Filed
Pursuant to Rule 433
Registration
No. 333−136666
October
23, 2006
STRUCTURED
EQUITY PRODUCTS
|
New
Issue
|
Indicative
Terms
|
|
|
|
The
Bear Stearns Companies Inc.
INVESTMENT
HIGHLIGHTS
1-year
term to maturity
| Reverse |
·
|
Note
offering linked to the common stock of Apple Computer, Inc. (the
“Reference Asset”).
|
|
Convertible
Note
|
·
|
The
Notes pay a fixed rate coupon of [14.00%] per annum, payable
semi-annually
in arrears. Each interest payment will equal one-half of the
Coupon Rate
times the principal amount of the Notes.
|
| Securities |
·
|
The
Notes are a direct obligation of The Bear Stearns Companies Inc.
(Rated A1
by Moody’s / A by S&P).
|
|
·
|
Issue
price for the Note offering: 100% of principal amount ($1,000);
provided,
however, investors who purchase an aggregate principal amount
of at least
$1,000,000 of this Note offering will be entitled to purchase
the Note for
99.00% of the principal amount.
|
|
|
·
|
The
Notes are not principal protected if: (i) the Trading Level of
the
Reference Asset ever equals or falls below the Contingent Protection
Level
at any time from the Pricing Date up to and including the Calculation
Date; and
(ii) the Final Level of the Reference Asset is less than the
Initial Level
of the Reference Asset.
|
|
|
·
|
The
Notes do not participate in the upside of the Reference Asset.
Even if the
Final Level of the Reference Asset exceeds the Initial Level
of the
Reference Asset, your return will not exceed the principal amount
invested
plus the coupon payments.
|
|
Reference
Asset
|
Symbol
|
Term
to Maturity
|
Coupon
Rate,
per Annum
|
Contingent
Protection
Percentage
|
Initial
Public
Offering
Price [1]
|
|
Apple
Computer, Inc., common stock, traded on the
NASDAQ
Stock Market
|
AAPL
|
1-year
|
[14.00]%
|
[80]%
|
100%
|
|
BEAR,
STEARNS & CO. INC.
STRUCTURED
PRODUCTS GROUP
(212)
272-6928
|
The
issuer has filed a registration statement (including a prospectus)
with
the SEC for the offering to which this free writing prospectus relates.
Before you invest, you should read the prospectus in that registration
statement and other documents the issuer has filed with the SEC for
more
complete information about the issuer and this offering. You may
get these
documents for free by visiting EDGAR on the SEC Web site at
www.sec.gov.
Alternatively, the issuer, any underwriter or any dealer participating
in
the offerings will arrange to send you the prospectus if you request
it by
calling toll free
1-866-803-9204.
|
______________________
1
Investors who purchase an aggregate principal amount of at least $1,000,000
of
the Note offering will be entitled to purchase the Note for 99.00% of the
principal amount.
|
|
STRUCTURED
PRODUCTS
GROUP
|
|
GENERAL
TERMS FOR THE NOTE
OFFERING
|
This
free
writing prospectus relates to the offering of Notes linked to the common stock
of Apple Computer, Inc. We
reserve
the right to withdraw, cancel or modify the offering and to reject orders in
whole or in part. Although the Note offering relates to the Reference Asset,
you
should not construe that fact as a recommendation as to the merits of acquiring
an investment linked to such Reference Asset or as to the suitability of an
investment in the Note. Defined
terms not defined herein shall have the same meaning as in the Prospectus
Supplement discussed below.
|
ISSUER:
|
The
Bear Stearns Companies Inc.
|
|
ISSUER’S
RATING:
|
A1
/
A (Moody’s / S&P)
|
|
PRINCIPAL
AMOUNT OF OFFERING:
|
$[●]
|
|
DENOMINATIONS:
|
$1,000
per Note and $1,000 multiples thereafter.
|
|
REFERENCE
ASSET:
|
The
common stock of Apple Computer, Inc., traded on the NASDAQ Stock
Market
under the symbol “AAPL.”
|
|
SELLING
PERIOD ENDS:
|
October
[●], 2006
|
|
PRICING
DATE:
|
October
[●], 2006
|
|
SETTLEMENT
DATE:
|
October
[●], 2006
|
|
CALCULATION
DATE:
|
October
[●], 2007
|
|
MATURITY
DATE:
|
October
[●], 2007
|
|
COUPON
RATE (PER ANNUM):
|
[14.00]%
per annum, payable semi-annually.
