SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549


FORM 10-Q


QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


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

For the quarterly period ended June 29,September 28, 2002

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

For the transition period from_____to______from_______to_______

Commission File Number2-55860

ACE HARDWARE CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE                                                                      36-0700810

(State or other jurisdiction of                                                (I.R.S. Employer
incorporation or organization)                                               Identification No.)

2200 Kensington Court, Oak Brook, IL                                  60523

(Address of principal executive offices)                                (Zip code)

(630) 990-6600

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)
report)

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 (or
(or for such shorter period that the registrant was required to file such reports), and (2) has 
been subject to such filing requirements for the past 90 days. YES [x] NO []

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as 
of the close of the latest practicable date.


                       Class                                                     Outstanding at June 29,November 5, 2002
Class A Voting Stock - $1,000 par value                                             3,6733,620 shares
Class B                         Stock - $1,000 par value                                             2,0481,976 shares
Class C Stock -                         $   100 par value                                      2,773,6732,719,613 shares







ACE HARDWARE CORPORATION

INDEX

Part I. - Financial Information:Information                                                                                                  Page No.

            Item 1. Condensed Consolidated Financial Statements

                        Condensed Consolidated Balance Sheets -
                                June 29,September 28, 2002 and December 29, 2001                                               1

                        Condensed Consolidated Statements of Earnings and
                                Condensed Consolidated Statements of Comprehensive
                                Income - Twenty-six Weeks and Thirteen Weeks Ended and Thirty-nine Weeks Ended
                                June 29,September 28, 2002 and June 30,September 29, 2001                                              2

                        Condensed Consolidated Statements of Cash Flows -
                                Twenty-sixThirty-nine Weeks Ended June 29,September 28, 2002
                                and June 30,September 29, 2001                                                                              3

                        Notes to Condensed Consolidated Financial Statements                                                       4 - 56

                        Item 2. Management's Discussion and Analysis of Financial
                                    Condition and Results of Operations                                                      67 - 89

                        Item 3. Quantitative and Qualitative Disclosures About
                                    Market Risk                                                                                            89

                        Item 4. Controls and Procedures                                                                         9

Part II. - Other Information

    Item 4. Submission of Matters to a Vote of Security Holders                                                   9

                        Item 6. Exhibits and Reports on Form 8-K                                                        910









PART I.  FINANCIAL INFORMATION
ACE HARDWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)

                                                                         June 29,September 28,                    December 29,
                                                                                2002                                  2001       
                                                                           (Unaudited)

ASSETS


Current Assets:Assets
      Cash and cash equivalents                             $         22,36424,178                    $       25,213
      Short-term investments                                             17,98716,489                             17,158
      Accounts receivable, net                                         388,997316,049                           369,035
      Merchandise inventory                                            392,378401,517                           412,568
      Prepaid expenses and other current assets                 17,108  16,684                             16,295

   
Total current assets                                          838,834774,917                           840,269

Property and equipment, net                                          279,120287,255                          287,507
Other assets                                                                    43,123    45,259                            41,015
 
                                                                            $    1,161,077     1,107,431                   $  1,168,791

   

LIABILITIES AND MEMBER DEALERS' EQUITY


Current Liabilities:Liabilities
      Current installment of long-term debt               $           7,1836,162                   $        7,179
      Short-term borrowings                                               8,50041,900                           72,600
      Accounts payable                                                     495,596370,430                         409,789
      Patronage dividends payable in cash                            19,33532,192                           34,229
      Patronage refund certificates payable                           13,20313,165                             9,084
      Accrued expenses                                                       67,026   81,847                           81,062

             Total current liabilities                                         610,843545,696                         613,943

Long-term debt                                                               166,519165,020                         170,387
Patronage refund certificates payable                                 74,18681,097                           77,401
Other long-term liabilities                                                   28,647    29,084                           27,184

Total liabilities                                                             880,195820,897                         888,915

