|
Title
of Each Class of Securities Offered
|
|
Maximum
Aggregate Offering Price
|
|
Amount
of
Registration
Fee(1)
|
|
||
|
Medium-Term
Notes, Series B
|
|
$
|
3,250,000
|
|
$
|
99.78
|
|
______________
(1) Calculated
in accordance with Rule 457(r) of the Securities Act of 1933, as amended.
The filing fee of $99.78 is being paid in connection with the registration
of
these Reverse Convertible Notes.
Filed
pursuant to Rule 424(b)(5)
Registration
No. 333-136666
PRICING
SUPPLEMENT
(To
Prospectus Dated August 16, 2006 and
Prospectus
Supplement Dated August 16, 2006)
The
Bear Stearns Companies Inc.
$3,250,000
Reverse Convertible Notes
12.25%
Coupon Per Annum, Due June 19, 2008
Linked
to the Class B Common Stock of Freeport-McMoRan Copper & Gold
Inc.
Terms
used herein are defined in the prospectus supplement. The Notes offered
will
have the terms described in the prospectus supplement and the prospectus,
as
supplemented or modified by this pricing supplement. The
Notes do not guarantee any return of principal at
maturity.
|
·
|
Reference
Asset:
|
The
Class B common stock of Freeport-McMoRan Copper & Gold Inc., traded on
the New York Stock Exchange, Inc. (the “NYSE”) under the symbol
“FCX”.
|
|
|
·
|
Principal
amount:
|
$3,250,000.
|
|
|
·
|
Pricing
Date:
|
June
14, 2007.
|
|
|
·
|
Original
Issue Date:
|
June
19, 2007.
|
|
|
·
|
Calculation
Date:
|
June
16, 2008, subject to postponement in the event of certain
Market
Disruption Events.
|
|
|
·
|
Maturity
Date:
|
June
19, 2008.
|
|
|
·
|
Coupon
rate:
|
12.25%
per annum, payable as two semi-annual payments, in arrears.
Interest will
be computed using a 360-day year of twelve 30-day months,
unadjusted.
|
|
|
·
|
Interest
Payment Dates:
|
December
19, 2007 and the Maturity Date.
|
|
|
·
|
Initial
Level:
|
$83.65,
the Closing Price of the Reference Asset on the Pricing
Date.
|
|
|
·
|
Final
Level:
|
The
Closing Price of the Reference Asset on the Calculation
Date.
|
|
|
·
|
Contingent
Protection Percentage:
|
70.00%.
|
|
|
·
|
Contingent
Protection Level:
|
$58.56,
equal to the product of the Contingent Protection Percentage
and the
Initial Level.
|
|
|
·
|
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 Closing Price of the Reference
Asset never
equals or falls below the Contingent Protection Level on
any day 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
Closing Price of the Reference Asset ever equals or falls
below the
Contingent Protection Level on any day 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 Note in
cash.
|
|||
|
·
|
Exchange
Ratio:
|
11;
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:
|
073902MA3
|
|
|
·
|
Listing:
|
The
Notes will not be listed on any U.S. securities exchange
or quotation
system.
|
INVESTMENT
IN THE NOTES INVOLVES CERTAIN RISKS. YOU SHOULD REFER TO “RISK FACTORS”
BEGINNING ON PAGE PS-4 BELOW.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of the Notes or determined that this pricing
supplement,
or the accompanying prospectus supplement and prospectus, is truthful
or
complete. Any representation to the contrary is a criminal
offense.
|
Per
Note
|
Total
|
|
|
Initial
public offering price1
|
99.6923%
|
$3,240,000
|
|
Agent’s
discount2
|
0.8462%
|
$27,500
|
|
Proceeds,
before expenses, to us
|
98.8462%
|
$3,212,500
|
1
The initial public offering price is a weighted average price at
which the Notes
are sold to the public, representing (i) Notes sold to investors
for 100.00% of
the principal amount and (ii) Notes sold to investors purchasing
greater than
$1,000,000 worth of Notes at 99.00% of the principal amount.
2 This
discount represents a weighted average of the Agent’s discount as discussed in
the Supplemental Plan of Distribution herein. Any additional reissuances
will be
offered at a price to be determined at the time of pricing of each
offering of
Notes, which will be a function of the prevailing market conditions
at the time
of the relevant sale.
