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, 2002 
[] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from_____to______



> 

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

June 29,              
December 29,
                                                                                                                                                                                       2002           2001
                                                                                                                                                                                 
(Unaudited)

ASSETS

Current Assets:
     Cash and cash equivalents                                                                            
$         22,364             
$         25,213
     Short-term investments                                                                                              
17,987                       
17,158
     Accounts receivable, net                                                                                         
388,997                     
369,035
     Merchandise inventory                                                                                            
392,378                     
412,568
     Prepaid expenses and other current assets                                                   17,108             16,295
     Total current assets                                                                                              
838,834                     
840,269
Property and equipment, net                                                                                     
279,120                     
287,507
Other assets                                                                                                          43,123             41,015
                                                                                                                                
                                                                                                                               
$   1,161,077         
$   1,168,791

LIABILITIES AND MEMBER DEALERS' EQUITY

Current Liabilities:
     Current installment of long-term debt                                                            
$          7,183              
$          7,179
     Short-term borrowings                                                                                                 
8,500                        
72,600
     Accounts payable                                                                                                    
495,596                      
409,789
     Patronage dividends payable in cash                                                                     
19,335                        
34,229
     Patronage refund certificates payable                                                                    
13,203                          
9,084
     Accrued expenses                                                                                             67,026               81,062
             
Total current liabilities                                                                                      
610,843                      
613,943
Long-term debt                                                                                                          
166,519                       
170,387
Patronage refund certificates payable                                                                     
74,186                         
77,401
Other long-term liabilities                                                                                   28,647                27,184
            Total liabilities                                                                                                     
880,195                       
888,915
Member dealers' equity:
     Class A Stock of $1,000 par value                                                                            
3,794                           
3,693
     Class B Stock of $1,000 par value                                                                             
6,499                           
6,499
     Class C Stock of $100 par value                                                                            
284,176                       
260,224
     Class C Stock of $100 par value, issuable to dealers
            for patronage dividends                                                                                        
13,149                         
23,284
     Additional stock subscribed, net                                                                                 
248                              
303
     Retained deficit                                                                                                         
(23,844)                       
(17,591)
     Contributed capital                                                                                                    
13,485                          
13,485
     Accumulated other comprehensive income                                                    (793)                (1,239)
                                                                                                                                                                                           
296,714                        
288,658
Less: Treasury Stock, at cost                                                                              (15,832)                (8,782)
             
Total member dealers' equity                                                                           
280,882                         
279,876
Total Liabilities and Member Dealers' Equity                                                 
$ 1,161,077              
$ 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-six Weeks Ended
                                                                                                                                             
June 29,        June 30,      
June 29,          June 30,
                                                                                                                                           2002    2001   2002    2001
Net sales                                                                                         
$ 841,153      $ 808,288    $1,548,320     
$1,481,114
Cost of sales                                                                                   757,440      731,613   1,405,715    1,344,591
    Gross profit                                                                                         
83,713            76,675       
142,605            136,523
Operating expenses:
Distribution operations                                                                     
13,441            15,798         
28,110             
32,670
Selling, general and administrative                                                  
15,891            15,937         
31,806             
33,137
Retail success and development                                                  16,991        19,489   35,101     38,064
Total operating expenses                                                                  
46,323            51,224         
95,017            103,871
Operating income                                                                               
37,390             25,451         
47,588             32,652
Interest expense                                                                                  
(5,848)            (5,993)       
(11,562)          (11,596)
Other income, net                                                                                 
2,518             
4,323             4,852              
7,533
Income taxes                                                                                    (552)       (1,606)   890     (1,378)
Net earnings                                                                                    
$  33,508         $  22,175     
$  41,768         $  27,211
Distribution of net earnings:
        Patronage dividends                                                                  
$  34,935         $  24,649     
$  48,021         $  32,859
        Retained earnings                                                                        (1,427)      (2,474)    (6,253)       (5,648)
Net earnings                                                                                    
$  33,508      $  22,175    
$  41,768       $  27,211

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

Thirteen Weeks Ended
Twenty-six Weeks Ended
                                                                                                              
June 29,       
June 30,        June 29,      
June 30,
                                                                                                                                               2002    2001     2002     2001
Net earnings                                                                                      
$  33,508       $  22,175       
$  41,768       $  27,211
Unrealized gains on securities                                                                 
(30)             
(419)               
(91)              
(80)
Foreign currency translation, net                                                    592     824      537     (356)
Comprehensive income                                                                   
$  34,070     $  22,580     
$  42,214    $  26,775
See accompanying notes to condensed consolidated financial statements.

