SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549

                               Form 10-K


           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

For the 2000 fiscal year ended December 30, 2000 Commission File No. 2-55860

                       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)

Registrant's telephone number, including Area Code:    (630) 990-6600

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: NONE

  State the aggregate market value of  the  voting and nonvoting stock
held by nonaffiliates of the Registrant. This Company's shares are only
issued to and held by, its dealer-stockholders. All shares held by these
stockholders  can  be  repurchased by the  Company  when  the  dealer-
stockholder's  membership  agreement terminates.  Thus,  there  is  no
market for these shares. The repurchase price for each share of  Class
A  Stock is equal to  the  par value of $1,000 per share. The repurchase
of Class B Stock is equal to twice the par value or $2,000 per share. The
repurchase price for each share of Class C Stock is equal to the par value
of $100.  As of February  16, 2001, the aggregate value of the Class A Stock
and Class C Stock held  by non-affiliates (dealer-stockholders) calculated on
the basis  of  this repurchase price was $251,623,900.

  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  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.YesX  No

  Indicate   the  number  of  shares  outstanding  of  each   of   the
Registrant's  classes  of common stock, as of the  latest  practicable
date  (applicable only to corporation Registrants). Outstanding shares
as of February 16, 2001:


          Class A (voting) Stock,     $1,000 par value       3,757 shares
          Class B (nonvoting) Stock,  $1,000 par value       2,224 shares
          Class C (nonvoting) Stock,  $  100 par value   2,478,669 shares

  PART I

Item 1. Business

  The  terms  "Ace," "Company," "cooperative," "we," "us,"  "our"  and
similar  words refer to Ace Hardware Corporation. The terms  "member,"
"retailer," "dealer," "you," "your" and similar words refer to someone
who purchases our stock.

  Ace  Hardware  Corporation  was formally  organized  as  a  Delaware
corporation in 1964. In 1973, as the result of a corporate merger,  it
became   the  successor  of  Ace  Hardware  Corporation,  an  Illinois
corporation  that  was  organized in 1928. Until  1973,  the  Illinois
corporation  conducted  the  business now  being  engaged  in  by  our
Company.  Our  main executive offices are located at  2200  Kensington
Court,  Oak Brook, Illinois 60523. Our main telephone number is  (630)
990-6600.

  We  operate  primarily  as  a wholesaler  of  hardware  and  related
products, and we also manufacture paint products. We mainly  sell  our
products  to hardware dealers who have Membership Agreements with  us.
These  Membership  Agreements allow the hardware dealers  to  purchase
merchandise  and services from us and to license some  of  our  marks,
such  as  "Ace"  and  "Ace  Hardware."  (See  the  heading  "Business"
subheading "Membership Agreement").

  We   operate  on  a  cooperative  basis  and  distribute   patronage
dividends  to  our eligible member dealers each year on the  basis  of
quantity  or  value  of  business that  we  do  with  them.  (See  the
subheading "Distribution of Patronage Dividends").

  As  of  the end of our 2000 fiscal year on December 30, 2000,  there
were 5,011  stores  having  Membership  Agreements with us. The States
with the largest concentration of members are California (approximately
10%), Texas (approximately 6%), Florida and Illinois (approximately 5%
each), and Michigan and Georgia (approximately  4%  each). The  States
where we shipped  the largest percentages  of  merchandise  in  fiscal
year 2000 are California (approximately 12%), Illinois  (approximately
10%),   Florida   (approximately  6%),  Texas,  Michigan  and  Georgia
(approximately  4% each).  Approximately 6.7% of our sales are made to
locations  outside of the United States and its territories.

  The  number of member locations that we had during each of our  past
three fiscal years is summarized in the following table:

                                               2000    1999    1998
                                               -----   -----   -----
  Member outlets at beginning of period        5,082   5,039   5,032
  New member outlets                             208     264     231
  Member outlets terminated                      279     221     224
                                               -----   -----   -----
  Member outlets at end of period              5,011   5,082   5,039
                                               =====   =====   =====
  Dealers having one or more member outlets
   at end of period                            3,858   3,932   3,963


  We  service  our  dealers by buying merchandise  in  quantity  lots,
mainly from manufacturers. We then warehouse large quantities of  this
merchandise  and sell it in smaller lots to our dealers. Most  of  the
products  that  we distribute to our members from our  warehouses  are
sold  at  a  price that we establish ("dealer cost"), to which  a  10%
adder  ("handling  charge") is generally added. In fiscal  year  2000,
warehouse sales were 70% of our total sales and bulletin sales were 3%
of  our  total  sales  with the balance of 27% being  direct  shipment
sales.

  The  following  is  a breakdown of our total warehouse  sales  among
various  general  classes of merchandise for each of  the  past  three
fiscal years:

  Class of Merchandise                           2000  1999  1998
  --------------------                           ----  ----  ----
  Paint, cleaning and related supplies            20%   20%   20%
  Plumbing and heating supplies                   15%   15%   15%
  Hand and power tools                            14%   14%   14%
  Garden, rural equipment and related supplies    14%   13%   13%
  Electrical supplies                             12%   13%   13%
  General hardware                                12%   12%   12%
  Sundry                                           7%    7%    7%
  Housewares and appliances                        6%    6%    6%

  We  sponsor  two  major hardware conventions each  year  at  various
locations.  We  invite  dealers and vendors  to  attend,  and  dealers
generally  place orders that are delivered before the next convention.
During the convention, there are exhibits of regular merchandise,  new
merchandise  and  seasonal merchandise. Lawn and garden  supplies  and
exterior paints are seasonal merchandise in many parts of the country.
Some types of goods such as holiday decorations are also seasonal.

  Warehouse  sales involve the sale of merchandise that  we  inventory
at  our  warehouses.  Direct shipment sales involve  sales  where  the
merchandise is shipped directly to dealers by vendors. Bulletin  sales
involve   our   special  bulletin  offers  where  we  order   specific
merchandise after dealers sign up to buy particular quantities of it.

  Dealers  place direct shipment orders with our vendors using special
purchase orders. The vendors then bill us for these orders, which  are
shipped  directly  to dealers. We, in turn, bill the ordering  dealers
with  an  adder  ("handling  charge") that  varies  according  to  the
following schedule:

  Invoice Amount                     Adder (Handling Charge)
  --------------                     -----------------------
  $    0.00 to $  999.99             2.00% or $1.00 whichever is greater
  $1,000.00 to $1,999.99             1.75%
  $2,000.00 to $2,999.99             1.50%
  $3,000.00 to $3,999.99             1.25%
  $4,000.00 to $4,999.99             1.00%
  $5,000.00 to $5,999.99              .75%
  $6,000.00 to $6,999.99              .50%
  $7,000.00 to $7,999.99              .25%
  $8,000.00 and over                  .00%

  We  make  bulletin sales based upon notices from dealers  that  they
wish  to participate in one of our special bulletin offers. Generally,
we  notify  dealers of our intention to purchase certain products  for
bulletin  shipment. We then purchase these products in the  quantities
that the dealers order. When the bulletin shipment arrives, we do  not
place it into warehouse inventory. Rather, we break it up into smaller
quantities and deliver it to the dealers who ordered it. We  generally
apply a 6% adder ("handling charge") to this category of sales.

  We  typically apply an additional adder of 3% to merchandise that is
exported   outside   of  the  United  States,  its   territories   and
possessions.  Ace  dealers located outside of the United  States,  its
territories  and possessions who are not subject to the additional  3%
adder  are  assessed a flat 2% adder on all direct shipment sales.  We
maintain  inventories  to meet only normal resupply  orders.  Resupply
orders  help  keep  our  inventories at normal levels.  Usually  these
resupply orders are filled within one day of receipt. Bulletin  orders
are  somewhat  similar  to resupply orders,  but  can  be  for  future
delivery.  We do not backlog normal resupply orders and therefore,  no
significant backlog exists at any point in time.

  Our  Store  Traffic Opportunity Program ("STOP") is a program  where
we   offer  our  dealers  specific  products  that  we  assign  to   a
"competitive price sales" classification. These products are delivered
from  our  warehouses with or without the addition of freight  charges
and  with an adder (if any) of up to 5%, determined on an item by item
basis. Management has the authority to add and withdraw items from the
STOP  program,  and to establish reasonable minimum or  multiple  item
purchase  requirements for this program. We do not make any  patronage
dividend  distributions for purchases under the STOP program.  We  do,
however,  consider STOP purchases to be either warehouse purchases  or
bulletin  purchases,  as  applicable,  in  determining  the  forms  of
patronage   dividend  distributions.  (See  the  heading   "Business,"
subheading "Forms of Patronage Dividend Distributions.")

  Our  LTL  Plus  Program allows dealers to purchase full  or  partial
truckloads  of  products  from specific vendors  for  direct  shipment
delivery. No adder or national advertising assessment applies to these
purchases.  (See  heading "Business," subheading  "Patronage  Dividend
Determinations and Allocations.")

  In  addition  to  hosting conventions as well  as  other  shows  and
product  exhibits  for  our  dealers, we  also  provide  many  special
services.  We  offer  these  services at  established  charges.  These
services include inventory control systems, as well as price  and  bin
ticketing.  We also provide dealers with a checklist service  so  that
they can have current information about the merchandise that we offer.
We  also provide a choice of ongoing educational and training programs
for  dealers. (See the heading "Business," subheading "Special Charges
and Assessments.")

  Our  wholly owned subsidiary, Ace Insurance Agency, Inc.,  offers  a
Group  Dealer Insurance Program so that dealers can purchase different
types  of  insurance coverage. This program offers "all risk" property
insurance  and  business interruption, crime, liability  and  workers'
compensation  insurance, in addition to medical  insurance  for  store
employees.  AHC  Realty Corporation, another wholly owned  subsidiary,
offers broker services to dealers who want to buy or sell stores. Loss
Prevention  Services,  Inc., another wholly owned  subsidiary,  offers
security training and other loss prevention services to dealers.

  Our  wholly owned subsidiary, Ace Hardware Canada, Limited, operates
as  a wholesaler of hardware and related merchandise in Canada. It has
two distribution facilities located in Calgary, Alberta and Brantford,
Ontario.  Ace  Hardware  Canada, Limited  generated  less  than  three
percent (3%) of our consolidated revenue during fiscal year 2000.

  We  operate  our  Company-owned retail hardware stores  through  our
wholly  owned  subsidiaries  A.H.C. Store Development  Corp.  and  Ace
Corporate  Stores,  Inc. For further information about  these  stores,
please see the heading "Properties."

  We  manufacture paint and similar coating products at our  factories
in  Matteson  and Chicago Heights, Illinois. These factories  are  the
main  source of the paint products that we offer for sale. We  operate
our paint manufacturing business as a separate Division of our Company
for  accounting purposes. We purchase all our raw materials for  paint
manufacturing  from outside sources. We have had adequate  sources  of
raw  materials  in  the  past,  and we do  not  currently  expect  any
shortages of raw materials that would have a major impact on our paint
operations. Paint manufacturing is seasonal in the sense that  greater
paint sales occur from April through September. Historically, our need
to  comply with environmental laws and regulations has not had a major
effect on our ability to conduct our paint manufacturing operations.

  Our business, both hardware wholesaling and paint manufacturing,  is
not  dependent  on  any  major suppliers and  we  feel  that  seasonal
fluctuations  do not have a major effect on our operations.  For  more
discussion of our business, see "Management's Discussion and  Analysis
of Financial Condition and Results of Operations."

  We  also  offer services to members that relate to the operation  of
their   retail  businesses.  We  provide  these  services   (such   as
advertising,  merchandising  and  training  programs)  to  assist  our
members and in some cases, to maximize our centralized buying power.

Strategic Planning

  We  have  a  strategic  planning  process  that  results  in  goals,
objectives and programs that we want to develop in the future for  our
Company and our members. Because strategic plans deal with the future,
this  discussion of them contains "forward looking statements,"  which
are  based  on  our current expectations. The actual  results  of  our
efforts  can differ greatly from the results that we might desire.  We
believe  that we have the facilities, the employees and the  resources
for  ongoing success as we implement our plans and programs,  but  the
future  is  difficult  to forecast, especially things  like  revenues,
costs, margins and profits which are influenced by many factors.  Some
of these factors are discussed below.

  The  effects  of future growth in the hardware and hardlines-related
industries, are uncertain. By "hardlines-related industries"  we  mean
home   center,   do-it-yourself,  rental   and   commercial/industrial
categories.  The  future condition of the economy is  also  uncertain,
when  viewed domestically, internationally or in specific geographical
regions. Some other uncertainties that could affect our plans  include
possible future changes in merchandise and inventory prices,  and  the
effect  of  increasingly intense competition. There could be potential
shifts  in  market  demand  for  some  products.  Lawsuits  and  laws,
especially   laws  dealing  with  franchising,  licensing,  importing,
exporting  and environmental matters could affect our future business.
We cannot predict whether these uncertainties might cause future costs
or  liabilities  or  have some other effect on our future  ability  to
achieve our plans.

  Through  our ongoing strategic planning process we have focused  our
plans  around  four  segments for future growth  and  success  in  our
competitive  industry.  These four cornerstones  are:  Retail  Success
(store  operations),  Wholesale Success (distribution),  International
growth  and  new member growth. Retail success for our  dealers  is  a
primary objective because, in our opinion, it drives both their retail
performance and our wholesale growth. We have therefore increased  our
efforts  to assist members in "retail success initiatives," which  are
designed  to  improve  their retail performance  and  competitiveness.
These  retail  success initiatives include retail goals that  we  urge
dealers  to  strive for within their stores and in locally competitive
markets.  These  goals do not, however, impose major  restrictions  or
requirements  on members. Our minimum requirements for the  acceptance
of  new  members are outlined in the current Membership Agreement  and
Supplement and in the Member Operational Requirements that apply under
that  Agreement. The Operational Requirements do require that,  within
one  year  the  member must make us the primary source of  supply  and
terminate any previous participation in the program of any other major
hardware  wholesaler.  There  are currently  no  general  requirements
(apart  from  special voluntary programs) where members have  to  make
particular percentages of purchases from us or have to achieve minimum
retail performance levels, such as sales dollars per square foot.

  Our  current strategic initiative, Vision 21, focuses on becoming  a
world  class retail organization through encouraging dealers to  adopt
certain  merchandising, marketing and operational practices  that  are
supported  by  some  of  our most successful dealers  to  improve  the
Company's and the dealers' overall competitiveness and efficiency. The
cornerstones to Vision 21 are to improve retailer's sales and profits,
streamline our processes, bring wholesale and retail together  as  one
Ace  team and provide ultimate customer satisfaction. Vision 21  goals
include   minimizing   disparities  between  retail   and   wholesale,
developing dealer-friendly procedures that take duplication and  costs
out  of  dealers'  operations, achieving consistent implementation  of
programs more rapidly and improving the dealers' financial performance
and  their  ability  to  pursue new stores and  store  expansions.  As
retailers  become  Vision  21  retailers  they  are  afforded  various
benefits to assist them to succeed at retail.

Special Charges and Assessments

  We  sponsor a national advertising program. To pay for this program,
we assess dealers an amount equal to 1.365% of their purchases (except
purchases  of  LTL  Plus  and certain hardware and  software  computer
systems), with minimum and maximum yearly assessments of $1,916.46 and
$6,500.00, respectively, for each store location. Effective January 1,
2001,  we  will  assess  dealers an amount  equal  to  1.5%  of  their
purchases.  The  minimum  assessment is  $2,223.00,  and  the  maximum
assessment  is $6,800.00 for each store location. We grant  exemptions
from these assessments and make various adjustments to them for stores
located  outside the continental United States. These  exemptions  and
adjustments are based on our management's evaluation of the number and
types  of television broadcasts that are received in these areas.  The
amount of our national advertising assessment can be changed from time
to time by our Board of Directors. We can also impose assessments at a
flat  monthly  rate  or based on a percentage of  sales  for  regional
advertising not to exceed 2% of a dealer's annual purchases.  Regional
advertising  assessments are subject to the same minimum  and  maximum
amounts as the National Advertising assessment.

  Every  two weeks, we bill the member store for a special low  volume
account  service charge of $75 if annual purchases from  us  are  less
than $50,000. Effective January 1, 2001, every two weeks, we will bill
the  store for a special low volume account service charge of $60  per
bi-weekly  billing statement period if purchases from us  during  such
period are less than $5,700.00. The low volume service charges that we
bill  to  the  store in a specific year are automatically refunded  if
that  store's  total  purchases increase to over $148,200  during  the
year. The store is excused from this low volume account service charge
during  the  first  12  months that it is a  member.  There  are  some
exceptions  to  our  low  volume  account  service  charges  that  are
described below:

  1.If  you purchase $148,200 of merchandise from us during the  year,
    we  give you credit on your next billing statement for any low  volume
    charges  which  we  billed to you earlier in the year.  We  then  stop
    billing you for low volume account service charges for the rest of the
    year,  even if your current purchases on a billing statement are  less
    than $5,700; and

  2.We  do not bill low volume account service charges every two weeks
    if  your  store's  sales volume with us the year  before  was  at  our
    minimum  ($148,200), but we will bill these charges in a lump  sum  to
    your  last  statement of the year if you do not reach  our  applicable
    minimum by that time.

  An  Ace store that falls below our minimum purchase levels can  also
be subject to termination.

  We  add  a late payment service charge on any past due balance  that
you  owe us for merchandise, services, or your stock subscription. The
current  rate for the late payment service charge is .77% per biweekly
statement  period,  except in Texas where  the  charge  is  .384%  and
Georgia  where the charge is .692%. We consider a past due balance  to
exist whenever we do not receive payment of the amount shown as due on
your  billing  statement  within  10  days  after  the  date  of  that
statement.  We can change the rate of our late payment service  charge
from time to time.

  Our  retail  training program called the "Ace Training  Network"  is
required  for  all  member  stores  in  the  United  States  and  U.S.
Territories. Under the "Ace Training Network," we will bill a  monthly
fee which we call a "monthly training assessment." This assessment  is
$16  per month for each single store or parent store and $11 for  each
branch  store. A single store or parent store is one that has a  share
of our Class A voting stock (or one that involves a stock subscription
for  a  share  of  our  Class A Stock.) A branch store  is  one  whose
membership involves only shares (or a subscription for shares) of  our
nonvoting  Class C Stock. (See Article XXV, Section 2 of our By-laws.)
Branch  stores  can  request an exemption from  the  monthly  training
assessment.

  With  the Ace Training Network, you have the option of choosing  how
your  monthly  training assessment dollars will be spent.  Under  this
program,  one  point  equals one dollar in your training  account.  We
credit you with another point for each dollar you pay for your monthly
training assessment. Thus, a single store or parent store can earn  16
points per month and a branch store can earn 11 points per month.  You
may  use  your points at any time to buy one of the training  programs
that  we offer. If you do not have enough points for the program  that
you  want, you can use the points that you have and we will  bill  you
for  the difference. Multiple stores and member groups can pool  their
points together to purchase our training programs.

  We  also  have a mandatory subscription service for Material  Safety
Data  Sheet  information for all member stores located in  the  United
States. As of the date of this filing, the yearly assessment for these
subscriptions is $20 for each single store or parent store and $10 for
each branch store.