Member dealers' equity:equity
      Class A Stock of $1,000 par value                                3,7943,815                           3,693
      Class B Stock of $1,000 par value                                6,499                           6,499
      Class C Stock of $100 par value                               284,176284,445                       260,224
      Class C Stock of $100 par value, issuable to dealers
           for patronage dividends                                          13,14921,893                         23,284
      Additional stock subscribed, net                                       248263                              303
      Retained deficit                                                          (23,844)(23,837)                       (17,591)
      Contributed capital                                                      ��                                                                13,485                         13,485
      Accumulated other comprehensive income                       (793)   (789)                        (1,239)

                                                                                                                                       296,714                                                                                       305,774                        288,658
Less: Treasury Stock, at cost                                                  (15,832)    (19,240)                         (8,782)

           Total member dealers' equity                         280,882        286,534       279,876

Total Liabilitiesliabilities and Member Dealers' Equitymember dealers' equity                $   1,161,077     1,107,431                 $   1,168,791 


See accompanying notes to condensed consolidated financial statements.



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ACE HARDWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(000's omitted)
(Unaudited)



                                         Thirteen Weeks Ended               Twenty-sixThirty-nine Weeks Ended
                                         JuneSeptember 28,   September 29,    June 30,       JuneSeptember 28,   September 29,          June 30,
                                                2002                  2001                  2002                  2001              2002            2001    

Net sales                            $       841,153749,811  $       808,288    $1,548,320      $1,481,114722,981     $   2,298,131     $   2,204,095 
Cost of sales                                757,440 669,146          731,613648,918     1,405,715        2,074,861          1,344,5911,993,509 

Gross profit                                   83,713            76,675        142,605            136,52380,665            74,063              223,270              210,586 

Operating expenses:
Distribution operations                   13,441            15,798          28,110              32,67014,132            15,771                42,242                48,441 
Selling, general and administrative   15,891            15,937          31,806              33,13715,209            14,897                47,015               48,034 
Retail success and development         16,99116,007           19,489  17,510                 35,101  51,108               38,06455,574 

Total operating expenses       46,323            51,224          95,017            103,871        45,348         48,178         140,365        152,049 

Operating income                          37,390             25,451          47,588             32,65235,317            25,885                 82,905               58,537 

Interest expense                             (5,848)            (5,993)        (11,562)          (11,596)(5,347)            (5,715)              (16,909)            (17,311)
Other income, net                            2,518              4,323             4,852               7,5332,710               3,096                  7,562              10,629 
Income taxes                                    (552) (638)                (1,606)(412)                    890252               (1,378)  (1,790)

Net earnings                        $        33,508         32,042 $        22,175      22,854 $         41,768         73,810 $        27,21150,065 

Distribution of net earnings:Net Earnings
  Patronage dividends                    $  34,935         $  24,649      $  48,021         $  32,85932,035             23,715                 80,056              56,574 
  Retained earnings                                 (1,427)7                 (2,474) (861)                (6,253) (6,246)              (5,648) (6,509)


Net earnings                        $        33,50832,042   $        22,17522,854        $       41,76873,810     $       27,21150,065 


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(000's omitted)
(Unaudited)

                                       Thirteen Weeks EndedTwenty-six              Thirty-nine Weeks Ended
                                           JuneSeptember 28,   September 29,    June 30,        JuneSeptember 28,   September 29,       June 30,
                                                2002                    2001                    2002                  2001       

Net earnings                        $         33,50832,042   $         22,17522,854     $        41,76873,810     $        27,21150,065 
Unrealized gains on securities               (30)              (419)                (91)               (80)436                   133                    345                      53 
Foreign currency translation, net         592   (432)                 824   (769)                   537105                (356)  (1,125)

Comprehensive income        $         34,070  32,046   $         22,580  22,218     $        42,21474,260     $        26,77548,993 

See accompanying notes to condensed consolidated financial statements.