We
may
grant the agents a 30-day option from the date of the final pricing
supplement,
to purchase from us up to an additional $487,500 of Notes at the public
offering
price, less the agent’s discount, to cover any over-allotments. We expect that
the Notes will be ready for delivery in book-entry form only through
the
book-entry facilities of The Depository Trust Company in New York,
New York, on
or about the Original Issue Date, against payment in immediately available
funds. The distribution of the Notes will conform to the requirements
set forth
in Rule 2720 of the National Association of Securities Dealers, Inc.
Conduct
Rules.
___________________
Bear,
Stearns & Co. Inc.
June
14,
2007
PS-2
WHERE
YOU CAN FIND MORE INFORMATION
We
have
filed a registration statement (including a prospectus, as supplemented
by a
prospectus supplement) with the SEC, for the offering to which this
pricing
supplement relates. Before you invest, you should read the prospectus
and
prospectus supplement and any other documents relating to this offering
that we
have filed with the SEC for more complete information about us and
this
offering. You should carefully consider, among other things, the matters
set
forth in “Risk Factors” in the pricing 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. You may get these documents without cost by visiting EDGAR on
the SEC web
site at www.sec.gov. Alternatively, the Agent will arrange to send
you the
prospectus and the prospectus supplement if you so request by calling
toll-free
866-803-9204.
You
may
access these documents on the SEC web site at www.sec.gov as
follows:
|
·
|
Prospectus
Supplement, dated August 16, 2006:
|
|
·
|
Prospectus,
dated August 16, 2006:
|
RETURN
ON THE NOTES
The
Notes are not principal protected and you may lose some or all of your
principal.
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 Closing Price of the Reference Asset never
equals or
falls below the Contingent Protection Level on any day 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
Closing Price
of the Reference Asset ever equals or falls below the Contingent Protection
Level on any day 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 Note 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, as applicable,
to be
delivered, and (ii) deliver such cash or shares of the Reference Asset (and
cash in respect of coupon and any fractional shares of the Reference
Asset), if
applicable, to the Trustee for delivery to you. The Calculation Agent
shall
determine the Exchange Ratio.
Interest
The
interest rate for the Notes is designated on the cover of this pricing
supplement. Interest will be computed using a 360-day year of twelve
30-day
months, unadjusted. The interest paid will include interest accrued
from the
Original Issue Date to, but excluding, the relevant Interest Payment
Date or
Maturity Date. Interest will be paid to the person in whose name the
Note is
registered at the close of business on the Record Date before each
Interest
Payment Date. However, interest payable on the Maturity Date will be
payable to
the person to whom principal is payable. If the Interest Payment Date
is also a
day on which principal is due, the interest payable will include interest
accrued to, but excluding, the stated Maturity Date.
The
following scenarios and graphs generally illustrate how the Cash Settlement
Value of the Reverse Convertible Note Securities is determined:
PS-3
|
Scenario
1
The
price of the underlying shares generally increases
over the term of the
Note. The Contingent Protection Level is never
breached.
|
 |
 |
|
Outcome
The
Cash Settlement Value equals 100% of the principal
amount of the Notes.
The share price generally increased over the term
of the Note and never
breached the Contingent Protection
Level.
|
|
Scenario
2
The
price of the underlying shares generally declines
over the term of the
Note. The Contingent Protection Level is never
breached.
|
|
 |
|
Outcome
The
Cash Settlement Value equals 100% of the principal
amount of the Notes.
The share price decreased over the term of the
Note and at maturity was
below the Initial Level, but never breached the
Contingent Protection
Level.
|
|
Scenario
3
The
price of the underlying shares declines over the
term of the Note. The
Contingent Protection Level is breached.
|
|
 |
|
Outcome
The
Cash Settlement Value is less than the principal
amount of the Notes,
reflecting the percentage decline in the underlying
shares below the
Initial Level. The Contingent Protection Level
is breached so there is no
principal protection.
|
|
Scenario
4
The
price of the underlying shares declines below the
Contingent Protection
Level, but ultimately recovers to finish above
its Initial
Level.
|
|
 |
|
Outcome
The
Cash Settlement Value equals 100% of the principal
amount of the Notes.