|
|
CONTINGENT
PROTECTION PERCENTAGE: [80%]
|
|
|
CONTINGENT
PROTECTION LEVEL:
|
$[●](Contingent
Protection Percentage x Initial Level)
|
|
AGENT’S
DISCOUNT:
|
[●]%,
to be disclosed in the final pricing supplement.
|
|
CASH
SETTLEMENT VALUE:
|
We
will pay you 100% of the principal amount of your Notes, in cash,
at
maturity if either
of
the following is true: (i) the Trading Level of the Reference Asset
never
equals or falls below the Contingent Protection Level at any time
from the
Pricing Date up to and including the Calculation Date; or
(ii) the Final Level of the Reference Asset is equal to or greater
than
the Initial Level of the Reference Asset.
|
|
However,
if both
of
the following are true, the amount of principal you receive at
maturity
will be reduced by the percentage decrease in the Reference Asset:
(i) the
Trading Level of the Reference Asset ever equals or falls below
the
Contingent Protection Level at any time from the Pricing Date up
to and
including the Calculation Date; and
(ii) the Final Level of the Reference Asset is less than the Initial
Level
of the Reference Asset. In that event, we, at our option, will
either: (i)
physically deliver to you an amount of the Reference Asset equal
to the
Exchange Ratio plus the Fractional Share Cash Amount (which means
that you
will receive shares with a market value that is less than the full
principal amount of your Notes); or (ii) pay you a cash amount
equal to
the principal amount you invested reduced by the percentage decrease
in
the Reference Asset. It is our intent to physically deliver the
Reference
Asset when applicable, but we reserve the right to settle the Notes
in
cash.
|
|
|
INTEREST
PAYMENT DATE:
|
April
[●], 2007 and October [●], 2007.
|
|
INITIAL
LEVEL:
|
$[●]
|
|
FINAL
LEVEL:
|
The
Closing Price of the Reference Asset on the Calculation
Date.
|
|
EXCHANGE
RATIO:
|
[●],
i.e.,
$1,000 divided by the Initial Level (rounded down to the nearest
whole
number, with fractional shares to be paid in cash).
|
|
FRACTIONAL
SHARE CASH AMOUNT:
|
An
amount in cash per Note equal to the Final Level multiplied by
the
difference between (x) $1,000 divided by the Initial Level (rounded
to the
nearest three decimal places), and (y) the Exchange
Ratio.
|
|
CUSIP:
|
[073902LF3]
|
|
LISTING:
|
The
Notes will not be listed on any U.S. securities exchange or quotation
system.
|
BEAR,
STEARNS & CO. INC.
-2-
|
|
STRUCTURED
PRODUCTS
GROUP
|
|
ADDITIONAL
TERMS SPECIFIC TO THE
NOTES
|
You
should read this document together with the prospectus, dated August 16, 2006
(the “Prospectus”), as supplemented by the prospectus supplement, dated August
16, 2006 (the “Prospectus Supplement”). You should carefully consider, among
other things, the matters set forth in “Risk Factors” and “Risk Factors -
Additional Risks Relating to Notes with an Equity Security or Equity Index
as
the Reference Asset” in the Prospectus Supplement, as the Notes involve risks
not associated with conventional debt securities. We urge you to consult your
investment, legal, tax, accounting and other advisers before you invest in
the
Notes. The Prospectus and Prospectus Supplement may be accessed on the SEC
Web
site at www.sec.gov as follows: http://www.sec.gov/Archives/edgar/data/777001/000104746906011011/a2172742z424b5.htm
|
SELECTED
RISK CONSIDERATIONS
|
The
following highlights some, but not all, of the risk considerations relevant
to
investing in the Notes. The
following must be read in conjunction with the sections “Risk Factors” and “Risk
Factors - Additional Risks Relating to Notes with an Equity Security or Equity
Index as the Reference Asset,” beginning on pages S-7 and S-14,
respectively, in the Prospectus Supplement.
|
·
|
Suitability
of Note for Investment — A
person should reach a decision to invest in the Notes after carefully
considering, with his or her advisors, the suitability of the
Notes in
light of his or her investment objectives and the information
set out in
the Prospectus Supplement. Neither the Issuer nor any dealer
participating
in the offering makes any recommendation as to the suitability
of the
Notes for investment.
