Free
Writing Prospectus
Filed
Pursuant to Rule 433
Registration
No. 333−136666
October
15, 2007
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New
Issue
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Indicative
Terms
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THE
BEAR STEARNS COMPANIES INC.
Note
Linked to a Portfolio of Indices
Due:
November [l],
2012
INVESTMENT
HIGHLIGHTS
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·
5
year term to maturity.
·
The
Notes are 100% 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).
·
Linked
to the potential positive performance of a portfolio comprised
of six
indices. The following are the six indices and their respective
Weightings
in the portfolio: (1) 20.00% the S&P 500®
Index (the “SPX”); (2) 20.00% the Dow Jones EURO STOXX 50®
Index (the “SX5E”); (3) 20.00% the S&P BRIC 40™ Index (the “SBR”); (4)
20.00% the Nikkei 225™ Stock Index (the “NKY”); (5) 12.00% the S&P 400
MidCap Index™ (the “MID”); and (6) 8.00% the Russell 2000®
Index (the “RTY”) (each such index a “Component” and together the
“Portfolio”).
·
The
Cash Settlement Value will be based on the appreciation, if any,
in the
Portfolio over the term of the Notes as measured by the Portfolio
Return.
The “Portfolio Return” is calculated as the weighted average of the six
Component Performances, where the “Component Performance” with respect to
a Component measures the arithmetic average level of such Component
as of
two Observation Dates relative to its respective Initial Component
Level
on the Pricing Date (with
a [120.00-128.00]% Participation Rate).
·
If,
at maturity, the Portfolio Return is greater than zero, the Cash
Settlement Value for each Note will be equal to the sum of (A)
the
principal amount of the Note plus (B) the product of (i) $1,000
multiplied
by (ii) the Portfolio Return multiplied by (iii) the Participation
Rate.
·
If,
at maturity, the Portfolio Return is equal to or less than zero,
the Cash
Settlement Value for each Note will be
$1,000.
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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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1
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GENERAL
TERMS
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This
free
writing prospectus relates to a Note offering linked
to
the potential positive performance of a portfolio comprised of six
indices. The
following are the six indices and their respective Weightings in the
portfolio:
(1) 20.00% the S&P 500®
Index
(the “SPX”); (2) 20.00% the Dow Jones EURO STOXX 50®
Index
(the “SX5E”); (3) 20.00% the S&P BRIC 40™ Index (the “SBR”); (4) 20.00% the
Nikkei 225™ Stock Index (the “NKY”); (5) 12.00% the S&P 400 MidCap Index™
(the “MID”); and (6) 8.00% the Russell 2000®
Index
(the “RTY”) (each such index a “Component” and together the “Portfolio”). 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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073928Y56
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ISSUE
PRICE:
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100.00%
of the Principal Amount
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PRINCIPAL
AMOUNT:
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$[l]
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DENOMINATIONS:
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$[10,000]
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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November
[l],
2007
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MATURITY
DATE:
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November
[l],
2012 (for a term of approximately 60 months). The Maturity
Date is subject
to adjustment as described in the Pricing Supplement.
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CASH
SETTLEMENT VALUE:
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An
amount in cash that depends upon the Portfolio Return. If,
at maturity,
the Portfolio Return is greater than zero, then the Cash
Settlement Value
for each Note will be equal to the sum of (A) the Principal
Amount of the
Note plus (B) the product of (i) $1,000 multiplied by (ii)
the Portfolio
Return multiplied by (iii) the Participation Rate.
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If,
at maturity, the Portfolio Return is equal to or less than
zero, then the
Cash Settlement Value for each Note will be $1,000. Because
the Notes are
principal protected if held to maturity, in no event will
the Cash
Settlement Value for each Note held to maturity be less than
$1,000.
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PORTFOLIO
RETURN:
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An
amount determined by the Calculation Agent and equal to the
sum of the
Component Performance for each Component multiplied by its
respective
Weighting in the Portfolio.
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COMPONENT
PERFORMANCE:
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As
of the Final Observation Date and with respect to a Component,
the
quotient, expressed as a percentage, of (i) the arithmetic
average of the
Observation Levels for that Component as of each Observation
Date minus
the Initial Component Level of that Component divided by
(ii) the Initial
Component Level of that Component.
