Free
Writing Prospectus
Filed
Pursuant to Rule 433
Registration
No. 333−136666
October
[l],
2007
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STRUCTURED
EQUITY PRODUCTS
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New
Issue
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Indicative
Terms
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THE
BEAR STEARNS COMPANIES INC.
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Accelerated
Market Participation Securities (“AMPS”)
Linked
to a Portfolio of Indices
Due:
October [l],
2009
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INVESTMENT
HIGHLIGHTS
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·
2
year term to maturity.
·
The
Notes are not principal protected.
·
Issue
is a direct obligation of The Bear Stearns Companies Inc. (Rated
A1 by
Moody’s / A+ by S&P).
·
Issue
Price: 100.00% of the principal amount ($1,000 per Note) ([99.00]%
for
investors who purchase a principal amount of at least
$1,000,000).
·
The
Notes are linked to the performance of an equally-weighted portfolio
comprised of the following three equity indices: (1) the S&P
500® Index (the “SPX”); (2) the Dow Jones EURO STOXX
50® Index (the “SX5E”); and (3) the Nikkei 225TM
Stock Index (the “NKY”) (each such index a “Component” and together the
“Portfolio”). The weighting of each Component within the Portfolio is
fixed at 1/3 and will not change during the term of the Notes unless
one
or more Components are modified during the term of the Notes.
·
The
Cash Settlement Value will be based on the performance of the Portfolio
over the term of the Notes as measured by the Portfolio Return. The
“Portfolio Return” is calculated as the difference of (i) the Final
Portfolio Value divided by the Initial Portfolio Value minus (ii)
one. The
“Final Portfolio Value” equals the Portfolio Value on the Valuation Date
and the “Initial Portfolio Value” equals the Portfolio Value on the
Pricing Date, or 100, in each case as determined by the Calculation
Agent.
·
The
Participation Rate is [135.00]%.
·
If,
on the
Valuation Date, the Portfolio Return is greater than or equal to
zero, the
Cash Settlement Value for each Note will be equal to the principal
amount
of the Note, plus the product of: (i) $1,000 multiplied by (ii) the
Portfolio Return, multiplied by (iii) the Participation Rate.
· If,
on the Valuation Date, the Portfolio Return is less than zero, the
Cash
Settlement Value for each Note will be equal to the product of (i)
$1,000
multiplied by (ii) the Final Portfolio Value divided by the Initial
Portfolio Value. In
this case, you will receive less, and possibly significantly less,
than
your initial investment in the Notes.
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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 offering will arrange to send you the prospectus if you request
it by
calling toll free 1-866-803-9204.
The
Notes will not be listed on any U.S. securities exchange or quotation
system. Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or
determined that this free writing prospectus is truthful or complete.
Any
representation to the contrary is a criminal offense.
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BEAR, STEARNS & CO. INC.
STRUCTURED
PRODUCTS GROUP
(212) 272-6928
1
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STRUCTURED
PRODUCTS GROUP
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GENERAL
TERMS
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This
free
writing prospectus relates to a Note offering linked
to
the performance of an equally-weighted portfolio comprised of the
following
three equity indices: (1) the S&P 500® Index (the “SPX”); (2) the
Dow Jones EURO STOXX 50® Index (the “SX5E”); and (3) the Nikkei
22TM Stock Index (the “NKY”) (each such index a “Component” and
together the “Portfolio”). The weighting of each Component within the Portfolio
is fixed at 1/3 and will not change during the term of the Notes
unless one or
more Components are modified during the term of the Notes. We reserve
the right
to withdraw, cancel or modify the offering and to reject orders in
whole or in
part.
Defined
terms not defined herein shall have the same meaning as in the Pricing
Supplement discussed below.
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ISSUER:
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The
Bear Stearns Companies Inc.
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ISSUER’S
RATING:
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A1
/ A+ (Moody’s / S&P)
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CUSIP
NUMBER:
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073928Y31
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ISSUE
PRICE:
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100.00%
of the Principal Amount (99.00% for investors who purchase
a Principal
Amount of at least $1,000,000).
