EXHIBIT 11 GRACO INC. AND SUBSIDIARIES COMPUTATION OF NET EARNINGS PER COMMON SHARE (Unaudited) Thirteen Weeks Ended Twenty-Six Weeks Ended ----------------------------- ----------------------------- June 26, 1998 June 27, 1997 June 26, 1998 June 27, 1997 ------------- ------------- ------------- ------------- (In thousands except per share amounts) Net earnings applicable to common shareholders for basic and diluted earnings per share $ 12,765 $ 10,418 $ 21,712 $ 16,599 ------------- ------------- ------------- ------------- Weighted average shares outstanding for basic earnings per share 25,817 25,701 25,644 25,680 Dilutive effect of stock options computed using the treasury stock method and the average market price 937 507 853 563 Weighted average shares outstanding for diluted earnings per share 26,755 26,208 26,497 26,243 Basic earnings per share $ .49 $ .41 $ .84 $ .65 ------------- ------------- ------------- ------------- Diluted earnings per share $ .48 $ .40 $ .82 $ .64 ------------- ------------- ------------- -------------