Even though the share price decreased below the
Contingent Protection
Level during the term of the Note, by the Calculation
Date the underlying
share price was above the Initial Level.
|
PS-4
RISK
FACTORS
You
will
be subject to significant risks not associated with conventional fixed-rate
or
floating-rate debt securities. Prospective purchasers of the Notes
should
understand the risks of investing in the Notes and should reach an
investment
decision only after careful consideration, with their advisers, of
the
suitability of the Notes in light of their particular financial circumstances,
the following risk factors and the other information set forth in this
pricing
supplement and the accompanying prospectus supplement and
prospectus.
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
Pricing
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
Closing Price
of the Reference Asset ever equals or falls below the Contingent Protection
Level on any day from the Pricing Date 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 outstanding Notes will be made in the future;
nor can
the prices of those 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 each 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
principal amount 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 under certain circumstances the
Notes may
be outstanding for more than one year it is possible that the Notes
may not be
treated as short-term obligations, in which case the tax treatment
of interest
payments on the Notes is described in "U.S. Federal Income Tax Considerations
--
Tax Treatment of U.S. Holders -- Tax Treatment of the Deposit on Notes
with a
Term of More Than a Year" in the prospectus supplement. Moreover, 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.
PS-5
ILLUSTRATIVE
EXAMPLES
The
following are illustrative examples demonstrating the hypothetical
amount
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 relevant Reference Asset. You should not construe
these
examples or the data included in tables 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: $75.00
|
|
·
|
Contingent
Protection Percentage: 70%
|
|
·
|
Contingent
Protection Level: $52.50 ($75.00 x
70%)
|
|
·
|
Exchange
Ratio: 13 ($1,000/$75.00)
|
|
·
|
Coupon:
12.25% per annum, paid semi-annually in
arrears.
|
|
·
|
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.
|
|
·
|
Assumes
cash settlement at maturity.
|
|
·
|
Maturity:
One year.
|
|
·
|
Dividend
and dividend yield on the Reference Asset: $1.25 and 1.66%
per
annum.
|
Example
1
- On the
Calculation Date, the Final Level of $90.00 is greater than the Initial
Level,
resulting in a payment at maturity of the principal of $1,000, regardless
of
whether the Contingent Protection Level was ever reached or breached,
plus two
interest payments of $61.25, for payments totaling $1,122.50. If you
had
invested directly in the Reference Asset for the same one-year period,
you would
have received total cash payments of $1,216.60 (number of shares of
the
Reference Asset multiplied by the Final Level, plus the dividend payments),
assuming liquidation of shares at the Final Level. You would have earned
a
12.25% return with an investment in the Notes and a 21.66% return with
a direct
investment in the Reference Asset.
Example
2
- On the
Calculation Date, the Final Level of $67.50 is below the Initial Level,
but the
Closing Price never equaled or fell below the Contingent Protection
Level. As
discussed in example 1 above, an investor would receive total payments
of
$1,122.50, earning a 12.25% 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 $916.60 (number of shares of the Reference
Asset
multiplied by the Final Level, plus the dividend payments), assuming
liquidation
of shares at the Final Level. You would have earned a 12.25% return
with an
investment in the Notes and incurred a loss of 8.34% with a direct
investment in
the Reference Asset.
Example
3
- On the
Calculation Date, the Final Level of $45.00 is below the Initial Level
and also
is below the Contingent Protection Level. At our election, an investor
would
receive a cash payment in the amount of $600.00 plus two interest payments
of
$61.25, for payments totaling $722.50. If you had invested directly
in the
Reference Asset for the same one-year period, you would have received
total cash
payments of $616.60 (number of shares of the Reference Asset multiplied
by the
Final Level, plus the dividend payments), assuming liquidation of shares
at the
Final Level. An investment in the Notes would have resulted in a loss
of 27.75%,
while a direct investment in the Reference Asset would have resulted
in a loss
of 38.34%.
