreased $3.8 million to $165.9 million in the first
quarter. The decrease was due primarily to lower deliveries resulting from 12
percent warmer weather than last year, the effects of which were partially
offset by weather protection benefits recorded in 2002. The positive effect of
lower natural gas prices on the cost of gas used to operate company equipment
and facilities was offset by lower customer finance charges.

Operating and maintenance expense. Operating and maintenance expenses increased
$4.0 million in the first quarter of 2002 to $105.4 million. The increase was
due primarily to higher operating and maintenance expenses at Nicor's other
energy ventures and in the shipping segment. The increase in other energy
ventures was associated primarily with a higher level of activity and revenues
at Nicor Services and Nicor Solutions. The increase in the shipping segment
relates primarily to higher shipping volumes. In the gas distribution segment,
operating and maintenance expenses increased only slightly from a year ago as
the negative effect of smaller pension credits and higher health care costs was
nearly offset by decreased bad debt expense and customer service costs resulting
from lower natural gas prices in 2002.

Nicor Inc.                                                      Page 16
----------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (continued)

FINANCIAL CONDITION AND LIQUIDITY

Operating cash flows. Net cash flow provided from operating activities decreased
$38.9 million to $137.8 million in the first quarter from $176.7 million in the
year earlier period. Year-to-year changes in operating cash flow result largely
from fluctuations in working capital items occurring mainly in the gas
distribution segment due to factors such as weather, the price of gas, the
timing of collections from customers and gas purchasing practices. The company
generally relies on short-term financing to meet temporary increases in working
capital needs.

Investing activities. 2002 capital expenditures are estimated at $200 million, a
$20 million increase from the projection included in Nicor's latest Annual
Report on Form 10-K. The increase is due primarily to storage field improvements
in the gas distribution segment.

During the second quarter of 2002 Horizon Pipeline, a 50/50 joint venture
between Nicor and Natural Gas Pipeline Company of America (NGPL), put into
operation a 74-mile, 36-inch pipeline from Joliet, Illinois to near the
Wisconsin/Illinois border. The project was initially financed through short-term
loans from Nicor and Kinder Morgan, Inc., the parent company of NGPL. In May
2002, Horizon Pipeline financed the project with partnership equity and
non-recourse third party long-term debt and repaid the short-term loans. Nicor's
equity contribution was $16.5 million.

In April 2002, Tropical Shipping, a subsidiary of Nicor, purchased certain
assets of Tecmarine Lines Inc. and TMX Logistics Inc. for cash, thereby
expanding its network of Caribbean and South American destinations. The
acquisition is expected to increase Tropical Shipping's annual volumes by about
10 to 15 percent.

Financing activities. Nicor Inc. and Nicor Gas maintain short-term line of
credit agreements with major domestic and foreign banks. At March 31, 2002,
these agreements, which serve as backup for the issuance of commercial paper,
allow for borrowings up to $415 million, and the company had $217 million of
commercial paper borrowings outstanding. The company had line of credit
agreements with eight banks at March 31, 2002 all of which expire by September
30, 2002.

Nicor and Nicor Gas continue to have debt ratings that are among the highest in
the gas distribution industry. However, because of uncertainties pertaining to
the energy industry in general and to the company, as described in Contingencies
and Subsequent Events beginning on page 8, the rating agencies have indicated
that they have put Nicor and Nicor Gas' debt ratings under review for possible
downgrade or on credit watch with negative implications. Standard & Poor's has
not put the company's commercial paper on credit watch. The company's primary
banks have indicated that they would expect to renew their line of credit
agreements with Nicor and Nicor Gas. The company's relative cost of financing
will likely increase.

Nicor believes it is in compliance with its debt covenants and will remain so
even if its debt ratings are lowered. Furthermore, Nicor believes it will
continue to generate sufficient capital resources to fund its capital
expenditures and other cash requirements.




Nicor Inc.                                                          Page 17
----------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (continued)

In April 2002, Nicor Gas issued $50 million of 3 percent unsecured notes due in
April 2003 with the proceeds to be used for general corporate purposes.

Under an existing common stock repurchase program, Nicor purchased and retired
261,000 common shares during the first quarter of 2002 at an aggregate cost of
$10.9 million. Nicor purchased and retired 128,000 more common shares during the
second quarter of 2002 at an aggregate cost of $6.0 million. Purchases may be
made from time to time through open market transactions and to the extent cash
flow is available after other investment opportunities.

On May 1 and August 1, 2002, Nicor paid quarterly dividends on common stock of
46 cents per share. In July 2002, Nicor announced that its Board of Directors
declared a quarterly common stock dividend of 46 cents per share, payable
November 1, 2002, to stockholders of record September 30, 2002.

FACTORS AFFECTING BUSINESS

Contingencies and subsequent events. Future operating results could be
materially impacted by certain contingencies discussed in Contingencies and
Subsequent Events beginning on pages 8 and 11, respectively, which are hereby
incorporated by reference.

