Filed Pursuant to Rule 433
Registration No. 333-121744
August 8, 2006
[BEAR STEARNS LOGO] BEAR, STEARNS & CO. INC.
STRUCTURED PRODUCTS GROUP
(212) 272-6928
STRUCTURED EQUITY PRODUCTS
New Issue Indicative Terms
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THE BEAR STEARNS COMPANIES INC.
2-YEAR NOTE LINKED TO THE DOW JONES - AIG COMMODITIES INDEX
These Notes are NOT Principal Protected
INVESTMENT HIGHLIGHTS
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o Two-year term to maturity.
o Issue is a direct obligation of The Bear Stearns Companies Inc.
(Rated A1 by Moody's / A by S&P).
o Issue Price: 100.00% of the principal amount of a Note (99.00% for
investors who purchase a principal amount of at least $1,000,000).
o Linked to the performance of the Dow Jones--AIG Commodity IndexSM
(the "Index").
o If the Final Index Level is greater than or equal to the Initial
Index Level, an investor will receive the principal amount of its
Notes at maturity plus a return equal to [130-140]% of the
percentage increase in the Index.
o The Notes are not principal protected. If the Final Index Level is
less than the Initial Index Level, the principal amount paid to an
investor at maturity will be reduced by the percentage decline in
the Index.
o The Notes will not pay periodic interest.
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.
[BEAR STEARNS LOGO] 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 the Dow Jones--AIG Commodity Index. We reserve the right to
withdraw, cancel or modify any offering and to reject orders in whole or in
part. Defined terms not defined herein shall have the same meaning as in the
Prospectus Supplement and Pricing Supplement discussed below.
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ISSUER: The Bear Stearns Companies Inc. ("BSC").
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ISSUER'S RATING: A1 / A (Moody's / S&P).
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CUSIP NUMBER: [073928R21].
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ISSUE PRICE: 100.00% of the principal amount of a
note (99.00% for investors who
purchase a principal amount of at least
$1,000,000).
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PRINCIPAL AMOUNT: To be disclosed in the final pricing
supplement.
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DENOMINATIONS: $1,000 per Note.
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SELLING PERIOD ENDS: August [22], 2006.
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PRICING DATE: August [23], 2006.
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SETTLEMENT DATE: August [28], 2006.
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CALCULATION DATE: August [26], 2008.
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MATURITY DATE: August [28], 2008 (for a term of two years).
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CASH SETTLEMENT VALUE: If the Final Index Level
is greater than or equal to the Initial
Index Level, then, on the Maturity Date,
you will receive the Cash Settlement
Value, an amount per Note in cash equal to
the principal amount of the Notes, plus:
(Final Index Level - Initial Index Level)
$1,000 x [Upside Participation Rate x ------------------------------------- ]
(Initial Index Level)
If the Final Index Level is less than the
Initial Index Level, you will receive, per
Note:
(Final Index Level)
$1,000 x -----------------------
(Initial Index Level)
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INDEX: The Dow Jones--AIG Commodity IndexSM
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UPSIDE PARTICIPATION RATE: [130-140]%.
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INDEX LEVEL: The closing value of the Index, as
determined by the Sponsors, on the
applicable Index Business Day.
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INITIAL INDEX LEVEL: Equals [o], the closing value of the
Index, as determined by the Sponsors,
on August [23], 2006.
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FINAL INDEX LEVEL: Will be determined by the Calculation Agent
and will equal the closing value of the
Index, as determined by the Sponsors, on
August [26], 2008, the "Calculation Date."
If that day is not an Index Business Day,
the next Index Business Day will be the
Calculation Date.
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- 2 - BEAR, STEARNS & CO. INC.