Trademark and Service Mark Registrations

  The  names "ACE HARDWARE" and "ACE" are used extensively by  members
and  ourselves in the promotion, advertising and marketing of products
and  services  that we sell. We have had the following  Trademark  and
Service  Mark  Registrations issued by the U.S. Patent  and  Trademark
Office for our marks:

                                             Registration
     Description of Mark       Type of Mark     Number      Expiration Date
  --------------------------   ------------  ------------   ---------------
  "ACE HARDWARE" with winged
    emblem design              Service Mark     840,176     December 5, 2007
  "ACE HARDWARE" with winged
    emblem design              Trademark        898,070     September 8, 2000(1)
  "THE PAINTIN' PLACE"         Service Mark   1,138,654     August 12, 2000(2)
  "HARDWARE UNIVERSITY"
    with design                Service Mark   1,180,539     December 1, 2001
  "SUPER STRIKER"              Trademark      1,182,330     December 15, 2001
  "PACE" with design           Service Mark   1,208,887     September 14, 2002
  "ACE HARDWARE" with winged
    emblem design              Trademark      1,277,581     May 15, 2004
  "ACE HARDWARE" in stylized
    lettering design           Trademark      1,426,137     January 27, 2007
  "ACE" in stylized lettering
    design                     Service Mark   1,464,025     November 3, 2007
  "ACE HARDWARE" in stylized
    lettering design           Service Mark   1,486,528     April 26, 2008
  "ACE HARDWARE AND
    GARDEN CENTER" in stylized
    lettering design           Service Mark   1,487,216     May 3, 2008
  "ACE NEW EXPERIENCE" in
    stylized lettering design  Trademark      1,554,322     September 5, 2009
  "ACE SEVEN STAR" in stylized
    lettering design           Trademark      1,556,389     September 19, 2009
  "ACE BEST BUYS" in circle
    design                     Service Mark   1,560,250     October 10, 2009
  "ACENET"                     Service Mark   1,574,019     December 26, 2009
  "ACE IS THE PLACE"           Service Mark   1,602,715     June 19, 2010
  "LUB-E"                      Trademark      1,615,386     October 2, 2010
  "ASK ACE"                    Service Mark   1,653,263     August 6, 2001
  Christmas Elves design       Trademark      1,669,306     December 24, 2001
  "ACE 2000"                   Service Mark   1,682,467     April 7, 2002
  "ACE" in stylized lettering
    design                     Trademark      1,683,538     April 21, 2002
  "THE OAKBROOK COLLECTION"
    in stylized lettering
    design                     Trademark      1,707,986     August 18, 2002

                                             Registration
     Description of Mark       Type of Mark     Number      Expiration Date
  -----------------------      ------------  ------------   ---------------
  "ACE HARDWARE BROWN BAG
    BONANZA" with design       Service Mark   1,761,277     April 13, 2003
  "ACE HARDWARE
    COMMITTED TO A QUALITY
    ENVIRONMENT" design        Service Mark   1,764,803     April 13, 2003
  "STORE 2000 THE
    STORE OF THE FUTURE"       Service Mark   1,811,032     December 14, 2003
  "ENVIROCHOICE"               Trademark      1,811,392     December 14, 2003
  "CELEBRATIONS"               Service Mark   1,918,785     September 12, 2005
  Repetitive Stylized "A"
    design                     Service Mark   1,926,798     October 10, 2005
  "The NEW AGE OF ACE" design  Service Mark   1,937,008     November 21, 2005
  "ACE RENTAL PLACE"
    in stylized lettering
    design                     Service Mark   1,943,140     December 19, 2005
  "HELPFUL HARDWARE FOLKS"     Service Mark   1,970,828     April 30, 2006
  "ACE HOME CENTER"            Service Mark   1,982,130     June 25, 2006
  "SEALTECH"                   Trademark      2,007,132     October 8, 2006
  "GREAT FINISHES"             Trademark      2,019,696     November 26, 2006
  "WOODROYAL"                  Trademark      2,065,927     May 27, 2007
  "ROYAL SHIELD"               Trademark      2,070,848     June 10, 2007
  "ROYAL TOUCH"                Trademark      2,070,849     June 10, 2007
  "QUALITY SHIELD"             Trademark      2,102,305     September 30, 2007
  "QUALITY TOUCH"              Trademark      2,102,306     September 30, 2007
  "STAINHALT"                  Trademark      2,122,418     December 16, 2007
  "ACE CONTRACTOR CENTER"      Service Mark   2,158,681     May 19, 2008
  "NHS NATIONAL
    HARDLINES SUPPLY"          Service Mark   2,171,775     July 7, 2008
  "ACE COMMERCIAL &
    INDUSTRIAL SUPPLY"         Service Mark   2,186,394     September 1, 2008
  "THE OAKBROOK COLLECTION"    Trademark      2,187,586     September 8, 2008
  "ACE GARDEN PLACE"           Service Mark   2,227,729     March 2, 2009
  "ACE ROYAL"                  Trademark      2,237,981     April 13, 2009
  "HELPFUL HARDWARE CLUB"      Service Mark   2,239,400     April 13, 2009
  "THE FOLKS IN THE RED VEST"  Service Mark   2,261,946     July 20, 2009
  "ACE CONTRACTOR PRO"         Trademark      2,273,483     August 31, 2009
  "ILLUMINATIONS"              Trademark      2,353,666     May 30, 2010
  "YOUR NEIGHBROHOOD
    SOLUTIONSPLACE"            Service Mark   2,386,359     September 12, 2010
  "ACE" with accent design     Service Mark   2,378,123     August 15, 2010
  "ACE SOLUTIONSPLACE"         Service Mark   2,394,181     October 10, 2010

(1) Application for renewal of registration filed October 10, 2000.
(2) Application for renewal of registration filed August 4, 2000.

  As  of  the  date  of  this  filing,  we  also  have  the  following
applications  for  new registrations pending in the  U.S.  Patent  and
Trademark Office:

  Mark                             Type of goods/services
  ----                             ----------------------
  "STORE-IT-RIGHT"                 hardware products, namely, hooks, brackets,
                                   knobs, hangers and extensions for support
                                   or hanging
  "ACE HOMEPLACE"                  magazines
  "ACE" with halo design           retail hardware store services

Competition

  Competitive   conditions  in  the  wholesale  and  retail   hardware
industry  are  intense and increasing. Independent hardware  retailers
must remain competitive with discount stores and chain stores, such as
WalMart, Home Depot, Menard's, Sears, and Lowe's, and with other  mass
merchandisers. Retail hardware stores have been slowly shifting  their
locations to high rent shopping centers. There has also been  a  trend
toward  longer  store  hours. There is intense  pressure  on  hardware
retailers  to  obtain  low cost wholesale supply sources.  In  several
markets  in  the  United States, we also compete directly  with  other
dealer-owned  wholesalers  such as TruServ  Corporation,  Do  it  Best
Corporation and United Hardware Distributing Co.

Employees

  We  have  5,513  full-time employees, of which  1,685  are  salaried
employees. We also have, as of the end of the 2000 fiscal year,  union
contracts  covering one (1) truck drivers' bargaining unit  and  three
(3)  warehouse bargaining unit(s). We consider our employee  relations
with both union and non-union employees to be good, and we have had no
strikes  in the past five years. In general, our employees are covered
by  either  negotiated  or nonnegotiated benefit  plans  that  include
hospitalization,  death benefits and, with few exceptions,  retirement
benefits.

Limitations on Ownership of Stock

  Our  members  own  all of our outstanding shares of  capital  stock.
Membership  in our Company is limited to approved dealers in  hardware
and related products who have Membership Agreements with us. These are
the  only ones eligible to own or purchase shares of any class of  our
stock.

  No  dealer is allowed to own more than 1 share of our Class A voting
stock,  no  matter  how  many  store locations  that  dealer  owns  or
controls.  This  ensures that each stockholder in our cooperative  has
equal voting power. We treat an unincorporated member or a partnership
member  as  being controlled by someone else if 50%  or  more  of  the
assets  or  profit  shares of that member are  owned  by  (i)  another
person,  partnership or corporation; or (ii) the owner(s)  of  50%  or
more of the assets or profit shares of another unincorporated business
firm  or (iii) the owner(s) of at least 50% of the capital stock of  a
corporation.  We  treat  a  member that  is  a  corporation  as  being
controlled  by  someone else if at least 50% of the capital  stock  of
that   member   is  owned  by  (i)  another  person,  partnership   or
corporation; or (ii) the owner(s) of at least 50% of the capital stock
of  another corporation; or (iii) the owner(s) of at least 50% of  the
assets or profit shares of another unincorporated business.

Distribution of Patronage Dividends

  We  operate on a cooperative basis for purchases of merchandise from
us that are made by dealers who have become members of our Company. We
also  operate on a cooperative basis with dealers who have  subscribed
for shares of our stock but who have not yet actually become "members"
because they have not yet fully paid for their $1,000 par value shares
of  our  Class  A  voting stock. The dealers in either  of  these  two
categories are entitled to receive patronage dividends once a year  on
an equitable basis.

  We   made   patronage  dividend  distributions  at   the   following
percentages  of  our  sales  in  the warehouse,  bulletin  and  direct
shipment categories and on the total sales of products manufactured by
our Paint Division during the past three fiscal years:
                                     2000       1999       1998
                                     ----       ----       ----
  Warehouse Sales                4.43564%   4.98172%   4.78251%
  Bulletin Sales                     2.0%       2.0%       2.0%
  Direct Shipment Sales              1.0%       1.0%       1.0%
  Paint Sales                     8.1131%    7.8827%    9.1653%

  Under  our  LTL Plus Program, we also calculate patronage  dividends
separately  on  sales  of  full  or  partial  truckloads  of  products
purchased by eligible dealers from certain vendors (see discussion  of
LTL  Plus Program under the heading "Business.") The LTL Plus  Program
patronage  dividend was .5% of these sales for fiscal year 2000,  1999
and 1998.

Patronage Dividend Determinations and Allocations

  The  amounts  that we distribute as patronage dividends  consist  of
our  gross profits on business that we do with dealers who qualify for
patronage  dividend distributions, less a proportionate share  of  our
expenses for administration and operations. Our gross profits  consist
of  the difference between our selling price for the merchandise  that
these dealers buy from us and our purchase price for that merchandise.
Our  computation of patronage dividends excludes all of our income and
expenses  from activities that are not directly related  to  patronage
transactions.  The  excluded items primarily  consist  of  profits  on
business that we do with dealers or other customers who do not qualify
for  patronage dividend distributions and any income or loss  that  we
realize  from  the  disposition  of  property  and  equipment.  If   a
disposition occurred, then the income we would derive from  this  type
of recapture would be included in computing patronage dividends.

  Our  By-laws  provide that, by virtue of dealers being "members"  of
our  Company (that is, by owning shares of our Class A voting  stock),
they  consent to include in their gross income for federal income  tax
purposes  all  patronage dividends that we distribute to  them.  These
distributions must be included in gross income for the taxable year in
which  the  dealer receives them. Dealers who have not yet fully  paid
the $1,000 purchase price for their shares of our Class A voting stock
are also required to include all patronage dividends we distribute  to
them  in  their  gross  income as explained  above.  Under  our  Stock
Subscription Agreement, dealers must expressly consent to  take  these
patronage dividend distributions into their gross incomes.

  The amount of the patronage dividends which dealers must include  in
their  gross  incomes  includes both the  cash  portion  of  patronage
dividends and any portion of patronage dividends that we apply against
any indebtedness the dealer owes to us in accordance with Section 7 of
Article XXIV of our By-laws. It also includes any portion of patronage
dividends that they receive in shares of our Class C nonvoting  stock,
other property and patronage refund certificates. The Company also has
the authority to issue a portion of the patronage dividend in the form
of other property.

  Under  our present program, patronage dividends on each of our three
basic  categories of sales (warehouse sales, bulletin sales and direct
shipment  sales) are allocated separately, as are patronage  dividends
under our LTL Plus Program. Dividend percentage calculations are  made
with reference to the net earnings derived from each of the respective
categories.  The 2000 patronage dividend rate for the LTL Plus Program
is  0.5%  of our LTL Plus sales. The 2000 patronage dividend rates for
direct shipment and bulletin sales are 1% and 2%, respectively,  while
the current 2000 patronage warehouse dividend rate is 4.44%.

  Patronage  dividends are calculated separately for full and  partial
truckloads of products purchased under the LTL Plus Program.  (See the
heading  "Business", discussion of LTL Plus Program and the subheading
"Forms of Patronage Dividend Distributions" below.)

  Any  manufacturing profit realized on intracompany sales of products
manufactured  by  our Paint Division is allocated and  distributed  as
patronage  dividends  to  eligible  dealers  in  proportion  to  their
respective annual dollar purchases of paint and related products  from
that division. The earnings we realize on wholesale sales of the Paint
Division's  products to our eligible dealers are currently distributed
as  patronage  dividends  to them as part of the  patronage  dividends
which   they  receive  each  year  in  the  basic  patronage  dividend
categories  of  warehouse sales, bulletin sales  and  direct  shipment
sales.  Under Section 8 of Article XXIV of our By-laws, if  the  Paint
Division's manufacturing operations for any year result in a net  loss
instead  of a profit to the Paint Division, this loss would be  netted
against the earnings we realized from our other activities during  the
year,  so  that the earnings available for distribution  as  patronage
dividends from these other activities would be reduced for the year.

  We  have  established  a LBM Retailer Incentive Pool  Plan  for  our
members  who  purchase LBM products through Builder Marts of  America,
Inc.  ("BMA"), and are eligible participants under our Ace  Contractor
Center standards. This is not a patronage dividend plan, but rather an
allocation of the increase in our stock investment in BMA.  Under  the
plan, we calculate an annual estimate of the amount by which our stock
in   BMA  has  increased  or  decreased  in  value  from  our  initial
investment,  net  of certain expenses. We allocate  this  estimate  to
eligible  members  annually  based on their  qualifying  purchases  of
LBM products.  A member's pool allocation only becomes vested  and can
only  be  redeemed upon the termination of the member's Ace membership
which  results  in the sale or redemption of Ace stock held  for  that
location,  Ace's termination of the LBM Retailer Incentive Pool  Plan,
or  Ace's  liquidation, whichever occurs first. Negative pool balances
are  not  charged to members. The 2000 incentive pool rate under  this
plan is 0.34% of qualifying purchases.

Forms of Patronage Dividend Distributions

  We  make patronage dividend distributions to our eligible dealers in
cash,  shares  of our Class C Stock and patronage refund  certificates
according  to  a specific plan that has been adopted by our  Board  of
Directors. This plan can be changed from time to time by the Board  as
they  deem  fit  depending on business conditions  and  our  Company's
needs.

  This  plan  is summarized below for the purchases that our  eligible
dealers make from us for the year 2000 and subsequent years.

  1.For  each  of  your  eligible stores, we initially  calculate  the
minimum cash patronage dividend distribution as follows:

       (a)  20% of the first $5,000 of the total patronage dividends allocated
            for distribution each year  to  you  based  on  the purchases made
            for the eligible store;

       (b)  25% of the portion of the total patronage dividends allocated for
            that store which exceed $5,000 but do not exceed $7,500;

       (c)  30% of the portion of the total patronage dividends allocated for
            that store which exceed $7,500 but do not exceed $10,000;

       (d)  35% of the portion of the total patronage dividends allocated for
            that store which exceed $10,000 but do not exceed $12,500;

       (e)  40% of the portion of the total patronage dividends allocated for
            that store which exceed $12,500.

  2.  We distribute the portion of patronage dividends in excess of  the cash
or  property amounts above in the form of shares of our Class  C nonvoting
stock (par value $100 per share) until the total par  value of  all  shares
of all classes of our capital stock that you hold  for the eligible store
equals the greater of:

       (a)  $20,000; or

       (b)  the sum of purchases in the following categories that you made
            for  the  eligible store during the most recent calendar year:

               (i)  15% of the volume of Ace manufactured paint and related
                    products purchases, plus

               (ii) 3% of the volume of drop-shipment or direct purchases
                    (excluding Ace manufactured paint and related products),
                    plus

               (iii)15% of the volume of warehouse and  bulletin purchases
                    (including STOP and excluding Ace manufactured paint
                    and related products), plus

               (iv) 4% of the volume of LTL Plus purchases.

     Please  note, however, that we do not issue fractional shares  of
Class  C  Stock. We take any amount that would result in a  fractional
share  of  stock  and  distribute  it  in  cash  or  patronage  refund
certificates instead.

  3.  The  portion of your total patronage dividends for  each  of  your
      eligible stores which exceeds the sum of:

       (a)  the cash amount determined under Paragraph 1 above and

       (b)  the amount of Class C Stock determined under Paragraph 2 above is
            distributed to you in cash up to certain limits.  The total amount
            that you receive in cash for an eligible  store cannot  exceed 45%
            of that store's total patronage dividends for the year.  If a
            store's total cash distribution would exceed this 45% limit, then
            the distribution over that amount is made instead in the form of a
            non-negotiable patronage refund certificate.  Our Board of Directors
            determines the maturity dates and interest rates of these patronage
            refund certificates before they are issued.  These certificates
            include provisions that give us a first lien on the amount of any
            indebtedness that you owe us.  The certificates also contain
            language subordinating them to all the rights and claims of our
            secured creditors, general creditors and our bank creditors.
            Historically, these patronage refund certificates have matured
            within five years from the date we issued them.

  Article XXIV, Section 7 of our By-laws requires the cash portion  of
any  patronage  dividends  to be applied against  any  indebtedness  a
member owes us where the membership for his store is terminated before
the distribution of patronage dividends. Despite this, however, 20% of
a  terminated store's total annual patronage dividends will be paid in
cash if we receive a timely request for this form of payment.

  Because  of the requirement of the U. S. Internal Revenue Code  that
we  withhold  30%  of  the annual patronage dividends  distributed  to
eligible  dealers  whose  places of business are  located  in  foreign
countries  or Puerto Rico, the cash portion of patronage dividends  to
these  dealers is a minimum of 30%. There are exceptions to  this  30%
cash  payment  in  the case of 1) unincorporated Puerto  Rico  dealers
owned  by  individuals who are U.S. citizens, and 2)  certain  dealers
incorporated in Guam, American Samoa, the Northern Mariana Islands  or
the  U.S. Virgin Islands. These exceptions apply if less than  25%  of
the  stock of these dealers is owned by foreign persons, and at  least
65%  of  their  gross  income  for  the  last  three  years  has  been
sufficiently  connected  with a trade or  business  in  one  of  these
locations or in the United States.

  We  also  have certain loan programs that allow dealers  to  pay  us
back with part of their patronage dividend distributions. For example,
to  help  members  buy standardized exterior signs  identifying  their
stores,  our  Board of Directors has authorized a loan program.  Under
this program, a dealer may apply to borrow between $100 to $20,000 per
location  from  us for this purpose. If you obtain a loan  under  this
program,  you  may either repay it in twelve payments billed  on  your
regular  bi-weekly  billing statement, or you may apply  the  non-cash
portion  of your annual patronage dividends (for up to the next  three
annual patronage dividend distributions) toward payment of your loan.

  Our  Board of Directors has also authorized finance programs to help
qualified dealers buy certain computer systems from us and to  finance
capital  improvements with patronage dividends.  The  amount  financed
cannot exceed 80% of the cost of any system. For PAINTMAKER computers,
members  have applied to borrow between $1,000 to $15,000 per location
repayable over a period of three (3) years.

  Under  these programs, members have directed us to first  apply  the
patronage  refund  certificate portion  of  their  patronage  dividend
distributions toward the balance owed on financed items  and  next  to
apply  patronage  dividends which would otherwise be payable  for  the
same  year  in the form of our Class C Stock. These signage,  computer
financing  and store retrofit programs may be revised or  discontinued
by our Board at any time. Members also have the ability to apply for a
Capital  Stock loan which is designed to provide them with  access  to
their  future patronage dividends to assist them in opening new retail
stores  or to assist in significant store expansions. These loans  are
repaid at the end of seven (7) years from rebate distributions of  the
non-cash  portion of the annual rebate on the respective store  during
that period.

