"When we went on the stock market, it didn't mean anything to some of us country boys. The chairmanalways said I came across the Red River barefooted and hunting a job, which is almost the way it was. Ididn't even know what stock was. But I bought some, thank God, because Phil Green said, Hey, youbuy some of that stock, boy.' I bought it and I kept it because I believed in Mr. Walton, and I believed inmy store. It's real simple. I believed him when he said we could do all these things with the company.

And we did."al miles,first assistant manager, store number 6, Fayetteville, Arkansas, now a retired Wal-MartexecutiveFrom the time I took out my first bank loanthe $1,800 to buy that ice cream machine for the BenFranklin down in NewportI was never really comfortable with debt. But I recognized it as a necessity ofdoing business, and I had gotten pretty good at accumulating it. For a while, I would just go down to thelocal bank and borrow whatever I could to build a store or buy something we needed to grow thebusiness. That practice had gotten me in debt to practically every bank in Arkansas and southernMissouri. They believed in what we had done up to that point, and they believed we would pay them off.

I always did pay them off on time, but sometimes I would borrow from one to pay the other. I hadbought a bank in Bentonville, for about $300,000, just a little old bank with only about $3.5 million indeposits. But it really helped me learn a lot about financing things. I made some new acquaintances andbegan to study more about bankers and how they liked to do business.

I struck;, up a relationship with a guy named Jimmy Jones at Republic Bank down in Dallas, and heloaned us a million dollars. And, of course, I had tried all along to attract some equity investment fromour store managers and a few relatives. So by 1970, we had seventy-eight partners invested in ourcompany, which really wasn't one company, but thirty-two different stores owned by a combination ofdifferent folks. My family owned the lion's share of every store, but Helen and I were also in debt up toour eyeballsseveral million dollars' worth. I never dwell on the negative, but that debt weighed heavy onme. If something happened and everybody decided to call their notes, I kept thinking, we would be sunk.

Maybe that's what being raised in the Depression does to you, but I wanted out of that debt in the worstway.

I had talked a little bit about the idea of taking the company public, seeking advice from people like AbeMarks and some of those other discounters in that association we all belonged to, but I really hadn'tpursued anything seriously. One day in 1969 we got a call from Mike Smith, who said he wanted tocome up and talk to us. Mike worked for Witt and Jack Stephens in Little Rock. Today, Stephens Inc. isthe largest investment banking firm west of the Mississippi, and one of the most respected in the country.

Back then it was mostly a bond house. Jack, by the way, was the fellow who had come in andsuccessfully developed that Little Rock shopping center after I failed. So Mike Smith drove up toBentonville. We were still in those old three rooms of offices over the lawyer's office and the barbershopon the square. I remember Mike climbing those stairs. He is a bit of a renegade himselfhe has a lot oforiginal ideasand during our conversation that day, he planted the seed that maybe we really were doingwell enough to go public, that is, to issue stock in the company and sell it to the public.

MIKE SMITH, STEPHENS INC.:

"I went up there to see them in the fall of 1969, and it was really the height of ambition. We had onlydone one public offering, and I had done it, so I thought I was an expert. Sam was eager to talk becausehe had borrowed all the money he possibly could. I stopped at every Wal-Mart between Little Rock andBentonville so I would know something about his stores. Of course the first thing he did was throw me inthat plane of his and fly us all over Oklahoma and Missouri looking at stores."Not long after that, Bud and I went quail hunting up on the Robson ranch in Oklahoma, and the huntingwas really good. We spent most of that day talking about our options. We wanted to expand, and werealized we weren't generating enough profits both to expand and to pay off our debts. In fact, our cashshortage had forced us to give up five land sites where we had already planned to build new stores, sowe knew we had to do something. Driving back that night, we agreed to seriously explore thepossibilities of going public. It was a huge step for us, and we were concerned about losing control of thecompany. My son Rob had graduated from Columbia University law school the year before and hadgone to work at the biggest law firm in Tulsa. We, the Walton family were his first client. As our lawyer,he also kept track of the various Wal-Mart store partnership agreements, so I asked him to start lookingat all our options.

We still weren't sure we could take the company public. Meanwhile, money was getting tight, and someof our creditors were pressuring us. I flew to Dallas and tried to borrow some more from Republic Bank,whose officers were getting nervous about what they'd already loaned us. They made it clear we had allof their money we were likely to see, and that ended our relationship. By then, Jimmy Jones had movedto a bank in New Orleans, First Commerce, so I flew down there from Dallas to see if he could help us.