- -2-


ACE HARDWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted)
(Unaudited)

                                                                                                Twenty-SixThirty-nine Weeks Ended         
                                                                                        JuneSeptember 28,           September 29,                        June 30,
                                                                                                2002                          2001      

Operating activities:Activities
   Net earnings                                                                  $          41,76873,810          $          27,21150,065 

Adjustments to reconcile net earnings
   to net cash used inprovided by operating activities:
        Depreciation and amortization                                               15,888                       13,85523,983                      21,240 
        Gain on sale of property and equipment,
            Netnet of deferred taxes of $1,522$1,587                                              - -                           (2,953)(3,079)
        IncreaseDecrease in accounts receivable, net                                      (19,962)                     (31,139)52,986                     43,636 
        Decrease (increase) in inventories                                          20,190                            48411,051                    (61,195)
        Increase in prepaid expenses and
            other current assets                                                               (887)                       (1,208)(500)                     (2,849)
        IncreaseDecrease in accounts payable and
            accrued expenses                                                             71,771                       49,351(38,574)                     (2,978)
        Increase in other long-term liabilities                                         1,4631,900                        2,061   2,847 


     Net Cash Provided by Operating Activities                              130,231                       57,662124,656                      47,687

Investing Activities:
        PurchaseProceeds from sale of (proceeds from)(purchase of) short-term
            investments                                                                           (829)                        1,260669                            (88)
        Purchase of property and equipment                                   (7,427)                     (34,338)(23,620)                     (48,838)
        Increase (decrease) in other assets                                                         (1,662)(3,794)                       468   (2,205)


Net Cash Used in Investing Activities                                      (9,918)                      (32,610)(26,745)                    (51,131)

Financing Activities:
        Payments of short-term borrowings                                        (64,100)                      (39,500)(30,700)                    (3,000)
        Proceeds from issuance of long-term debt                                   -                          -                           70,000
        Principal payments on long-term debt                                       (3,864)                         (2,619)(6,384)                    (2,840)
        Payments of patronage refund certificates
            and patronage financing deductions                                     (14,633)                      (10,657)(18,194)                 (13,633)
        Proceeds from sale of common stock                                         714                              8021,019                     1,161 
        Repurchase of common stock                                                 (7,050)                      (10,552)(10,458)                 (12,498)
        Payments of cash portion of patronage dividend                      (34,229)                 (34,764)


��    Net Cash Used inProvided by (Used in) Financing Activities                             (123,162)        (27,290)   (98,946)                    4,426 

DecreaseIncrease (decrease) in Cash and Cash Equivalents                             (2,849)                        (2,238)(1,035)                       982 

Cash and Cash Equivalents at Beginningbeginning of Periodperiod                             25,213                   24,644 

Cash and Cash Equivalents at Endend of Periodperiod                       $            22,36424,178           $       22,40625,626 

See accompanying notes to condensed consolidated financial statements.

-3-



ACE HARDWARE CORPORATION


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1)      General



The condensed consolidated interim period financial statements presented herein do not
                    include all of the information and disclosures required in annual financial statements
                    and have not been audited, as permitted by the rules and regulations of the Securities 
and Exchange Commission.  The condensed consolidated interim period financial
                    statements should be read in conjunction with the annual financial statements included
                    in the Ace Hardware Corporation Annual Report on Form 10-K/A as filed with the 
Securities and Exchange Commission on May 31, 2002. In the opinion of management, 
these financial statements have been prepared in conformity with accounting principles
                    generally accepted in the United States and reflect all adjustments necessary for a fair statement
                    presentation of the results of operations and cash flows for the interim periods ended June 29,
                    September 28, 2002 and June 30,September 29, 2001, and of the Company's financial position
                    as of June 29,September 28, 2002. All such adjustments are of a normal recurring nature. The
                    results of operations for the thirteen week and twenty-sixthirty-nine week periods ended June 29,
                    September 28, 2002 and June 30,September 29, 2001 are not ne cessarilynecessarily indicative of the
                    results of operations for a full year.

2)      Patronage Dividends

The Company operates as a cooperative organization and will pay patronage dividends
          to consenting member dealers based on the earnings derived from business done with
          such dealers. It has been the practice of the Company to distribute substantially all
          patronage sourced earnings in the form of patronage dividends.