Federal Income Tax Treatment of Patronage Dividends

  Both  the shares of Class C nonvoting stock and the patronage refund
certificates  that  we use to pay patronage dividends  are  "qualified
written  notices  of allocation" within the meaning of  Sections  1381
through 1388 of the U.S. Internal Revenue Code. The Company may pay  a
portion  of  its  dividend  in the form of  other  qualified  property
pursuant  to  Section  1382 of the U.S. Internal Revenue  Code.  These
Sections  of  the  Internal  Revenue Code deal  with  the  income  tax
treatment  of cooperatives and their patrons and have been  in  effect
since 1963. The dollar amount stated on a qualified written notice  of
allocation and fair market value of other qualified property  must  be
taken  into  the  gross income of the person to  whom  the  notice  is
issued, even though this dollar amount may not actually be paid to the
person in the same year that it is taxed.

  In  order  for us to receive a deduction from our gross  income  for
federal  income tax purposes for the amount of any patronage dividends
that  we  pay  to  a  patron  (that is, to one  of  our  eligible  and
qualifying  dealers)  in  the  form of qualified  written  notices  of
allocation  or  other qualified property, we have  to  pay  (or  apply
against  any  indebtedness that the patron owes us in accordance  with
Section  7 of Article XXIV of our By-laws) not less than 20%  of  each
patron's total patronage dividend distribution in cash and the  patron
also  has  to  consent to having the written notices of allocation  at
their stated dollar amounts, and other qualified property at the  fair
market  value,  included in his gross income for the taxable  year  in
which  he receives them. The Internal Revenue Code also requires  that
any  patronage  dividend distributions that we deduct on  our  federal
income  tax  return for business we do with patrons must  be  paid  to
those patrons within 8 months after the end of that taxable year.

  If  you  become one of our "members" by owning 1 share  of  Class  A
voting  stock, you are deemed under the U.S. Internal Revenue Code  to
have  consented  to take the written notices of allocation  and  other
qualified  property that we distribute to you into your gross  income.
Your  consent  is  deemed  because of 1)  your  act  of  obtaining  or
retaining  membership  in  our Company, and  2)  because  our  By-laws
provide that your membership constitutes this consent, and we give you
written notification of that By-law provision. Under another provision
of  the  Internal Revenue Code, dealers who have subscribed for shares
of  our  stock  are also deemed to have consented to take  the  dollar
amounts  of  their written notices of allocation and  other  qualified
property into their gross incomes. This occurs because of the  consent
provisions included in the Subscription Agreement for our stock.

  If  you  receive  a patronage refund certificate  as  part  of  your
patronage  dividends (see the subheading "Forms of Patronage  Dividend
Distributions"),  you may be deemed to have received interest  income.
This interest would arise in the form of an original issue discount to
the extent that the face amount of the certificate exceeds the present
value  of the stated principal and interest payments that we  have  to
pay you under the terms of the certificate. This interest income would
be  taxable  to  you "ratably" over the term of the certificate  under
Section  7872(b) (2) of the U.S. Internal Revenue Code. Present  value
for  this purpose is determined by using a discount rate equal to  the
applicable  Federal rate in effect as of the day of  issuance  of  the
certificate, compounded twice a year.

  We  are  required to withhold for federal income tax  on  the  total
patronage  dividend  distribution  we  make  to  anyone  who  has  not
furnished  us  with a correct taxpayer identification number.  We  can
also be required to withhold federal taxes on the cash portion of each
patronage  dividend distribution made to someone who fails to  certify
to  us  that he is not subject to backup withholding. This withholding
obligation  based  on  a  failure to certify may  not  be  applicable,
however, unless 50% or more of the total distribution is made in cash.
Since we distribute all of our patronage dividends for a given year at
the  same time and since our current patronage dividend plan (see  the
subheading  "Forms  of  Patronage Dividend  Distributions")  does  not
permit  any  member store to receive more than 45%  of  its  patronage
dividends  for  the  year  in cash, we believe  that  a  certification
failure like this should not ordinarily have any effect on our Company
or any of its dealers.

  Patronage  dividends that we distribute to patrons who  are  located
in foreign countries or certain U.S.  possessions (including those who
are incorporated in Puerto Rico or  who  reside  in Puerto Rico but
have not become  citizens  of  the United  States) have been held to
be "fixed or determinable annual  or periodic  income."  Patrons  who
receive  this  type  of  income  are currently  required to pay a tax
of 30% of the amount  received  under Sections 871(a)(1)(A) and 881(a)
(1) of the Internal Revenue Code. When dealers  are subject to this
30% tax, we must withhold it  from  their patronage  dividends  and
pay it over to the  U.S.  Internal  Revenue Service. The above does
not apply to a corporation organized in  Guam, American  Samoa,  the
Northern Mariana Islands or  the  U.  S.  Virgin Islands if less than
25% of its stock is owned by foreign persons  and at least 65% of its
gross income for the last three years  has been effectively connected
with the conduct of a trade or business in that location or in the
United States.

  The  20%  minimum portion of the patronage dividends  that  must  be
paid  in cash to patrons other than those discussed above may  not  be
enough, depending upon the patron's income tax bracket, to pay all  of
the  patron's  federal  income tax on his  annual  patronage  dividend
distributions. In our management's opinion, the payment of  a  minimum
of 20% of total patronage dividends in cash each year will not have  a
material adverse affect on our operations or on our ability to  obtain
sufficient  working  capital  for  the  normal  requirements  of   our
business.

Membership Agreement

  If  you  apply to become an Ace member, you must sign a Subscription
Agreement  to  purchase our stock. You must also  sign  our  customary
Membership  Agreement and Supplement. You must  submit  a  payment  of
$1,500  ($2,500  for conversions or new investor ground-ups  effective
January 1, 2001) with your signed Membership Agreement and Supplement.
We  use  this  fee  toward  our estimated  costs  of  processing  your
membership application. If you submit a membership application and  we
accept  it,  we sign your Membership Agreement, Supplement  and  Stock
Subscription  Agreement and send them back to you  for  your  records.
Your  membership  may  generally  be terminated  upon  various  notice
periods  and  for various reasons (including voluntary termination  by
either of us). The details of these reasons and notice periods are  in
the  Membership  Agreement. These reasons for termination  and  notice
periods  apply  except  where special laws or regulations  in  certain
locations limit our right to terminate memberships, or require  longer
notice periods.

Non-Shareholder Programs

  In  1989,  our  Board of Directors first authorized us to  affiliate
non-shareholder  international dealers who operate  retail  businesses
outside  the  United  States, its territories and  possessions.  These
international  dealers sign agreements that differ  from  our  regular
Membership Agreement. They may be granted a license to use certain  of
our  trademarks  and  service  marks,  but  they  do  not  sign  stock
subscription  agreements or become shareholders, nor do  they  receive
patronage dividends.

  In  1995,  our  Board of Directors first authorized us to  affiliate
non-shareholder  retail  accounts other  than  international  dealers.
These  accounts,  which are generally served through our  wholly-owned
subsidiary National Hardlines Supply, Inc. ("NHS"), are not granted an
ongoing  license  to use our trademarks and service  marks.  They  can
purchase selected types of products from us for resale. They  are  not
members  of  our cooperative, and therefore do not own  our  stock  or
receive patronage dividends.

  In  1996,  we  established a license program for international  non-
shareholder  dealers. These international licensees typically  receive
the  exclusive right to use our trademarks and service marks, as  well
as  exclusive rights to distribute the merchandise they purchase  from
us  in  their  home  countries.  International  licensees  pay  us   a
negotiated license fee and ongoing royalties on their retail sales  in
exchange for these rights, and for our ongoing training and support.

  In  1996,  we  also  began  operations through  our  subsidiary  Ace
Hardware  Canada, Limited ("Ace Canada"). Ace Canada's  customers  are
non-shareholders who do not receive patronage dividends from us.  Only
customers signed under the Ace Canada Franchise Agreement are licensed
to use our trademarks and service marks.

  In  1998,  the Company began developing joint ventures with  certain
dealers as a way of increasing the Ace presence in key markets without
the  need  for  Ace to use solely its own resources  to  open  company
stores. For each joint venture, the Company and the dealer enter  into
a  Limited Liability Company Agreement, with the dealer acting as  the
managing  member,  and  form a limited liability  company  ("LLC")  to
operate  the joint venture stores. In each joint venture, the  Company
owns  50% or less of the LLC's units. To date, the Company has entered
into  five  joint ventures. In the future, we may explore other  joint
venture  opportunities  with our members; however,  we  consider  each
situation unique and we evaluate each opportunity on its own merits.

  In  our  sole discretion, we may offer a member a mutually agreeable
termination  arrangement. In some situations, a member who  terminates
on this basis may be offered the opportunity to purchase products from
us  (including Ace private label products) for a period  of  up  to  5
years  after the termination of membership. The former member  is  not
required  to  make  any  such purchases from  us,  but  must  maintain
favorable credit status in order to do so.

  Sales   to  international  non-shareholder  dealers  accounted   for
approximately  6.7% of our total sales in 2000 and approximately  6.5%
in   1999  and  1998.  Sales  to  domestic  non-shareholder  locations
accounted  for less than 2.5% of our total sales in fiscal year  2000,
less  than 1.5% of our total sales in 1999 and less than 1%  in  1998.
(See  Appendix  A,  Article XXV, Sections  3  and  4  of  our  By-laws
regarding International Retail Merchants and non-member accounts.)

Item 2. Properties

  Our  general  offices  are  located at 2200  Kensington  Court,  Oak
Brook,  Illinois 60523. Information about our main properties  appears
below:
<TABLE>

                                       Square Feet      Owned        Lease
                                       of Facility        or      Expiration
            Location                 (Land in Acres)   Leased        Date
            --------                 ---------------   ------     ----------
  <S>                                  <C>             <C>        <C>
  General Offices:
   Oak Brook, Illinois                   206,030       Leased     September 30, 2009
   Oak Brook, Illinois                    70,508       Leased     September 30, 2009
   Oak Brook, Illinois                    15,278       Leased     September 30, 2009
   Downers Grove, Illinois                23,962       Leased     June 30, 2004
   Markham, Ontario, Canada(1)            15,372       Leased     February 28, 2006

  Distribution Warehouses:
   Lincoln, Nebraska                     345,440       Leased     December 31, 2006
   Arlington, Texas                      313,091       Leased     July 31, 2002
   Perrysburg, Ohio                      393,720       Leased     November 1, 2004
   Tampa, Florida                        391,755        Owned
   Hanover, Maryland (2)                 278,505        Owned
   Yakima, Washington                    507,030        Owned
   Maumelle, Arkansas                    597,253        Owned
   LaCrosse, Wisconsin (6)               591,964        Owned
   Huntersville, North Carolina (2)      354,336        Owned
   Rocklin, California                   478,468        Owned
   Gainesville, Georgia                  481,013        Owned
   Prescott Valley, Arizona              631,485        Owned
   Princeton, Illinois                 1,094,756        Owned

                                       Square Feet      Owned        Lease
                                       of Facility        or      Expiration
            Location                 (Land in Acres)   Leased        Date
            --------                  --------------   ------     ----------
   Chicago, Illinois (3)                  18,168       Leased     May 31, 2002
   Odenton, Maryland (3)                  57,500       Leased     June 26, 2003
   Colorado Springs, Colorado            494,219        Owned
   Wilton, New York                      800,525       Leased     September 1, 2007
   Loxley, Alabama                       798,698       Leased     May 27, 2009
   Brantford, Ontario, Canada (4)        354,000       Leased     March 31, 2006
   Calgary, Alberta, Canada (4)          240,000       Leased     December 31, 2001
   Prince George County, Virginia (5)155.4 acres  See Note 5
   Fort Worth, Texas (3)                  10,915       Leased     December 31, 2005

  Print Shop Facility:
   Downers Grove, Illinois                41,000       Leased     April 30, 2002

  Paint Manufacturing Facilities:
   Matteson, Illinois                    371,411        Owned
   Chicago Heights, Illinois             194,000        Owned

  Other Property:
   Aurora, Illinois                     72 acres        Owned
</TABLE>

  (1)  This property is leased by our subsidiary Ace Hardware Canada,
       Limited for its corporate office.

  (2)  This property is under contract to be sold to Citation Properties,
       Inc. on May 1, 2001, and leased back by the Company for a five-year
       term ending April 30, 2006, with an option to terminate the lease at
       the end of the first nine months of the term. The Company recently
       announced that it intends to close this facility.

  (3)  This property is leased for use as a freight consolidation center.

  (4)  Our subsidiary, Ace Hardware Canada, Limited leases this property for
       a distribution warehouse.

  (5)  This property is owned by Panattoni/Woods Road-Richmond, LCC, which has
       contracted with the Company to build a 778,000 square foot distribution
       warehouse. The property and distribution warehouse will be purchased by
       the Company upon completion, estimated to be on or before May 1, 2001.

  (6)  Includes a 220,710 square foot expansion estimated to be completed in
       May, 2001.

  In  addition  to  the  above, we or our subsidiaries,  A.H.C.  Store
Development Corp. and Ace Corporate Stores, Inc. lease other  property
for  retail  hardware  stores  ranging from  approximately  13,000  to
slightly  less  than  25,000 square feet  in  size.  The  numbers  and
locations of these leased retail stores as of the date of this  filing
are summarized in the table below:
                                                 Number of
       State                                Retail Store Leases
       -----                                -------------------
     Colorado                                        1
     Georgia                                         8
     Illinois                                        6
     New Jersey                                      2
     Washington                                      9
     Wisconsin                                       1

  We  also  lease a fleet of trucks and equipment for the main purpose
of delivering merchandise from our warehouses to our dealers.

Item 3. Legal Proceedings

  In the normal course of our business, we are a party to various legal
proceedings.  We do not expect that any currently pending proceedings will,
individually or in the aggregate, have a material adverse affect on our
business, results of operations or financial condition.

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

  None.


                                PART II

Item 5. Market for The Registrant's Common Equity and Related
        Stockholder Matters

  There  is  no  existing  market  for  our  stock  and  there  is  no
expectation  that  one will develop. We are organized  as  a  Delaware
corporation  and  operate  as  a  cooperative  corporation,  and  only
retailers of hardware and similar merchandise who are our members  own
our stock.

  The  table below shows the number of stockholders of record that  we
had as of February 16, 2001:

     Title of Class                      Number of Record Holders
     --------------                      ------------------------
     Class A Stock, $1,000 par value               3,757
     Class B Stock, $1,000 par value               2,224
     Class C Stock, $100 par value                 4,835

  Our  Company's  Articles of Incorporation and  By-laws  prohibit  us
from declaring dividends (other than patronage dividends). (Please see
the discussion of patronage dividends under Item 1. Business.)

Item 6. Selected Financial Data
<TABLE>
                                                   SELECTED FINANCIAL DATA

Income Statement Data:

                           December 30,    January 1,    January 2,    December 31,    December 31,
                               2000           2000          1999           1997            1996
                           ------------    ----------    ----------    ------------    ------------
                                                       (000's omitted)
<S>                        <C>             <C>           <C>           <C>             <C>
Net sales                  $  2,945,151    $3,181,802    $3,120,380    $  2,907,259    $  2,742,451
Cost of sales                 2,665,614     2,908,138     2,879,296       2,693,362       2,542,562
                           ------------    ----------    ----------    ------------    ------------
Gross profit                    279,537       273,664       241,084         213,897         199,889
Total expenses                  199,145       181,102       153,124         137,510         127,582
                           ------------    ----------    ----------    ------------    ------------
Net earnings               $     80,392    $   92,562    $   87,960    $     76,387    $     72,307
                           ============    ==========    ==========    ============    ============
Patronage dividends
 (Notes A, B and 5)        $     86,537    $   95,260    $   88,022    $     76,153    $     73,837
                           ============    ==========    ==========    ============    ============
Balance Sheet Data:
                           December 30,    January 1,    January 2,    December 31,    December 31,
                               2000           2000          1999           1997            1996
                           ------------    ----------    ----------    ------------    ------------
                                                       (000's omitted)
<S>                        <C>             <C>           <C>           <C>             <C>
Total assets               $  1,122,173    $1,081,484    $1,047,580    $    977,478    $    916,375
Working capital                 182,741       180,763       191,926         158,676         146,862
Long-term debt                  105,891       111,895       115,421          96,815          71,837
Patronage refund
 certificates payable,
 long-term                       68,385        55,257        43,465          49,044          49,639
Member dealers' equity          284,658       279,963       261,512         245,479         233,313
</TABLE>

(A)  The  Company operates as a cooperative organization, and  pays patronage
     dividends  to  member dealers on  earnings  derived  from  business done
     with such dealers. It is the practice of the Company to distribute
     substantially all patronage sourced earnings in the form of patronage
     dividends.

(B)  The form in which patronage dividends are to be distributed can only be
     determined at the end of each year when the amount distributable to each
     of the member dealers is known.  Patronage dividends were payable as
     listed in the table below.

(5)  Refers to Note (5) of the Consolidated Financial Statements beginning on
     page F-10 of this Form 10-K.

<TABLE>
                           December 30,    January 1,    January 2,    December 31,    December 31,
                               2000           2000          1999           1997            1996
                           ------------    ----------    ----------    ------------    ------------
                                                       (000's omitted)
<S>                        <C>             <C>           <C>           <C>             <C>
In cash                    $     34,764    $   38,173    $   34,826    $     29,943    $     28,178
In  patronage refund
 certificates payable            18,029        12,249        15,720          13,726           9,500
In Class C Stock                 24,267        21,648        26,170          22,366          26,474
In other property                    -         10,190            -               -               -
In patronage financing
 deductions                       9,477        13,000        11,306          10,118           9,685
                           ------------    ----------    ----------    ------------    ------------
Total patronage dividends  $     86,537    $   95,260    $   88,022    $     76,153    $     73,837
                           ============    ==========    ==========    ============    ============
</TABLE>



Item 7. Management's Discussion and Analysis of Financial Condition and
        Results of Operations

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

  The  Company'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.

  The  Company has an established, unsecured revolving credit facility
with  a  group of banks. The Company has unsecured lines of credit  of
$190.0  million of which $108.5 million was available at December  30,
2000.  Any borrowings under these lines of credit would bear  interest
at  the  prime  rate  or  less. Long-term  financing  is  arranged  as
determined   necessary  to  meet  the  Company's  capital   or   other
requirements,  with  principal amount, timing and  form  dependent  on
prevailing debt markets and general economic conditions.

  Capital  expenditures  for new and improved facilities  were  $44.6,
$43.1  and $26.5 million in 2000, 1999 and 1998, respectively.  During
2000,  the  Company financed the $44.6 million of capital expenditures
out  of  current and accumulated internally generated funds and short-
term  borrowings. Capital expenditures for 2001 are anticipated to  be
approximately $72.5 million primarily for a new distribution facility,
improvements to existing facilities and technology investments.

  As  a cooperative, the Company distributes substantially all of  its
patronage  sourced  earnings to its members in the form  of  patronage
dividends, which are deductible for income tax purposes.

