FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

OMB APPROVAL OMB Number: 3235-0287 Expires: January 31, 2005 Estimated average burden hours per response... 0.5

(Print or Type Responses)

1. Name and Address of Reporting Person * LOWE DAVID M   2. Issuer Name and Ticker or Trading Symbol GRACO INC [GGG] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) _____ Director _____ 10% Owner __X__ Officer (give title below) _____ Other (specify below) Vice President (Last) (First) (Middle) 88 11TH AVENUE NE 3. Date of Earliest Transaction (Month/Day/Year) 02/16/2007 (Street) MINNEAPOLIS, MN 55413 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) _X_ Form filed by One Reporting Person ___ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock               43,548 D   Common Stock               357.5215 I by ESOP

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
	Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.		SEC 1474 (9-02)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Underlying Securities (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
				Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares
Non-Qualified Stock Option (right to buy)	$ 41.36 (1)	02/16/2007		A		22,500		(1)	02/16/2017	Common Stock	22,500	$ 41.36 (1)	22,500	D
Non-Qualified Stock Option (right to buy)	$ 6.15							(2)	02/28/2007	Common Stock	50,625		50,625	D
Non-Qualified Stock Option (right to buy)	$ 6.37							(2)	02/22/2009	Common Stock	25,312		25,312	D
Non-Qualified Stock Option (right to buy)	$ 8.74							(2)	02/27/2008	Common Stock	16,875		16,875	D
Non-Qualified Stock Option (right to buy)	$ 9.09							(3)	02/23/2010	Common Stock	25,312		25,312	D
Non-Qualified Stock Option (right to buy)	$ 11.71							(3)	02/23/2011	Common Stock	16,875		16,875	D
Non-Qualified Stock Option (right to buy)	$ 17.34							(4)	02/21/2013	Common Stock	22,500		22,500	D
Non-Qualified Stock Option (right to buy)	$ 18.39							(4)	02/22/2012	Common Stock	16,875		16,875	D
Non-Qualified Stock Option (right to buy)	$ 27.91							(5)	02/20/2014	Common Stock	22,500		22,500	D
Non-Qualified Stock Option (right to buy)	$ 38.13 (5)							(5)	02/18/2015	Common Stock	22,500		22,500	D
Non-Qualified Stock Option (right to buy)	$ 40.68 (5)							(5)	02/17/2016	Common Stock	22,500		22,500	D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
LOWE DAVID M 88 11TH AVENUE NE MINNEAPOLIS, MN 55413			Vice President

Signatures

By: Kristen C. Nelson, attorney-in-fact For: David M. Lowe		02/20/2007
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	Employee stock option granted pursuant to the Amended and Restated Graco Inc. Stock Incentive Plan (2006) 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.
(2)	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.
(3)	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 one installment, three years after the date of the grant.
(4)	Employee 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 one installment, three years after the date of the grant.
(5)	Employee 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.
Remarks: When a stock split occurred, the share tracking software used by the Company applied the stock split protocol to the entire share balance owned by the reporting insider and generated a single fractional share.  However, the insider held his shares in several accounts.  When the stock split protocol was applied to the separate share balance in each of the accounts, multiple fractional shares (and pay in lieu thereof) were generated.  Because of this different application of the stock split protocol, the number of shares report by the Company exceeded the number of shares actually owned by the insider.  This transaction corrects this over-reporting by reducing the number of shares owned by the insider to the correct number.

Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB number.