Filed
Pursuant to Rule 433
Registration
No. 333−136666
November
10, 2006
Accelerated
Market
Participation
Securities
BEAR,
STEARNS & CO. INC.
STRUCTURED
PRODUCTS GROUP
(212)
272-6928
STRUCTURED
EQUITY PRODUCTS
|
New
Issue
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Indicative
Terms
|
THE
BEAR STEARNS COMPANIES INC.
Note
Linked to the ISE-CCM Homeland Security Index
Due:
May [__], 2008
INVESTMENT
HIGHLIGHTS
| · |
18-month
term to maturity.
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| · |
The
Notes are not principal protected.
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| · |
Issue
is a direct obligation of The Bear Stearns Companies Inc. (Rated
A1 by
Moody’s / A+ by S&P).
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| · |
Issue
Price: 100.00% of the Principal Amount
($1,000).
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| · |
Linked
to the ISE-CCM Homeland Security Index.
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| · |
Depending
upon the value of the Index at maturity, the Note will pay 1.5 times
the
percent increase in the Index, if any, up to a maximum return of
[20.00-22.00]%.
|
| · |
If
the Index declines in value at maturity, the Note will lose value
at a
rate of 1% for every 1% decline in the Index from the Initial Index
level.
|
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.
| USActive 6012024.5 |
BEAR,
STEARNS & CO.
INC.
|
-1-
| |
STRUCTURED
PRODUCTS GROUP
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|
GENERAL
TERMS FOR THE NOTE
OFFERING
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This
free
writing prospectus relates to the offering of Notes linked to the ISE-CCM
Homeland Security Index (the “Index”). 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 Prospectus
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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[073928S20]
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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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$[_______]
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|
DENOMINATIONS:
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$1,000
per Note and $1,000 multiples thereafter.
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SELLING
PERIOD ENDS:
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November
[__], 2006
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|
SETTLEMENT
DATE:
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November
[__], 2006
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|
CALCULATION
DATE:
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May
[__], 2008
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MATURITY
DATE:
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May
[__], 2008 (for a term of approximately 18-months)
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CASH
SETTLEMENT VALUE:
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On
the Maturity Date you will receive the Cash Settlement Value,
an amount in
cash that depends upon the relation of the Final Index Level
to the
Initial Index Level. If, on the Calculation Date, the Final
Index Level is
greater than or equal to the Initial Index Level, we will pay
you the
principal amount of the Notes, plus the lesser of:
|
|
|
 ,
and$[200.00-220.00]
If,
on the Calculation Date, the Final Index Level is less than
the Initial
Index Level, you will receive less and possibly significantly
less, than
the principal you invested. In this case, we will pay you,
per
Note:
 |
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INITIAL
INDEX LEVEL:
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The
closing value of the Index on November [__], 2006.
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FINAL
INDEX LEVEL:
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The
closing value of the Index on the Calculation Date.
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INDEX:
|
ISE-CCM
Homeland Security Index (HSX), an index compiled by the International
Securities Exchange and published on ISE’s website at www.iseoptions.com.
The Index is comprised of the common stock of 30 companies
engaged in
contractual work with the Department of Homeland Security or
law
enforcement agencies, or engaged in providing products or services
that
meet the needs of domestic security and the prevention of terrorist
attacks.
|
| USActive 6012024.5 |
BEAR,
STEARNS & CO.
INC.
|
-2-
| |
STRUCTURED
PRODUCTS GROUP
|
|
ADDITIONAL
TERMS SPECIFIC TO THE
NOTES
|
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 November 10, 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 advisers before you invest
in
the Notes. You may access the Pricing Supplement on the SEC web site at
www.sec.gov. You
may
access the Prospectus Supplement and Prospectus on the SEC web site as
follows:
| · |
Prospectus
Supplement dated August 16, 2006:
http://www.sec.gov/Archives/edgar/data/777001/000104746906011015/a2172743z424b5.htm
|
| · |
Prospectus
dated August 16, 2006: http://sec.gov/Archives/edgar/data/777001/000104746906011007/a2172711zs-3asr.htm
|
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ILLUSTRATIVE
CASH SETTLEMENT VALUE
TABLE
|
The
following is an illustrative table demonstrating the hypothetical Cash
Settlement Value of a Note based on the assumptions listed below. Actual returns
may be different.
ASSUMPTIONS:
| · |
Investor
purchases $1,000 principal amount of Notes at the initial offering
price
of $1,000.
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| · |
Investor
does not sell the Notes and holds the Notes to
maturity.
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| · |
The
Initial Index Level is equal to
70.00.
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| · |
The
maximum return is 21.00%.
