GRACO INC — Director's Dealing 2006

Jan 10, 2006

SEC Form 4 — Statement of Changes in Beneficial Ownership

Issuer: GRACO INC (GGG)
CIK: 0000042888
Period of Report: 2006-01-09

Reporting Person: VAN DYKE WILLIAM G (Director)

Non-Derivative Transactions

Date	Security	Code	Shares	Price	A/D	Holdings After	Ownership
2006-01-09	Common Stock	M	10125	$3.73	Acquired	18036.839	Direct
2006-01-09	Common Stock	S	969	$38.97	Disposed	17067.839	Direct

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2006-01-09	Non-Qualified Stock Option (right to buy)	$3.73	M	10125	Disposed	2006-05-07	Common Stock (10125)	Direct

Footnotes

F1: Shares tendered to cover the exercise price of stock option granted pursuant to the Graco Inc. Nonemployee Director Stock Option Plan were withdrawn from the Graco Inc. Automatic Dividend Reinvestment Plan and will be cancelled.

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.