Jimmy came up with a $1.5 million loan, which helped us out in the short term, but it really wasn't theanswer to our long-term problem.

For various reasons, including taxes, Rob recommended restructuring our debt, consolidating it into onebig loan for the company. Ron Mayer and I had heard that the Prudential was making loans to a lot ofsmall retail chains, so we made an appointment with one of their loan officers and flew to New York. Bynow we really needed the money, pure and simple. I went to Prudential. I had my predictions all spelledout on my yellow legal pad, and I was sure they were going to loan us the money. I went through myfive-year planmy sales, profits, number of storesand talked about our strategy of going to the smalltowns where there was no competition and told the loan officer how much business we thought there wasout there waiting to be plucked. He didn't buy it at all, told us he didn't think a company like thePrudential could afford to gamble with us. I saved those projections for a long time, and they were allexceeded by 15 to 20 percent in the years to come.

Somehow we had a contact at another insurance company, Mass Mutual, so we went to see them. Theyagreed to lend us a million dollars, and, in turn, we agreed to give them our right arm and our left leg. Wedidn't just pay interest, we had to give them all sorts of stock options in case we did go public. By nowthey had us over a barrel. I had no choice: we had to have the money. When we went public they mademillions and millions on that deal.

By then, I was tired of owing money to people I knew, and I was even more tired of begging moneyfrom strangers. I made up my mind for sure that we were going to take Wal-Mart to the stock market. Ilet Mike Smith and Jack Stephens know we wanted to go ahead with the idea, but I also let them knowthey were going to have to compete for our business, just like I've always made everybody else competefor business with us. Also, I let them know I didn't feel comfortable going with a Little Rock firm; Ithought we needed a Wall Street underwriter. Maybe that was right, and maybe it wasn't. I know Mikeand Jack didn't feel too good about it. But I went running off to New York to see what I could find out.

MIKE SMITH:

"Obviously, we wanted to handle the whole offering, but Sam was always one to shop around. Here'swhat happened the way I remember it: Sam was up in New York on a buying trip, and he decided to godown to Wall Street and hear what some of those guys had to say, just cold callingright off the street.

He knew that White, Weld had taken public a retail chain called Pamida up in Omaha, so he went to visitthem. He introduced himself to the receptionist as Sam Walton of Wal-Mart storeslike he alwaysdoesand said, 'I want to talk to somebody about taking my company public' She said, 'Oh really, whereare you from' And when he told her Bentonville, Arkansas, she said, 'Well, we have a Mr. Remmelhere, and he's from Arkansas. Perhaps he could help you.' And she introduced him to Buck Remmel,who was from Little Rock."I don't really remember how I met Buck, but Mike might have it right. I remember introducing myself tohim and saying something like, "What are the chances that you folks would be interested in backing us onthis offering" Well, he said he would look at it, and, sure enough, they decided they were interested. Istill think that's one reason the offer was so successful, because at the time White, Weld was one of theleading institutional investment banking firms. Not everyone around here agrees with me, but I'm stickingto my opinion.

MIKE SMITH:

"Sam decidedcorrectly at the timethat White, Weld knew more about public offerings than we did, sohe let them have the business. But he told them, 'I hope you'll include the folks at Stephens, becausethey're good friends, and they're good people.' White, Weld asked us if we wanted to take a third of thedeal to their two-thirds. I talked it over with Jack, and he asked me what I thought of the company. Isaid I thought we ought to do it. And we did. Later on, in other offerings, we got a fifty-fifty piece of thedeal along with White, Weld."So Rob started to work on the plan, which was to consolidate all these partnerships into one companyand then sell about 20 percent of it to the public. At the time, our family owned probably 75 percent ofthe company, Bud owned 15 percent or so, some other relatives owned a percentage, Charlie Baumowned some, Willard Walker owned some, Charlie Cate owned some, Claude Harris owned some. Allthose early managers would borrow money from our bank to buy stock in the stores. Willard was themost skillful at getting money. He would cultivate the guys who ran the banks and they'd let him havewhat he wanted. Consequently, he realized fabulous returns on it. He had more ownership than any of themanagers.

Rob Walton:

"Dad had a spread sheet listing all the minority ownerships in the various companies, and the problemwas figuring out on what basis to value them all for the initial offering. As I recall, we basically proposedusing book value. We did not do any kind of sophisticated relative evaluation of the companies whichwould have taken into account earnings and growth projections and all that sort of stuff. But everybodysigned right up. And as far as I know, everybody's happy today with the way it worked out."We were all ready to go at the beginning of 1970, and Ron Mayer and I did a dog and pony show allover the placeLos Angeles, San Francisco, Chicagotelling everybody how great we were going to be.