[BEAR STEARNS LOGO] 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 February 2, 2005 (the "Prospectus" and "Prospectus
Supplement," respectively), and the more detailed information contained in the
Pricing Supplement filed with the SEC on August 7, 2006 (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 advisors
before you invest in the Notes. The Pricing Supplement and the accompanying
Prospectus and Prospectus Supplement may be accessed on the SEC Web site at
www.sec.gov as follows:
http://www.sec.gov/Archives/edgar/data/777001/000104746906010467/
a2172414z424b5.htm
ILLUSTRATIVE SETTLEMENT TABLE
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The following illustrative table demonstrates the hypothetical Cash
Settlement Value of a Note based on the assumptions outlined below. The table
does not purport to be representative of every possible scenario concerning
increases or decreases in the Index Level. You should not construe this table as
an indication or assurance of the expected performance of the Notes. Actual
returns may be different. The table demonstrating the hypothetical Cash
Settlement Value of a Note is based on the following assumptions:
o Investor purchases $1,000 aggregate principal amount of Notes at the
initial public offering price of $1,000.
o Investor holds the Notes to maturity.
o The Upside Participation Rate is 135%.
o The Initial Index Level is equal to 170.00.
o All returns are based on a 2-year term; pre-tax basis.
o No Market Disruption Events or Events of Default occur during the
term of the Notes.
Initial Percentage
Index Final Index Change in Return if Held Cash Settlement Value
Level Level Index to Maturity Per Note
-------------- --------------- -------------- ----------------- ---------------------------
170.00 340.00 100.00% 135.00% $ 2,350.00
170.00 323.00 90.00% 121.50% $ 2,215.00
170.00 306.00 80.00% 108.00% $ 2,080.00
170.00 289.00 70.00% 94.50% $ 1,945.00
170.00 272.00 60.00% 81.00% $ 1,810.00
170.00 255.00 50.00% 67.50% $ 1,675.00
170.00 238.00 40.00% 54.00% $ 1,540.00
170.00 221.00 30.00% 40.50% $ 1,405.00
170.00 204.00 20.00% 27.00% $ 1,270.00
170.00 187.00 10.00% 13.50% $ 1,135.00
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170.00 170.00 0.00% 0.00% $ 1,000.00
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170.00 153.00 -10.00% -10.00% $ 900.00
170.00 136.00 -20.00% -20.00% $ 800.00
170.00 119.00 -30.00% -30.00% $ 700.00
- 3 - BEAR, STEARNS & CO. INC.
[BEAR STEARNS LOGO] STRUCTURED PRODUCTS GROUP
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170.00 102.00 -40.00% -40.00% $ 600.00
170.00 85.00 -50.00% -50.00% $ 500.00
170.00 68.00 -60.00% -60.00% $ 400.00
170.00 51.00 -70.00% -70.00% $ 300.00
The following table sets forth the monthly performance of the Index from
January 31, 2001 through July 31, 2006. We obtained the Index Levels listed
below from public sources and believe such information to be accurate.
Since its inception, the Index has experienced significant fluctuations.
Any historical upward or downward trend in the level of the Index during any
period shown in the following table is not an indication that the level of the
Index is more or less likely to increase or decrease at any time during the term
of the Notes. The historical Index Level during any period shown in the
following table is not an indication of the future performance of the Index. The
results shown should not be considered as a representation of the income, yield
or capital gain or loss that may be generated by the Index in the future. The
actual performance of the Index over the life of the Notes may bear little
relation to the historical terms shown below.
2001 2002 2003 2004 2005 2006
-------------------------------- ------------ ------------ ------------- ------------ ------------ -----------
January.................... 111.374 88.309 118.644 137.620 146.821 173.669
February................... 110.479 90.476 122.526 146.445 156.886 162.234
March...................... 105.372 99.588 113.171 150.837 162.094 165.194
April...................... 108.708 99.431 112.360 148.046 152.294 175.767
May........................ 106.091 97.755 118.821 150.436 150.727 176.679
June....................... 101.571 99.518 115.788 144.034 152.885 173.235
July....................... 102.570 98.826 116.395 146.414 159.33 178.032
August..................... 102.225 102.581 120.898 143.556 170.816
September.................. 95.107 106.294 120.898 153.175 178.249
October.................... 90.407 105.053 126.571 155.549 166.516
November................... 90.959 105.247 126.087 153.406 166.402
December................... 89.033 110.276 135.269 145.604 171.149
SELECTED RISK CONSIDERATIONS
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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" beginning on pages S-3 and PS-12, respectively,
in the Prospectus Supplement and Pricing Supplement.