PS-6
Table
of Hypothetical Cash Settlement Values
Assumes
the Closing Price 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
|
Dividend
Yield
|
1-Year
Total Return
|
|
|
75.00
|
97.50
|
$
1,000.00
|
12.25%
|
12.25%
|
30.00%
|
1.66%
|
31.66%
|
|
|
75.00
|
93.75
|
$
1,000.00
|
12.25%
|
12.25%
|
25.00%
|
1.66%
|
26.66%
|
|
|
75.00
|
90.00
|
$
1,000.00
|
12.25%
|
12.25%
|
20.00%
|
1.66%
|
21.66%
|
|
|
75.00
|
86.25
|
$
1,000.00
|
12.25%
|
12.25%
|
15.00%
|
1.66%
|
16.66%
|
|
|
75.00
|
82.50
|
$
1,000.00
|
12.25%
|
12.25%
|
10.00%
|
1.66%
|
11.66%
|
|
|
75.00
|
78.75
|
$
1,000.00
|
12.25%
|
12.25%
|
5.00%
|
1.66%
|
6.66%
|
|
|
75.00
|
75.00
|
$
1,000.00
|
12.25%
|
12.25%
|
0.00%
|
1.66%
|
1.66%
|
|
|
75.00
|
71.25
|
$
1,000.00
|
12.25%
|
12.25%
|
-5.00%
|
1.66%
|
-3.34%
|
|
|
75.00
|
67.50
|
$
1,000.00
|
12.25%
|
12.25%
|
-10.00%
|
1.66%
|
-8.34%
|
|
|
75.00
|
63.75
|
$
1,000.00
|
12.25%
|
12.25%
|
-15.00%
|
1.66%
|
-13.34%
|
|
Table
of Hypothetical Cash Settlement Values
Assumes
the Closing Price 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
|
Dividend
Yield
|
1-Year
Total Return
|
|
|
75.00
|
93.75
|
$
1,000.00
|
12.25%
|
12.25%
|
25.00%
|
1.66%
|
26.66%
|
|
|
75.00
|
90.00
|
$
1,000.00
|
12.25%
|
12.25%
|
20.00%
|
1.66%
|
21.66%
|
|
|
75.00
|
86.25
|
$
1,000.00
|
12.25%
|
12.25%
|
15.00%
|
1.66%
|
16.66%
|
|
|
75.00
|
82.50
|
$
1,000.00
|
12.25%
|
12.25%
|
10.00%
|
1.66%
|
11.66%
|
|
|
75.00
|
78.75
|
$
1,000.00
|
12.25%
|
12.25%
|
5.00%
|
1.66%
|
6.66%
|
|
|
75.00
|
75.00
|
$
1,000.00
|
12.25%
|
12.25%
|
0.00%
|
1.66%
|
1.66%
|
|
|
75.00
|
71.25
|
$
950.00
|
12.25%
|
7.25%
|
-5.00%
|
1.66%
|
-3.34%
|
|
|
75.00
|
67.50
|
$
900.00
|
12.25%
|
2.25%
|
-10.00%
|
1.66%
|
-8.34%
|
|
|
75.00
|
63.75
|
$
850.00
|
12.25%
|
-2.75%
|
-15.00%
|
1.66%
|
-13.34%
|
|
|
75.00
|
60.00
|
$
800.00
|
12.25%
|
-7.75%
|
-20.00%
|
1.66%
|
-18.34%
|
|
|
75.00
|
56.25
|
$
750.00
|
12.25%
|
-12.75%
|
-25.00%
|
1.66%
|
-23.34%
|
|
|
75.00
|
52.50
|
$
700.00
|
12.25%
|
-17.75%
|
-30.00%
|
1.66%
|
-28.34%
|
|
|
75.00
|
48.75
|
$
650.00
|
12.25%
|
-22.75%
|
-35.00%
|
1.66%
|
-33.34%
|
|
|
75.00
|
45.00
|
$
600.00
|
12.25%
|
-27.75%
|
-40.00%
|
1.66%
|
-38.34%
|
|
|
75.00
|
41.25
|
$
550.00
|
12.25%
|
-32.75%
|
-45.00%
|
1.66%
|
-43.34%
|
|
|
75.00
|
37.50
|
$
500.00
|
12.25%
|
-37.75%
|
-50.00%
|
1.66%
|
-48.34%
|
|
|
75.00
|
33.75
|
$
450.00
|
12.25%
|
-42.75%
|
-55.00%
|
1.66%
|
-53.34%
|
|
REFERENCE
ASSET
Additional
Information Regarding the Reference Asset
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 a
company
issuing a Reference Asset can be located by reference to the SEC file
number
provided below.