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PRINCIPAL
AMOUNT:
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$[l]
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DENOMINATIONS:
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$1,000
per Note and $1,000 multiples thereafter
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SELLING
PERIOD ENDS:
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October
[l],
2007
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SETTLEMENT
DATE:
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October
[l],
2007
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MATURITY
DATE:
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October
[l],
2009 (for a term of approximately 24 months). The Maturity
Date is subject
to adjustment as described in the Pricing Supplement.
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COMPONENTS:
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The
Notes are linked to the performance of an equally-weighted
portfolio
comprised of the following three equity indices: (1)
the S&P
500® Index (the “SPX”); (2) the Dow Jones EURO STOXX
50® Index (the “SX5E”); and (3) the Nikkei 225TM
Stock Index (the “NKY”) (each such index a “Component” and together the
“Portfolio”).
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COMPONENT
SPONSORS:
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Standard
& Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) as
the sponsor of the S&P 500® Index, STOXX Limited, a
partnership of Deutsche Börse AG, Dow Jones & Company and the SWX
Group as the sponsor of the Dow Jones EURO STOXX 50® Index, and
Nihon Keizai Shimbun, Inc. as the sponsor of the Nikkei
225TM
Stock Index are hereinafter referred to as “Component
Sponsors.”
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CASH
SETTLEMENT VALUE:
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An
amount in cash that depends upon the Portfolio Return.
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If,
on the Valuation Date, the Portfolio Return is greater
than or equal to
zero, the Cash Settlement Value is equal to the $1,000
principal amount of
the Notes, plus the product of (i) $1,000 multiplied
by (ii) the Portfolio
Return multiplied by (iii) the Participation Rate.
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If,
on the Valuation Date, the Portfolio Return is less than
zero, the Cash
Settlement Value for each Note will be equal to the product
of (i) $1,000
multiplied by (ii) the Final Portfolio Value divided
by the Initial
Portfolio Value.
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PORTFOLIO
RETURN:
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An
amount determined by the Calculation Agent and calculated
as the
difference of (i) the Final Portfolio Value divided by
the Initial
Portfolio Value minus (ii) one.
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FINAL
PORTFOLIO VALUE:
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Equals
the Portfolio Value on the Valuation Date as determined
by the Calculation
Agent.
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INITIAL
PORTFOLIO VALUE:
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Equals
the Portfolio Value on the Pricing Date, or 100.
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PORTFOLIO
VALUE:
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On
the Valuation Date, is calculated as follows:
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VALUATION
DATE:
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October
[l],
2009; the Valuation Date is subject to adjustment as
described in the
Pricing Supplement.
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BEAR,
STEARNS & CO. INC.
2
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STRUCTURED
PRODUCTS GROUP
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FINAL
LEVEL:
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As
of the Valuation Date and for each Component, the closing
index level as
reported by the relevant Component Sponsor and displayed
on Bloomberg Page
SPX <Index> <Go> with respect to the SPX, Bloomberg Page SX5E
<Index> <Go> with respect to the SX5E; and Bloomberg Page NKY
<Index> <Go> with respect to the NKY.
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VALUATION
DATE:
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October
[l],
2009. The Valuation Date is subject to adjustment as
described in the
Pricing Supplement.
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INITIAL
LEVEL:
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Means
(i) [l]
with respect to the SPX; (ii) [l]
with respect to the SX5E; (iii) and [l]
with respect to the NKY, in each case, representing the
closing level of
the respective Component on the Pricing Date.
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INTEREST:
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The
Notes will not bear interest.
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PARTICIPATION
RATE:
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[135.00]%
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PRICING
DATE:
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October
[l],
2007
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BEAR,
STEARNS & CO. INC.
