FOR IMMEDIATE RELEASE:                            FOR FURTHER INFORMATION:
Monday, May 18, 1998                              Mark W. Sheahan (612) 623-6656


            GRACO ANNOUNCES STOCK PURCHASE FROM FOUNDING FAMILY TRUST

Minneapolis, MN (May 18, 1998) -- Graco Inc. (NYSE: GGG) announced today that it
has entered into an agreement with its largest shareholder,  the Trust under the
Will of Clarissa L. Gray, to purchase from the Trust  5,800,000  shares of Graco
common  stock,  at a price of  approximately  $32.91  per  share,  or a total of
$190,887,100.  This price  represents a discount of 5% from the average  closing
price of Graco stock over the ten  trading  days ending  Friday,  May 15,  1998.
Graco intends to use current  available  cash and arrange bank financing to fund
the stock  purchase.  The stock  purchase is expected to be  completed  in July,
1998,  subject to the completion of financing  arrangements  and other customary
conditions.

After completion of the transaction,  the Trust will own 993,642 shares of Graco
stock, representing  approximately 5% of the remaining outstanding shares. David
A. Koch, the Chairman of Graco and a trustee of the Trust,  and his wife Barbara
G. Koch, own an additional 578,848 shares.

"This  repurchase  is a positive  development  for Graco's  shareholders,"  said
George Aristides,  Chief Executive Officer. "It is a good use of our strong cash
flow that we expect will increase net earnings per share and reduce our weighted
average cost of capital.  We are  confident  that the Company  will  continue to
invest  in new  products,  manufacturing  and  other  growth  and  profitability
opportunities."

In a separate  action,  the Board of Directors has declared a regular  quarterly
dividend of 11 cents per common share payable on August 5, 1998 to  shareholders
of record at the close of business on July 1, 1998.  The Company  currently  has
approximately 25.8 million shares outstanding.

Graco Inc.  supplies  technology  and expertise for the  management of fluids in
both  industrial  and  commercial  applications.  It designs,  manufactures  and
markets systems and equipment to move, measure, control dispense and apply fluid
materials.  A  recognized  leader in its  specialties,  Minneapolis-based  Graco
serves customers around the world in the manufacturing, processing, construction
and maintenance industries.

SAFE HARBOR CAUTIONARY STATEMENT

This  press  release  contains  various  forward-looking  statements  about  the
Company's future,  which involve risks and uncertainties that could cause actual
results to differ materially from those expected.  These risks and uncertainties
include,  but are not  limited  to,  general  economic  conditions  in the world
economies (including the United States), currency rate fluctuations, the ability
of the Company to execute its plans, and the factors identified in the Company's
SEC filings,  including  Exhibit 99 of the Company's report on form 10-K for the
fiscal year 1997.

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