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

Operations 2000 Compared to 1999

  On  June  30,  1999 the Company entered into a business  combination
agreement  with  Builder Marts of America, Inc. (BMA) to  combine  the
Company's lumber and building materials division (the "LBM Division")
with BMA. Under this agreement, the Company contributed   defined
business  assets  (primarily   vendor   rebate receivables,  fixed
assets  and inventories)  for  a  non-controlling interest in the
combined entity. The investment in the combined entity is   accounted
for  under  the  equity  method  of  accounting.   The accompanying
consolidated financial statements include the  financial results of the
LBM Division through the closing date of August 2, 1999.

  The  total  sales  decrease  of 7.4% was affected  by  the  business
combination  of  the  LBM Division with BMA. As a result of  this
transaction, lumber and building materials (LBM) sales are not reported
within  the Company's  sales  results after August 2, 1999. Excluding
LBM,  sales increased  4.7%  in  2000  primarily due to conversions to
Ace membership, additional sales to non-members, increased existing
retailer volume  and targeted  efforts  on new store  development  within
our retailer  base. Domestic basic business sales increased  5.3%,  while
international basic business sales decreased 1.8%.

  Gross  profit increased $5.9 million and increased as a  percent  of
total  sales from 8.60% in 1999 to 9.49% in 2000. The increase,  as  a
percent of sales, results primarily from the loss of lower margin  LBM
Division sales  volume  since August 1999. Basic business (excluding
LBM Division) gross profit  decreased slightly as a percent of basic
business sales (9.49% in  2000 vs. 9.52% in 1999) due to a sales mix
shift towards the lower margin  direct  ship  sales  category  and
higher  warehousing  costs absorbed  into  inventory.  Increased  vendor
rebates  and  increased company-owned  store  gross  profit  driven  by
higher  sales  volume partially offset the year-to-date gross profit
percentage decline.

  Warehouse  and  distribution expenses increased  $4.4  million  over
1999  and increased as a percent of total sales from 0.9% in  1999  to
1.1%  in  2000.  As  a  percent of basic business sales,  these  costs
increased from 1.0% in 1999 to 1.1% in 2000. Higher distribution wages
required  to  support the increased sales volume  combined  with  pre-
opening  costs  associated  for  a new  Loxley,  Alabama  distribution
facility are partially offset by higher logistics income.

  Selling,   general  and  administrative  expenses   decreased   $2.0
million, or 2.3% due to continued cost control measures and lower  LBM
Division  costs.  Higher  information technology  costs  and  expenses
associated  with  opening  the Loxley, Alabama  distribution  facility
partially  offset  these  expense  decreases,  and,  along  with   the
exclusion of LBM sales in the sales base, account for the increase  in
general and administrative expenses as a percent of sales.

  Retail  success  and  development expenses increased  $16.0  million
primarily  due to operating costs associated with operating additional
company-owned  stores and investments made at retail  to  support  our
Vision 21 strategy. As part of this strategy, the Company entered into
an  agreement  with  an outside party to co-develop  a  common  retail
software  platform for our dealers. This resulted in a  write-down  of
prior software development costs which will not contribute to the  new
system.  Increased advertising income partially offset  these  expense
increases. Increases in this category are directly related  to  retail
support  of  the Ace retailer as the Company continues to make  retail
investments in our dealer base.

  Interest  expense  increased  $5.2 million  due  to  higher  average
borrowing levels and increased interest rates. The increased borrowing
levels   resulted  from  the  construction  of  the  Loxley,   Alabama
distribution center, the expansion of our LaCrosse, Wisconsin facility
and increased retailer dating programs.

  Other  income increased $3.8 million primarily due to  the  gain  on
pension  plan  termination  and  income  realized  on  non-controlling
investments in affiliates.

  Income tax expense decreased due to increased operating losses  from
non-patronage activities.

Operations 1999 Compared to 1998

  On  June  30,  1999 the Company entered into a business  combination
agreement  with  Builder Marts of America, Inc. (BMA) to  combine  the
Company's lumber and building materials division (the "LBM Division")
with BMA. Under this agreement, the Company contributed   defined
business  assets  (primarily   vendor   rebate receivables,  fixed
assets  and inventories)  for  a  non-controlling interest in the
combined entity. The investment in the combined entity is   accounted
for  under  the  equity  method  of  accounting.   The accompanying
consolidated financial statements include the  financial results of the
LBM Division through the closing date of August 2, 1999.

  The  total  sales  increase  of 2.0% was affected  by  the  business
combination of the LBM Division with BMA. As a result of this transaction,
LBM Division sales  were  not  reported within the Company's  sales
results  after August  2,  1999.  Sales  of  basic  hardware  and  paint
merchandise (including warehouse, bulletin and direct shipments) increased
7.8% in 1999  primarily  due to increased existing retailer  volume,
targeted efforts  on  new  store  development  within  our  retailer
base  and conversions  to Ace membership. Excluding international,
domestic basic business sales were up 8.8%. Sales were negatively impacted
by a decline  in international sales. Net dealer outlets increased in  1999
due to targeted sales efforts on new store development and conversions to
Ace membership and continued emphasis on retail success.

  Gross  profit  increased $32.6 million or 13.5% and increased  as  a
percent  of  sales  to 8.60% vs. 7.73% in 1998.  This  increase  as  a
percent  of sales results partially from the loss of lower margin  LBM
Division volume. Higher cash discounts and vendor rebates and increased
margin from  import  products  and retail operations resulted  in  the
gross profit increase.

  Warehouse   and   distribution  expenses  increased   $918,000   and
increased as a percent of sales from .87% to .88%. Increased warehouse
and  distribution costs required to support higher handled  sales  are
partially  offset  by  increased logistics  income.  Higher  logistics
income combined with improvements in productivity drove expenses as  a
percent  of basic business sales down to 1.00% in 1999 from  1.04%  in
1998.

  Selling,  general  and  administrative expenses  increased  by  $4.5
million  or 5.4% and increased as a percent to sales due to  increased
information technology costs to support our Year 2000 efforts.

  Retail  success and development expenses increased $24.2 million  or
73.7%   due  to  increased  new  business  development  costs,   costs
associated  with additional company-owned stores and costs to  support
retail initiatives. Increases in this category are directly related to
retail  support of the Ace retailer as the Company continues  to  make
retail investments in our dealer base.

Impact of New Accounting Standards

  In  June,  1998,  the  Financial Accounting Standards  Board  (FASB)
issued  Statement of Financial Accounting Standards  (SFAS)  No.  133,
"Accounting  for Derivative Instruments and Hedging Activities."  SFAS
No.  133, as  amended by SFAS Nos. 137 and 138, requires companies  to
record  derivatives  on the balance sheet as assets  and  liabilities,
measured  at fair value. The accounting treatment of gains  or  losses
resulting from changes in the values of those derivatives is dependent
on  the  use  of  the  derivative and whether it qualifies  for  hedge
accounting.  The company is required to comply with SFAS  No. 133,  as
amended, in fiscal year 2001 and estimates its adoption will not  have
a material effect on the consolidated financial statements.

  In   September,  2000,  the  FASB  issued  Statement  of   Financial
Accounting  Standards  (SFAS) No. 140, "Accounting  for  Transfer  and
Servicing  of  Financial Assets and Extinguishments  of  Liabilities."
SFAS  No.  140  replaces SFAS No. 125 and revises  the  standards  for
accounting for securitizations and other transfers of financial assets
and collateral. The company is required to comply with SFAS No. 140 in
the  second  quarter  of fiscal year 2001 and  does  not  believe  its
adoption  will  have  a material effect on the consolidated  financial
statements.

Inflation and Changes in Prices

  The  Company's business is not generally governed by contracts  that
establish prices substantially in advance of the receipt of  goods  or
services. As vendors increase their prices for merchandise supplied to
the  Company,  the Company increases the price to its  dealers  in  an
equal  amount plus the normal handling charge on such amounts. In  the
past,  these increases have provided adequate gross profit  to  offset
the impact of inflation on operating expenses.

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

  The  Company  is subject to certain market risks, including  foreign
currency  and interest rates. The Company uses a variety of  practices
to  manage these market risks, including, when considered appropriate,
derivative   financial  instruments.  The  Company   uses   derivative
financial instruments only for risk management and does not  use  them
for  trading  or  speculative purposes.  The  Company  is  exposed  to
potential gains or losses from foreign currency fluctuations affecting
net  investments  and earnings denominated in foreign currencies.  The
Company's  primary exposure is to changes in exchange  rates  for  the
U.S. dollar versus the Canadian dollar.

  Interest  rate risk is managed through a combination of  fixed  rate
debt  and variable rate short-term borrowings with varying maturities.
At  December 30, 2000, all short-term and long-term debt was issued at
fixed rates.

  The  table  below  presents principal amounts and  related  weighted
average   interest  rates  by  year  of  maturity  for  the  Company's
investments and debt obligations:
<TABLE>
                                2001     2002     2003     2004    2005     Thereafter      Total
                                ----     ----     ----     ----    ----     ----------      -----
                                                 (000's omitted)
 <S>                           <C>      <C>      <C>      <C>     <C>         <C>         <C>
 Assets:
    Short-term investment-
      fixed rate               $10,594  $ 2,987  $   977  $ -     $ 2,060     $ 6,748     $ 23,366
    Fixed interest rate          5.52%    6.98%    5.75%    -       7.44%       6.70%        6.23%

  Liabilities:
    Short-term borrowings-
      variable rate            $81,500       -        -     -          -           -      $ 81,500
    Average variable
      interest rate              7.18%       -        -     -          -           -         7.18%
    Long-term debt-fixed
      rate                     $ 6,904  $ 6,715  $ 5,975  $ 5,629  $12,857    $74,715     $112,795
    Average fixed interest
      rate                       7.08%    7.07%    7.07%    7.10%    7.08%      7.09%        7.08%
</TABLE>

  The  Company is exposed to credit risk on certain assets,  primarily
accounts receivable. The Company provides credit to customers  in  the
ordinary  course of business and performs ongoing credit  evaluations.
Concentrations  of credit risk with respect to trade  receivables  are
limited  due to the large number of customers comprising the Company's
customer  base.  The  Company  currently believes  its  allowance  for
doubtful accounts is sufficient to cover customer credit risks.

  The  Company's various currency exposures often offset  each  other,
providing  a  natural  hedge against currency risk.  The  Company  has
utilized  foreign exchange forward contracts to hedge non-U.S.  equity
investments.  Gains  and losses on these foreign currency  hedges  are
included  in  the  basis of the underlying hedged  investment.  During
1999,  the  Company settled all outstanding foreign currency contracts
that resulted in a gain of approximately $2.0 million reflected within
accumulated other comprehensive income at January 1, 2000. The Company
does  not  have any outstanding foreign exchange forward contracts  at
December  30,  2000.  Settlement of foreign sales  and  purchases  are
generally  denominated in U.S. currency resulting in  limited  foreign
currency transaction exposure.

Item 8. Financial Statements and Supplementary Data

  Financial   statements  covered  by  the  report  of  the  Company's
independent certified public accountants are listed on Page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosures

  None.


                               PART III

Item 10. Directors and Executive Officers of the Company Our directors and
         executive officers are:

                                             Position(s) Currently Held
                                             and Business Experience (for
          Name               Age                  the past 5 years)
          ----               ---             ----------------------------

  Jennifer C. Anderson        50             Director since June, 1994; term
                                             expires 2003; President of Davis
                                             Lumber and Ace Hardware, Inc.,
                                             Davis, California since November,
                                             1985.

  Richard F. Baalmann, Jr.    41             Director since June, 1999; term
                                             expires 2002; President of Homart,
                                             Inc., Centralia, Illinois since
                                             May, 1988.

  Eric R. Bibens II           44             Director since June, 1997; term
                                             expires 2003; President of Bibens
                                             Home Center, Inc., Springfield,
                                             Vermont since 1983.

  Michael C. Bodzewski        51             Vice President, Marketing,
                                             Advertising, Retail Development
                                             and Company Stores effective
                                             October, 2000; Vice President -
                                             Marketing, Advertising and Retail
                                             Operations East effective October,
                                             1999; Vice President - Sales and
                                             Marketing effective October, 1998;
                                             Vice President - Merchandising
                                             effective June, 1990.

  Lori L. Bossmann            40             Vice President, Merchandising
                                             effective October, 2000; Vice
                                             President - Finance effective
                                             October 1999; Vice President -
                                             Controller effective September,
                                             1997; Controller effective
                                             January, 1994.

  Lawrence R. Bowman          54             Director since February, 1991;
                                             term expires 2001; President of
                                             Owenhouse Hardware Co., Inc.,
                                             Bozeman, Montana since February,
                                             1996 and Vice President of that
                                             company from March, 1988 until
                                             February, 1996.

  James T. Glenn              41             Director since June, 1996; term
                                             expires 2002; President of Ace
                                             Hardware of Chattanooga,
                                             Chattanooga, Tennessee since
                                             January, 1990.

  Ray A. Griffith             47             Executive Vice President, Retail
                                             effective October, 2000; Vice
                                             President - Merchandising
                                             effective October, 1998; Vice
                                             President - Retail Development and
                                             Marketing effective September,
                                             1997; Director - Retail Operations,
                                             Western Division effective
                                             September, 1994.

  Daniel L. Gust              51             Director since June, 1998; term
                                             expires 2001; President of Garden
                                             Acres Ace Hardware, Longmont,
                                             Colorado since January, 1991.

  D. William Hagan            43             Director since June, 1997; term
                                             expires 2003; President of Hagan
                                             Ace Hardware, Orange Park, Florida
                                             since February, 1980.

  David F. Hodnik             53             President and Chief Executive
                                             Officer effective January, 1996;
                                             President and Chief Operating
                                             Officer effective January 1, 1995.

                                             Position(s) Currently Held
                                             and Business Experience (for
          Name               Age                  the past 5 years)
          ----               ---             ----------------------------

  Paul M. Ingevaldson         55             Senior Vice President -
                                             International and Technology
                                             effective September, 1997; Vice
                                             President - Corporate Strategy
                                             and International Business
                                             effective September, 1992.

  Howard J. Jung              53             Chairman of the Board and Director
                                             since June, 1998; term expires
                                             2001; Vice President of Ace
                                             Hardware Stores, Inc., Raleigh,
                                             North Carolina since June, 1997.

  Rita D. Kahle               44             Executive Vice President effective
                                             October, 2000; Senior Vice
                                             President - Wholesale effective
                                             September, 1997; Vice President -
                                             Finance effective January, 1994.

  Richard A. Karp             49             Director since June, 2000;
                                             President, Cole Hardware, San
                                             Francisco, California since June,
                                             1979.

  David F. Myer               55             Senior Vice President, Retail
                                             Support and Logistics effective
                                             October, 2000; Vice President -
                                             Retail Support effective
                                             September, 1997; Vice President
                                             Retail Support and New Business
                                             effective October, 1994.

  Mario R. Nathusius          57             Director since June, 1998; term
                                             expires 2001; President of Cemaco
                                             S.A. Guatemala City, Guatemala
                                             since March, 1978.

  Fred J. Neer                61             Vice President - Human Resources
                                             effective April, 1989.

  Ken L. Nichols              52             Vice President, Retail Operations
                                             effective October, 2000; Vice
                                             President - Retail Operations West
                                             effective October, 1999; Vice
                                             President - New Business effective
                                             October, 1998; Director - Retail
                                             Operations, Eastern Division
                                             effective October, 1994.

  Richard W. Stine            55             Director since June, 1999; term
                                             expires 2002; Vice President of
                                             Stine, Inc., Sulphur, Louisiana
                                             since September, 1976.


  Our  By-laws  provide that our Board shall have  between  9  and  12
directors.  A  minimum  of 9 directors must  be  dealer  directors.  A
maximum  of  two  directors  may be non-dealer  directors.  Non-dealer
directors cannot exceed 25% of the total number of directors in office
at  any  one  time. Non-dealer directors may (but do not have  to  be)
shareholders of ours who are in the retail hardware business. Our  By-
laws provide for three classes of directors who are to be elected  for
staggered  3-year  terms,  except that  one  director  who  would  not
otherwise  be  eligible for reelection in 2001 may be elected  at  the
2001  annual meeting of stockholders for a two year term under Article
IV, Sections 1 through 3 of our By-laws.  On January 23, 2001, the Board
of Directors  passed a resolution reducing the number of  directors  from
eleven to ten effective with the 2001 Annual Stockholders meeting on
June 4, 2001.

  Our  By-laws also provide that no one can serve as a dealer director
unless that person is an owner, executive officer, general partner  or
general  manager  of  a  retail  business  organization  that   is   a
shareholder  of  ours.  Regional dealer  directors  are  elected  from
geographic  regions of the United States. The Board under Article  IV,
Section 1 of our By-laws, determines these regions. If the Board finds
that  regional  dealer  directors represent all regions,  then  dealer
directors  at large may be elected, so long as the maximum  number  of
directors allowed under our By-laws is not exceeded.

  A  geographic breakdown of our current regions for the  election  of
directors at our 2001 annual stockholders meeting to be held  on  June
4, 2001 appears below:

  Region 1 -  Maine,  New  Hampshire,  Vermont,   Massachusetts, Connecticut,
              Rhode Island, New York, Pennsylvania, New Jersey;

  Region 2 -  Delaware, Maryland, Virginia, West Virginia, Kentucky, Tennessee,
              North Carolina, South Carolina, District of Columbia, Ohio;

  Region 3 -  Alabama, Mississippi, Georgia, Florida;

  Region 4 -  Indiana, Illinois, Michigan, Wisconsin;

  Region 5 -  Colorado,  Idaho, Iowa, Kansas, Minnesota,  Missouri, Montana,
              Nebraska, North Dakota, South Dakota, Utah, Wyoming;

  Region 6 -  Arkansas,  Louisiana, Oklahoma,  Texas,  New  Mexico, Arizona;

  Region 7 -  Hawaii, California, Nevada, Oregon, Washington, Alaska

  Under   the   procedure  required  by  our  By-laws,  the  following
directors  have  been  selected as nominees for reelection  as  dealer
directors at the 2001 annual stockholders meeting:

   Nominee                                 Age  Class  Region  Term
   -------                                 ---  -----  ------  ----
Daniel L. Gust                             51   Third     5   3 years
Howard J. Jung                             53   First    N/A* 2 years
                                           *Non-dealer director

  The person named below has been  selected  as  a nominee  for  election
to the Board for the first  time  at  the  2001 annual meeting as a dealer
director of the class, from the region  and for the term indicated:

    Nominee                                Age  Class  Region  Term
    -------                                ---  -----  ------  ----
David S. Ziegler                           45   Third At large 3 years

  Non-dealer  directors and dealer directors at large are not  elected
from particular geographic regions.

  Article  IV  of our By-laws has information about the qualifications
for  membership on the Board of Directors, the terms of directors, the
limitations  on  the  total period of time that a  director  may  hold
office,  the procedure for Nominating Committees to select  candidates
and  nominees for election to the Board of Directors and the procedure
for  filling vacancies on the Board if one occurs during an  unexpired
term.

  None  of  the  events described under Item 401(f) of Regulation  S-K
occurred  during  the past 5 years for any of our directors,  nominees
for directorships or for any of our executive or staff officers.