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FINAL
OBSERVATION DATE:
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October
[l],
2012.
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OBSERVATION
LEVELS:
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As
of any Observation Date and with respect to each Index, the
closing index
level as reported by the relevant Index Sponsor and displayed
on Bloomberg
Page SPX <Index> <Go> with respect to the SPX; Bloomberg Page
SX5E <Index> <Go> with respect to the SX5E; Bloomberg Page SBR
<Index> <Go> with respect to the SBR; Bloomberg Page NKY
<Index> <Go> with respect to the NKY; Bloomberg Page MID
<Index> <Go> with respect to the MID; and Bloomberg Page RTY
<Index> <Go> with respect to the RTY.
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OBSERVATION
DATES:
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April
[l],
2010 and October [l],
2012. The Observation Dates are subject to adjustment as
described in the
Pricing Supplement.
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INITIAL
COMPONENT LEVELS:
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[l]
with respect to the SPX;
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[l]
with respect to the SX5E;
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[l]
with respect to the SBR;
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FIFTH
THIRD SECURITIES, INC.
2
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[l]
with respect to the NKY;
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[l]
with respect to the MID; and
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[l]
with respect to the RTY.
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WEIGHTING:
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20.00%
with respect to the SPX;
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20.00%
with respect to the SX5E;
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20.00%
with respect to the SBR;
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20.00%
with respect to the NKY;
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12.00%
with respect to the MID; and
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8.00%
with respect to the RTY.
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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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[120.00-128.00]%
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COMPONENTS:
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The
Notes are linked to the potential positive performance of
a portfolio
comprised of six indices. The following are the six indices
and their
respective Weightings in the portfolio: (1) 20.00% the S&P
500®
Index (the “SPX”); (2) 20.00% the Dow Jones EURO STOXX 50®
Index (the “SX5E”); (3) 20.00% the S&P BRIC 40™ Index (the “SBR”); (4)
20.00% the Nikkei 225™ Stock Index (the “NKY”); (5) 12.00% the S&P 400
MidCap Index™ (the “MID”); and (6) 8.00% the Russell 2000®
Index (the “RTY”) (each such index a “Component” and together the
“Portfolio”). The Weighting of each Component is fixed at the respective
Weighting mentioned above and will not change during the
term of the Notes
unless one or more Components are modified during the term
of the
Notes.
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INDEX
SPONSORS:
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Standard
& Poor’s (“S&P”), a division of The McGraw-Hill Companies, Inc. as
sponsor of the SPX, SBR, and MID; STOXX Limited, a partnership
of Deutsche
Börse AG, Dow Jones & Company and the SWX Group as the sponsor of the
SX5E; Nihon Keizai Shimbun, Inc. as the sponsor of the NKY;
and Russell
Investment Group as the sponsor of the RTY are hereinafter
referred to as
“Component Sponsors.” See “Description of the Portfolio” in the Pricing
Supplement.
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FIFTH
THIRD SECURITIES, INC.
3
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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 15, 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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·
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Pricing
Supplement dated October 15, 2007 (subject to completion):
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·
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Prospectus
Supplement, dated August 16, 2006:
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·
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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 tables are for illustrative purposes and are not indicative
of the
future performance of the Components or the future value of the
Notes.
The
following examples demonstrate how the hypothetical Cash Settlement
Value of a
Note is calculated based on the assumptions outlined below. The
examples do not
purport to be representative of every possible scenario concerning
increases or
decreases in the Portfolio or
the Components underlying the Portfolio. You should not construe
the 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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·
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Investor
holds the Notes to maturity.
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·
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The
Participation Rate is 125.00%.
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The
Initial Component Level for the SPX is equal to 1,500.00.
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The
Initial Component Level for the SX5E is equal to
4,400.00.
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The
Initial Component Level for the SBR is equal to
3,050.00.
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The
Initial Component Level for the NKY is equal to
17,100.00.
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The
Initial Component Level for the MID is equal to
900.00.
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The
Initial Component Level for the RTY is equal to
825.00.