Net earnings and patronage dividends will normally be similar since substantially all
          patronage sourced net earnings are paid to consenting member dealers. International
          dealers signed under a Retail Merchant Agreementagreement are not eligible for patronage
          dividends and related earnings or losses are not included in patronage sourced earnings.

3)      Reclassifications

Certain financial statement reclassifications have been made to prior year and prior quarter
          interim period amounts to conform to comparable classifications followed in 2002.
          During 2002, the Company reclassified as sales and cost of sales certain shipping and
          handling costs that had previously been presented on a net basis within distribution
          operations expenses and reclassified certain amounts within selling, general and
          administrative expenses to distribution operations expenses.

4)      Segments

The Company is principally engaged as a wholesaler of hardware and related
                    products and manufactures paint products. The Company identifies segments based
                    on management responsibility and the nature of the business activities of each 
component of the Company. The Company measures segment earnings as operating
                    earnings including an allocation for administrative expenses, interest expense and
                    income taxes. The net sales from external customers included in the other category 
are primarily generated from company-owned retail locations. Information
                    regarding the identified segments and the related reconciliation to the consolidated
                    financial information is as follows:

                                                                                                     Twenty-six

                                                                                     Thirty-Nine Weeks Ended
                                                                                           JuneSeptember 28, 2002                                          
                                                                                                                           Elimination
                                                                                        Paint                          Intersegment
                                                            Wholesale      Manufacturing      Other      Activities      Consolidated
Net Sales from External Customers       $2,245,168    $       15,455    $ 37,508  $           -        $2,298,131 
Intersegment Sales                                       17,557             95,757                -     (113,314)                      -
Segment Earnings (Loss)                              63,400            13,708        (3,065)          (233)             73,810 

                                                                                     Thirty-Nine Weeks Ended
                               September 29, 2001                                          
                                                                                                                          Elimination
                                                                                       Paint                         Intersegment
                                                            Wholesale     Manufacturing     Other      Activities        Consolidated
Net Sales from External Customers       $2,149,826   $       13,921   $ 40,348  $           -          $2,204,095 
Intersegment Sales                                       19,850            89,628               -    (109,478)                         -
Segment Earnings (Loss)                              41,707            10,420       (1,822)         (240)              50,065 

                                                                                         Thirteen Weeks Ended
                               September 28, 2002                                          
                                                                                                                           Elimination
                                                                                        Paint                          Intersegment
Wholesale
Manufacturing      Other      ActivitiesConsolidated
Net Sales from External Customers       $   1,512,198732,970    $         12,1103,345    $ 24,01213,496  $           -        $   1,548,320 749,811 
Intersegment Sales                                         11,116 64,0816,441             31,676                -      (75,197)(38,117)                       -
Segment Earnings (Loss)                              36,562 8,938 (3,532) (200) 41,768


	                                                                                 Twenty-six26,838             4,770            467             (33)             32,042

                                                                                         Thirteen Weeks Ended
                                                                                           June 30,September 29, 2001                                          
                                                                                                                          Elimination
                                                                                       Paint                         Intersegment
Wholesale
Manufacturing      Other      Activities       Consolidated
Net Sales from External Customers       $  1,444,664705,162    $         10,5223,399    $ 25,92814,420  $           -        $    1,481,114 722,981 
Intersegment Sales                                        12,341 56,8407,509             32,788                -     (69,181)(40,297)                         -
Segment Earnings (Loss)                             22,396 6,839 (1,904)19,311               3,581              82         (120)               27,211


	                                                                                   Thirteen Weeks Ended
	                                                                                         June 29,22,854 

5)      Subsequent Event

           On October 22, 2002, Elimination Paint Intersegment Wholesale Manufacturing Other Activities Consolidated Net Salesthe Company announced that it had entered into a letter of
           intent to sell all of the issued and outstanding shares of Ace Hardware Canada 
           Limited, a wholly-owned subsidiary. Proceeds from External Customers $ 821,278 $ 6,497 $ 13,378 - $ 841,153 Intersegment Sales 6,891 33,321 - (40,212) - Segment Earnings (Loss) 28,850 4,981 177 (200) 33,508