Item 11. Executive Compensation

  Below  is  information about the cash compensation that we  paid  to
our  five  highest paid executive officers earning over  $100,000  for
their  services  in  all capacities to us and our subsidiaries  during
fiscal years 2000, 1999 and 1998:

                      SUMMARY COMPENSATION TABLE
<TABLE>
                                                                  Long-Term
                                      Annual Compensation        Compensation

    Name                                                                          (3)
    and                                                             (2)        All Other
  Principal                                            (1)       Long-Term      Compen-
  Position                        Year   Salary($)   Bonus($)    Payouts($)     sation($)
  --------                        ----   ---------   --------    ----------     ---------
<S>                               <C>    <C>         <C>         <C>            <C>
David F. Hodnik                   2000   $630,000    $ 56,700    $533,829       $117,568
President and Chief               1999    600,000         -       478,104        187,730
Executive Officer                 1998    600,000         -       230,268        151,997

Rita D. Kahle                     2000   $298,000    $103,704    $ 85,921       $ 51,455
Executive Vice President          1999    285,000     128,685      77,826         64,536
                                  1998    270,000     114,372      65,409         53,852

Paul M. Ingevaldson               2000   $295,000    $ 85,550    $ 89,479       $ 49,013
Senior Vice President,            1999    287,000      99,662      85,242         73,401
International and  Technology     1998    279,000      85,430      76,590         64,702

Michael C. Bodzewski              2000   $270,500    $ 87,570    $ 79,437       $ 45,382
Vice President, Marketing,        1999    261,000      94,472      73,923         57,346
Advertising, Retail Development   1998    248,000      85,450      63,681         53,658
and Company Stores

David F. Myer                     2000   $263,000    $ 80,215    $ 73,967       $ 42,994
Senior Vice President,            1999    245,000      92,453      69,180         53,849
Retail Support and Logistics      1998    230,000      72,726      60,474         44,381
</TABLE>

(1)  The  Incentive Compensation Plan covers each of the  executive officers.
     Mr.  Hodnik  participates  only  in  the  retail sales component of the
     Annual Incentive Plan. The bonus amounts  awarded to  participants  in
     the  Plan are determined  in  accordance  with  achievement   of
     individual  performance  based   objectives   and  achievement  of
     corporate goals. The maximum  short-term  incentive  award  for  each
     executive officer is 25% to 35% of their respective  salary  in 1998,
     30% to 40% of their respective salary in  1999  and  35%  to 45% of
     their respective salary in 2000. The short-term bonus award  becomes
     payable to each participant as early as  practicable at or after the end
     of the fiscal year.


(2)  Includes  the  long-term incentive award under  the  Long-Term Incentive
     Compensation Deferral Option Plan effective in 1995.  The long-term
     Officer incentive plan is based upon corporate performance  over  a three
     year period with emphasis on total  shareholder return  through
     maximizing both year-end  patronage  dividends  and upfront  dividends
     (throughout the year) through  pricing  programs and  discounts.  This
     plan maintains the  commitment  to  long-term performance and shareholder
     return in a  cooperative  environment.  One  third  of the total long-term
     incentive award is subject to a one  year  vesting provision.

     Effective January 1, 1995, executive officers may elect to  defer  a
     portion  (20%  to  100%,  in 20% increments)  of  the  annual  award
     granted.  Participants' compensation deferrals are credited  with  a
     specified  rate  of  interest  to  provide  a  means  to  accumulate
     supplemental  retirement  benefits. Deferred  benefits  are  payable
     over  a  period of 5 to 20 years. Annual elections are required  for
     the  upcoming deferral year by December of the preceding year. Total
     long-term incentives for the three year period ended in 2000, to  be
     awarded  in  2001,  were $531,474, $100,779,  $91,182,  $86,382  and
     $99,843  for  Messrs. Hodnik, Ingevaldson, Bodzewski, Myer  and  Ms.
     Kahle, respectively.

(3)  Includes  contributions to the Company's Profit Sharing Plus Plan
     and contributions  to  the  Company's Retirement  Benefits  Replacement
     Plan.  All  active  employees are eligible  to  participate  in  the
     Company's  profit  sharing plan after one  year  of  service.  Those
     active  employees  covered  by a collective  bargaining  agreement
     regarding retirement benefits, which were the subject of good  faith
     bargaining,  are  not eligible if such agreement  does  not  include them
     in  the  plan.  For the year 2000, the Company  contributed a maximum of
     9.6% of each participant's eligible compensation to the Profit  Sharing
     Plus Plan (8.6% profit sharing and 1% Company 401-K match).  During the
     year 2000, $16,320 was contributed to the Company's Profit Sharing Plus
     Plan by  the Company pursuant  to  the  Plan for each of Messrs. Hodnik,
     Ingevaldson, Bodzewski, Myer and Ms. Kahle.

     The  Company  has also established a Retirement Benefits Replacement
     Plan  covering  all executive officers of the Company.  This  is  an
     unfunded  Plan under which the participants therein are eligible  to
     receive  retirement  benefits equal to  the  amounts  by  which  the
     benefits  they  would otherwise have been entitled to receive  under
     the  Company's Profit Sharing Plan may be reduced by reason  of  the
     limitations on contributions and benefits imposed by any current  or
     future  provisions  of  the  U.S. Internal  Revenue  Code  or  other
     federal legislation. During the year 2000, amounts were contributed
     to the Company's Retirement Benefit Replacement Plan $101,248 for
     Mr. Hodnik,  $32,693 for  Mr.  Ingevaldson, $29,062 for Mr. Bodzewski,
     $26,674  for  Mr. Myer and $35,135 for Ms. Kahle.

     The   Company  also  funds  the  base  premium  for  a  supplemental
     universal  life  insurance  policy for each  officer  but  does  not
     contribute   to  supplemental  retirement  benefits   through   this
     vehicle.  Participants may elect to deposit a portion  (up  to  one-
     third)  of  the long-term incentive award into the variable  annuity
     insurance  policy in their name or may elect to defer  this  portion
     under the Deferral Option Plan.

(4)  As  a cooperative whereby all stockholders are member dealers, the
     Company does not grant or issue stock awards of any kind.

  Messrs.  Hodnik  and Ingevaldson are employed under contracts,  each
commencing  January  1,  2001  for  respective  terms  of  two  years,
terminating  December 31, 2002. Ms. Kahle and Mr.  Myer  are  employed
under  contracts, each commencing January 1, 2000 for respective terms
of two years, terminating December 31, 2001. Mr. Bodzewski is employed
under  a  contract commencing April 1, 2000 for a term of  two  years,
terminating  March  31,  2002.  The  contracts  provide   for   annual
compensation   effective  January  1,  2001  of  $649,000,   $305,000,
$313,000,  $278,000  and  $278,000,  respectively  or  such  increased
amount, if any, as shall be approved by the Board of Directors. If an
executive's employment is terminated without cause, each contract provides
for continuing salary payments for the balance of the contract term, with
the minimum period for these payments being 6 months (12 months in the
case of Mr. Hodnik).

  The  Company  also maintained a Pension Plan which  was  established
December 31, 1970. The Plan was closed to new entrants on December 31,
1995.  Pension  Plan benefit accruals were frozen as of  February  29,
2000.  The  Company  terminated the Pension Plan effective  April  30,
2000.  All active employees were eligible to participate in this  Plan
on  the first January 1 that they were working for the Company.  Those
active   employees  covered  by  a  collective  bargaining   agreement
regarding  retirement benefits, which were the subject of  good  faith
bargaining were not eligible if such agreement did not include them in
the plan. The Plan provided benefits at retirement at or after age  65
determined  under  a  formula  which  took  into  account  60%  of   a
participant's average base pay (including overtime) during the
5  highest  consecutive  calendar years of  employment  and  years  of
service prior to age 65, and under which an offset was applied for the
straight  life  annuity  equivalent  of  the  vested  portion  of  the
participant in the amount of benefits provided for them by the Company
under the Profit Sharing Plan.

  Examples  of yearly benefits provided by the Pension Plan (prior  to
reduction by the Profit Sharing Plan offset) are as follows:

                                      Years of Service
                                      ----------------
Remuneration              10       15       20       25      30 or more
------------              --       --       --       --      ----------
$170,000               $34,000  $51,000  $68,000  $85,000    $102,000
$150,000                30,000   45,000   60,000   75,000      90,000
$100,000                20,000   30,000   40,000   50,000      60,000
$ 50,000                10,000   15,000   20,000   25,000      30,000

  The  amounts  shown above represent straight life  annuity  amounts.
Maximum benefits from the Pension Plan were attained after 30 years of
service  and  attainment of age 65. The compensation  covered  by  the
Pension Plan consisted of base compensation (exclusive of bonuses  and
non-recurring salary or wage payments) not to exceed $170,000 of  such
total  remuneration  paid  to  a participant  during  any  plan  year.
Remuneration  and  yearly benefits under the Plan  were  limited,  and
subject to adjustment, under Sections 415(d) and 401(a)17 of the  U.S.
Internal  Revenue Code. The amount of covered compensation  under  the
Pension Plan, therefore was $170,000 for each Executive Officer  named
in  the Compensation table. Upon termination of the plan, the credited
years  of  service  under the Pension Plan for the currently  employed
executive  officers named in the compensation table as follows:  David
F.  Hodnik  -  27  years; Paul M. Ingevaldson - 20 years;  Michael  C.
Bodzewski - 22 years; David F. Myer - 18 years and Rita D. Kahle -  14
years.

Compensation Committee Report

  The   Compensation  Committee  is  responsible  for  approving   the
compensation  programs, plans and guidelines  for  all  Corporate  and
Company  Officers, and administering the Company's Executive Incentive
Plans.  Our decisions are based on our understanding of Ace's business
and  it's  long-term  strategies, as well  as  our  knowledge  of  the
capabilities and performance of the Company and of the executives.  We
stress  long-term  measured results, focus  on  team  work,  accepting
prudent    risks   and   are   strongly   committed   to    fulfilling
retailer/consumer needs.

  We  believe  that our retailers (shareholders) are  best  served  by
running  the  Company with a long-term perspective while  striving  to
deliver  consistently good year-end results. Therefore, the  Company's
Executive  Compensation Program and Officer Incentive  Plan  has  been
designed  to  attract,  retain and reward superior  talent  that  will
produce  positive  results and enhance Ace's position  in  the  highly
competitive hardware and home improvement marketplace. The Company  is
led  by  exceptional  leaders, many of them long-term  Ace  employees;
while others bring experiences from outside Ace.

  We   believe   the  compensation  for  our  executives   should   be
competitive with other high performing companies in order to  motivate
and  retain  the  talent needed to produce superior results.  In  that
regard,  our  Committee  conducts an overall  review  of  compensation
programs  and philosophies bi-annually. We review information supplied
by  an independent Compensation consultant and other marketplace  data
to determine the competitiveness of Ace's total compensation package.

  The  Committee  believes  that special leadership  competencies  and
sensitivities are required to balance the unique relationship  between
and   among  the  Company,  its  employees,  retailers  and   vendors.
Therefore,  we  go  beyond a simple evaluation of  competitive  salary
information  and  Company  financial results  in  making  compensation
decisions.

  Our  Committee  annually  establishes an  executive's  base  salary,
based  on  evaluation of the executive's level of  responsibility  and
individual   performance  considered  in  light  of  competitive   pay
practices.  We gage Executive performance in developing and  executing
corporate  strategies; leading and developing people;  initiating  and
leading  change;  passion  for  retail  success;  balancing  the  many
relationships  within  and outside the Ace  family;  and  leading  and
coordinating   with  others,  programs  which  impact  the   Company's
performance.

  Under  the  Annual  Incentive  Plan  each  officer  is  assigned  an
incentive target percent at the beginning of the year (the greater the
Officer's  responsibility, the higher the target percent  is  of  base
salary).  This plan has individual, team and retail sales  components.
This  concept is used to reflect the accomplishments of each Officer's
functional organization results, overall Company wholesale performance
and retail sales growth compared to the competition.

  Consistent  with  our focus on long-term objectives,  our  long-term
incentive  plan is based on total corporate world-wide performance.  A
three-year  performance cycle is established each year  with  Officers
receiving  an  award  if minimum pre-determined (by  the  Compensation
Committee)  performance goals are achieved at the end of  each  annual
cycle. As a pay for performance plan, the long-term incentive plan  is
intended  to  motivate and reward executives by directly  linking  the
amount  of  any award to specific long-term corporate financial  goals
and  total  team  performance. There is a direct  shared  relationship
between what a retail owner receives in patronage rebate and what  the
Officer group receives as an award pool.

  The  President and CEO participates in the base salary, Retail Sales
Incentive and Long-Term Incentive Plan compensation programs described
in  this  report consistent with our compensation philosophy. At  risk
compensation  represents a major portion of the  President  and  CEO's
total  compensation  package.  The President  and  CEO's  compensation
includes  a competitive base salary, a significant long-term incentive
award to maintain our commitment to long-term company performance  and
shareholder return and an annual retail sales award.

Compensation of Directors

  Effective January 1, 2001, and January 1, 2000, each member  of  the
Board  of Directors (other than the Chairman of the Board) receives  a
monthly  fee  of $2,917 and $2,833, respectively, for their  services.
Effective January 1, 1998 each member of the Board of Directors (other
than the Chairman of the Board) receives $1,500 per Board of Directors
meeting  attended. In addition, effective January 1, 1999, each  Board
of  Director Committee Chairperson received $750 per meeting  chaired,
which  was increased to $1,000 effective January 1, 2000. Mr. Jung  is
paid a total  annual  fee  of  $150,000  effective  June  1, 2000, and
$130,000 effective June 1, 1999 in his capacity  as  Chairman  of  the
Board.

  The  Company has adopted a Directors' Deferral Option Plan. Like the
Officers' Long-Term Incentive Compensation Deferral Option Plan, under
this  Directors' Plan, directors may elect to defer a portion  (5%  to
100%,  in  5%  increments)  of their annual director's  fee.  Deferred
benefits  are  payable  over a period of 5 to 20  years,  as  elected.
Annual  elections  are  required for the  upcoming  deferral  year  by
December 15 of the preceding year.

  Each  member  of  the Board is also reimbursed  for  the  amount  of
travel  and  lodging expenses incurred in attending  meetings  of  the
Board  and  of the Committees of the Board. The expenses  incurred  by
them  in attending the semi-annual conventions and exhibits which  the
Company  sponsors  are also paid by the Company. Each  member  of  the
Board  is  also paid $200 per diem compensation for special  committee
meetings and nominating committee regional trips attended.

Item 12. Security Ownership of Certain Beneficial Owners and Management

  No  shares  of our stock are held by any of our officers except  for
the  shares  held by Mr. Jung. He is a director, but his  position  as
Chairman  of  the  Board is also an executive officer  position  under
Article VIII Section 1 of our By-laws. We are not aware of anyone  who
holds  more than five percent of our outstanding voting stock, whether
in their own names, or on behalf of someone else.

  The  table below shows the shares of our Class B and Class  C  Stock
that is held (directly or indirectly), by our directors, officers  and
nominees for directorships as of February 16, 2001:

                                Class B Stock Owned     Class C Stock Owned
                                -------------------     -------------------
                                  Number    Percent       Number    Percent
                                of Shares  of Class     of Shares  of Class
                                ---------  --------     ---------  --------
  Jennifer C. Anderson              4        .180         3,660      .148
  Richard F. Baalmann, Jr.          4        .180         2,988      .121
  Eric R. Bibens II                 -          --         1,071      .043
  Lawrence R. Bowman                4        .180         2,732      .110
  James T. Glenn                    4        .180         9,310      .376
  Daniel L. Gust                    -          --           926      .037
  D. William Hagan                  -          --         1,629      .066
  Howard J. Jung                    -          --           555      .022
  Richard A. Karp                   -          --         4,360      .176
  Mario R. Nathusius                -          --         4,779      .193
  Richard W. Stine                  4        .180         8,289      .334
  David S. Ziegler                  -          --         9,437      .381

                                ---------  --------     ---------  --------
  All above directors and
  officers as a group              20        .900        49,736     2.007
                                =========  ========     =========  ========

  We  are  not aware of any contracts or securities pledges  that  may
result in a change in control of our Company at a later date.

Item 13. Certain Relationships and Related Transactions

  The  term "owner" as used in this section pertains to owners of  our
shares.  It includes both those who are named as owners of  shares  on
our corporate books and records, as well as those who are not named as
owners  of  record, but for whose benefit someone else is holding  the
shares. No director, executive officer or shareholder whom we know  to
be  the  owner  of more than five percent of any class of  our  voting
securities or any member of their immediate families had during fiscal
year  2000  or is currently expected to have any significant  interest
(whether direct or indirect) in any transaction over $60,000 with  us,
except  that those of our directors who are also Ace Hardware  dealers
purchased  merchandise and services from us and  participated  in  our
programs  for their stores, including but not limited to  our  lending
programs,  in the ordinary course of business. None of these directors
received any special terms in connection including but not limited  to
our  lending  programs, with these transactions or any  benefits  that
were not available to the other cooperative members that we supply.



                                PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form
         8-K.

  (a)1.  Financial Statements

         The  financial statements listed in the accompanying index (page
         F-1)  to  the consolidated financial statements are filed as part of
         this annual report.

    2.   Financial Statement Schedules

         None.

    3.   Exhibits

         The exhibits listed on the accompanying index to exhibits (pages
         E-1 through E-7) are filed as part of this annual report.

         (b)Reports on Form 8-K

         No Form 8-K was required to be filed during the fourth quarter of
         fiscal 2000.


                              SIGNATURES

Pursuant  to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                 ACE HARDWARE CORPORATION


                                 By     HOWARD J. JUNG
                                        Howard J. Jung
                                 Chairman of the Board and Director

DATED: March 22, 2001

Pursuant  to the requirements of the Securities Exchange Act of  1934,
this  Annual Report has been signed by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

         Signature                Title             Date

       HOWARD J. JUNG     Chairman of the Board     March 22, 2001
       Howard J. Jung          and Director



      DAVID F. HODNIK      President and Chief      March 22, 2001
      David F. Hodnik       Executive Officer


       RITA D. KAHLE     Executive Vice President   March 22, 2001
       Rita D. Kahle     (Principal Financial and
                           Accounting Officer)

Jennifer C. Anderson, Richard F. Directors
Baalmann, Jr., Eric R. Bibens II,
Lawrence R. Bowman, James T. Glenn,
Daniel L. Gust, D. William Hagan,
Richard A. Karp, Mario R. Nathusius,
and Richard W. Stine


*By DAVID F. HODNIK March 22, 2001
       David F. Hodnik


*By RITA D. KAHLE March 22, 2001
        Rita D. Kahle

     *Attorneys-in-fact



                           INDEX TO EXHIBITS

Exhibits
Enclosed                Description
--------                -----------
     3-A    Copy of Restated Certificate of Incorporation of the Registrant,
            as amended, through June 3, 1996 filed as Exhibit 3-A the
            Registrant's Form S-2 Registration Statement (Registration No.
            33-58191) on or about March 22, 2001.

     21     Subsidiaries of the Registrant.

     23     Consent of KPMG LLP.

     24     Powers of Attorney.

Exhibits
Incorporated
by Reference            Description
------------            -----------
     3-B    Copy  of  By-laws  of  the Registrant as  amended  through
            December   6,  2000  included  as  Appendix  A   to   the
            Prospectus  constituting  a part  of  the  Post-Effective
            Amendment  No.  6  to  the Registrant's Form S-2  Registration
            Statement (Registration No. 33-58191) filed on  or  about
            March 22, 2001 and incorporated herein by reference.

     4-A    Specimen  copy of Class B Stock certificate as revised  as
            of  November, 1984 filed as Exhibit 4-A to Post-Effective
            Amendment   No.   2   to   the  Registrant's   Form   S-1
            Registration  Statement  (Registration  No.  2-82460)  on
            March 15, 1985 and incorporated herein by reference.

     4-B    Specimen  copy of Patronage Refund Certificate as  revised
            in  1988 filed as Exhibit 4-B to Post-Effective Amendment
            No.   2   to   the  Registrant's  Form  S-1  Registration
            Statement  (Registration No. 33-4299) on March  29,  1988
            and incorporated herein by reference.