PS-7
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.
Freeport-McMoRan
Copper & Gold Inc. (“FCX”)
Freeport-McMoRan
Copper & Gold Inc.’s Class B common stock, par value $0.10 per share, trades
on the New York Stock Exchange, Inc. under the symbol “FCX.” Through its
operating subsidiaries and joint ventures with other mining companies,
Freeport-McMoRan Copper & Gold Inc. conducts exploration, mining,
processing, production and marketing activities related to copper,
gold and
silver. Freeport-McMoRan
Copper & Gold Inc.’s SEC file number is 001-11307-01.
Historical
Performance of the Reference Asset
The
following table sets forth, on a per share basis, the high and low
closing
prices, 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
|
|
December
31, 2001
|
14.24
|
9.40
|
13.39
|
|
September
30, 2004
|
42.13
|
31.54
|
40.50
|
|
March
29, 2002
|
17.84
|
13.06
|
17.62
|
|
December
31, 2004
|
42.55
|
33.98
|
38.23
|
|
June
28, 2002
|
20.83
|
16.60
|
17.85
|
|
March
31, 2005
|
43.90
|
35.12
|
39.61
|
|
September
30, 2002
|
18.50
|
11.75
|
13.46
|
|
June
30, 2005
|
40.31
|
31.52
|
37.44
|
|
December
31, 2002
|
16.96
|
9.95
|
16.78
|
|
September
30, 2005
|
49.48
|
37.12
|
48.59
|
|
March
31, 2003
|
19.30
|
16.01
|
17.05
|
|
December
30, 2005
|
56.35
|
43.41
|
53.80
|
|
June
30, 2003
|
25.70
|
16.72
|
24.50
|
|
March
31, 2006
|
65.00
|
47.11
|
59.77
|
|
September
30, 2003
|
34.57
|
23.45
|
33.10
|
|
June
30, 2006
|
72.20
|
43.10
|
55.41
|
|
December
31, 2003
|
46.74
|
32.73
|
42.13
|
|
September
29, 2006
|
62.29
|
47.58
|
53.26
|
|
March
31, 2004
|
44.90
|
35.09
|
39.09
|
|
December
29, 2006
|
63.70
|
47.60
|
55.73
|
|
June
30, 2004
|
39.85
|
27.76
|
33.15
|
|
April
2, 2007 to June 8, 2007
|
80.00
|
65.62
|
74.08
|
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.
PS-8
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. However, because under certain circumstances
the Notes
may be outstanding for more than one year it is possible that the Notes
may not
be treated as short-term obligations, in which case the tax treatment
of
interest payments on the Notes is described in "U.S. Federal Income
Tax
Considerations -- Tax Treatment of U.S. Holders -- Tax Treatment of
the Deposit
on Notes with a Term of More Than a Year" in the prospectus
supplement.
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.
|
Reference
Asset
|
Term
to Maturity
|
Coupon
Rate, per
Annum
|
Yield
on the Deposit,
per
Annum
|
Put
Premium, per
Annum
|
|
Freeport-McMoRan
Copper & Gold Inc.
|
1
year
|
12.25%
|
5.485%
|
6.77%
|
CERTAIN
ERISA CONSIDERATIONS
Section
4975 of the Internal Revenue Code of 1986 (the “Code”) prohibits the borrowing
of money, the sale of property and certain other transactions involving
the
assets of plans that are qualified under the Code ("Qualified Plans")
or
individual retirement accounts ("IRAs") and persons who have certain
specified
relationships to them. Section 406 of the Employee Retirement Income
Security
Act of 1974, as amended ("ERISA"), prohibits similar transactions involving
employee benefit plans that are subject to ERISA ("ERISA Plans"). Qualified
Plans, IRAs and ERISA Plans are referred to as "Plans."