o Suitability of Notes 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.
o Possible loss of principal--The Notes are not principal protected. If the
Final Index Level is less than the Initial Index Level, the Notes will not
be principal protected and the Cash Settlement Value you will receive at
maturity will be less than the initial public offering price in proportion
to the percentage decline in the Index Level. In that case, you will
receive less, and possibly significantly less, than the initial public
offering price of $1,000.
o Not exchange-listed--The Notes will not be listed on any securities
exchange, 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.
o Liquidity--If a trading market were to develop in the Notes, it may not be
liquid. Our subsidiary, Bear Stearns & Co., Inc. has advised us that,
under ordinary market conditions, it intends to indicate prices for the
Notes on request. However, we cannot guarantee that bids for outstanding
Notes will be made; nor can we predict the price at which any such bids
will be made. In any event, the Notes will cease trading as of the close
of business on the Maturity Date.
- 4 - BEAR, STEARNS & CO. INC.
[BEAR STEARNS LOGO] STRUCTURED PRODUCTS GROUP
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o Possible loss of value in the secondary market--If you sell your Notes
prior to maturity, you may receive less than the amount you originally
invested or the amount you would have received had you held the Notes to
maturity.
o No interest or other payments and no current income--During the term of
the Notes, you will not receive any interest or other periodic
distributions and such payments will not be included in the calculation of
the Cash Settlement Value you will receive at maturity. 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.
o Return related to commodity market price movement--The Notes entail
exposure to commodity price movements. If the Final Index Level is less
than the Initial Index Level, your return will be reduced in proportion to
the percentage decline in the Index Level.
o Taxes--The U.S. federal income tax consequences of an investment in the
Notes are uncertain. We intend to treat the Notes for federal income tax
purposes as pre-paid cash-settled forward contracts linked to the value of
the Index and, where required, to file information returns with the
Internal Revenue Service in accordance with such treatment. Assuming the
Notes are treated as pre-paid cash-settled forward 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). However, other
treatments are possible. Prospective investors are urged to consult their
tax advisors regarding the U.S. federal income tax consequences of an
investment in the Notes.
LICENSE AGREEMENTS
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We have entered into a non-exclusive license agreement with the Sponsors
providing for the license to us and certain of our affiliated or subsidiary
companies, in exchange for a fee, of the right to use the Index, which is owned
and published by the Sponsors, in connection with certain products, including
the Notes.
The license agreement between the Sponsors and us provides that the
following language must be set forth in this free writing prospectus.
