GRACO INC — Director's Dealing 2004

Aug 3, 2004

SEC Form 4 — Statement of Changes in Beneficial Ownership

Issuer: GRACO INC (GGG)
CIK: 0000042888
Period of Report: 2004-07-30

Reporting Person: SUTTER FRED A (VICE PRESIDENT)

Non-Derivative Transactions

Date	Security	Code	Shares	Price	A/D	Holdings After	Ownership
2004-07-30	Common Stock	M	8436	$6.37	Acquired	31867	Direct
2004-07-30	Common Stock	M	3375	$8.76	Acquired	35242	Direct
2004-07-30	Common Stock	M	25312	$9.09	Acquired	60554	Direct
2004-07-30	Common Stock	S	22245	$31.44	Disposed	38309	Direct
2004-07-30	Common Stock	F	8878	$31.44	Disposed	29431	Direct
2004-03-31	Common Stock	J	18.4671	$29.11	Acquired	346.4671	Indirect
2004-06-30	Common Stock	J	0.066	$31.05	Acquired	346.5331	Indirect

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2004-07-30	Non-Qualified Stock Option (right to buy)	$6.37	M	8436	Disposed	2009-02-22	Common Stock (8436)	Direct
2004-07-30	Non-Qualified Stock Option (right to buy)	$8.76	M	3375	Disposed	2008-02-18	Common Stock (3375)	Direct
2004-07-30	Non-Qualified Stock Option (right to buy)	$9.09	M	25312	Disposed	2010-02-23	Common Stock (25312)	Direct

Footnotes

F1: On March 30, 2004, the common stock of Graco Inc. split 3-for-2. Reporting person's end of period holdings and the exercise price and amount of shares underlying derivative securities have been proportionately adjusted to reflect this split.

F2: Transaction exempt under Rule 16b-3(e); stock delivered to issuer to cover the exercise price, or stock retained by issuer to cover withholding taxes.

F3: Dividends paid pursuant to the Graco Employee Stock Ownership Plan, exempt under Rule 16b-3(c).

F4: Employee stock option granted pursuant to the Graco Inc. Long-Term Stock Incentive Plan in a transaction exempt under Rule 16b-3. The stock option becomes exercisable in four equal annual installments, commencing two years after the date of the grant.

F5: Employee stock option granted pursuant to the Graco Inc. Long-Term Stock Incentive Plan in a transaction exempt under Rule 16b-3. The stock option becomes exercisable in four equal annual installments, commencing one year after the date of the grant.