     4-C    Specimen  copy of Class A Stock certificate as revised  in
            1987  filed  as  Exhibit 4-C to Post-Effective  Amendment
            No.   2   to   the  Registrant's  Form  S-1  Registration
            Statement  (Registration No. 33-4299) on March  29,  1988
            and incorporated herein by reference.

     4-D    Specimen  copy  of  Class  C Stock  certificate  filed  as
            Exhibit  4-I  to  the Registrant's Form S-1  Registration
            Statement  (Registration No. 2-82460) on March  16,  1983
            and incorporated herein by reference.

     4-E    Copy   of  current  standard  form  of  Subscription   for
            Capital  Stock  Agreement  to  be  used  for  dealers  to
            subscribe  for  shares  of  the  Registrant's  stock   in
            conjunction  with new membership agreements submitted  to
            the  Registrant  filed as Exhibit 4-L  to  Post-Effective
            Amendment   No.   2   to   the  Registrant's   Form   S-2
            Registration Statement (Registration No. 33-46449) on  or
            about   March  23,  1994  and  incorporated   herein   by
            reference.

     4-F    Copy  of  plan for the distribution of patronage dividends
            with  respect to purchases of merchandise made  from  the
            Registrant  for  the  year  2000  and  subsequent   years
            adopted  by  the Board of Directors of the Registrant  on
            December  6,  2000  and  filed as Exhibit  4-F  to  Post-
            Effective  Amendment No. 6 to the Registrant's  Form  S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  22,  2001  and  incorporated   herein   by
            reference.

Exhibits
Incorporated
by Reference            Description
------------            -----------
     4-G    Copy  of  LBM Retailer Incentive Pool  Plan  adopted   on
            December  8,  1999  by  the Board  of  Directors  of  the
            Registrant   filed  as  Exhibit  4-G  to   Post-Effective
            Amendment   No.   5   to   the  Registrant's   Form   S-2
            Registration Statement (Registration No. 33-58191)  filed
            on  or  about March 15, 2000 and incorporated  herein  by
            reference.

     10-A   Copy  of  Ace  Hardware  Corporation  Retirement  Benefits
            Replacement  Plan Restated and Adopted December  7,  1993
            filed  as Exhibit 10-A to Post-Effective Amendment No.  3
            to  the  Registrant's  Form  S-2  Registration  Statement
            (Registration  No. 33-58191) on or about March  18,  1998
            and incorporated herein by reference.

     10-B   Copy   of   First  Amendment  to  Restated  Ace   Hardware
            Corporation Retirement Benefits Replacement Plan  adopted
            on  August  19,  1997  filed as  Exhibit  10-B  to  Post-
            Effective  Amendment No. 3 to the Registrant's  Form  S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  18,  1998  and  incorporated   herein   by
            reference.

     10-C   Copy  of  First  Amendment  to  Ace  Hardware  Corporation
            Deferred  Compensation Plan adopted on  August  19,  1997
            filed as Exhibit 10-C to Post-Effective Amendment  No.  3
            to  the Registrant's Form S-2  Registration Statement
            (Registration No. 33-58191) on or about  March 18, 1998 and
            incorporated herein by reference.

     10-D   Copy  of  Restated PREP Plan (formerly known as  Executive
            Supplemental Benefit Plans) adopted on December  6,  2000
            filed  as Exhibit 10-D to Post-Effective Amendment No.  6
            to  the  Registrant's  Form  S-2  Registration  Statement
            (Registration  No. 33-58191) on or about March  22,  2001
            and incorporated herein by reference.

     10-E   Copy  of  the  Ace  Hardware Corporation Restated  Officer
            Incentive  Plan  effective  January  1,  1999  filed   as
            Exhibit  10-E to Post-Effective Amendment No.  4  to  the
            Registrant's    Form    S-2    Registration     Statement
            (Registration  No. 33-58191) on or about March  15,  1999
            and incorporated herein by reference.

     10-F   Copy  of Second Modification of Amended and Restated  Note
            Purchase  and Private Shelf Agreement dated as of  August
            23,  1996 as amended by the First Modification of Amended
            and  Restated Purchase and Private Shelf Agreement  dated
            as of April 2, 1997  with  The Prudential Insurance Company
            of  America filed  as Exhibit 10-F to Post-Effective
            Amendment No.  3 to  the  Registrant's  Form  S-2
            Registration  Statement (Registration  No. 33-58191) on or
            about March  18,  1998 and incorporated herein by reference.

     10-G   Copy   of  Participation  Agreement  with  PNC  Commercial
            Corp.  dated December 17, 1997 establishing a $10,000,000
            discretionary leasing facility for the purchase  of  land
            and  construction  of  retail hardware  stores  filed  as
            Exhibit  10-G to Post-Effective Amendment No.  3  to  the
            Registrant's    Form    S-2    Registration     Statement
            (Registration  No. 33-58191) on or about March  18,  1998
            and incorporated herein by reference.

     10-H   Copy  of  Form  of Executive Officer Employment  Agreement
            effective  January  1, 1996 filed as Exhibit  10-a-17  to
            Post-Effective  Amendment No. 1 to the Registrant's  Form
            S-2  Registration Statement (Registration  No.  33-58191)
            on  or  about March 11, 1996 and incorporated  herein  by
            reference.

Exhibits
Incorporated
by Reference            Description
------------            -----------
     10-I   Copy  of  Note  Purchase and Private Shelf Agreement  with
            The Prudential Insurance  Company  of America dated
            September 27, 1991 securing  8.74%  Senior Series A Notes
            in  the  principal sum  of $20,000,000 with a maturity date
            of July 1, 2003 filed  as  Exhibit  10-A-q to the Registrant's
            Form  S-2 Registration  Statement (Registration  No.  33-46449)
            on March 23, 1992 and incorporated herein by reference.

     10-J   Copy   of   current   standard  form   of   Ace   Hardware
            Corporation International Franchise Agreement filed as Exhibit
            10-J to Post-Effective Amendment No. 6 to the Registrant's Form
            S-2 Registration Statement (Registration No. 33-58191) on  or
            about March 22, 2001 and incorporated herein by reference.

     10-K   Copy  of  current standard form of Ace Hardware Membership
            Agreement   filed   as  Exhibit  10-P  to   Pre-Effective
            Amendment   No.   2   to   the  Registrant's   Form   S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   April  26,  1995  and  incorporated   herein   by
            reference.

     10-L   Copy  of  Supplement to Ace Hardware Membership  Agreement
            effective April 1, 2000, filed as Exhibit 10-L  to  Post-
            Effective  Amendment No. 6 to the Registrant's  Form  S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  22,  2001  and  incorporated   herein   by
            reference.

     10-M   Copy  of  6.47%  Senior Series A notes  in  the  aggregate
            principal  sum of $30,000,000 issued September  22,  1993
            with  a  maturity  date of June 22, 2008 and  $20,000,000
            Private  Shelf  Facility, pursuant to Note  Purchase  and
            Private  Shelf  Agreement with The  Prudential  Insurance
            Company  of America dated as of September 22, 1993  filed
            as  Exhibit 10-R to Post-Effective Amendment No. 2 to the
            Registrant's    Form    S-2    Registration     Statement
            (Registration  No.  33-46449)  on  March  23,  1994   and
            incorporated herein by reference.

     10-N   Copy  of  Lease  dated  March  24,  1997  for  print  shop
            facility  of Registrant in Downers Grove, Illinois  filed
            as  Exhibit 10-N to Post-Effective Amendment No. 3 to the
            Registrant's    Form    S-2    Registration     Statement
            (Registration  No. 33-58191) on or about March  18,  1998
            and incorporated herein by reference.

     10-O   Copy  of  Lease  dated  September  30,  1992  for  general
            offices  of  the Registrant in Oak Brook, Illinois  filed
            as  Exhibit  10-a-u to the Post-Effective Amendment  No.1
            to  the  Registrant's  Form  S-2  Registration  Statement
            (Registration  No.  33-46449)  on  March  22,  1993   and
            incorporated herein by reference.

     10-P   Copy  of Deed of Lease with Arundel II L.L.C. dated as  of
            January  30,  1998  for  the Registrant's  redistribution
            center  in  Odenton, Maryland filed as  Exhibit  10-P  to
            Post-Effective  Amendment No. 4 to the Registrant's  Form
            S-2 Registration Statement  (Registration No. 33-58191) on
            or about  March  15, 1999 and incorporated herein by reference.

     10-Q   Copy  of  Ace  Hardware Corporation Deferred  Compensation
            Plan  effective January 1, 1994 filed as Exhibit 10-X  to
            Post-Effective  Amendment No. 2 to the Registrant's  Form
            S-2  Registration Statement (Registration  No.  33-46449)
            on March 23, 1994 and incorporated herein by reference.

Exhibits
Incorporated
by Reference            Description
------------            -----------
     10-R   Copy   of   current   standard  form   of   Ace   Hardware
            Corporation    License   Agreement   for    international
            licensees   filed  as  Exhibit  10-R  to   Post-Effective
            Amendment   No.   6   to   the  Registrant's   Form   S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  22,  2001  and  incorporated   herein   by
            reference.

     10-S   Copy   of   Lease   dated   May  4,   1994   for   freight
            consolidation  center  of  the  Registrant  in   Chicago,
            Illinois  filed as Exhibit 10-Z to the Registrant's  Form
            S-2  Registration Statement (Registration  No.  33-58191)
            on  or  about March 23, 1995 and incorporated  herein  by
            reference.

     10-T   Copy  of  Long-Term Incentive Compensation Deferral Option
            Plan  of  the Registrant effective January 1, 2000  filed
            as   Exhibit  10-a-13  to  the  Registrant's   Form   S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  15,  2000  and  incorporated   herein   by
            reference.

     10-U   Copy  of  Ace  Hardware  Corporation  Directors'  Deferral
            Option  Plan effective January 1, 2001 filed  as  Exhibit
            10-U   to   Post-Effective  Amendment  No.   6   to   the
            Registrant's    Form    S-2    Registration     Statement
            (Registration  No. 33-58191) on or about March  22,  2001
            and incorporated herein by reference.

     10-V   Copy  of  Agreement  dated January  6,  1995  between  Ace
            Hardware  Corporation  and Roger  E.  Peterson  filed  as
            Exhibit  10-a-9 to the Registrant's Form S-2 Registration
            Statement  (Registration No. 33-58191) on or about  March
            23, 1995 and incorporated herein by reference.

     10-W   Copy  of  Lease  dated July 28, 1995 between A.H.C.  Store
            Development  Corp.  and  Tri-R  Corporation  for   retail
            hardware  store  premises located in Yorkville,  Illinois
            filed as Exhibit 10-a-11 to Post-Effective Amendment  No.
            1  to  the  Registrant's Form S-2 Registration  Statement
            (Registration  No. 33-58191) on or about March  11,  1996
            and incorporated herein by reference.

     10-X   Copy  of Lease dated October 31, 1995 between Brant  Trade
            &  Industrial Park, Inc. and Ace Hardware Canada  Limited
            for  warehouse space in Brantford, Ontario, Canada  filed
            as  Exhibit 10-a-12 to Post-Effective Amendment No. 1  to
            the   Registrant's   Form   S-2  Registration   Statement
            (Registration  No. 33-58191) on or about March  11,  1996
            and incorporated herein by reference.

     10-Y   Copy  of  Lease  dated  November 27, 1995  between  674573
            Ontario  Limited  and  Ace Hardware  Canada  Limited  for
            general  office space in Markham, Ontario,  Canada  filed
            as  Exhibit 10-a-13 to Post-Effective Amendment No. 1  to
            the   Registrant's   Form   S-2  Registration   Statement
            (Registration  No. 33-58191) on or about March  11,  1996
            and incorporated herein by reference.

     10-Z   Copy  of  Executive Healthcare Plan adopted by  the  Board
            of  Directors of the Registrant on August 25, 1998  filed
            as  Exhibit 10-Z to Post-Effective Amendment No. 4 to the
            Registrant's    Form    S-2    Registration     Statement
            (Registration No. 33-58191)  on  or  about March 15, 1999
            and  incorporated herein by reference.

     10-a-1 Copy   of   Ace  Hardware  Corporation  Executive  Benefit
            Security  Trust Agreement effective July 19,  1995  filed
            as  Exhibit 10-a-18 to Post-Effective Amendment No. 1  to
            the   Registrant's   Form   S-2  Registration   Statement
            (Registration  No. 33-58191) on or about March  11,  1996
            and incorporated herein by reference.

Exhibits
Incorporated
by Reference            Description
------------            -----------
     10-a-2 Copy  of  current  standard form of  International  Retail
            Merchant  Agreements  filed as Exhibit  10-a-2  to  Post-
            Effective  Amendment No. 6 to the Registrant's  Form  S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  22,  2001  and  incorporated   herein   by
            reference.

     10-a-3 Copy  of  Lease  Agreement dated as of September  1,  1996
            for  the  Registrant's project facility  in  Wilton,  New
            York   filed   as   Exhibit  10-a-13  to   Post-Effective
            Amendment   No.   2   to   the  Registrant's   Form   S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  12,  1997  and  incorporated   herein   by
            reference.

     10-a-4 Copy  of  6.47%  Series A Senior Notes  in  the  aggregate
            principal  amount of $30,000,000 issued August  23,  1996
            with  a  maturity  date of June 22, 2008 and  $70,000,000
            Private  Shelf Facility, pursuant to Amended and Restated
            Note  Purchase  and  Private  Shelf  Agreement  with  The
            Prudential Insurance Company dated August 23, 1996  filed
            as  Exhibit 10-a-14 to Post-Effective Amendment No. 2  to
            the   Registrant's   Form   S-2  Registration   Statement
            (Registration  No. 33-58191) on or about March  12,  1997
            and incorporated herein by reference.

     10-a-5 Copy  of  Second  Amendment to the Restated  Ace  Hardware
            Corporation Retirement Benefits Replacement Plan  adopted
            on  December 8, 1998 and effective January 1, 1999  filed
            as  Exhibit 10-a-6 to Post-Effective Amendment No.  4  to
            the   Registrant's   Form   S-2  Registration   Statement
            (Registration  No. 33-58191) on or about March  15,  1999
            and incorporated herein by reference.

     10-a-6 Copy  of  Lease  Agreement dated  May  27,  1999  for  the
            Registrant's  project facility in Loxley,  Alabama  filed
            as  Exhibit 10-a-9 to Post-Effective Amendment No.  5  to
            Registrant's    Form    S-2    Registration     Statement
            (Registration  No. 33-58191) on or about March  15,  2000
            and incorporated herein by reference.

     10-a-7 Copy   of   Agreement  dated  October  29,  1999   between
            Registrant  and William A. Loftus filed as Exhibit  10-a-
            10  to  Post-Effective Amendment No.  5  to  Registrant's
            Form  S-2  Registration Statement (Registration  No.  33-
            58191)  on  or  about  March 15,  2000  and  incorporated
            herein by reference.

     10-a-8 Copy   of   Third  Amendment  to  Restated  Ace   Hardware
            Corporation Retirement Benefits Replacement Plan  adopted
            December  8, 1999 and effective January 1, 2000 filed  as
            Exhibit  10-a-11  to Post-Effective Amendment  No.  5  to
            Registrant's    Form    S-2    Registration     Statement
            (Registration  No. 33-58191) on or about March  15,  2000
            and incorporated herein by reference.

     10-a-9 Copy  of  First  Amendment  to  Ace  Hardware  Corporation
            Restated  Officer Incentive Plan adopted on  December  8,
            1999 and effective January 1, 2000 filed as Exhibit 10-a-
            12  to  Post-Effective Amendment No.  5  to  Registrant's
            Form  S-2  Registration Statement (Registration  No.  33-
            58191)  on  or  about  March 15,  2000  and  incorporated
            herein by reference.

    10-a-10 Copy of Second Amendment to Ace Hardware Corporation
            Restated Officer Incentive Plan adopted on December 6,
            2000 and effective January 1, 2001 filed as Exhibit 10-a-
            10 to Post-Effective Amendment No. 6 to the Registrant's
            Form S-2 Registration Statement (Registration No. 33-
            58191) on or about March 22, 2001 and incorporated
            herein by reference.

Exhibits
Incorporated
by Reference            Description
------------            -----------
    10-a-11 Copy  of  $175,000,000 Revolving Credit Facility Agreement
            dated as of May 2, 2000 filed as Exhibit 10-a-11 to Post-
            Effective  Amendment No. 6 to the Registrant's  Form  S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  22,  2001  and  incorporated   herein   by
            reference.

    10-a-12 Copy  of  Lease  effective November 27, 2000  for  freight
            consolidation  center of the Registrant  in  Fort  Worth,
            Texas   filed   as   Exhibit  10-a-12  to  Post-Effective
            Amendment   No.   6   to   the  Registrant's   Form   S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  22,  2001  and  incorporated   herein   by
            reference.

    10-a-13 Copy  of  Lease  (Reference Date April 1,  2000)  for  the
            Registrant's additional general office space at 1220  and
            1300  Kensington  Rd.,  Oak  Brook,  Illinois  filed   as
            Exhibit 10-a-13 to Post-Effective Amendment No. 6 to  the
            Registrant's    Form    S-2    Registration     Statement
            (Registration  No. 33-58191) on or about March  22,  2001
            and incorporated herein by reference.

    10-a-14 Copy   of  current  standard  form  of  Limited  Liability
            Company  Agreement  for retail joint  ventures  filed  as
            Exhibit 10-a-14 to Post-Effective Amendment No. 6 to  the
            Registrant's    Form    S-2    Registration     Statement
            (Registration  No. 33-58191) on or about March  22,  2001
            and incorporated herein by reference.

    10-a-15 Copy  of  Amendment dated September 25, 2000  to  Restated
            Note  Purchase and Private Shelf Agreement  dated  as  of
            August 23, 1996 with The Prudential Insurance Company  of
            America   filed  as  Exhibit  10-a-15  to  Post-Effective
            Amendment   No.   6   to   the  Registrant's   Form   S-2
            Registration Statement (Registration No. 33-58191) on  or
            about   March  22,  2001  and  incorporated   herein   by
            reference.

  Upon  request of the Commission, we agree to furnish copies  of  any
agreements regarding indebtedness that does not exceed ten percent  of
our  total assets and the assets of our subsidiaries on a consolidated
basis.

  Supplemental   Information  to  be  Furnished  with  Reports   Filed
Pursuant  to  Section 15(d) of the Act by Registrants which  have  not
Registered Securities Pursuant to Section 12 of the Act.

  As  of  the  date of the Report mentioned above, neither our  annual
report for fiscal year 2000 nor any proxy soliciting materials for our
2001 annual meeting have been sent to our shareholders. Copies of that
annual  report as well as our proxy soliciting materials will be  sent
to  our  shareholders  and  furnished to the Securities  and  Exchange
Commission at a later date.



Item 14(a)  Index to Consolidated Financial Statements and Financial
            Statement Schedules
                                                              Page
                                                              ----
Independent Auditors' Report                                   F-2

Consolidated Balance Sheets at December 30, 2000
  and January  1,  2000                                        F-3

Consolidated Statements of Earnings and Consolidated
  Statements of Comprehensive Income for each of the
  years in the three-year period ended December 30, 2000       F-5

Consolidated Statements of Member Dealers' Equity for
  each of the years in the three-year period ended
  December 30, 2000                                            F-6

Consolidated Statements of Cash Flows for each of the
  years in the three-year period ended December 30, 2000       F-7

Notes to Consolidated Financial Statements                     F-8

  All schedules have been omitted because the required information  is
not  present  or  is  not  present in amounts  sufficient  to  require
submission of the schedule or the required information is included  in
the consolidated financial statements or the notes thereto.


