GRACO INC — Director's Dealing 2005

Dec 12, 2005

SEC Form 4 — Statement of Changes in Beneficial Ownership

Issuer: GRACO INC (GGG)
CIK: 0000042888
Period of Report: 2005-11-02

Reporting Person: MORFITT MARTHA A M (Director)

Non-Derivative Transactions

Date	Security	Code	Shares	Price	A/D	Holdings After	Ownership
2005-12-08	Common Stock	M	10125	$3.73	Acquired	12422	Direct
2005-12-08	Common Stock	M	7593	$5.23	Acquired	20015	Direct
2005-12-08	Common Stock	M	5000	$10.31	Acquired	25015	Direct

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2005-12-08	Non-Qualified Stock Option (right to buy)	$3.73	M	10125	Disposed	2006-05-07	Common Stock (10125)	Direct
2005-12-08	Non-Qualified Stock Option (right to buy)	$5.23	M	7593	Disposed	2007-05-06	Common Stock (7593)	Direct
2005-12-08	Non-Qualified Stock Option (right to buy)	$10.31	M	5000	Disposed	2008-05-05	Common Stock (5000)	Direct
2005-11-02	Phantom Stock Units	$0	J	48.872	Acquired		Common Stock (48.872)	Direct

Footnotes

F1: Nonemployee director stock option granted pursuant to the Graco Inc. Nonemployee Director Stock Option Plan in 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.

F2: Dividends on the accrued phantom stock units were credited under the Graco Inc. Stock Incentive Plan and are to be settled 100% in Graco common stock in a lump sum or installments upon reporting person's termination of service on the Board.