|
|
·
|
Not
Principal Protected —The
Notes are not principal protected. If both
of
the following are true, the amount of principal you receive at
maturity
will be reduced by the percentage decrease in the Reference Asset:
(i) the
Trading Level of the Reference Asset ever equals or falls below
the
Contingent Protection Level at any time from the Pricing Date
up to and
including the Calculation Date; and
(ii) the Final Level of the Reference Asset is less than the
Initial Level
of the Reference Asset. In that event, we, at our option, will
either: (i)
physically deliver to you an amount of the Reference Asset equal
to the
Exchange Ratio plus the Fractional Share Cash Amount (which means
that you
will receive shares with a market value that is less than the
full
principal amount of your Notes); or (ii) pay you a cash amount
equal to
the principal amount you invested reduced by the percentage decrease
in
the Reference Asset.
|
|
·
|
Return
Limited to Coupon — Your
return is limited to the principal amount you invested plus the
coupon
payments. You will not participate in any appreciation in the
value of the
Reference Asset.
|
|
·
|
No
Secondary Market — Because
the Notes will not be listed on any securities exchange, a secondary
trading market is not expected to develop, and, if such a market
were to
develop, it may not be liquid. Bear, Stearns & Co. Inc. intends under
ordinary market conditions to indicate prices for the Notes on
request.
However, there can be no guarantee that bids for the outstanding
Notes
will be made in the future; nor can the prices of any such bids
be
predicted.
|
|
·
|
No
Interest, Dividend or Other Payments —
You will not receive any interest or dividend payments or other
distributions on the stock comprising the Reference Asset; nor
will such
payments be included in the calculation of the Cash Settlement
Value you
will receive at maturity.
|
|
·
|
Taxes —
We
intend to treat the Note as a put option written by you in respect
of the
Reference Asset and a deposit with us of cash in an amount equal
to the
issue price of the Note to secure your potential obligation under
the put
option, and we intend to treat the deposit as a short-term obligation
for
U.S. federal income tax purposes. Pursuant to the terms of the
Notes, you
agree to treat the Notes in accordance with this characterization
for all
U.S. federal income tax purposes. However, because there are
no
regulations, published rulings or judicial decisions addressing
the
characterization for U.S. federal income tax purposes of securities
with
terms that are substantially the same as those of the Notes,
other
characterizations and treatments are possible. See “Certain U.S. Federal
Income Tax Considerations” below.
|
|
·
|
The
Notes are Subject to Equity Market Risks—
The
Notes involve exposure to price movements in the equity securities
to
which they are linked. Equity securities price movements are
difficult to
predict, and equity securities may be subject to volatile increases
or
decreases in value.
|
|
·
|
The
Notes May be Affected by Certain Corporate Events and You Will
Have
Limited Antidilution Protection —
Following certain corporate events relating to the underlying
Reference
Asset (where the underlying company is not the surviving entity),
you will
receive at maturity, cash or a number of shares of the common
stock of a
successor corporation to the underlying company, based on the
Closing
Price of such successor’s common stock. The Calculation Agent for the
Notes will adjust the amount payable at maturity by adjusting
the Initial
Level of the Reference Asset, Contingent Protection Percentage,
Contingent
Protection Level and Exchange Ratio for certain events affecting
the
Reference Asset, such as stock splits and stock dividends and
certain
other corporate events involving an underlying company. However,
the
Calculation Agent is not required to make an adjustment for every
corporate event that can affect the Reference Asset. If an event
occurs
that is perceived by the market to dilute the Reference Asset
but that
does not require the Calculation Agent to adjust the amount of
the
Reference Asset payable at maturity, the market value of the
Notes and the
amount payable at maturity may be materially and adversely
affected.
|
BEAR,
STEARNS & CO. INC.
-3-
|
|
STRUCTURED
PRODUCTS
GROUP
|
|
INTEREST
AND PAYMENT AT MATURITY
|
Interest.
The
interest rate for the Notes is designated on the cover of this free-writing
prospectus. The interest paid will include interest accrued from the Original
Issue Date to, but excluding, the Maturity Date. Interest will be paid to the
person to whom principal is payable.
Payment
at Maturity.
