GRACO INC — Director's Dealing 2006

Oct 3, 2006

SEC Form 4 — Statement of Changes in Beneficial Ownership

Issuer: GRACO INC (GGG)
CIK: 0000042888
Period of Report: 2006-10-01

Reporting Person: VAN DYKE WILLIAM G (Director)

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2006-10-01	Phantom Stock Units	$0	A	362.91	Acquired		Common Stock (362.91)	Direct

Holdings (Non-Derivative)

Security	Shares	Ownership
Common Stock	14101.696	Direct

Holdings (Derivative)

Security	Exercise Price	Expiration	Underlying	Shares	Ownership
Non-Qualified Stock Option (right to buy)	$5.23	2007-05-06	Common Stock (7593)	7593	Direct
Non-Qualified Stock Option (right to buy)	$9.35	2009-05-04	Common Stock (7593)	7593	Direct
Non-Qualified Stock Option (right to buy)	$10.07	2010-05-02	Common Stock (7593)	7593	Direct
Non-Qualified Stock Option (right to buy)	$10.31	2008-05-05	Common Stock (7593)	7593	Direct
Non-Qualified Stock Option (right to buy)	$12.18	2011-05-01	Common Stock (5625)	5625	Direct
Non-Qualified Stock Option (right to buy)	$19.13	2012-05-07	Common Stock (5625)	5625	Direct
Non-Qualified Stock Option (right to buy)	$20.27	2013-05-06	Common Stock (3750)	3750	Direct
Non-Qualified Stock Option (right to buy)	$29.48	2004-04-23	Common Stock (3000)	3000	Direct
Non-Qualified Stock Option (right to buy)	$37.13	2015-04-22	Common Stock (3600)	3600	Direct
Non-Qualified Stock Option (right to buy)	$48.95	2016-04-21	Common Stock (3600)	3600	Direct

Footnotes

F1: The phantom stock units were accrued under the Amended and Restated Graco Inc. Stock Incentive Plan (2006) 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.

F2: 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.

F3: Nonemployee director stock option granted pursuant to the Graco Inc. Stock Incentive 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.

F4: Nonemployee director stock option granted pursuant to the Graco Inc. 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.

F5: Nonemployee director stock option granted pursuant to the Amended and Restated Graco Inc. Stock Incentive Plan (2006) 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.