3
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STRUCTURED
PRODUCTS GROUP
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ADDITIONAL
TERMS SPECIFIC TO THE
NOTES
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You
should read this document together with the prospectus and prospectus
supplement, each dated August 16, 2006 (the “Prospectus” and “Prospectus
Supplement,” respectively), and the more detailed information contained in the
Pricing Supplement, dated October 1, 2007 (subject to completion)
(the “Pricing
Supplement”). You should carefully consider, among other things, the matters
set
forth in “Risk Factors” in the Prospectus Supplement and 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 access the Pricing Supplement,
the
Prospectus Supplement and the Prospectus on the SEC web site as
follows:
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Pricing
Supplement dated October 1, 2007 (subject to completion):
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Prospectus
Supplement dated August 16, 2006:
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Prospectus
dated August 16, 2006:
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ILLUSTRATIVE
EXAMPLES OF CASH SETTLEMENT
VALUE
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The
following hypothetical examples are for illustrative purposes and
are not
indicative of the future performance of the Components, the Portfolio
or the
future value of the Notes. The following hypothetical examples demonstrate
the
hypothetical Cash Settlement Value of a Note based on the assumptions
outlined
below. The hypothetical examples do not purport to be representative
of every
possible scenario concerning increases or decreases in the Components
or the
Portfolio Value. You should not construe these examples as an indication
or
assurance of the expected performance of the Notes. Actual returns
may be
different. Numbers may be rounded for ease of use. The examples demonstrating
the hypothetical Cash Settlement Value of a Note are based on the
following
assumptions:
ASSUMPTIONS:
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·
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Investor
purchases $1,000 aggregate principal amount of Notes at
the initial public
offering price of $1,000.
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Investor
holds the Notes to maturity.
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The
Initial Level for the SPX is equal to 1,525.00.
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The
Initial Level for the SX5E is equal to 4,400.00.
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The
Initial Level for the NKY is equal to
16,500.00.
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All
returns are based on a 24-month term, pre-tax
basis.
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No
Market Disruption Events or Events of Default occur during
the term of the
Notes.
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BEAR,
STEARNS & CO. INC.
4
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STRUCTURED
PRODUCTS GROUP
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Example
1: At maturity, the Final Portfolio Value is greater than the Initial
Portfolio
Value.
In
this
example, the Portfolio Value generally increases relative to the
Initial
Portfolio Value over the term of the Notes. On the Valuation Date,
the Final
Levels for the SPX, SX5E, and NKY are 1,760.00, 4,713.00, and 29,507.00,
respectively. On the Valuation Date, the Final Portfolio Value is
equal to
133.78, as calculated below:
The
Final
Portfolio Value equals the following:
=
133.78
The
Portfolio Return equals the difference of (i) the Final Portfolio
Value divided
by the Initial Portfolio Value minus (ii) one, or as follows:
In
this
example, using the formula below, the Cash Settlement Value will
equal
$1,456.03.
Cash
Settlement Value
Example
2: At maturity, the Final Portfolio Value is less than the Initial
Portfolio
Value.
In
this
example, the Portfolio Return on the Valuation Date is less than
zero. On the
Valuation Date, the Final Levels for the SPX, SX5E, and NKY are 1,291.00,
3,635.00, and 11,586.00, respectively. On the Valuation Date, the
Final
Portfolio Value is equal to 79.16, as calculated below:
The
Final
Portfolio Value equals the following:
=
79.16
The
Portfolio Return equals the difference of (i) the Final Portfolio
Value divided
by the Initial Portfolio Value minus (ii) one, or as follows:
BEAR,
STEARNS & CO. INC.
5
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STRUCTURED
PRODUCTS GROUP
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In
this
example, since the Portfolio Return would be less than zero, the
Cash Settlement
Value for each Note, using the formula below, would be $791.60.
Cash
Settlement Value
Example
3: During the term of the Notes, the levels of the Components fluctuate
and at
maturity the Final Portfolio Value is slightly greater than the Initial
Portfolio Value.
In
this
example, during the term of the Notes the levels of the Components
fluctuate and
the Portfolio Return on the Valuation Date is slightly greater than
zero. On the
Valuation Date, the Final Levels for the SPX, SX5E, and NKY are 2,093.00,
4,642.00, and 9,950.00, respectively. On the Valuation Date, the
Final Portfolio
Value is equal to 101.02, as calculated below:
The
Final
Portfolio Value equals the following:
=
101.02
The
Portfolio Return equals the difference of (i) the Final Portfolio
Value divided
by the Initial Portfolio Value minus (ii) one, or as follows:
In
this
example, using the formula below, the Cash Settlement Value will
equal
$1,013.77.