We will
pay you 100% of the principal amount of your Notes, in cash, at maturity if
either
of the
following is true: (i) the Trading Level of the Reference Asset never equals
or
falls below the Contingent Protection Level at any time
from the
Pricing Date up to and including the Calculation Date;
or
(ii) the
Final Level of the Reference Asset is equal to or greater than the Initial
Level
of the Reference Asset.
However,
if both
of the
following are true, the amount of principal you receive at maturity will be
reduced by the percentage decrease in the Reference Asset: (i) the Trading
Level
of the Reference Asset ever equals or falls below the Contingent Protection
Level at any time from the Pricing Date up to and including the Calculation
Date; and
(ii) the
Final Level of the Reference Asset is less than the Initial Level of the
Reference Asset.
In
that
event, we, at our option, will either: (i) physically deliver to you an amount
of the Reference Asset equal to the Exchange Ratio plus the Fractional Share
Cash Amount (which means that you will receive shares with a market value that
is less than the full principal amount of your Notes); or (ii) pay you a cash
amount equal to the principal amount you invested reduced by the percentage
decrease in the Reference Asset. It is our intent to physically deliver the
Reference Asset when applicable, but we reserve the right to settle the Notes
in
cash.
We
will
(i) provide written notice to the Trustee and to the Depositary, on or
prior to the Business Day immediately prior to the Maturity Date of the amount
of cash or number of shares of the Reference Asset (and cash in respect of
coupon and cash in respect of any fractional shares of the Reference Asset),
as
applicable, to be delivered, and (ii) deliver such cash or shares of the
Reference Asset (and cash in respect of coupon and cash in respect of any
fractional shares of the Reference Asset), if applicable, to the Trustee for
delivery to you. The Calculation Agent shall determine the Exchange
Ratio.
|
REFERENCE
ASSET INFORMATION
|
We
urge
you to read the section “Sponsors or Issuers and Reference Asset” on
page S-25 in the Prospectus Supplement. Companies with securities
registered under the Exchange Act are required to file periodically certain
financial and other information specified by the SEC. Information provided
to or
filed with the SEC electronically can be accessed through a website maintained
by the SEC. The address of the SEC’s website is http://www.sec.gov. Information
provided to or filed with the SEC pursuant to the Exchange Act by the company
issuing a Reference Asset can be located by reference to the SEC file number
provided below.
The
summary information below regarding the company issuing the stock comprising
the
Reference Asset comes from the issuer’s SEC filings and has not been
independently verified by us. We do not make any representations as to the
accuracy or completeness of such information or of any filings made by the
issuer of the Reference Asset with the SEC. Investors
are urged to refer to the SEC filings made by the issuer and to other publicly
available information (such as the issuer’s annual report) to obtain an
understanding of the issuer’s business and financial prospects. The summary
information contained below is not designed to be, and should not be interpreted
as, an effort to present information regarding the financial prospects of the
issuer or any trends, events or other factors that may have a positive or
negative influence on those prospects or as an endorsement of the
issuer.
Apple
Computer, Inc. (“AAPL”)
Apple
Computer, Inc.’s (“Apple”) common stock, no par value, trades on the NASDAQ
Stock Market under the symbol “AAPL.” Apple designs, manufactures, and markets
personal computers and related software, services, peripherals, and networking
solutions. It also designs, develops, and markets a line of portable digital
music players along with related accessories and services including the online
distribution of third-party music, audio books, music videos, short films,
and
television shows. Apple’s
SEC file number is 000-10030.
BEAR,
STEARNS & CO. INC.
-4-
|
|
STRUCTURED
PRODUCTS
GROUP
|
|
ILLUSTRATIVE
EXAMPLES & HISTORICAL
TABLES
|
The
following are illustrative examples demonstrating the hypothetical amounts
payable at maturity based on the assumptions outlined below. These examples
do
not purport to be representative of every possible scenario concerning increases
or decreases in the Reference Asset or of the movements that are likely to
occur
with respect to the Reference Asset. You should not construe these examples
or
the data included in the tables set forth below as an indication of the expected
performance of the Notes. Some amounts are rounded and actual returns may be
different.