Pension investment returns. Nicor Gas maintains noncontributory defined benefit
pension plans covering substantially all employees hired prior to 1998. For
valuation purposes Nicor Gas utilizes an October 1 measurement date to determine
the company's annual pension expense or credit. Since October 1, 2001, the
pension plan has experienced negative investment returns, consistent with market
conditions, and it is not possible to project what the value of the plan assets
will be at the 2002 measurement date. It is likely that lower-than-anticipated
asset values, in conjunction with possible assumption changes, would negatively
impact the company's pension credit and operating income in 2003 and could be
material. The pension plans are adequately funded. Market performance could
impact future company contributions but should not impact participant benefits.

Health care costs. Health care costs have been rising and additional increases
could negatively impact Nicor's results of operations in future periods.




Nicor Inc.                                                          Page 18
----------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (continued)

Market risk. The company is exposed to market risk in the normal course of its
business operations, including the risk of loss arising from adverse changes in
natural gas and electricity commodity prices and interest rates. It is Nicor's
practice to manage these risks utilizing derivative instruments and other
methods, as deemed appropriate. This section updates the Commodity Price Risk
and Counterparty Credit Risk sections of the market risk disclosure in Nicor's
latest Annual Report on Form 10-K.

Commodity price risk. With regard to commodity price risk, the company has
established policies and procedures governing the management of such risks and
the use of derivative commodity instruments to hedge its exposure to such risks.
A risk management committee oversees compliance with such policies and
procedures. The company utilizes various techniques to limit, measure and
monitor market risk, including limits based on volume, dollar amounts, and
duration, and in some cases value at risk (VaR). VaR is the potential loss for
an instrument or portfolio from adverse changes in market factors, for a
specified time period and at a specified confidence level. The risk management
committee has established exposure limits at such a level that any adverse
results are not expected to have a material adverse effect on the results of
operations or the financial condition of the company. The company's policies and
procedures continue to evolve with its businesses and are subject to ongoing
review and modification.

In accordance with SEC disclosure requirements, Nicor performs sensitivity
analyses to assess the potential loss in earnings based upon a hypothetical 10
percent adverse change in market prices. Management does not believe that
sensitivity analyses alone provide an accurate or reliable method for monitoring
and controlling risks and therefore relies on the experience and judgment of its
management to revise strategies and adjust positions as deemed necessary. Losses
in excess of the amounts determined in sensitivity analyses could occur if
market prices exceed the 10 percent shift used for the analyses.
Based on the company's unhedged positions at March 31, 2002 and June 30, 2002, a
10 percent decrease in natural gas prices at March 31, 2002 and June 30, 2002
would have decreased Nicor's earnings by about $.9 million and $.5 million,
respectively. In addition, substantial increases in natural gas prices may
indirectly impact Nicor Gas' earnings by increasing the cost of gas used by the
company, bad debt expense and other operating expenses. Higher natural gas
prices may also lead to lower customer gas consumption.

Nicor's regulated utility, Nicor Gas, is generally not exposed to market risk
caused by changes in commodity prices because of Illinois rate regulation
allowing for the recovery of natural gas supply costs from customers. However,
Nicor Gas has a PBR plan for natural gas costs which creates some exposure to
commodity price risk. The company's exposure to this market risk is partially
mitigated because the PBR plan compares actual gas costs to a market-sensitive
benchmark as opposed to a fixed benchmark. Other risks related to the PBR plan
are described in the Performance-Based Rate Plan section beginning on page 11.

In 2002, Nicor Services began offering Nicor Gas customers a 12-month
fixed-price alternative to their monthly utility bills regardless of natural gas
prices or weather. The commodity risk of this product is partially hedged using
swap agreements. Management also believes it has taken appropriate steps to
minimize other risks of loss associated with this product.

Nicor's other energy businesses are subject to natural gas and electricity
commodity price risk, arising primarily from fixed-price purchase and sale
agreements and natural gas inventories.  Derivative commodity instruments
such as futures, options, forwards and swaps may be used to hedge this risk.

Nicor Inc.                                                         Page 19
-----------------------------------------------------------------------------

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations (continued)

Counterparty credit risk. The company is also exposed to credit risk in the
event a hedging transaction counterparty or supplier defaults on a contract to
pay for or deliver product at agreed-upon terms and conditions. To manage this
risk, the company has established procedures to determine and monitor the
creditworthiness of counterparties, to require guarantees or collateral back-up,
and to limit its exposure to any one counterparty. Nicor is also entering into
master netting arrangements to mitigate counterparty credit risk.

FORWARD-LOOKING INFORMATION

Although management believes its statements about forwarding-looking information
are based on reasonable assumptions, actual results may vary materially from
stated expectations. Factors that could cause materially different results
include, but are not limited to, legal contingencies, the matters referred to in
the Contingencies section beginning on page 8, weather conditions, natural gas
and electricity prices, interest rates, borrowing needs, credit conditions,
economic and market conditions, health care costs, energy conservation,
legislative and regulatory actions, asset sales, any future mercury-related
charges or credits, additional adjustments related to Nicor Energy, and PBR plan
review results or adjustments. These forward-looking statements speak only as of
the date of this filing, and the company assumes no obligation to update any
forward-looking statements.