Persons
who have such specified relationships are referred to as "parties in
interest"
under ERISA and as "disqualified persons" under the Code. "Parties
in interest"
and "disqualified persons" encompass a wide range of persons, including
any
fiduciary (for example, investment manager, trustee or custodian) of
a Plan, any
person providing services (for example, a broker) to a Plan, the Plan
sponsor,
an employee organization any of whose members are covered by the Plan,
and
certain persons related to or affiliated with any of the foregoing.
The
purchase and/or holding of securities by a Plan with respect to which
we, Bear,
Stearns & Co. Inc. (“Bear Stearns”) and/or certain of our affiliates is a
fiduciary and/or a service provider (or otherwise is a "party in interest"
or
"disqualified person") would constitute or result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code, unless such
securities
are acquired or held pursuant to and in accordance with an applicable
statutory
or administrative exemption. Each of us and Bear Stearns is considered
a
"disqualified person" under the Code or "party in interest" under ERISA
with
respect to many Plans, although neither we nor Bear Stearns can be
a "party in
interest" to any IRA other than certain employer-sponsored IRAs, as
only
employer-sponsored IRAs are covered by ERISA.
Applicable
administrative exemptions may include certain prohibited transaction
class
exemptions (for example, Prohibited Transaction Class Exemption ("PTCE")
84-14
relating to qualified professional asset managers, PTCE 96−23 relating to
certain in-house asset managers, PTCE 91-38 relating to bank collective
investment funds, PTCE 90−1 relating to insurance company separate accounts and
PTCE 95-60 relating to insurance company general accounts).
PS-9
It
should
also be noted that the recently enacted Pension Protection Act of 2006
contains
a new statutory exemption from the prohibited transaction provisions
of Section
406 of ERISA and Section 4975 of the Code for transactions involving
certain
parties in interest or disqualified persons who are such merely because
they are
a service provider to a Plan, or because they are related to a service
provider.
Generally, the new exemption would be applicable if the party to the
transaction
with the Plan is a party in interest or a disqualified person to the
Plan but is
not (i) an employer, (ii) a fiduciary who has or exercises any discretionary
authority or control with respect to the investment of the Plan assets
involved
in the transaction, (iii) a fiduciary who renders investment advice
(within the
meaning of ERISA and Section 4975 of the Code) with respect to those
assets, or
(iv) an affiliate of (i), (ii) or (iii). Any Plan fiduciary relying
on this new
statutory exemption (Section 408(b)(17) of ERISA and Section 4975(d)(20)
of the
Code) and purchasing securities on behalf of a Plan will be deemed
to represent
that (x) the fiduciary has made a good faith determination that the
Plan is
paying no more than, and is receiving no less than, adequate consideration
in
connection with the transaction and (y) neither we, Bear Stearns nor
any of our
affiliates directly or indirectly exercises any discretionary authority
or
control or renders investment advice (as defined above) with respect
to the
assets of the Plan which such fiduciary is using to purchase the Notes,
both of
which are necessary preconditions to utilizing this new exemption.
Any purchaser
that is a Plan is encouraged to consult with counsel regarding the
application
of the new exemption.
A
fiduciary that causes a Plan to engage, directly or indirectly, in
a non-exempt
prohibited transaction may be subject to a penalty under ERISA, and
may be
liable for any losses to the Plan resulting from such transaction.
Code Section
4975 generally imposes an excise tax on disqualified persons who engage,
directly or indirectly, in non-exempt transactions with the assets
of Plans
subject to such Section. If an IRA engages in a prohibited transaction,
the
assets of the IRA are deemed to have been distributed to the IRA
beneficiaries.
In
accordance with ERISA’s general fiduciary requirements, a fiduciary with respect
to any ERISA Plan who is considering the purchase of securities on
behalf of
such plan should consider the foregoing information and the information
set
forth in the applicable prospectus supplement and any applicable pricing
supplement, and should determine whether such purchase is permitted
under the
governing plan document and is prudent and appropriate for the ERISA
Plan in
view of its overall investment policy and the composition and diversification
of
its portfolio. Fiduciaries of Plans established with, or for which
services are
provided by, us, Bear Stearns and/or certain of our affiliates should
consult
with counsel before making any acquisition. Each purchaser of any securities,
the assets of which constitute the assets of one or more Plans, and
each
fiduciary that directs such purchaser with respect to the purchase
or holding of
such securities, will be deemed to represent that the purchase, holding
and
disposition of the securities does not and will not constitute a prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code
for which an
exemption is not available.
