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GRACO REPORTS IMPROVED EARNINGS

 GRACO REPORTS IMPROVED EARNINGS
 MINNEAPOLIS, July 16 /PRNewswire/ -- Graco Inc. (NYSE: GGG) today


announced operating results for its second quarter ended June 26, 1992. Sales for the quarter were $86,118,000 which approximated sales of $86,306,000 for the second quarter of 1991. Net earnings for the period were $4,810,000, or 63 cents per share, an increase in net earnings of 39 percent from $3,452,000, or 45 cents per share, in the 1991 period.
 Included in earnings before income taxes for the quarter is a $1,500,000 gain ($900,000 after taxes, or 12 cents per share) resulting from the sale during the quarter of the company's wholly owned subsidiary, Lockwood Technical Inc. (LTI) and a related Japanese joint- venture affiliate. Included in second quarter 1991 results were $2,000,000 in costs associated with the sale of the company's robotics business and a $1,000,000 gain on the sale of a facility.
 GRACO INC.
 (In thousands, except per share amounts)
 2nd Quarter (13 Weeks) Ended 6 Months (26 Weeks) Ended
 6/26/92 6/28/91 6/26/92 6/28/91
 Net Sales $86,118 $86,306 $159,003 $153,795
 Net Earnings 4,810 3,452 6,744 3,637
 Net Earnings Per Common Share $.63 $.45 $.89 $.48
 Company Chairman and Chief Executive Officer David A. Koch said, "The sale of LTI completes our efforts to refocus on those core businesses which Graco considers as its strengths. These businesses each have potential for substantial overseas expansion and new product growth. Excluding the company's recently divested robotics and LTI operations, consolidated sales of our continuing core businesses are up 9 percent for the quarter and 12 percent for the first six months of 1992 compared with the same periods in 1991. We are encouraged by these volume gains and the improved year-to-date performance."
 Sales in the Americas for the quarter decreased 3 percent to $49,102,000 with large increases in sales of contractor equipment being offset by declines in the sales of paint circulating and sealant and adhesive equipment to automotive manufacturers in the U.S. Sales in Europe increased 13 percent to $20,734,000, principally due to shipments of paint circulating systems to the automotive industry. Sales in the Pacific were $16,282,000, a decline of 7 percent from strong second quarter 1991 sales which included large robotic systems sales in Korea.
 Consolidated sales for the six months were $159,003,000, an increase of 3 percent over the same period last year. Sales to customers in the Americas increased by 3 percent to $96,127,000. Sales in Europe amounted to $35,283,000, a gain of 9 percent, while sales in the Pacific declined by 1 percent to $27,593,000. For the six months (26 weeks) ended June 26, 1992, net earnings were $6,744,000, or 89 cents per share, an increase in net earnings of 85 percent from $3,637,000, or 48 cents per share, in 1991.
 Consolidated backlog at June 26, 1992 was $29 million, down from $32 million at the beginning of the quarter and $36 million at the end of the 1991 second quarter.
 Chairman Koch commented, "We are encouraged by the strength of our contractor equipment bookings in the Americas, but remain cautious about the strength of the economic recovery in the U.S. and slowing business activity in certain of our overseas markets, particularly Japan."
 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.
 GRACO INC. AND SUBSIDIARIES
 Consolidated Statements of Earnings
 (In thousands, except per share amounts)
 Second Quarter Six Months
 (13 Weeks) Ended (26 Weeks) Ended
 6/26/92 6/28/91 6/26/92 6/28/91
 NET SALES $86,118 $86,306 $159,003 $153,795
 Cost of products sold 44,582 44,293 80,571 78,778
 GROSS PROFIT 41,536 42,013 78,432 75,017
 Product development 2,562 3,072 5,192 6,239
 Selling 21,300 20,591 41,567 40,525
 General and administrative(a) 10,108 11,941 19,998 20,464
 OPERATING PROFIT 7,566 6,409 11,675 7,789
 Interest expense 666 870 1,418 1,876
 Other income, net(b) (1,110) (163) (1,037) (99)
 EARNINGS BEFORE INCOME TAXES 8,010 5,702 11,294 6,012
 Income taxes 3,200 2,250 4,550 2,375
 NET EARNINGS $4,810 $3,452 $6,744 $3,637
 NET EARNINGS PER COMMON SHARE $.63 $.45 $.89 $.48
 WEIGHTED AVERAGE NUMBER
 OF COMMON SHARES 7,582 7,570 7,561 7,474
 Notes:
 (a) Included in 1991 general and administrative expenses is $2,000,000 in costs associated with the sale of the robotics business.
 (b) Included in 1992 other income is a gain of $1,500,000 resulting from the sale of the company's wholly owned subsidiary, Lockwood Technical Inc. and a related Japanese joint-venture affiliate. All figures are subject to audit and adjustment at the end of the fiscal year.
 -0- 7/16/92
 /CONTACT: Roger L. King, 612-623-6700, or David L. Schoeneck, 612-623-6679, both of Graco/
 (GGG) CO: Graco Inc. ST: Minnesota IN: SU: ERN


AL -- MN007 -- 9689 07/16/92 11:48 EDT
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