	                                                                                  Thirteen Weeks Ended
	                                                                                        June 30, 2001                                                             
				                                                          Elimination
		                                                      Paint		              Intersegment
	                                         WholesaleManufacturing  Other ActivitiesConsolidated
Net Sales from External Customers  $       787,403     $       6,368            $    14,517 	            -   	 $        808,288
Intersegment Sales	                                 8,120            32,921 	       -   	 (41,041)	                       -
Segment Earnings (Loss)	         18,397 	             4,477 	 (579)	      (120)	              22,175 
the sale are expected to be
           approximately US $14 million, reflecting the value of inventory, trade receivables and
           net tax operating losses. Additionally, the Company will receive ongoing royalties
-5-
           for the use of the Ace name. The transaction is expected to close in December 2002.
           Based on the terms of the letter of intent, the Company expects to record a fiscal
           2002 fourth quarter loss in discontinued operations in the range of US $1.0 to US $5.0
           million, net of tax, related to the operation and disposal of its interest in Ace Canada,
           including all related shut-down costs, severance and contractual lease commitments.


 ACE HARDWARE CORPORATION
       PART I. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Thirteen Weeks Ended June 29,September 28, 2002 compared to Thirteen Weeks Ended June 30, 2001.
       September 29, 2001


Results of Operations

Consolidated sales increased 4.1%3.7%. Domestic sales increased 3.8%4.0% primarily due to
        conversions of new stores to the Ace program and continued growth of same store sales. Domesticsales
        together with lower retailer cancellations partially offset by a decrease in sales were positively impacted by the Memorial Day Weekend sale.to non-coop
        members. International sales increased 10.9%declined 2.6% primarily from growth withindue to lower sales to our existing
        customers.

Gross profit increased $7.0$6.6 million and increased as a percent of total sales from 9.49%10.24% in
        2001 to 9.95%10.76% in 2002. Excluding company-owned retail stores, gross profit was 9.47%10.22%
        of sales in 2002. The increase as a percent of sales resulted primarily from increased
        handling charges due to a shift toward handled sales, lower retailer product returns and
        increased paint margin due to lower raw material costs.

Distribution operations expenses decreased $2.4$1.6 million from 2001 and decreased as a
        percent of handled sales from 2.76%2.80% in 2001 to 2.18%2.38% in 2002 primarily due to improved
        productivity, lower fixed costs as a result of the east coast distribution center reconfigurationcontinued cost controls and the closure of a Canadian distribution center.

Selling, general and administrative expenses were flat with 2001,increased $312,000 over 2001; however,
        decreased as a percent of total sales from 1.97%2.06% in 2001 to 1.89%2.03% in 2002 driven by increased sales anda
        continued focus on cost controls.controls together with a reduction of expenses within the Canadian
        operations and lease savings due to the purchase of the corporate office location.

Retail success and development expenses decreased $2.5$1.5 million from 2001 primarily due to favorable timing of advertising cost reimbursements,
        continued cost control measures put in place in 2001 and lower company-owned store operating costs.the timing of retailer and vendor
        advertising cost reimbursements. These expenses consist primarily of field personnel and
        related costs, marketing, advertising, and training programs for Ace retailers and expenses of
        company-owned retail operations. Ace continues to make investments in retail initiatives
        under its Vision 21 strategy to support Ace Retailers.

Interest expense decreased $145,000$368,000 due to lower interest rates and lower average 
borrowing levels under the revolving credit facility.

Other income decreased $1.8 million$386,000 primarily due to 2001 non-recurring gains recognized on the sale of two distribution centers offset by a 2001 partial write-down of a minority-owned investment of $3.0 million. Additionally, lowerdecline in retailer past due and low
        volume service charges were offset by increased income on non-controlling investments in affiliates.and lower interest income.

-6-

Income taxes decreased $1.1 millionincreased $226,000 primarily due to the tax incurredincreased income recognized on the sale of two retail support centers in 2001.non-
        patronage activities.