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| · |
All
returns are based on an 18-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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Initial
Index
Level
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Final
Index Level
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Percentage
Change
in
Index
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Cash
Settlement
Value
Per Note
|
Return
if Held to
Maturity
|
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70.00
|
98.00
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40.00%
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$1,210.00
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21.00%
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70.00
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94.50
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35.00%
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$1,210.00
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21.00%
|
|
70.00
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91.00
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30.00%
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$1,210.00
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21.00%
|
|
70.00
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87.50
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25.00%
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$1,210.00
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21.00%
|
|
70.00
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84.00
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20.00%
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$1,210.00
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21.00%
|
|
70.00
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80.50
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15.00%
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$1,210.00
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21.00%
|
|
70.00
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77.00
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10.00%
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$1,150.00
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15.00%
|
|
70.00
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73.50
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5.00%
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$1,075.00
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7.50%
|
|
70.00
|
70.00
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0.00%
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$1,000.00
|
0.00%
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70.00
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66.50
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-5.00%
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$950.00
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-5.00%
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70.00
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63.00
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-10.00%
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$900.00
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-10.00%
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70.00
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59.50
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-15.00%
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$850.00
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-15.00%
|
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70.00
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56.00
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-20.00%
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$800.00
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-20.00%
|
|
70.00
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52.50
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-25.00%
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$750.00
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-25.00%
|
|
70.00
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49.00
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-30.00%
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$700.00
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-30.00%
|
|
70.00
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45.50
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-35.00%
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$650.00
|
-35.00%
|
|
70.00
|
42.00
|
-40.00%
|
$600.00
|
-40.00%
|
| USActive 6012024.5 |
BEAR,
STEARNS & CO.
INC.
|
-3-
| |
STRUCTURED
PRODUCTS GROUP
|
The
graph
below depicts the hypothetical Cash Settlement Values for the Note structure
as
the level of the Index changes.
| USActive 6012024.5 |
BEAR,
STEARNS & CO.
INC.
|
-4-
| |
STRUCTURED
PRODUCTS GROUP
|
|
SELECTED
RISK CONSIDERATIONS
|
| · |
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.
|
| · |
Not
Principal Protected - The
Notes are not principal protected. If the Final Index Level is less
than
the Initial Index Level, there will be no principal protection on
the
Notes and the Cash Settlement Value you will receive will be less
than the
initial offering price in proportion to the percentage decline in
the
Index. In that case, you will receive less, and possibly significantly
less, than the original public offering price of
$1,000.
|
| · |
Maximum
return of [20.00-22.00]%
—
You will not receive more than the maximum return of [20.00-22.00]%
at maturity. Because
the maximum return on the Notes is [20.00 - 22.00]%, the maximum
Cash
Settlement Value per $1,000 note is $[1,200 - 1,220]; therefore,
if the
Final Index Level is in excess of [113.3333-114.6667]% of the
Initial Index Level, the Cash Settlement Value will not reflect such
excess in the increase in the Index
level.
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| · |
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
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.
|
| · |
No
dividend or other payments —
You will not receive any dividend payments or other distributions
on the
stocks underlying the Index, nor will such payments be included in
the
calculation of the Cash Settlement Value you will receive at
maturity.
|
| · |
The
Notes are subject to equity market risks—
Equity securities are susceptible to general equity market fluctuations
and to volatile increases and decreases in value. Performance of
the
stocks comprising the Index may be affected by a variety of factors,
including the occurrence or non-occurrence of terrorist attacks or
any
change in spending by the Department of Homeland Security, other
state or
federal agencies or the private sector on domestic security and the
prevention of terrorist attacks. The stocks comprising the Index
are not
equally weighted and may not move in tandem. Increases in one or
more such
stocks therefore may be offset by decreases in one or more other
such
stocks.
|
| · |
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 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. 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 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).
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|
LICENSE
AGREEMENT
|
We
have
entered into a non-exclusive license agreement with the Sponsor providing for
the license to us, in exchange for a fee, of the right to use the Index in
connection with certain securities, including the Notes.
The
Notes
are not sponsored, endorsed, sold or promoted by the Sponsor. The Sponsor makes
no representation or warranty, express or implied, to the owners of the Notes
or
any member of the public regarding the advisability of investing in securities
generally or in the Notes particularly.
All
disclosures contained in this pricing supplement regarding the Index, including
its make-up, method of calculation and changes in its components, are derived
from publicly available information prepared by the Sponsor. None of us, Bear
Stearns or the Trustee assumes any responsibility for the accuracy or
completeness of such information.
| USActive 6012024.5 |
BEAR,
STEARNS & CO.
INC.
|
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