  INDEPENDENT AUDITORS' REPORT



The Board of Directors
Ace Hardware Corporation:

  We  have audited the accompanying consolidated balance sheets of Ace
Hardware  Corporation  and subsidiaries as of December  30,  2000  and
January  1, 2000 and the related consolidated statements of  earnings,
comprehensive income, member dealers' equity and cash flows  for  each
of  the years in the three-year period ended December 30, 2000.  These
consolidated  financial  statements  are  the  responsibility  of  the
Company's  management. Our responsibility is to express an opinion  on
these consolidated financial statements based on our audits.

  We  conducted  our  audits  in accordance  with  auditing  standards
generally  accepted in the United States of America.  Those  standards
require  that  we  plan  and perform the audit  to  obtain  reasonable
assurance about whether the financial statements are free of  material
misstatement.  An audit includes examining, on a test basis,  evidence
supporting the amounts and disclosures in the financial statements. An
audit  also  includes  assessing the accounting  principles  used  and
significant  estimates made by management, as well as  evaluating  the
overall  financial statement presentation. We believe that our  audits
provide a reasonable basis for our opinion.

  In  our  opinion, the consolidated financial statements referred  to
above present fairly, in all material respects, the financial position
of  Ace Hardware Corporation and subsidiaries as of December 30,  2000
and  January  1, 2000, and the results of their operations  and  their
cash flows for each of the years in the  three-year  period  ended
December 30, 2000  in  conformity  with accounting  principles
generally accepted in  the  United  States  of America.



                              KPMG LLP


Chicago, Illinois
January 26, 2001


                       ACE HARDWARE CORPORATION

                      CONSOLIDATED BALANCE SHEETS

                  December 30, 2000 and January 1, 2000

                                ASSETS

                                                 December 30,       January 1,
                                                     2000              2000
                                                 -------------     ------------
                                                        (000's omitted)
Current assets:
 Cash and cash equivalents                       $     24,644      $    35,422
 Short-term investments                                12,772               -
 Receivables:
   Trade                                              316,339          317,144
   Other                                               59,090           56,360
                                                 -------------     ------------
                                                      375,429          373,504
   Less allowance for doubtful receivables             (2,458)          (2,625)
                                                 -------------     ------------
     Net receivables                                  372,971          370,879
 Inventories (Note 2)                                 395,565          373,090
 Prepaid expenses and other current assets             15,105           13,341
                                                 -------------     ------------
     Total current assets                             821,057          792,732
                                                 -------------     ------------
Property and equipment (Note 10):
 Land                                                  16,791           18,210
 Buildings and improvements                           211,024          188,795
 Warehouse equipment                                   90,250           79,573
 Office equipment                                      99,560           94,377
 Manufacturing equipment                               14,590           14,360
 Transportation equipment                              16,888           16,426
 Leasehold improvements                                17,445           17,400
 Construction in progress                               2,054           14,456
                                                 -------------     ------------
                                                      468,602          443,597
   Less accumulated depreciation and
     amortization                                    (206,712)        (184,419)
                                                 -------------     ------------
     Net property and equipment                       261,890          259,178

Other assets                                           39,226           29,574
                                                 -------------     ------------
                                                 $  1,122,173      $ 1,081,484
                                                 =============     ============

     See accompanying notes to consolidated financial statements.



                       ACE HARDWARE CORPORATION

                      CONSOLIDATED BALANCE SHEETS

                 December 30, 2000 and January 1, 2000


                LIABILITIES AND MEMBER DEALERS' EQUITY

                                                 December 30,       January 1,
                                                     2000              2000
                                                 -------------     ------------
                                                         (000's omitted)

Current liabilities:
 Current installments of long-term debt
   (Note  4)                                     $      6,904      $     4,067
 Short-term borrowings (Note 3)                        81,500           49,869
 Accounts payable                                     448,766          449,497
 Patronage dividends payable in cash (Note 5)          34,764           38,173
 Patronage refund certificates payable (Note 5)         4,795              373
 Accrued expenses                                      61,587           69,990
                                                 -------------     ------------
     Total current liabilities                        638,316          611,969

Long-term debt (Note 4)                               105,891          111,895
Patronage refund certificates payable (Note 5)         68,385           55,257
Other long-term liabilities                            24,923           22,400
                                                 -------------     ------------
     Total liabilities                                837,515          801,521
                                                 -------------     ------------

Member dealers' equity (Notes 5 and 8):
 Class A Stock of $1,000 par value                      3,783            3,856
 Class B Stock of $1,000 par value                      6,499            6,499
 Class C Stock of $100 par value                      250,480          241,226
 Class C Stock of $100 par value, issuable
   to dealers for patronage dividends                  24,267           21,648
 Additional stock subscribed, net                         351              498
 Retained earnings (deficit)                           (5,551)             594
 Contributed capital                                   13,485           13,485
 Accumulated other comprehensive income (loss)           (162)             291
                                                 -------------     ------------
                                                      293,152          288,097
 Less:  Treasury  stock, at cost                       (8,494)          (8,134)
                                                 -------------     ------------
     Total member dealers' equity                     284,658          279,963

 Commitments (Notes 6 and 10)

     Total liabilities and member dealers'       -------------     ------------
       equity                                    $  1,122,173      $ 1,081,484
                                                 =============     ============


     See accompanying notes to consolidated financial statements.



                       ACE HARDWARE CORPORATION

                  CONSOLIDATED STATEMENTS OF EARNINGS

<TABLE>



                                                            Year Ended
                                             ---------------------------------------
                                             December 30,   January 1,   January 2,
                                                 2000          2000         1999
                                             ------------- ------------ ------------
                                                          (000's omitted)

<S>                                          <C>           <C>          <C>
Net sales                                    $  2,945,151  $ 3,181,802  $ 3,120,380
Cost of sales                                   2,665,614    2,908,138    2,879,296
                                             ------------- ------------ ------------
 Gross profit                                     279,537      273,664      241,084
                                             ------------- ------------ ------------
Operating expenses:
 Warehouse and distribution                        32,516       28,122       27,204
 Selling, general and administrative               85,774       87,763       83,228
 Retail success and development                    73,132       57,149       32,907
                                             ------------- ------------ ------------
   Total operating expenses                       191,422      173,034      143,339
                                             ------------- ------------ ------------
     Operating income                              88,115      100,630       97,745

Interest expense (Note 12)                        (21,803)     (16,651)     (17,412)
Other income, net                                  14,207       10,416        9,363
Income taxes (Note 7)                                (127)      (1,833)      (1,736)
                                             ------------- ------------ ------------
        Net earnings                         $     80,392  $    92,562  $    87,960
                                             ============= ============ ============

Retained earnings at beginning of year       $        594  $     3,292  $     3,354
Net earnings                                       80,392       92,562       87,960
Patronage dividends (Note 5)                      (86,537)     (95,260)     (88,022)
                                             ------------- ------------ ------------
Retained earnings (deficit) at end of year   $     (5,551) $       594  $     3,292
                                             ============= ============ ============
</TABLE>




                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


<TABLE>

                                                            Year Ended
                                             ---------------------------------------
                                             December 30,   January 1,   January 2,
                                                 2000          2000         1999
                                             ------------- ------------ ------------
                                                         (000's omitted)
<S>                                          <C>           <C>          <C>
Net earnings                                 $     80,392  $    92,562  $    87,960
Unrealized gains on securities                        458           -            -
Foreign currency translation, net                    (911)       1,109         (483)
                                             ------------- ------------ ------------
   Comprehensive income                      $     79,939  $    93,671  $    87,477
                                             ============= ============ ============

</TABLE>

     See accompanying notes to consolidated financial statements.

<TABLE>

                                              ACE HARDWARE CORPORATION
                                  CONSOLIDATED STATEMENTS OF MEMBER DEALERS' EQUITY
                                Three Years Ended December 30, 2000  (000's omitted)

                                                          Class C                                      Accum-
                                                           Stock                                       ulated
                                                        Issuable to                                  Other Comp-
                                                        Dealers for Additional Retained               rehensive
                                 Class A Class B Class C Patronage   Stock     Earnings   Contributed  Income/     Treasury
                                  Stock   Stock   Stock  Dividends Subscribed* (deficit)    Capital    (loss)       Stock   Total
                                  -----   -----   ------ --------- ----------- ---------    -------   --------      -----   ------
<S>                              <C>     <C>    <C>        <C>        <C>      <C>          <C>       <C>        <C>      <C>
Balance at December 31, 1997     $3,874  $6,499 $213,609   $22,366    $  383   $ 3,354      $ 3,295   $  (335)   $(7,566) $245,479
 Net earnings                        -       -        -         -         -     87,960           -         -          -     87,960
 Net payments on subscriptions       -       -        -         -      1,463        -            -         -          -      1,463
 Patronage financing deductions      -       -        -       (485)       -         -            -         -          -       (485)
 Stock issued                       215      -    23,526   (21,881)   (1,375)       -            -         -          -        485
 Stock repurchased                   -       -        -         -         -         -            -         -     (11,055)  (11,055)
 Stock retired                     (243)     -   (10,564)       -         -         -            -         -      10,807        -
 Patronage dividends issuable        -       -        -     26,170        -         -            -         -          -     26,170
 Patronage dividends payable         -       -        -         -         -    (88,022)          -         -          -    (88,022)
 Accumulated other
   comprehensive income              -       -        -         -         -         -            -       (483)        -       (483)
                                  -----   -----   ------ --------- ----------- ---------    -------   --------    -------  -------
Balance at January 2, 1999        3,846   6,499  226,571    26,170       471     3,292        3,295      (818)    (7,814)  261,512
 Net earnings                        -       -        -         -         -     92,562           -         -          -     92,562
 Net payments on subscriptions       -       -        -         -      1,531        -            -         -          -      1,531
 Patronage financing deductions      -       -        -       (847)       -         -            -         -          -       (847)
 Stock issued                       238      -    26,616   (25,323)   (1,504)       -            -         -          -         27
 Stock repurchased                   -       -        -         -         -         -            -         -     (12,509)  (12,509)
 Stock retired                     (228)     -   (11,961)       -         -         -            -         -      12,189        -
 Patronage dividends issuable        -       -        -     21,648        -         -        10,190        -          -     31,838
 Patronage dividends payable         -       -        -         -         -    (95,260)          -         -          -    (95,260)
 Accumulated other
   comprehensive income              -       -        -         -         -         -            -      1,109         -      1,109
                                  -----   -----   ------ --------- ----------- ---------    -------   --------    -------  -------
Balance at January 1, 2000        3,856   6,499  241,226    21,648       498       594       13,485       291     (8,134)  279,963
 Net earnings                        -       -        -         -         -     80,392           -         -          -     80,392
 Net payments on subscriptions       -       -        -         -      1,830        -            -         -          -      1,830
 Patronage financing deductions      -       -        -       (158)       -         -            -         -          -       (158)
 Stock issued                       234      -    23,391   (21,490)   (1,977)       -            -         -          -        158
 Stock repurchased                   -       -        -         -         -         -            -         -     (14,804)  (14,804)
 Stock retired                     (307)     -   (14,137)       -         -         -            -         -      14,444        -
 Patronage dividends issuable        -       -        -     24,267        -         -            -         -          -     24,267
 Patronage dividends payable         -       -        -         -         -    (86,537)          -         -          -    (86,537)
 Accumulated other
   comprehensive income              -       -        -         -         -         -            -       (453)        -       (453)
                                  -----   -----   ------ --------- ----------- ---------    -------   --------   --------  -------
Balance at December 30, 2000     $3,783  $6,499 $250,480   $24,267    $  351   $(5,551)     $13,485   $  (162)   $(8,494) $284,658
                                 ======  ====== ======== ========= =========== =========    =======   ========   ========  =======
</TABLE>

*Additional stock subscribed is comprised of the following amounts at
January 2, 1999, January 1, 2000 and December 30, 2000:

                                                  1998    1999   2000
                                                  ----    ----   ----
                     Class A Stock               $  60   $ 118  $  41
                     Class B Stock                  -       -      -
                     Class C Stock                 955   1,452    975
                                                 -----   -----  -----
                                                 1,015   1,570  1,016
                     Less unpaid portion           544   1,072    665
                                                 -----   -----  -----
                                                 $ 471   $ 498  $ 351
                                                 =====   =====  =====
     See accompanying notes to consolidated financial statements.





                       ACE HARDWARE CORPORATION

                 CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>

                                                                        Year Ended
                                                         --------------------------------------
                                                         December 30,   January 1,   January 2,
                                                             2000          2000         1999
                                                         ------------  -----------  -----------
                                                                     (000's omitted)
<S>                                                      <C>           <C>          <C>
Operating Activities:

Net earnings                                             $     80,392  $    92,562  $    87,960
Adjustments to reconcile net earnings to net cash
 provided by operating activities:
  Depreciation and amortization                                32,273       23,396       21,536
  Decrease (increase) in accounts receivable, net             (11,569)      13,095      (44,481)
  Decrease (increase) in inventories                          (22,475)     (38,685)       4,104
  Decrease (increase) in prepaid expenses and
   other current assets                                        (1,764)       1,805       (1,531)
  Increase (decrease) in accounts payable and
   accrued expenses                                            (9,134)      (1,101)      42,264
  Increase in other long-term liabilities                       2,523        3,718        3,960
                                                         ------------- ------------ ------------
   Net Cash Provided by Operating Activities                   70,246       94,790      113,812
                                                         ------------- ------------ ------------
Investing Activities:
 Purchase of short-term investments                           (12,314)          -            -
 Purchase of property and equipment                           (44,649)     (43,074)     (26,554)
 Proceeds from sale of property and equipment                   9,664          349        8,148
 Increase in other assets                                     (10,563)     (21,160)      (3,383)
                                                         ------------- ------------ ------------
   Net Cash Used in Investing Activities                      (57,862)     (63,885)     (21,789)
                                                         ------------- ------------ ------------
Financing Activities:
 Proceeds (payments) of short-term borrowings                  31,631       24,869      (17,000)
 Proceeds from notes payable                                       -            -        26,117
 Payments on long-term debt                                    (3,167)      (6,892)      (7,593)
 Payment of cash portion of patronage dividend                (38,173)     (34,826)     (29,943)
 Payments of patronage refund certificates                       (479)     (21,557)     (14,282)
 Proceeds from sale of common stock                             1,830        1,531        1,463
 Repurchase of common stock                                   (14,804)     (12,509)     (11,055)
                                                         ------------- ------------ ------------
     Net Cash Used in Financing Activities                    (23,162)     (49,384)     (52,293)
                                                         ------------- ------------ ------------

Increase (decrease) in Cash and Cash Equivalents              (10,778)     (18,479)      39,730
Cash and Cash Equivalents at beginning of year                 35,422       53,901       14,171
                                                         ------------- ------------ ------------
Cash and Cash Equivalents at end of year                 $     24,644  $    35,422  $    53,901
                                                         ============= ============ ============
</TABLE>
     See accompanying notes to consolidated financial statements.


                       ACE HARDWARE CORPORATION


              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





(1)  Summary of Significant Accounting Policies

  (a)    The Company and Its Business

  Ace  Hardware Corporation (the Company) operates as a wholesaler  of
hardware and related products,   and   manufactures  paint  products.
As  a   dealer-owned cooperative,  the  Company  distributes  substantially
all of its patronage  sourced  earnings in the form  of  patronage
dividends  to member dealers based on their volume of merchandise purchases.

  (b)    Cash Equivalents and Investments

  The  Company  considers  all  highly  liquid  investments  with   an
original  maturity  of  three months or less to be  cash  equivalents.
Short-term  investments consist primarily of corporate and  government
agency bonds and are classified as held for sale.

  (c)    Consolidation

  The  accompanying  consolidated  financial  statements  include  the
accounts of the Company and subsidiaries. All significant intercompany
transactions have been eliminated. The equity method of accounting  is
used  for  the Company's 50% or less owned affiliates over  which  the
Company has the ability to exercise significant influence. The Company
has other investments that are accounted for at cost.

  (d)    Receivables

  Receivables  from  dealers include amounts  due  from  the  sale  of
merchandise  and special equipment used in the operation  of  dealers'
businesses.  Other  receivables  are  principally  amounts  due   from
suppliers  for  promotional and advertising  allowances.  The  Company
recognizes revenue from product sales upon shipment to customers.

  (e)    Inventories

  Inventories  are  valued  at the lower of  cost  or  net  realizable
value.  Cost  is  determined primarily using  the  last-in,  first-out
method.

  (f)    Property and Equipment

  Property   and  equipment  are  stated  at  cost  less   accumulated
depreciation  and amortization. Expenditures for maintenance,  repairs
and  renewals  of  relatively minor items  are  generally  charged  to
earnings. Significant improvements or renewals are capitalized.

  Depreciation   expense  is  computed  on  both   straight-line   and
accelerated methods based on estimated useful lives as follows:

                                     Useful Life         Principal
                                        Years       Depreciation Method
                                        -----       -------------------
      Buildings and improvements        10-40       Straight line
      Warehouse equipment                5-10       Accelerated
      Office equipment                   3-10       Various
      Manufacturing equipment            3-20       Straight line
      Transportation equipment           3-7        Straight line

  Leasehold  improvements are generally amortized on  a  straight-line
basis over the term of the respective lease.

  (g)    Foreign Currency Translation

  Substantially all assets and liabilities of foreign operations are
translated at the rate of exchange in effect at the balance sheet date
while revenues and expenses are translated at the average monthly ex-
change rates prevailing during the year. The Company has utilized
foreign exchange forward contracts to hedge non-U.S. equity
investments. Gains and losses on these foreign hedges are included in
the basis of the underlying hedged investment. During 1999 the Company
settled all outstanding foreign currency contracts  that  resulted  in
a gain of  approximately  $2.0  million reflected  within accumulated
other comprehensive income  at  December 30, 2000 and January 1, 2000.
Foreign  currency   translation adjustments, net of gains on foreign
exchange contracts, are reflected in the accompanying Consolidated
Statement of Comprehensive Income for 2000, 1999 and 1998. The Company
does not have any outstanding foreign exchange forward contracts at
December 30, 2000 or January 1, 2000.

  (h)    Financial Instruments

  The   carrying  value  of  assets  and  liabilities  that  meet  the
definition  of  a  financial instrument included in  the  accompanying
Consolidated Balance Sheets approximate fair value.

  (i)    Retirement Plans

  The  Company  has retirement plans covering substantially  all  non-
union  employees.  Costs  with respect to the noncontributory  pension
plans  are  determined actuarially and consist of  current  costs  and
amounts  to  amortize prior service costs and unrecognized  gains  and
losses.  The  Company contribution under the profit  sharing  plan  is
determined annually by the Board of Directors.

  (j)    Use of Estimates

  The   preparation   of  financial  statements  in  conformity   with
generally accepted accounting principles requires management  to  make
estimates  and assumptions that affect the reported amounts of  assets
and  liabilities  at  the  date of the financial  statements  and  the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

  (k)    Fiscal Year

  Effective  January 1, 1998 the Company changed its fiscal year  from
December  31st  to  the Saturday nearest December  31st.  Accordingly,
2000,  1999 and 1998 ended on December 30, 2000, January 1,  2000  and
January 2, 1999, respectively.

  (l)    Reclassifications

Certain financial statement reclassifications have been made to prior
year amounts to conform to comparable classifications followed in
2000.