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·
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The
Weightings of the Components comprising the Portfolio
are 20.00% with
respect to the SPX, 20.00% with respect to the SX5E,
20.00% with respect
to the SBR, 20.00% with respect to the NKY, 12.00%
with respect to the
MID, and 8.00% with respect to the
RTY.
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·
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All
returns are based on a 60 month term, pre tax
basis.
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·
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No
Market Disruption Events or Events of Default occur
during the term of the
Notes.
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FIFTH
THIRD SECURITIES, INC.
4
Example
1: The Portfolio Return is greater than zero.
In
this
example, the levels of all six Components increase relative
to their Initial
Component Levels as of the first Observation Date. As of
the second Observation
Date, the Observation Levels of four Components decrease
relative to their
Component Levels on the first Observation Date while the
Observation Levels of
two Components increase relative to their Component Levels
on the first
Observation Date. The Observation Levels of all six Components
increase relative
to their Initial Component Levels as of the second Observation
Date. This
example illustrates how holders of the Notes may benefit
from the increase in
the Observation Level of the Components relative to their
respective Initial
Component Levels on each related Observation Date.
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Component
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Initial
Component
Level
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Observation
Date
1
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Observation
Date
2
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Component
Performance
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Weighting
in the Portfolio
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SPX
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1,500.00
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1,745.00
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1,624.00
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12.30%
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20.00%
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SX5E
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4,400.00
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5,100.00
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6,905.00
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36.42%
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20.00%
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SBR
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3,050.00
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6,233.00
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6,843.00
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114.36%
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20.00%
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NKY
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17,100.00
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20,564.00
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16,108.00
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7.23%
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20.00%
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MID
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900.00
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1,961.00
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1,761.00
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106.78%
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12.00%
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RTY
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825.00
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1,570.00
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1,327.00
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75.58%
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8.00%
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On
the
Final Observation Date, the Component Performance for SPX
would be 12.30%, the
Component Performance for SX5E would be 36.42%, the Component
Performance for
SBR would be 114.36%, the Component Performance for NKY
would be 7.23%, the
Component Performance for MID would be 106.78%, and the
Component Performance
for RTY would be 75.58%, each as calculated pursuant to
the below formula:
In
this
example, using the formula below, the Portfolio Return
would be greater than
zero.
The
Portfolio Return is an amount equal to the sum of the Component
Performance for
each Component multiplied by its respective Weighting in
the Portfolio.
Portfolio
Return = (12.30% x 20.00%) + (36.42% x 20.00%) + (114.36%
x 20.00%) + (7.23% x
20.00%) + (106.78% x 12.00%) + (75.58% x 8.00%)
Portfolio
Return = 52.92%
The
Cash
Settlement Value, using the formula below, would equal
$1,661.52
Cash
Settlement Value
Because
the level of the Components of the Portfolio generally
increased over the term
of the Notes, you will receive a positive return on your
investment in the
Notes. Additionally, because of the Participation Rate,
the return on the Notes
may in this case be greater than the return on a direct
investment in the
underlying indices.
FIFTH
THIRD SECURITIES, INC.
5
Example
2: The Portfolio Return might be less than zero.
In
this
example, the Observation Levels all six Components decrease
relative to their
Initial Component Levels as of the first Observation Date.
On the second
Observation Date, the Observation Levels of four of the Components
decrease
relative to their Component Levels on first Observation Date
while the
Observation Levels of two Components increase relative to their
Component Levels
on the first Observation Date. The Observation Levels of all
six Components
decrease relative to their Initial Component Levels as of the
second Observation
Date. As a result, the Portfolio Return would be less than
zero, and holders of
the Notes would therefore have received only the principal
amount of each Note
at maturity.
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Component
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Initial
Component
Level
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Observation
Date
1
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Observation
Date
2
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Component
Performance
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Weighting
in the Portfolio
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SPX
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1,500.00
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978.00
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938.00
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-36.13%
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20.00%
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SX5E
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4,400.00
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1,930.00
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2,285.00
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-52.10%
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20.00%
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SBR
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3,050.00
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2,310.00
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2,073.00
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-28.15%
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20.00%
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NKY
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17,100.00
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12,765.00
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12,214.00
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-26.96%
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20.00%
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MID
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900.00
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347.00
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327.00
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-62.56%
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12.00%
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RTY
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825.00
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619.00
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627.00
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-24.48%
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8.00%
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On
the
Final Observation Date, the Component Performance for SPX would
be -36.13%, the
Component Performance for SX5E would be -52.10%, the Component
Performance for
SBR would be -28.15%, the Component Performance for NKY would
be -26.96%, the
Component Performance for MID would be -62.56%, and the Component
Performance
for RTY would be -24.48%, each as calculated pursuant to the
below
formula:
In
this
example, using the formula below, the Portfolio Return would
not be greater than
zero.