Assumptions:
|
·
|
Investor
purchases $1,000 principal amount of Notes on the Pricing Date at
the
initial offering price of 100% and holds the Notes to maturity. No
Market
Disruption Events or Events of Default occur during the term of the
Notes.
|
|
·
|
Initial
Level: $80.00
|
|
·
|
Contingent
Protection Percentage: [80]%
|
|
·
|
Contingent
Protection Level: $64.00 ($80.00 x
80%)
|
|
·
|
Exchange
Ratio: 12 ($1,000/$80.00)
|
|
·
|
Coupon:
[14.00]% per annum, payable
semi-annually.
|
|
·
|
The
reinvestment rate on any interest payments made during the term of
the
Notes is assumed to be 0%. The one-year total return on a direct
investment in the Reference Asset is calculated below prior to the
deduction of any brokerage fees or charges. Both a positive reinvestment
rate, or the incurrence of any brokerage fees or charges, would increase
the total return on the Notes relative to the total return of the
Reference Asset.
|
|
·
|
Maturity:
one year.
|
|
·
|
Dividend
and dividend yield on the Reference Asset: No dividend distributed.
|
Example
1
- On the
Calculation Date, the Final Level of $96.00 is greater than the Initial Level,
resulting in a principal payment at maturity of $1,000.00, regardless of whether
the Contingent Protection Level was ever reached or breached, plus two interest
payments of $70.00, for payments totaling $1,140.00. If you had invested
directly in the Reference Asset for the same one-year period, you would have
received total cash payments of $1,200.00 (number of shares of the Reference
Asset multiplied by the Final Level), assuming liquidation of shares at the
Final Level. You would have earned a 14.00% return with an investment in the
Notes and a 20.00% return with a direct investment in the Reference
Asset.
Example
2
- On the
Calculation Date, the Final Level of $72.00 is below the Initial Level, but
the
Trading Level never equaled or fell below the Contingent Protection Level.
As
discussed in example 1 above, an investor would receive total payment of
$1,140.00, earning a 14.00% return over the term of the Notes. A direct
investment in the Reference Asset during that same one-year time period would
have generated a return of $900.00 (number of shares of the Reference Asset
multiplied by the Final Level), assuming liquidation of shares at the Final
Level. You would have earned a 14.00% return with an investment in the Notes
and
incurred a loss of 10.00% with a direct investment in the Reference
Asset.
Example
3
- On the
Calculation Date, the Final Level of $56.00 is below the Initial Level and
also
is below the Contingent Protection Level. At our election, an investor would
receive a number of shares equal to the Exchange Ratio, plus the Fractional
Share Cash Amount plus two interest payments of $70.00, which is 12 shares
(worth $56.00 each) plus $28.00 (the Fractional Share Cash Amount) plus $140.00.
The cash equivalent equals $840.00. If you had invested directly in the
Reference Asset for the same one-year period, you would have received total
cash
payments of $700.00 (number of shares of the Reference Asset multiplied by
the
Final Level), assuming liquidation of shares at the Final Level. An investment