Cash
Settlement Value
BEAR,
STEARNS & CO. INC.
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STRUCTURED
PRODUCTS GROUP
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Summary
of Illustrative Examples 1-3 Reflecting the Relevant Cash Settlement
Value
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Example
1
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Example
2
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Example
3
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Initial
Portfolio Value
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100.00
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100.00
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100.00
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Hypothetical
Final Portfolio Value
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133.78
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79.16
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101.02
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Portfolio
Return (expressed as a percentage)
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33.78%
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-20.84%
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1.02%
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Upside
Participation Rate
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135%
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135%
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135%
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Hypothetical
Return on Investment
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45.60%
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-20.84%
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1.38%
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Cash
Settlement Value per Note
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$1,456.03
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$791.60
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$1,013.77
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BEAR,
STEARNS & CO. INC.
7
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STRUCTURED
PRODUCTS GROUP
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SELECTED
RISK CONSIDERATIONS
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·
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Possible
loss of principal—The
Notes are not
principal protected.
If, on
the Valuation
Date, the Portfolio
Return is less
than zero, the
Cash
Settlement Value
you will receive
will be less
than the initial
offering
price. In that
case, you will
receive less,
and possibly
significantly
less, than your
initial investment
in the Notes.
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No
current income—We
will not pay
any interest
on the Notes.
The yield on
the Notes, therefore,
may be less than
the overall return
you would earn
if you purchased
a
conventional
debt security
at the same time
and with the
same Maturity
Date from an
issuer with a
comparable credit
rating.
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No
interest, dividend
or other payments—You
will not receive
any interest,
dividend payments
or other distributions
on
the stocks underlying
the Components;
nor will such
payments be included
in the calculation
of the Cash Settlement
Value you will
receive at
maturity.
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Not
exchange-listed—The
Notes will not
be listed on
any securities
exchange or quotation
system
and we do not
expect a trading
market to develop,
which may affect
the
price that you
receive for your
Notes upon any
sale prior to
maturity. If
you sell the
Notes prior to
maturity, you
may receive less,
and possibly
significantly
less, than your
initial investment
in the
Notes.
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Liquidity—Because
the Notes will
not be listed
on any securities
exchange or quotation
system, we do
not expect a
trading market
to develop, and,
if such a
market were to
develop, it may
not be liquid.
Our subsidiary,
Bear,
Stearns & Co. Inc. has
advised us that
they intend under
ordinary
market conditions
to indicate prices
for the Notes
on request. However,
we
cannot guarantee
that bids for
outstanding Notes
will be made
in the
future; nor can
we predict the
price at which
those bids will
be made. In
any event, Notes
will cease trading
as of the close
of business on
the
Maturity Date.
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The
Components may
not move in tandem—At
a time when the
level of one
or more of the
Components increases,
the
level of one
or more of the
other Components
may decline.
Therefore, in
calculating the
Portfolio Return,
increases in
the level of
one or more of
the Components
may be moderated,
or wholly offset,
by lesser increases
or
declines in the
level of one
or more of the
other
Components.
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Taxes—The
U.S. federal
income tax consequences
of an investment
in the Notes
are
complex and uncertain.
We intend to
treat the Notes
for all tax purposes
as pre-paid cash-settled
executory contracts
linked to the
level of the
Index and, where
required, to
file information
returns with
the Internal
Revenue Service
in accordance
with such treatment.
Prospective investors
are urged to
consult their
tax advisors
regarding the
U.S. federal
income
tax consequences
of an investment
in the Notes.
Assuming the
Notes are
treated as pre-paid
cash-settled
executory contracts,
you should be
required to recognize
capital gain
or loss to the
extent that the
cash you
receive on the
Maturity Date
or upon a sale
or exchange of
the Notes prior
to the Maturity
Date differs
from your tax
basis on the
Notes (which
will
generally be
the amount you
paid for the
Notes). You should
review the
discussion under
the section entitled
“Certain U.S.
Federal Income
Tax
Considerations” in the Pricing
Supplement.
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BEAR,
STEARNS
&
CO.
INC.
8