Twenty-sixThirty-nine Weeks Ended June 29,September 28, 2002 compared to Twenty-sixThirty-Nine Weeks Ended June 30, 2001.
September 29, 2001

Results of Operations

Consolidated sales increased 4.5%4.3%. Domestic sales increased 4.7%4.5% while International sales
        were affected by lower sales in Canada. The increase in domestic sales was primarily due to
        higher sales to our existing retailer base, lower retailer cancellations and sales to newly
        affiliated retailers. This increase was partially offset by a decrease in sales to non-coop
        members.

Gross profit increased $6.1$12.7 million and decreased slightlyincreased as a percent of total sales from 9.22%9.55% in
        2001 to 9.21%9.72% in 2002. The increase primarily resulted from higher handling charges due to
        a shift in sales mix towards handled sales, lower retailer product returns and freight costs
        and increased paint margin due to lower raw material costs partially offset by inventory
        adjustments.

Distribution operations expenses decreased $4.6$6.2 million from 2001 and decreased as a
        percent of handled sales from 3.13%2.98% in 2001 to 2.52%2.45% in 2002 primarily due to improved
        productivity, continued cost controls, lower fixed costs as a result of the east coast 
distribution center reconfiguration, the closure of a Canadian distribution center and 
        additional volume from logistics operations.

        Selling, general and administrative expenses decreased $1.0 million due to continued cost
        control measures put in place in 2001, lease savings due to the purchase of the corporate
        office location and the closure of a Canadian distribution center.

Selling, general        Retail success and administrativedevelopment expenses decreased $1.3$4.5 million or 4.0%from 2001 primarily due to
        favorable timing of advertising cost reimbursements, continued cost control measures put in
        place in 2001 and additional income realized on the spring convention.

Retail success and development expenses decreased $3.0 million or 7.8% from 2001 primarily due to favorable timing of advertising cost reimbursements, improvements inlower retail technology and continued cost control measures put in place in 2001.costs. These expenses consist primarily of field
        personnel and related costs, marketing, advertising, and training programs for Ace retailers
        and expenses of company-owned retail operations. Ace continues to make investments in 
retail initiatives under its Vision 21 strategy to support Ace Retailers.

        Interest expense decreased $402,000 due to lower interest rates and lower average
        borrowing levels under the revolving credit facility.

Other income decreased $2.7$3.1 million primarily due to 2001 non-recurring gains recognized
        on the sale of two distribution centers offset by a 2001 partial write-down of a minority-ownedminority-
        owned investment of $3.0 million. Other income was also impacted by increased income on
        from non-controlling investments of $1.1$1.4 million offset by a decline in retailer past due and
        low volume charges and lower interest income.

Income taxes decreased $2.3$2.0 million primarily due to the taxes incurred on the sale of two
        retail support centers in 2001.2001 and higher tax benefits from non-patronage activities in 2002.

- -7-
Liquidity and Capital Resources

Ace's abilitysources of cash necessary to generate cash adequate to meetoperate its needsbusiness ("liquidity") results frominclude internally
        generated funds, short-term lines of credit and long-term financing.



Cash flow generated from operations provides a significant source of liquidity.  Through
        the secondthird quarter of 2002, cash provided by operations increased to $130.2$124.7 million
        compared to $57.7$47.7 million in the same period of 2001.  The increase was primarily due to
        an increase in net earnings, improved receivable collections, and a reduction of inventory and a growth in accounts payable due to the timing of vendor dating programs.

inventory.

Cash used in investing activities through the secondthird quarter of 2002 was $9.9$26.7 million
       compared to $32.6$51.1 million in the comparablesame period lastof the prior year.  The decrease was
       primarily due to decreased expenditures for the distribution network. Capitalnetwork as 2001 included
       expenditures for the acquisition of Prince George, Virginia distribution center. Net capital 
       expenditures of $7.4$23.6 million in 2001 were financed out of current and accumulated
       internally generated funds and short-term borrowings.