Certain
employee benefit plans, such as governmental plans (as defined in Section
3(32)
of ERISA) and, if no election has been made under Section 410(d) of
the Code,
church plans (as defined in Section 3(33) of ERISA), are not subject
to Section
406 of ERISA or Section 4975 of the Code. However, such plans may be
subject to
the provisions of applicable federal, state or local law ("Similar
Law") similar
to the foregoing provisions of ERISA or the Code. Fiduciaries of such
plans
("Similar Law Plans") should consider applicable Similar Law when investing
in
the securities. Each fiduciary of a Similar Law Plan will be deemed
to represent
that the Similar Law Plan’s acquisition and holding of the securities will not
result in a non-exempt violation of applicable Similar Law.
The
sale
of any security to a Plan or a Similar Law Plan is in no respect a
representation by us or any of our affiliates that such an investment
meets all
relevant legal requirements with respect to investments by Plans or
Similar Law
Plans generally or any particular Plan or Similar Law Plan, or that
such an
investment is appropriate for a Plan or a Similar Law Plan generally
or any
particular Plan or Similar Law Plan.
PS-10
SUPPLEMENTAL
PLAN OF DISTRIBUTION
Subject
to the terms and conditions set forth in the Distribution Agreement
dated as of
June 19, 2003, as amended, we have agreed to sell to Bear Stearns,
as principal,
and Bear Stearns has agreed to purchase from us, the aggregate
principal amount
of Notes set forth opposite its name below.
|
Agent
|
Principal
Amount of Notes
|
|
Bear,
Stearns & Co. Inc.
|
$3,250,000
|
|
Total
|
$3,250,000
|
The
Agent
intends to initially offer $3,250,000 of the Notes to the public
at the offering
price set forth on the cover page of this pricing supplement, and
to
subsequently resell the remaining face amount of the Notes at prices
related to
the prevailing market prices at the time of resale. Potential investors
should
understand that, as described on the cover, investors who purchase
an aggregate
amount of at least $1,000,000 of Notes in this initial distribution
will be
entitled to purchase such Notes for 99.00% of the principal amount.
In the
future, the Agent may repurchase and resell the Notes in market-making
transactions, with resales being made at prices related to prevailing
market
prices at the time of resale or at negotiated prices. We will offer
the Notes to
Bear Stearns at a discount of 0.8462% of the aggregate notional
amount of the
Notes offered to the public. Bear Stearns may reallow a discount
to other agents
not in excess of 0.8462% of the aggregate notional amount of the
Notes offered
to the public.
In
order
to facilitate the offering of the Notes, we may grant the Agent
a 30-day option
from the date of the final pricing supplement, to purchase from
us up to an
additional $487,500 at the public offering price, less the agent’s discount, to
cover any over-allotments. The Agent may over-allot or effect transactions
which
stabilize or maintain the market price of the Notes at a level
higher than that
which might otherwise prevail in the open market. Specifically,
the Agent may
over-allot or otherwise create a short position in the Notes for
its own account
by selling more Notes than have been sold to it by us. If this
option is
exercised, in whole or in part, subject to certain conditions,
the Agent will
become obligated to purchase from us and we will be obligated to
sell to the
Agent an amount of Notes equal to the amount of the over-allotment
exercised.
The Agent may elect to cover any such short position by purchasing
Notes in the
open market. No representation is made as to the magnitude or effect
of any such
stabilization or other transactions. Such stabilizing, if commenced,
may be
discontinued at any time and in any event shall be discontinued
within a limited
period. No other party may engage in stabilization.
Payment
of the purchase price shall be made in funds that are immediately
available in
New York City.
The
agents may be deemed to be “underwriters” within the meaning of the Securities
Act of 1933, as amended (the “Securities Act”). We have agreed to indemnify the
agents against or to make contributions relating to certain civil
liabilities,
including liabilities under the Securities Act. We have agreed
to reimburse the
agents for certain expenses.
The
Notes
are a new issue of securities with no established trading market.