The
Portfolio Return is an amount equal to the sum of the Component
Performance for
each Component multiplied by its respective Weighting in the
Portfolio.
Portfolio
Return = (-36.13% x 20.00%) + (-52.10% x 20.00%) + (-28.15%
x 20.00%) + (-26.96%
x 20.00%) +
(-62.56%
x 12.00%) + (-24.48% x 8.00%)
Portfolio
Return = -38.13%
Since
the
Portfolio Return would be less than zero, the Cash Settlement
Value for each
Note would be the principal amount of $1,000. In this case,
an investor in the
Notes benefits from principal protection.
Example
3: Some Components move higher while others move lower.
In
this
example, the Observation Levels of three Components decrease
relative to their
Initial Component Levels as of the first Observation Date and
the Observation
Levels of three Components increase relative to their Initial
Component Levels
as of the first Observation Date. The Observation Levels of
three Components
decrease relative to their Initial Component Levels as of the
second Observation
Date and the Observation Levels of three Components increase
relative to their
Initial Component Levels as of the second Observation Date.
This example
illustrates how holders of the Notes may benefit from the increase
in the
Observation Level of some of the Components relative to their
respective Initial
Component Levels on each related Observation Date.
FIFTH
THIRD SECURITIES, INC.
6
|
Component
|
Initial
Component
Level
|
Observation
Date
1
|
Observation
Date
2
|
Component
Performance
|
Weighting
in the Portfolio
|
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SPX
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1,500.00
|
1,138.00
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1,334.00
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-17.60%
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20.00%
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SX5E
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4,400.00
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5,838.00
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7,033.00
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46.26%
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20.00%
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SBR
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3,050.00
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1,575.00
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1,240.00
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-53.85%
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20.00%
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NKY
|
17,100.00
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27,684.00
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22,964.00
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48.09%
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20.00%
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MID
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900.00
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654.00
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570.00
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-32.00%
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12.00%
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RTY
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825.00
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891.00
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1,177.00
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25.33%
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8.00%
|
On
the
Final Observation Date, the Component Performance for SPX
would be -17.60%, the
Component Performance for SX5E would be 46.26%, the Component
Performance for
SBR would be -53.85%, the Component Performance for NKY would
be 48.09%, the
Component Performance for MID would be -32.00%, and the Component
Performance
for RTY would be 25.33%, each as calculated pursuant to the
below formula:
In
this
example, using the formula below, the Portfolio Return would
be greater than
zero.
The
Portfolio Return is an amount equal to the sum of the Component
Performance for
each Component multiplied by its respective Weighting in
the Portfolio.
Portfolio
Return = (-17.60% x 20.00%) + (46.26% x 20.00%) + (-53.85%
x 20.00%) + (48.09% x
20.00%) +
(-32.00%
x 12.00%) + (25.33% x 8.00%)
Portfolio
Return = 2.77%
The
Cash
Settlement Value, using the formula below, would equal $1,034.59.
Cash
Settlement Value
In
this
example, because the level of the Portfolio increased over
the term of the
Notes, you will receive a positive return on your investment
in the Notes, which
is further increased by the Participation Rate.S
FIFTH
THIRD SECURITIES, INC.
7
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SELECTED
RISK
CONSIDERATIONS
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·
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No
current income—We
will not pay any interest during
the term of the Notes.
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·
|
Non-conventional
return—The
yield on the Notes 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 from an issuer with
a comparable credit
rating.
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|
·
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No
interest, dividend or other payments—You
will not receive any interest, dividend
payments or other distributions on
the securities underlying any of
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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·
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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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·
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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. Fifth Third Securities,
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.
|
FIFTH
THIRD SECURITIES, INC.
8