  (2)    Inventories

  Inventories    consist   primarily   of   merchandise   inventories.
Substantially all of the Company's domestic inventories are valued  on
the  last-in, first-out (LIFO) method; the excess of replacement  cost
over  the  LIFO  value of inventory was approximately $62,502,000  and
$61,483,000  at  December 30, 2000 and January 1, 2000,  respectively.
Indirect  costs,  consisting  primarily  of  warehousing  costs,   are
absorbed as inventory costs rather than period costs.

  (3)    Short-Term Borrowings

  Short-term  borrowings  were utilized  during  2000  and  1999.  The
maximum  amount  outstanding at any month-end during  the  period  was
$147.0  million  in  2000 and $108.0 million  in  1999.  The  weighted
average interest rate effective as of December 30, 2000 and January 1,
2000   was   7.18%  and  6.84%,  respectively.  Short-term  borrowings
outstanding as of December 30, 2000 and January 1, 2000 were $81.5 and
$49.9  million,  respectively. At December 30, 2000  the  Company  has
available  a revolving credit facility with a group of banks providing
for  $175.0  million in committed lines and also has  available  $15.0
million  in  uncommitted lines. The aggregate unused  line  of  credit
available at December 30, 2000 and January 1, 2000 was $108.5  million
and $160.1 million, respectively. At December 30, 2000 the Company had
no compensating balance requirements.



  (4)    Long-Term Debt

  Long-term debt is comprised of the following:
                                                     December 30,   January 1,
                                                         2000          2000
                                                     -----------    ----------
                                                          (000's omitted)
Notes Payable:
 $20,000,000 due in quarterly installments of
 $540,500 with interest payable quarterly at a
 fixed rate of 8.74%                                 $    5,946     $   8,108

 $20,000,000 due in quarterly installments of
 $952,400 with interest payable quarterly at a
 fixed rate of 6.89%                                         -            952

 $30,000,000 due in semi-annual installments of
 $2,000,000 commencing June 22, 2001 with interest
 payable quarterly at a fixed rate of 6.47%              30,000        30,000

 $20,000,000 due in quarterly installments of
 $714,300 commencing September 15, 2004 with interest
 payable quarterly at a fixed rate of 7.49%              20,000        20,000

 $30,000,000 due in annual installments of
 $6,000,000 commencing March 25, 2005 with interest
 payable quarterly at a fixed rate of 7.55%              30,000        30,000

 $25,000,000 due in annual installments of
 $5,000,000 commencing February 9, 2006 with interest
 payable quarterly at a fixed rate of 6.61%              25,000        25,000

Liability under capitalized leases (see Note 10)             83           510
Installment notes with maturities through 2004
 with various interest rates                              1,766         1,392
                                                     -----------    ----------
                                                        112,795       115,962
Less current installments                                (6,904)       (4,067)
                                                     -----------    ----------
                                                     $  105,891     $ 111,895
                                                     ===========    ==========

  Aggregate  maturities of long-term debt are $6,904,000,  $6,715,000,
$5,975,000,   $5,629,000  and  $12,857,000  in  2001   through   2005,
respectively, and $74,715,000 thereafter.

  (5)    Patronage Dividends and Refund Certificates Payable

  The  Company operates as a cooperative organization and has paid  or
will  pay  patronage dividends to member dealers  on  the  portion  of
earnings  derived  from  business done with  such  dealers.  Patronage
dividends  are allocated in proportion to the volume of  purchases  by
member dealers during the period. The amount of patronage dividends to
be remitted in cash depends upon the level of dividends earned by each
member  outlet, varying from 20% on the total dividends  under  $5,000
and  increasing  by  5% on total dividends for each subsequent  $2,500
earned  to  a maximum of 40% on total dividends exceeding $12,500.  In
1999, amounts exceeding the cash portion were distributed in the  form
of  options  (i.e.  other property) exercisable by the  dealers  at  a
future date to acquire shares of the Company's ownership in a minority-
owned   investment.  Amounts  exceeding  the  cash  portion  will   be
distributed in the form of Class C $100 par value stock, to a  maximum
based  upon  the current year purchase volume or $20,000 whichever  is
greater,  and  thereafter  in a combination  of  additional  cash  and
patronage  refund  certificates  having  maturity  dates  and  bearing
interest  as  determined by the Board of Directors. A portion  of  the
dealer's  annual patronage dividends distributed under the above  plan
in  a  form other than cash can be applied toward payment of principal
and  interest  on  any  balances outstanding  for  approved  patronage
financing programs.


  The patronage dividend composition for 2000, 1999 and 1998 follows:

               Subordinated  Class             Patronage   Total
         Cash     Refund       C     Other     Financing Patronage
       Portion Certificates  Stock  Property  Deductions Dividends
       ------- ------------  -----  --------  ---------- ---------
                           (000's omitted)

2000   $34,764   $18,029    $24,267   $    -    $ 9,477    $86,537
1999    38,173    12,249     21,648    10,190    13,000     95,260
1998    34,826    15,720     26,170        -     11,306     88,022

  Patronage  dividends  are  allocated on a  fiscal  year  basis  with
issuance in the following year.

  The  patronage  refund  certificates  outstanding  or  issuable   at
December 30, 2000 are payable as follows:

                                                       Interest
          January 1,                       Amount        Rate
          ----------                       ------      --------
                                      (000's omitted)

          2001                            $ 4,795         6.00%
          2002                              9,142         6.25
          2003                             13,370         6.00
          2004                             15,348         6.00
          2005                             12,496         6.25
          2006                             18,029         6.50

(6) Retirement Plans

  The   Company  has  two  defined  benefit  pension  plans   covering
substantially all non-union employees, the Employees' Pension Plan and
Trust and the Employees' Retirement Income Plan and Trust. The Company
terminated the Employees' Pension Plan and Trust effective  April  30,
2000.  In  addition to the net periodic pension expense,  the  Company
recognized a gain of $3,131,000 (net of tax) in 2000 of which the pre-
tax  portion  is  classified as other income, net in the  accompanying
consolidated financial statements. Benefits in these plans  are  based
on years of service, highest average compensation (as defined) and the
related   profit   sharing  and  primary  social   security   benefit.
Contributions  to the plans are based on the Entry Age Normal,  Frozen
Initial  Liability actuarial funding method and are limited to amounts
that  are  currently  deductible for tax  reporting  purposes.  As  of
December 30, 2000 plan assets in the Employees' Retirement Income Plan
and  Trust  were  held primarily in equities, mutual funds  and  group
annuity contracts.

  Pension  expense  for  2000, 1999 and 1998  included  the  following
components:
                                         December 30,  January 1,  January 2,
                                             2000         2000        1999
                                         ------------  ----------  ----------
                                                    (000's omitted)

      Service cost - benefits earned
       during the period                 $        52   $     309   $     293
      Interest cost on projected
       benefit obligation                        112         399         428
      Expected return on plan assets            (115)       (733)       (710)
      Net amortization and deferral              (31)        125          87
                                         ------------  ----------  ----------
      Net periodic pension expense       $        18   $     100   $      98
                                         ============  ==========  ==========
  The  following table sets forth the funded status of the  plans  and
amounts  recognized in the Company's Consolidated  Balance  Sheets  at
December 30, 2000 and January 1, 2000:
                                                  December 30,    January 1,
                                                      2000           2000
                                                  ------------    ----------
                                                        (000's omitted)
      Change in benefit obligation:
        Benefit obligation at beginning of year   $     5,412     $   5,341
        Service cost                                       52           309
        Interest cost                                     112           399
        Actuarial gains                                  (119)         (213)
        Benefits paid                                  (3,801)         (424)
                                                  ------------    ----------
      Benefit obligation at end of year                 1,656         5,412
                                                  ------------    ----------
      Change in plan assets:
        Fair value of plan assets at beginning
         of year                                       10,293         9,448
        Actual return on plan assets                       29         1,198
        Employer contribution (reversion)              (4,961)           71
        Benefits paid                                  (3,801)         (424)
                                                  ------------    ----------
      Fair value of plan assets at end of year          1,560        10,293
                                                  ------------    ----------
        Funded status                                     (96)        4,881
        Unrecognized transition asset                     (65)          (78)
        Unamortized prior service cost                   (581)         (583)
        Unrecognized net actuarial losses (gains)         688        (3,634)
                                                  ------------    ----------
      Prepaid (accrued) pension cost              $       (54)    $     586
                                                  ============    ==========

  The   weighted  average  discount  rate  used  in  determining   the
actuarial present value of the projected benefit obligation was  7.50%
in  2000  and  7.75% in 1999. The related expected long-term  rate  of
return  was  8.0%  in  2000 and 1999. The rate of increase  in  future
compensation was projected using actuarial salary tables plus 1.0%  in
2000 and 1999.

  The  Company  also  participates  in  several  multi-employer  plans
covering  union employees. Amounts charged to expense and  contributed
to  the plans totaled approximately $222,000, $233,000 and $216,000 in
2000, 1999 and 1998, respectively.

  The  Company's profit sharing plan contribution for 2000,  1999  and
1998  was  approximately  $14,586,000,  $15,071,000  and  $13,746,000,
respectively.

(7) Income Taxes

  As  a cooperative, the Company distributes substantially all of  its
patronage sourced earnings to its  members  in the form of patronage
dividends. The 2000,  1999  and 1998  provisions  (benefit) for federal
income taxes were  $(162,000), $1,000,000  and $1,105,000, respectively,
and for state  income  taxes were $289,000, $833,000 and $631,000,
respectively.

  The  tax  benefit for the current period results from a  combination
of  losses in nonpatronage areas and from the offset of available  tax
credits  against  federal  income tax  liability.  All  available  tax
credits  have  been utilized. There are no available  tax  credits  to
carry forward into future periods.

  The   Company  made  tax  payments  of  $1,095,000,  $2,755,000  and
$1,374,000 during 2000, 1999 and 1998, respectively.

(8)  Member Dealers' Equity

  The Company's classes of stock are described below:
<TABLE>
                                                                  Number of Shares at
                                                                  -------------------
                                                              December 30,     January 1,
                                                                  2000            2000
                                                              ------------     ----------
      <S>                                                          <C>            <C>
      Class A Stock, voting, redeemable at par value -
        Authorized                                                 10,000         10,000
        Issued and outstanding                                      3,783          3,856
      Class B Stock, nonvoting, redeemable at not less than
       twice par value-
        Authorized                                                  6,500          6,500
        Issued                                                      6,499          6,499
        Outstanding                                                 2,252          2,432
        Treasury stock                                              4,247          4,067
      Class C Stock, nonvoting, redeemable at not less
       than par value -
        Authorized                                              4,000,000      4,000,000
        Issued and outstanding                                  2,504,796      2,412,255
        Issuable as patronage dividends                           242,671        216,480
      Additional Stock Subscribed:
        Class A Stock                                                  41            118
        Class B Stock                                                  -              -
        Class C Stock                                               9,750         14,520
</TABLE>

  At December 30, 2000 and January 1, 2000 there were no common
shares reserved for options, warrants, conversions or other
rights; nor were any options granted or exercised during the two
years then ended.

  Member  dealers  may subscribe for the Company's  stock  in  various
prescribed combinations. Only one share of Class A Stock may be  owned
by  a dealer with respect to the first member retail outlet controlled
by  such dealer. Only four shares of Class B Stock may be owned  by  a
dealer  with respect to each retail outlet controlled by such  dealer,
but  only  if  such outlet was a member of the Company  on  or  before
February  20, 1974. An appropriate number of shares of Class  C  Stock
must  be  included in any subscription by a dealer  in  an  amount  to
provide that such dealer has a par value of all shares subscribed  for
equal to $5,000 for each retail outlet. Unregistered shares of Class C
Stock  are  also  issued  to  dealers  in  connection  with  patronage
dividends. No dividends can be declared on any shares of any class  of
the Company's Stock.

  Upon  termination  of the Company's membership  agreement  with  any
retail  outlet, all shares of stock of the Company held by the  dealer
owning  or controlling such outlet, must be sold back to the  Company,
unless a transfer of such shares is made to another party accepted  by
the Company as a member dealer with respect to the same outlet.

                       ACE HARDWARE CORPORATION


        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


  A  Class  A  share is issued to a member dealer only when the  share
subscribed  has been fully paid. Class B and Class C shares  are  only
issued when all such shares subscribed with respect to a retail outlet
have  been fully paid. Additional stock subscribed in the accompanying
statements  represents the par value of shares subscribed, reduced  by
the unpaid portion.

  All  shares  of  stock are currently issued and repurchased  at  par
value, except for Class B Stock which is repurchased at twice its  par
value, or $2,000 per share. Upon retirement of Class B shares held  in
treasury, the excess of redemption price over par is allocated equally
between contributed capital and retained earnings.

  Treasury   stock  transactions  during  1998,  1999  and  2000   are
summarized below:

                                                 Shares Held in Treasury
                                                 -----------------------
                                             Class A     Class B     Class C
                                           ----------- ----------- -----------
Balance at December 31, 1997                       -        3,783          -
 Stock issued                                      -           -           -
 Stock repurchased                                243         124     105,639
 Stock retired                                   (243)         -     (105,639)
                                           ----------- ----------- -----------
Balance at January 2, 1999                         -        3,907          -
 Stock issued                                      -           -           -
 Stock repurchased                                228         160     119,614
 Stock retired                                   (228)         -     (119,614)
                                           ----------- ----------- -----------
Balance at January 1, 2000                         -        4,067          -
 Stock issued                                      -           -           -
 Stock repurchased                                307         180     141,365
 Stock retired                                   (307)         -     (141,365)
                                           ----------- ----------- -----------
Balance at December 30, 2000                       -        4,247          -
                                           =========== =========== ===========


                        ACE HARDWARE CORPORATION

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


(9)  Segments

  The  Company is principally engaged as a wholesaler of hardware  and
related products and is a manufacturer of 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  interest  expense  and  income  taxes.   Information
regarding  the  identified segments and the related reconciliation  to
consolidated information are as follows:
<TABLE>
                                                          December 30, 2000
                                                          -----------------
                                                           (000's omitted)

                                                                     Elimination of
                                                   Paint              Intersegment
                                   Wholesale   Manufacturing   Other   Activities    Consolidated
                                   ---------   -------------   -----   ----------    ------------
<S>                                <C>         <C>            <C>       <C>           <C>
Net sales from external customers  $2,879,952  $  20,852      $44,347         -       $2,945,151
Intersegment sales                     28,641    100,780           -    (129,421)             -
Interest expense                       21,803      1,209        1,278     (2,487)         21,803
Depreciation and amortization          29,176      1,694        1,403         -           32,273
Segment profit (loss)                  73,540      9,739       (2,452)      (435)         80,392
Identifiable segment assets         1,024,493     68,130       48,775    (19,225)      1,122,173
Expenditures for long-lived assets     39,807        937        3,905         -           44,649

                                                          January 1, 2000
                                                          ---------------
                                                          (000's omitted)

                                                                     Elimination of
                                                   Paint              Intersegment
                                   Wholesale   Manufacturing   Other   Activities    Consolidated
                                   ---------   -------------   -----   ----------    ------------
<S>                                <C>         <C>            <C>       <C>           <C>
Net sales from external customers  $3,128,269  $  27,268      $26,265         -       $3,181,802
Intersegment sales                     22,647    100,758           -    (123,405)             -
Interest expense                       16,651      1,383          590     (1,973)         16,651
Depreciation and amortization          21,022      1,589          785         -           23,396
Segment profit (loss)                  85,574      9,475       (1,819)      (668)         92,562
Identifiable segment assets           975,618     78,057       40,235    (12,426)      1,081,484
Expenditures for long-lived assets     35,027      2,846        5,201         -           43,074

                                                          January 2, 1999
                                                          ---------------
                                                          (000's omitted)

                                                                     Elimination of
                                                   Paint              Intersegment
                                   Wholesale   Manufacturing   Other   Activities    Consolidated
                                   ---------   -------------   -----   ----------    ------------
<S>                                <C>         <C>            <C>       <C>           <C>
Net sales from external customers  $3,086,913  $  20,798      $12,669         -       $3,120,380
Intersegment sales                     13,701     93,536           -    (107,237)             -
Interest expense                       17,412      1,464          244     (1,708)         17,412
Depreciation and amortization          19,808      1,392          336         -           21,536
Segment profit (loss)                  78,442     10,364         (382)      (464)         87,960
Identifiable segment assets           963,354     54,215       39,030     (9,019)      1,047,580
Expenditures for long-lived assets     21,849        937        3,768         -           26,554

</TABLE>


                       ACE HARDWARE CORPORATION


        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)





Net sales and long-lived assets by geographic region based upon
customer location for 2000, 1999 and 1998 were as follows:

                         December 30, 2000   January 1, 2000   January 2, 1999
                         -----------------   ---------------   ---------------
                                             (000's omitted)
Net sales:
 United States              $2,748,740          $2,975,567        $2,903,906
 Foreign countries             196,411             206,235           216,474
                         -----------------   ---------------   ---------------
   Total                    $2,945,151          $3,181,802        $3,120,380
                         =================   ===============   ===============
Long-lived assets, net:
 United States              $  258,802          $  254,747        $  234,543
 Foreign countries               3,088               4,431             5,306
                         -----------------   ---------------   ---------------
   Total                    $  261,890          $  259,178        $  239,849
                         =================   ===============   ===============



(10)  Commitments


  Leased  property under capital leases is included as  "Property  and
Equipment" in the Consolidated Balance Sheets as follows:

                                                    December 30,   January 1,
                                                        2000          2000
                                                    ------------   ----------
                                                          (000's omitted)

   Data processing equipment                             $3,598       $3,598
   Less: accumulated depreciation and amortization       (3,252)      (2,711)
                                                    ------------   ----------
                                                         $  346       $  887
                                                    ============   ==========

  The  Company rents buildings and warehouse, office and certain other
equipment  under  capital and operating leases. At December  30,  2000
annual  minimum rental commitments under leases that have  initial  or
remaining noncancelable terms in excess of one year are as follows:

Year Ending,                                  Capital      Operating
------------                                  -------      ---------
                                                  (000's omitted)

2001                                          $   93       $ 22,646
2002                                               -         17,811
2003                                               -         13,304
2004                                               -         11,153
2005                                               -          9,070
Thereafter                                         -         26,183
                                              -------      ---------
   Total minimum lease payments                   93       $100,167
Less amount representing interest                (10)      =========
                                              -------
Present value of total minimum lease payments $   83
                                              =======



                      ACE HARDWARE CORPORATION


        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)





  All  leases expire prior to 2014. Under certain leases, the  Company
pays real estate taxes, insurance and maintenance expenses in addition
to  rental  expense. Management expects that in the normal  course  of
business,  leases  that expire will be renewed or  replaced  by  other
leases.  Rent  expense was approximately $45,514,000, $39,149,000  and
$37,023,000  in  2000,  1999  and  1998,  respectively.  Rent  expense
includes  $9,977,000, $7,352,000 and $6,004,000 in contingent  rentals
paid   in   2000,   1999   and  1998,  respectively,   primarily   for
transportation equipment mileage.

  (11) Media Expense

  The  Company expenses media costs the first time the advertising takes
place.  Gross media expense, prior to income offsets from dealers  and
suppliers,  amounting to $76,372,000, $79,639,000 and $70,254,000  was
charged to operations in 2000, 1999 and 1998, respectively.

  (12) Interest Expense

  Interest paid was $20,256,000, $16,411,000 and $16,553,000 in  2000,
1999  and  1998, respectively, net of capitalized interest of $715,000
and $234,000 in 2000 and 1999.