But before we got the stock issued, the market fell out on us, and we had to postpone the offering. Wewere already having unusual managers' meetings in those days. We would all go fishing together, withoutwives, for four or five days at a time and talk about the business. I remember we were on one of thosetrips to Table Rock Dam, and I had to tell everybody that we were pulling back on the deal. But themarket recovered some, and on October 1, 1970, Wal-Mart became a public company, traded over thecounter. Our prospectus offered 300,000 shares at a price of $15, but it sold for $16.50. It was wellreceived, though not widely held; we only had about 800 shareholders, most of them either institutions orfolks we knew. Those who bought in that offering, or who owned some of those early partnerships andhad them converted in that offering, made an absolute killing.

As everybody today knows, Wal-Mart's stock performance, and the wealth it has created, is a story initself. Just fifteen years ago, the market value of the company was around $135 million; today it's over$50 billion. But here's a better way to look at it: let's say you bought 100 shares back in that originalpublic offering, for $1,650. Since then, we've had nine two-for-one stock splits, so you would have51,200 shares today. Within the last year, it's traded at right under $60 a share. So your investmentwould have been worth right around $3 million at that price. Obviously, our stock has made a lot of folkshappy over the years, and pure and simplethat's where the Walton family net worth has been created.

It's paid off beyond any of our dreams.

Here's a chart that shows the course over the years of that 100 shares:

SHARES/100% SPLITS /MKT. PRICE ON SPLIT DATE200 /May 1971 / $46/47 OTC400 / March 1972 / 46/47 OTC800 / August 1975 / 23 NYSE1,600 / November 1980 / 50 NYSE3,200 / June 1982 / 49  NYSE6,400 / June 1983 / 81  NYSE12,800 / September 1985 / 49  NYSE25,600 / June 1987 / 66  NYSE51,200 / June 1990 / 62 NYSEOne funny memory about that public offering. The day it went through Ron and I were leaving NewYork, and at the airport we met a guy from T. Rowe Price, a money management firm in Baltimore. Wewere so full of ourselves that somehow we made him believe we were going to do well. He went back toBaltimore and bought a pretty large share of that stock for his firm. They held it for ten or fifteen yearsand became the star of their industry. We would split and split, and they would sell and sell. I don't knowhow many millions they made on that stock.

HELEN WALTON:

"I realized before we went public that I didn't want it to happen. I guess if I were going to be mad withSam about anything, it would be over the fact that I always felt we could have gotten by without goingpublic. Nothing about the company ever affected me as deeply, and it was at that point that I decided Ihad to pursue my other interests outside the company. I just hated the idea that we were going to put allour financial interests out there for everybody to see. When you go public, they can ask all kinds ofquestions, and the family gets involved. We just became an open book, and I hated it."Helen's right, of course, about the downside of taking the company public. It did end up bringing us a lotof unwanted attention. But coming back from New York that day, I experienced one of the greatestfeelings of my life, knowing that all our debts were paid off. The Walton family only owned 61 percent ofWal-Mart after that day, but we were able to pay off all those bankers, and from that day on, we haven'tborrowed one dime personally to support Wal-Mart. The company has rolled along on its own andfinanced itself. Going public really turned the company loose to grow, and it took a huge load off me. Wehad another offering later on, trying to get broader ownership of the stock so we could be traded on theNew York Stock Exchange, but as a family we've only sold very limited amounts of Wal-Mart stockoutside of those offerings. I think that has really set us apart, and, as I said, that's the source of our networth. We just kept that stock. Most families somewhere along the line would have said, We don't wantthis rat race. We don't need to do what we are doing. Let somebody else have it. And then either Iwould have retired and backed out of the company and sold it to some Dutch investor or to Kmart orFederated, or somebody like that. But I enjoyed doing what I was doing so much and seeing the thinggrow and develop, and seeing our associates and partners do so well, that I never could quit.

It was always interesting to me that, except for those folks who worked in our company, our stock gotvery little support early on from the folks right here in northwest Arkansas. I always had the feeling thatthe people around here who remembered us when we had one store and three stores, or rememberedme when I was president of the Rotary or the Chamber of Commerce, somehow thought we were doingit with mirrors. They couldn't help but think we were just lucky, that we could not continue long term todo as well as we have done. I don't think it was anything peculiar to this part of the country or me oranything like that. I think it must be human nature that when somebody homegrown gets on to something,the folk............