The Notes will
not be listed on any securities exchange or quotation system, and
we do not
expect a trading market will develop. Bear Stearns has advised
us that,
following completion of the offering of the Notes, it intends under
ordinary
market conditions to indicate prices for the Notes on request,
although it is
under no obligation to do so and may discontinue any market-making
activities at
any time without notice. Accordingly, no guarantees can be given
as to whether
an active trading market for the Notes will develop or, if such
a trading market
develops, as to the liquidity of such trading market. We cannot
guarantee that
bids for outstanding Notes will be made in the future; nor can
we predict the
price at which any such bids will be made. The Notes will cease
trading as of
the close of business on the Maturity Date.
Because
Bear Stearns is our wholly-owned subsidiary, each distribution
of the Notes will
conform to the requirements set forth in Rule 2720 of the NASD
Conduct
Rules.
PS-11
|
You
should only rely on the information contained in this pricing
supplement,
the accompanying prospectus supplement and prospectus. We
have not
authorized anyone to provide you with information or to make
any
representation to you that is not contained in this pricing
supplement,
the accompanying prospectus supplement and prospectus. If
anyone provides
you with different or inconsistent information, you should
not rely on it.
This pricing supplement, the accompanying prospectus supplement
and
prospectus are not an offer to sell these securities, and
these documents
are not soliciting an offer to buy these securities, in any
jurisdiction
where the offer or sale is not permitted. You should not
under any
circumstances assume that the information in this pricing
supplement, the
accompanying prospectus supplement and prospectus is correct
on any date
after their respective dates.
|
The
Bear Stearns
Companies
Inc.
$3,250,000
Medium-Term
Notes, Series B
Reverse
Convertible Notes, 12.25%
Coupon
Per Annum, due June 19, 2008
Linked
to the Class B common stock of
Freeport-McMoRan
Copper & Gold Inc.
June
14, 2007
PRICING
SUPPLEMENT
|
||
|
_______________
|
|||
|
TABLE
OF CONTENTS
|
|||
|
Pricing
Supplement
|
|||
|
Page
|
|||
|
Where
You Can Find More Information
|
PS-3
|
||
|
Return
on the Notes
|
PS-3
|
||
|
Risk
Factors
|
PS-5
|
||
|
Illustrative
Examples
|
PS-6
|
||
|
Reference
Asset
|
PS-7
|
||
|
Certain
U.S. Federal Income Tax Considerations
|
PS-8
|
||
|
Certain
ERISA Considerations
|
PS-9
|
||
|
Supplemental
Plan of Distribution
|
PS-11
|
||
|
Prospectus
Supplement
|
|||
|
Summary
|
S-2
|
||
|
Illustrative
Examples
|
S-4
|
||
|
Risk
Factors
|
S-7
|
||
|
Pricing
Supplement
|
S-20
|
||
|
Description
of Notes
|
S-21
|
||
|
Sponsors
or Issuers and Reference Asset
|
S-25
|
||
|
Antidilution
Adjustments
|
S-26
|
||
|
Use
of Proceeds and Hedging
|
S-30
|
||
|
Certain
U.S. Federal Income Tax Considerations
|
S-31
|
||
|
Supplemental
Plan of Distribution
|
S-40
|
||
|
Validity
of the Notes
|
S-41
|
||
|
Definitions
|
S-41
|
||
|
Prospectus
|
|||
|
Where
You Can Find More Information
|
1
|
||
|
The
Bear Stearns Companies Inc.
|
2
|
||
|
Use
of Proceeds
|
4
|
||
|
Description
of Debt Securities
|
4
|
||
|
Description
of Warrants
|
16
|
||
|
Description
of Preferred Stock
|
21
|
||
|
Description
of Depositary Shares
|
25
|
||
|
Description
of Purchase Contracts
|
28
|
||
|
Description
of Units
|
31
|
||
|
Book-Entry
Procedures and Settlement
|
33
|
||
|
Limitations
on Issuance of Bearer Debt Securities and Bearer Warrants
|
43
|
||
|
Plan
of Distribution
|
44
|
||
|
ERISA
Considerations
|
48
|
||
|
Legal
Considerations
|
48
|
||
|
Experts
|
49
|
||