in the Notes would have resulted in a loss of 16.00%, while a direct investment
in the Reference Asset would have resulted in a loss of 30.00%.
BEAR,
STEARNS & CO. INC.
-5-
|
|
STRUCTURED
PRODUCTS
GROUP
|
Table
of Hypothetical Cash Settlement Values
Assumes
the Trading Level Never
Equals
or Falls Below the Contingent Protection Level Before the Calculation
Date
|
Investment
in the Notes
|
Direct
Investment in the Reference Asset
|
|||||||
|
Initial
Level
|
Hypothetical
Final
Level
|
Cash
Settlement
Value
|
Total
Coupon
Payments
(in %
Terms)
|
1-year
Total
Return
|
Percentage
Change in
Value
of Reference
Asset
|
1-year
Dividend
Yield
|
1-year
Total Return
|
|
|
80.00
|
100.00
|
$1,000.00
|
14.00%
|
14.00%
|
25.00%
|
0.00%
|
25.00%
|
|
|
80.00
|
96.00
|
$1,000.00
|
14.00%
|
14.00%
|
20.00%
|
0.00%
|
20.00%
|
|
|
80.00
|
92.00
|
$1,000.00
|
14.00%
|
14.00%
|
15.00%
|
0.00%
|
15.00%
|
|
|
80.00
|
88.00
|
$1,000.00
|
14.00%
|
14.00%
|
10.00%
|
0.00%
|
10.00%
|
|
|
80.00
|
84.00
|
$1,000.00
|
14.00%
|
14.00%
|
5.00%
|
0.00%
|
5.00%
|
|
|
80.00
|
80.00
|
$1,000.00
|
14.00%
|
14.00%
|
0.00%
|
0.00%
|
0.00%
|
|
|
80.00
|
76.00
|
$1,000.00
|
14.00%
|
14.00%
|
-5.00%
|
0.00%
|
-5.00%
|
|
|
80.00
|
72.00
|
$1,000.00
|
14.00%
|
14.00%
|
-10.00%
|
0.00%
|
-10.00%
|
|
Table
of Hypothetical Cash Settlement Values
Assumes
the Trading Level Does
Equal or
Fall Below the Contingent Protection Level Before the Calculation
Date
|
Investment
in the Notes
|
Direct
Investment in the Reference Asset
|
|||||||
|
Initial
Level
|
Hypothetical
Final
Level
|
Cash
Settlement
Value
|
Total
Coupon
Payments
(in %
Terms)
|
1-year
Total Return
|
Percentage
Change in
Value
of Reference
Asset
|
1-year
Dividend
Yield
|
1-year
Total Return
|
|
|
80.00
|
100.00
|
$1,000.00
|
14.00%
|
14.00%
|
25.00%
|
0.00%
|
25.00%
|
|
|
80.00
|
96.00
|
$1,000.00
|
14.00%
|
14.00%
|
20.00%
|
0.00%
|
20.00%
|
|
|
80.00
|
92.00
|
$1,000.00
|
14.00%
|
14.00%
|
15.00%
|
0.00%
|
15.00%
|
|
|
80.00
|
88.00
|
$1,000.00
|
14.00%
|
14.00%
|
10.00%
|
0.00%
|
10.00%
|
|
|
80.00
|
84.00
|
$1,000.00
|
14.00%
|
14.00%
|
5.00%
|
0.00%
|
5.00%
|
|
|
80.00
|
80.00
|
$1,000.00
|
14.00%
|
14.00%
|
0.00%
|
0.00%
|
0.00%
|
|
|
80.00
|
76.00
|
$950.00
|
14.00%
|
9.00%
|
-5.00%
|
0.00%
|
-5.00%
|
|
|
80.00
|
72.00
|
$900.00
|
14.00%
|
4.00%
|
-10.00%
|
0.00%
|
-10.00%
|
|
|
80.00
|
68.00
|
$850.00
|
14.00%
|
-1.00%
|
-15.00%
|
0.00%
|
-15.00%
|
|
|
80.00
|
64.00
|
$800.00
|
14.00%
|
-6.00%
|
-20.00%
|
0.00%
|
-20.00%
|
|
|
80.00
|
60.00
|
$750.00
|
14.00%
|
-11.00%
|
-25.00%
|
0.00%
|
-25.00%
|
|
|
80.00
|
56.00
|
$700.00
|
14.00%
|
-16.00%
|
-30.00%
|
0.00%
|
-30.00%
|
|
|
80.00
|
52.00
|
$650.00
|
14.00%
|
-21.00%
|
-35.00%
|
0.00%
|
-35.00%
|
|
|
80.00
|
48.00
|
$600.00
|
14.00%
|
-26.00%
|
-40.00%
|
0.00%
|
-40.00%
|
|
|
80.00
|
44.00
|
$550.00
|
14.00%
|
-31.00%
|
-45.00%
|
0.00%
|
-45.00%
|
|
|
80.00
|
40.00
|
$500.00
|
14.00%
|
-36.00%
|
-50.00%
|
0.00%
|
-50.00%
|
|
The
following table sets forth, on a per share basis, the high and low Trading
Levels, as well as end-of-quarter closing prices, for the Reference Asset during
the periods indicated below. We obtained the information in the table below
from
Bloomberg Financial Markets, without independent verification.