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

Twenty-Six Weeks Ended
                                                                                                                                                                                      
June 29,                       
June 30,
                                                                                                                                                                                      2002                 2001
Operating activities:
                          
Net earnings                                                                                         
$       41,768              
$       27,211
       Adjustments to reconcile net earnings
       to net cash used in operating activities:
                         
Depreciation and amortization                                                                     
15,888                      
13,855
                         
Gain on sale of property and equipment,
                                
Net of deferred taxes of $1,522                                                                       
-                          
(2,953)
                         
Increase in accounts receivable, net                                                          
(19,962)                    
(31,139)
                         
Decrease in inventories                                                                                 
20,190                           
484
                         
Increase in prepaid expenses and
                              
other current assets                                                                                       
(887)                      
(1,208)
                         
Increase in accounts payable and
                              
accrued expenses                                                                                        
71,771                      
49,351
                         
Increase in other long-term liabilities                                                   1,463               2,061
       Net Cash Provided by Operating Activities                                                          
130,231                      
57,662
Investing Activities:
                        
Purchase of (proceeds from) short-term
                             
investments                                                                                                      
(829)                       
1,260
                        
Purchase of property and equipment                                                            
(7,427)                    
(34,338)
                        
Increase (decrease) in other assets                                                      (1,662)              468
       Net Cash Used in Investing Activities                                                                     
(9,918)                     
(32,610)
Financing Activities:
                   
Payments of short-term borrowings                                                             
(64,100)                     
(39,500)
                   
Proceeds from issuance of long-term debt                                                           
-                          
70,000
                   
Principal payments on long-term debt                                                           
(3,864)                        
(2,619)
                   
Payments of patronage refund certificates
                        
and patronage financing deductions                                                        
(14,633)                     
(10,657)
                   
Proceeds from sale of common stock                                                                  
714                             
802  
                   
Repurchase of common stock                                                                          
(7,050)                     
(10,552)
                   
Payments of cash portion of patronage dividend                                (34,229)              (34,764)
     Net Cash Used in Financing Activities                                                           (123,162)              (27,290)
Decrease in Cash and Cash Equivalents                                                                       
(2,849)                       
(2,238)
Cash and Cash Equivalents at Beginning of Period                                           25,213              24,644
Cash and Cash Equivalents at End of Period                                                      
$       22,364             
$       22,406
See accompanying notes to condensed consolidated financial statements.

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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 of the results of operations and cash flows for the interim periods ended June 29, 2002 and June 30, 2001 and of the Company's financial position as of June 29, 2002. All such adjustments are of a normal recurring nature. The results of operations for the thirteen week and twenty-six week periods ended June 29, 2002 and June 30, 2001 are not necessarily 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 patronage sourced net earnings are paid to consenting member dealers.  International dealers signed under a Retail Merchant Agreement 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 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 consolidated information is as follows:

`Twenty-six Weeks Ended
                                                                                                                June 29, 2002                                                          
                                                                                                                                                Elimination
		                                                       Paint                                    Intersegment
	                                          Wholesale	    Manufacturing         Other          Activities         Consolidated
Net Sales from External Customers	$    1,512,198    $    12,110             $    24,012                          -   	  $    1,548,320
Intersegment Sales	                                11,116           64,081 	        -   	   (75,197)	                       -
Segment Earnings (Loss)	           36,562             8,938                   (3,532)	        (200)	              41,768`

`Twenty-six Weeks Ended
	                                                                                            June 30, 2001			
				                                                           Elimination
		                                                       Paint                                    Intersegment
	                                          Wholesale       Manufacturing         Other          Activities         Consolidated
Net Sales from External Customers	$    1,444,664    $    10,522              $    25,928 	             -         $    1,481,114
Intersegment Sales	                                12,341          56,840 	       -   	  (69,181)	                       -
Segment Earnings (Loss)	           22,396            6,839 	(1,904)	       (120)	              27,211`