Cash used in financing activities through the secondthird quarter of 2002 was $123.2$98.9 million
       compared to $27.3$4.4 million provided in the comparable period last year.  In the second
       quarter of 2001, Ace obtained proceeds of $70 million from the issuance of Senior Notes to fund capital investments made in 2000 and 2001.

Notes.

Ace has an established, unsecured revolving credit facility with a group of banks.  Ace has
       unsecured lines of credit of $185.0 million of which $176.5$143.1 million was available at June 29,
       September 28, 2002. Borrowing under these lines of credit bear interest at a spread over
       LIBOR based upon quarterly debt to EBITDA ratios. Long-term financing is arranged as 
determined necessary to meet Ace's capital or other requirements, with principal amount, 
timing and form dependent on prevailing debt markets and general economic conditions.



The Company expects that existing and internally generated funds, along with new and
       established lines of credit and long-term financing, will continue to be sufficient in the 
foreseeable future to finance the Company's working capital requirements and patronage
       dividend and capital expendituresexpenditure programs.


Item 3.      Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company's market risk during the twenty-six
       thirty-nine week period ended June 29,September 28, 2002. For additional information,
       refer to Item 7a in the Company's Annual Report on Form 10-K/A for the year
       ended December 29, 2001.

-8-Item 4.      Controls and Procedures

       Our Chief Executive Officer and Principal Financial Officer have concluded, based
       on their evaluation within 90 days of the filing date of this report, that our
       disclosure controls and procedures are effective for gathering, analyzing and
       disclosing the information we are required to disclose in our reports filed under the
       Securities Exchange Act of 1934. There have been no significant changes in our 
       internal controls or in other factors that could significantly affect these controls 
       subsequent to the date of the previously mentioned evaluation.


PART II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

          The following information is furnished with respect to matters submitted to a vote of the 
          shareholders of the registrant at a meeting thereof held during the quarter covered by this report:

          (a)      Date of meeting: June 3, 2002 - said meeting was
                    an annual meeting.

          (b)     1.     The following director was elected at said
                            meeting for a three year term expiring in 2005:

                                           Jeffery M. Schulein

                   2.     The following directors were reelected at said
                            meeting for a three year term expiring in 2005:

                                           Richard F. Baalmann, Jr.
                                           J. Thomas Glenn
                                           Richard W. Stine

                   4.     The names of the other directors other than the
                           above elected directors whose terms of office
                           as directors continue after the meeting are:

                                           Eric R. Bibens II
                                           Daniel L. Gust
                                           D. William Hagan
                                           Howard J. Jung
                                           Richard A. Karp
                                           David S. Ziegler

-9-
Item 6.    Exhibits and Reports on Form 8-K

               (a)      Exhibits

  • Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as
                       Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

  • Exhibit 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as
                       Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



     (b)       A Form 8-K was filed on August 8,October 23, 2002 containing:

reporting under Item 5:
  • Statements submitted under oath

          A letter of intent entered into by the Company's PresidentAce Hardware Corporation to sell all
          issued and Chief Executive Officer, David F. Hodnik, and Executive Vice President (Principal Financial and Accounting Officer), Rita D. Kahle, in response to the orderoutstanding shares of the Securities and Exchange Commission pursuant to Section 21(a)(1) of the Securities Exchange Act of 1934.

its wholly-owned subsidiary Ace Hardware
      Canada, Limited.

-10-


SIGNATURE

 

                                                     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.









ACE HARDWARE CORPORATION




Date: November 12, 2002                                        /s/              /s/ Rita D. Kahle                                                   DATE                  August 13, 2002
Rita D. Kahle
Executive Vice President

(Principal                                                                                    (Principal Financial and Accounting
Officer, and duly authorized
Officer of the registrant)



Certification of President and Chief Executive Officer

I, David F. Hodnik, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Ace Hardware
        Corporation;

     2. Based on my knowledge, this quarterly report does not contain any untrue
         statement of a material fact  or omit to state a material fact necessary to make the
         statements made, in light of the circumstances under which such statements were
         made, not misleading with respect to the period covered by this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all material
         respects the financial condition, results of operations and cash flows of the
         registrant as of, and for the periods presented in this quarterly report;