"The Notes are not sponsored, endorsed, sold or promoted by Dow
Jones, American International Group, AIGI or any of their respective
subsidiaries or affiliates. None of Dow Jones, American International
Group, AIGI or any of their affiliates makes any representation or
warranty, express or implied, to the owners of or counterparts to the
Notes or any member of the public regarding the advisability of investing
in securities or commodities generally or in the Notes particularly. The
only relationship of Dow Jones, American International Group, AIGI or any
of their respective subsidiaries or affiliates to the Licensee is the
licensing of certain trademarks, trade names and service marks and of the
Dow Jones--AIG Commodity IndexSM, which is determined, composed and
calculated by Dow Jones in conjunction with AIGI without regard to us or
the Notes. Dow Jones and AIGI have no obligation to take our needs or the
needs of the owners of the Notes into consideration in determining,
composing or calculating the Dow Jones--AIG Commodity IndexSM. None of Dow
Jones, American International Group, AIGI or any of their respective
subsidiaries or affiliates is responsible for or has participated in the
determination of the timing of, prices at, or quantities of the Notes to
be issued or in the determination or calculation of the equation by which
the Notes are to be converted into cash. None of Dow Jones, American
International Group, AIGI or any of their respective subsidiaries or
affiliates shall have any obligation or liability, including without
limitation to Notes customers, in connection with the administration,
marketing or trading of the Notes. Notwithstanding the foregoing, AIGI,
American International Group and their respective subsidiaries or
affiliates may independently issue and/or sponsor financial products
unrelated to the Notes currently being issued by Licensee, but which may
be similar to and competitive with the Notes. In addition, American
International Group, AIGI and their respective subsidiaries or affiliates
actively trade commodities, commodity indices and commodity futures
(including the Dow Jones--AIG Commodity IndexSM and the Dow Jones--AIG
Commodity Index Total ReturnSM, as well as swaps, options and derivatives
which are linked to the performance of such commodities, commodity indices
and commodity futures. It is possible that this trading activity will
affect the value of the Dow Jones--AIG Commodity IndexSM and the Notes.
This free writing prospectus relates only to the Notes and does not
relate to the exchange-traded physical commodities underlying any of the
Dow Jones--AIG Commodity IndexSM components. Purchasers of the Notes
- 5 - BEAR, STEARNS & CO. INC.
[BEAR STEARNS LOGO] STRUCTURED PRODUCTS GROUP
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should not conclude that the inclusion of a futures contract in the Dow
Jones--AIG Commodity IndexSM is any form of investment recommendation of
the futures contract or the underlying exchange-traded physical commodity
by Dow Jones, American International Group, AIGI or any of their
respective subsidiaries or affiliates. The information in this free
writing prospectus regarding the exchange-traded futures contracts on
physical commodities which comprise the Dow Jones--AIG Commodity IndexSM
components has been derived solely from publicly available documents. None
of Dow Jones, American International Group, AIGI or any of their
respective subsidiaries or affiliates has made any due diligence inquiries
with respect to the exchange-traded futures contracts which comprise the
Dow Jones--AIG Commodity IndexSM in connection with Notes. None of Dow
Jones, American International Group, AIGI or any of their respective
subsidiaries or affiliates makes any representation that these publicly
available documents or any other publicly available information regarding
the exchange-traded futures contracts which comprise the Dow Jones--AIG
Commodity IndexSM, including without limitation a description of factors
that affect the prices of such exchange-traded futures contracts, are
accurate or complete.
None of Dow Jones, American International Group, AIGI or any of their
respective subsidiaries or affiliates guarantees the accuracy and/or the
completeness of the Dow Jones--AIG Commodity IndexSM or any data included
therein and none of Dow Jones, American International Group, AIGI or any
of their respective subsidiaries or affiliates shall have any liability
for any errors, omissions, or interruptions therein. None of Dow Jones,
American International Group, AIGI or any of their respective subsidiaries
or affiliates makes any warranty, express or implied, as to results to be
obtained by us, owners of the Notes or any other person or entity from the
use of the Dow Jones--AIG Commodity IndexSM or any data included therein.
None of Dow Jones, American International Group, AIGI or any of their
respective subsidiaries or affiliates makes any express or implied
warranties, and expressly disclaims all warranties of merchantability or
fitness for a particular purpose or use with respect to the Dow Jones--AIG
Commodity IndexSM or any data included therein without limiting any of the
foregoing, in no event shall Dow Jones, American International Group, AIGI
or any of their respective subsidiaries or affiliates have any liability
for any lost profits or indirect, punitive, special or consequential
damages or losses, even if notified of the possibility thereof. There are
no third party beneficiaries of any agreements or arrangements among Dow
Jones, AIGI and us, other than American International Group and its
affiliates."
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