`Thirteen Weeks Ended
	                                                                                         June 29, 2002			
				                                                         Elimination
		                                                     Paint		             Intersegment
	                                        Wholesale       Manufacturing         Other          Activities         Consolidated
Net Sales 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
	                                         Wholesale       Manufacturing         Other          Activities         	Consolidated
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`

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

> Thirteen Weeks Ended June 29, 2002 compared to Thirteen Weeks Ended June 30, 2001.
> Results of Operations
> Consolidated sales increased 4.1%. Domestic sales increased 3.8% primarily due to conversions of new stores to the Ace program and continued growth of same store sales. Domestic sales were positively impacted by the Memorial Day Weekend sale.
> International sales increased 10.9% primarily from growth within existing customers.
> Gross profit increased $7.0 million and increased as a percent of total sales from 9.49% in 2001 to 9.95% in 2002.  Excluding company-owned retail stores, gross profit was 9.47% 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 million from 2001 and decreased as a percent of handled sales from 2.76% in 2001 to 2.18% in 2002 primarily due to improved productivity, lower fixed costs as a result of the east coast distribution center reconfiguration and the closure of a Canadian distribution center.
> Selling, general and administrative expenses were flat with 2001, however, decreased as a percent of total sales from 1.97% in 2001 to 1.89% in 2002 driven by increased sales and continued focus on cost controls.
> Retail success and development expenses decreased $2.5 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. 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 due to lower interest rates and lower average borrowing levels under the revolving credit facility.
> Other income decreased $1.8 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-owned investment of $3.0 million.  Additionally, lower retailer past due and low volume service charges were offset by increased income on non-controlling investments in affiliates.-6-
> Income taxes decreased $1.1 million primarily due to the tax incurred on the sale of two retail support centers in 2001.Twenty-six Weeks Ended June 29, 2002 compared to Twenty-six Weeks Ended June 30, 2001.Results of Operations
> Consolidated sales increased 4.5%. Domestic sales increased 4.7% 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.
> Gross profit increased $6.1 million and decreased slightly as a percent of total sales from 9.22% in 2001 to 9.21% 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 increased paint margin due to lower raw material costs partially offset by inventory adjustments.
> Distribution operations expenses decreased $4.6 million from 2001 and decreased as a percent of handled sales from 3.13% in 2001 to 2.52% in 2002 primarily due to improved productivity, lower fixed costs as a result of the east coast distribution center reconfiguration and the closure of a Canadian distribution center.
> Selling, general and administrative expenses decreased $1.3 million or 4.0% due to 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 in retail technology and continued cost control measures put in place in 2001. 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.
> Other income decreased $2.7 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-owned investment of $3.0 million.  Other income was also impacted by increased income on non-controlling investments of $1.1 million offset by a decline in retailer past due and low volume charges and lower interest income.
> Income taxes decreased $2.3 million primarily due to the taxes incurred on the sale of two retail support centers in 2001. -7-Liquidity and Capital Resources
> 
>   
>   Ace's
>   ability to generate cash adequate to meet its needs ("liquidity")
>   results from 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 second quarter of 2002, cash provided by operations increased to
>   $130.2 million compared to $57.7 million in the same period of 2001.  The
>   increase was primarily due to an increase in net earnings, reduction of
>   inventory and a growth in accounts payable due to the timing of vendor dating
>   programs.
>   
>   Cash
>   used in investing activities through the second quarter of 2002 was $9.9
>   million compared to $32.6 million in the comparable period last year. 
>   The decrease was primarily due to decreased expenditures for the distribution
>   network. Capital expenditures of $7.4 million were financed out of
>   current and accumulated internally generated funds and short-term borrowings.
>   
>   Cash
>   used in financing activities through the second quarter of 2002 was $123.2
>   million compared to $27.3 million 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.
>   
>   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 million was available at June 29, 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 expenditures 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  
> week  period ended June 29, 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.

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> 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

> 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, 2002 containing:

> Statements submitted under oath by the Company's President and Chief Executive Officer, David F. Hodnik, and Executive Vice President (Principal Financial and Accounting Officer), Rita D. Kahle, in response to the order of the Securities and Exchange Commission pursuant to Section 21(a)(1) of the Securities Exchange Act of 1934.



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/s/ Rita D.
Kahle                                                  
DATE August 13, 2002
       Rita D. Kahle
  Executive Vice President
(Principal Financial and Accounting
   Officer, and duly authorized 
    Officer of the registrant)

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