Nicor Inc.                                                  Page 20
--------------------------------------------------------------------

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations (continued)

GAS DISTRIBUTION STATISTICS

Operating revenues, deliveries, customers and other statistics are presented
below.
                                                Three months ended
                                                     March 31
                                                -------------------
                                                  2002       2001
                                                --------   --------
Operating revenues (millions)
   Sales
    Residential                                 $  340.2   $  993.2
    Commercial                                      64.3      188.5
    Industrial                                      10.7       29.9
                                                --------   --------
                                                   415.2    1,211.6
                                                --------   --------
   Transportation
    Residential                                      3.1        2.9
    Commercial                                      25.7       27.8
    Industrial                                      11.0       12.0
    Other                                            2.5        3.9
                                                --------   --------
                                                    42.3       46.6
                                                --------   --------
   Other revenues
    Revenue taxes                                   36.4       66.5
    Environmental cost recovery                     12.0       10.3
    Performance-based rate plan                      2.9        2.5
    Chicago Hub                                      3.4        2.8
    Weather protection                               3.5          -
    Other                                            3.8        6.2
                                                --------   --------
                                                    62.0       88.3
                                                --------   --------
                                                 $ 519.5   $1,346.5
                                                ========   ========
Deliveries (Bcf)
   Sales
    Residential                                     94.7      102.4
    Commercial                                      17.2       19.3
    Industrial                                       3.1        3.1
                                                --------   --------
                                                   115.0      124.8
                                                --------   --------
   Transportation
    Residential                                      3.2        3.0
    Commercial                                      39.8       40.9
    Industrial                                      37.7       39.7
                                                --------   --------
                                                    80.7       83.6
                                                --------   --------
                                                   195.7      208.4
                                                ========   ========
Customers at end of period (thousands)
   Sales
    Residential                                  1,777.0    1,756.7
    Commercial                                     105.5      101.1
    Industrial                                       6.9        6.7
                                                --------   --------
                                                 1,889.4    1,864.5
                                                --------   --------
   Transportation
    Residential                                     58.2       51.3
    Commercial                                      64.7       67.2
    Industrial                                       6.9        7.3
                                                --------   --------
                                                   129.8      125.8
                                                --------   --------
                                                 2,019.2    1,990.3
                                                ========   ========

Other statistics
   Degree days                                     2,723      3,104
   Average gas cost per Mcf sold                $   2.74   $   8.88


Nicor Inc.                                                  Page 21
--------------------------------------------------------------------

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations (concluded)

SHIPPING STATISTICS

                                                Three months ended
                                                     March 31
                                                -------------------
                                                  2002       2001
                                                --------   --------

TEUs shipped (thousands)
   Southbound                                       31.9       31.0
   Northbound                                        4.2        4.6
   Interisland                                       3.0        1.4
                                                --------   --------
                                                    39.1       37.0
                                                ========   ========

Other statistics
   Revenue per TEU                              $  1,532   $  1,583
   Ports served                                       21         22
   Vessels operated                                   16         17





Nicor Inc.                                                  Page 22
---------------------------------------------------------------------------
Item 3. Quantitative and Qualitative Disclosures about Market Risk

For disclosures about market risk, see Market Risk beginning on page 18, which
is incorporated herein by reference.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For information concerning legal proceedings, see Contingencies beginning on
page 8, which is incorporated herein by reference.

Item 5. Other Information

Because of the inability of the company's independent public accountant to
complete their review of the condensed unaudited 2002 financial statements
included herein, as required by Rule 10-01(d) of Regulation S-X (see Item 1),
the company's Chief Executive Officer and Chief Financial Officer are unable to
complete the statement required under 18 U.S.C. sec. 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002).

Item 6. Exhibits and Reports on Form 8-K

   (a)  See Exhibit Index on page 24 filed herewith.

   (b) The company did not file a report on Form 8-K during the
       first quarter of 2002.



<PAGE>


Nicor Inc.                                                  Page 23
-------------------------------------------------------------------------

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                         Nicor Inc.




Date    August 13, 2002              By  /s/ KATHLEEN L. HALLORAN
      --------------------              --------------------------
                                         Kathleen L. Halloran
                                         Executive Vice President
                                         Finance and Administration


<PAGE>


Nicor Inc.                                                  Page 24
-------------------------------------------------------------------------
Exhibit Index

  Exhibit
  Number               Description of Document
---------     -----------------------------------------------------

10.01         * 2002 Long-Term Incentive Program (File No. 1-7297, Form 10-Q
                for March 2002, Nicor Inc., Exhibit 10.01).

10.02         * 2002 Incentive Compensation Plan (File No. 1-7297, Form 10-Q
                for March 2002, Nicor Inc., Exhibit 10.02).

99.01           Letter regarding Sarbanes-Oxley Act of 2002.


*    These exhibits have been previously filed with the Securities and Exchange
     Commission as exhibits to registration statements or to other filings with
     the Commission and are incorporated herein as exhibits by reference. The
     file number and exhibit number of each such exhibit, where applicable, are
     stated, in parentheses, in the description of such exhibit.

   Upon written request, the company will furnish free of charge a copy of any
   exhibit. Requests should be sent to Investor Relations at the corporate
   headquarters.