|
Quarter
Ending
|
Quarterly
High
|
Quarterly
Low
|
Quarterly
Close
|
Quarter
Ending
|
Quarterly
High
|
Quarterly
Low
|
Quarterly
Close
|
|
|
March
28, 2002
|
12.99
|
10.13
|
11.84
|
September
30, 2004
|
19.64
|
14.37
|
19.38
|
|
|
June
28, 2002
|
13.09
|
7.99
|
8.86
|
December
31, 2004
|
34.79
|
18.83
|
32.20
|
|
|
September
30, 2002
|
9.40
|
6.90
|
7.25
|
March
31, 2005
|
45.44
|
31.30
|
41.67
|
|
|
December
31, 2002
|
8.69
|
6.68
|
7.165
|
June
30, 2005
|
44.45
|
33.11
|
36.81
|
|
|
March
31, 2003
|
7.69
|
6.78
|
7.07
|
September
30, 2005
|
54.56
|
36.29
|
53.61
|
|
|
June
30, 2003
|
9.85
|
6.36
|
9.53
|
December
30, 2005
|
75.46
|
47.87
|
71.89
|
|
|
September
30, 2003
|
11.66
|
9.26
|
10.36
|
March
31, 2006
|
86.40
|
57.67
|
62.72
|
|
|
December
31, 2003
|
12.51
|
9.63
|
10.69
|
June
30, 2006
|
73.80
|
55.41
|
57.27
|
|
|
March
31, 2004
|
14.07
|
10.59
|
13.52
|
September
29, 2006
|
77.78
|
50.16
|
76.98
|
|
|
June
30, 2004
|
17.10
|
12.75
|
16.27
|
October
1, 2006 to
October
20, 2006
|
79.99
|
72.60
|
79.95
|
BEAR,
STEARNS & CO. INC.
-6-
|
|
STRUCTURED
PRODUCTS
GROUP
|
|
CERTAIN
U.S. FEDERAL INCOME TAX
CONSIDERATIONS
|
This
summary supplements the section entitled “Certain U.S. Federal Income Tax
Considerations” in the prospectus supplement and supersedes it to the extent
inconsistent therewith but is subject to the limitations and qualifications
set
forth therein. In the opinion of Cadwalader, Wickersham & Taft LLP, special
U.S. tax counsel to us, the following discussion, when read together with the
section entitled, “Certain U.S. Federal Income Tax Considerations” in the
prospectus supplement, summarizes certain of the material U.S. federal income
tax consequences of the purchase, beneficial ownership, and disposition of
the
Notes.
There
are
no statutory provisions, regulations, published rulings or judicial decisions
addressing the characterization for U.S. federal income tax purposes of
securities with terms that are substantially the same as those of the Notes.
Under one approach, the Note should be treated as a put option written by you
(the “Put Option”) that permits us to (1) sell the Reference Assets to you at
maturity for an amount equal to the principal amount of the Note, or (2) “cash
settle” the Put Option (i.e., require you to pay to us at maturity the
difference between the principal amount of the Note and the value of the
Reference Assets otherwise deliverable under the Put Option), and a deposit
with
us of cash (the “Deposit”) in an amount equal to the “issue price” (as described
in the prospectus supplement) of your Notes to secure your potential obligation
under the Put Option. We intend to treat the Notes consistent with this approach
and pursuant to the terms of the Notes, you agree to treat the Notes under
this
approach for all U.S. federal income tax purposes. The description below of
the
Reference Asset includes a chart that indicates the portion of each interest
payment that represents the yield on the Deposit and the Put Premium, assuming
that the issue price of the Notes is par. You may contact Bill Bamber at (212)
272-6635 for the issue price of the Notes.
We
also
intend to treat the Deposits as “short-term obligations” for U.S. federal income
tax purposes. See “Certain U.S. Federal Income Tax Considerations —Tax Treatment
of the Deposit on Notes with a Term of One Year or Less” in the prospectus
supplement for certain U.S. federal income tax considerations applicable to
short-term obligations.
Because
there are no statutory provisions, regulations, published rulings or judicial
decisions addressing the characterization for U.S. federal income tax purposes
of securities with terms that are substantially the same as those of the Notes,
other characterizations and treatments are possible and the timing and character
of income in respect of the Notes might differ from the treatment described
above. For example, the Notes could be treated as short-term obligations rather
than a Put Option and a Deposit.
PROSPECTIVE
PURCHASERS OF NOTES SHOULD CONSULT THEIR TAX ADVISORS AS TO THE FEDERAL, STATE,
LOCAL, AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF NOTES.
|
Reference
Asset
|
Term
to Maturity
|
Coupon
Rate, per
Annum
|
Yield
on the Deposit,
per
Annum
|
Put
Premium, per
Annum
|
|
Apple
Computer, Inc.
|
1-year
|
[14.00]%
|
[●]%
|
[●]%
|
BEAR,
STEARNS & CO. INC.
-7-