     4. The registrant's other certifying officers and I are responsible for establishing
         and maintaining disclosure controls and procedures (as defined in Exchange Act
         Rules 13a-14) for the registrant and we have:

             a)    designed such disclosure controls and procedures to ensure that material
                    information relating to the registrant, including its consolidated
                    subsidiaries, is made known to us by others within those entities,
                    particularly during the period in which this quarterly report is being
                    prepared;

            b)     evaluated the effectiveness of the registrant's disclosure controls and
                    procedures as of a date within 90 days prior to the filing date of this
                    quarterly report (the "Evaluation Date"); and

            c)     presented in this quarterly report our conclusions about the effectiveness
                    of the disclosure controls and procedures based on our evaluation as of
                    the Evaluation Date;

     5. The registrant's other certifying officers and I have disclosed, based on our most
         recent evaluation, to the registrant's auditors and the audit committee of the
         registrant's board of directors (or persons performing equivalent function):

            a)     all significant deficiencies in the design or operation of internal controls
                    which could adversely affect the registrant's ability to record, process,
                    summarize and report financial data and have identified for the registrant's
                    auditors any material weaknesses in internal controls; and

            b)     any fraud, whether or not material, that involves management or other
                    employees who have a significant role in the registrant's internal controls;
                    and

     6. The registrant's other certifying officers and I have indicated in this quarterly
         report whether or not there  were significant changes in internal controls or in
         other factors that could significantly affect internal controls subsequent to the
         date of our most recent evaluation, including any corrective actions with regard
         to significant deficiencies and material weaknesses.


         Date: November 12, 2002                           /s/ David F. Hodnik           
                            David F. Hodnik
                            President and Chief Executive Officer

Certification of Executive Vice President (Principal Financial and Accounting
Officer)

-11-I, Rita D. Kahle, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Ace Hardware
        Corporation;

     2. Based on my knowledge, this quarterly report does not contain any untrue
         statement of a material fact  or omit to state a material fact necessary to make the
         statements made, in light of the circumstances under which such statements were
         made, not misleading with respect to the period covered by this quarterly report;

     3. Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all material
         respects the financial condition, results of operations and cash flows of the
         registrant as of, and for the periods presented in this quarterly report;

     4. The registrant's other certifying officers and I are responsible for establishing
         and maintaining disclosure controls and procedures (as defined in Exchange Act
         Rules 13a-14) for the registrant and we have:

             a)    designed such disclosure controls and procedures to ensure that material
                    information relating to the registrant, including its consolidated
                    subsidiaries, is made known to us by others within those entities,
                    particularly during the period in which this quarterly report is being
                    prepared;

            b)     evaluated the effectiveness of the registrant's disclosure controls and
                    procedures as of a date within 90 days prior to the filing date of this
                    quarterly report (the "Evaluation Date"); and

            c)     presented in this quarterly report our conclusions about the effectiveness
                    of the disclosure controls and procedures based on our evaluation as of
                    the Evaluation Date;

     5. The registrant's other certifying officers and I have disclosed, based on our most
         recent evaluation, to the registrant's auditors and the audit committee of the
         registrant's board of directors (or persons performing equivalent function):

            a)     all significant deficiencies in the design or operation of internal controls
                    which could adversely affect the registrant's ability to record, process,
                    summarize and report financial data and have identified for the registrant's
                    auditors any material weaknesses in internal controls; and

            b)     any fraud, whether or not material, that involves management or other
                    employees who have a significant role in the registrant's internal controls;
                    and

     6. The registrant's other certifying officers and I have indicated in this quarterly
         report whether or not there  were significant changes in internal controls or in
         other factors that could significantly affect internal controls subsequent to the
         date of our most recent evaluation, including any corrective actions with regard
         to significant deficiencies and material weaknesses.




        Date: November 12, 2002                                       /s/ Rita D. Kahle               

           Rita D. Kahle
           Executive Vice President
           (Principal Financial and Accounting Officer)