Filed Pursuant to Rule 433
Registration No.: 333-121744
[BEAR STEARNS LOGO]
Reverse Convertible Note Securities
BEAR, STEARNS & CO. INC.
STRUCTURED PRODUCTS GROUP
(212) 272-6928
--------------------------------------------------------------------------------
New Issue
STRUCTURED EQUITY PRODUCTS
Indicative Terms
[GRAPHIC OMITTED]
THE BEAR STEARNS COMPANIES INC.
INVESTMENT HIGHLIGHTS
-------------------------------
1-year term to maturity.
o Note offering linked to the common stock of Wheeling-Pittsburgh
Corporation (the "Reference Asset").
o The Note pays an annualized fixed rate coupon; payments are made quarterly
in arrears.
o The Notes are a direct obligation of The Bear Stearns Companies Inc.
(Rated A1 by Moody's / A by S&P).
o Issue price for the Note offering: 100% of principal amount ($1,000);
o The Note is not principal protected if: (i) the Closing Price of the
Reference Asset ever equals or falls below the Contingent Protection Level
at any time from the Pricing Date up to and including the Calculation
Date; and (ii) the Final Level of the Reference Asset is less than the
Initial Level of the Reference Asset.
o The Note does not participate in the upside of the Reference Asset. Even
if the Final Level of the Reference Asset exceeds the Initial Level of the
Reference Asset, your return will not exceed the principal amount invested
plus the coupon payments.
Initial
Contingent Public
Term to Coupon Protection Offering
Reference Asset Symbol Maturity Rate Percentage Price
-------------------------------------------------- ---------- ---------- --------- --------------------- --------------
Wheeling-Pittsburg Corporation, common stock, WPSC 1-year [14.50%] 54.95% 100%
par value $0.01 per share, traded on the Nasdaq
Global Market
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.
- 1 -
[BEAR STEARNS LOGO] STRUCTURED PRODUCTS GROUP
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GENERAL TERMS FOR NOTE OFFERING
-------------------------------
This free writing prospectus relates to the offering of a Note linked to
the common stock of Wheeling-Pittsburg Corporation. We reserve the right to
withdraw, cancel or modify the offering and to reject orders in whole or in
part. Although the Note offering relates to the Reference Asset, you should not
construe that fact as a recommendation as to the merits of acquiring an
investment linked to such Reference Asset or as to the suitability of an
investment in the Note.
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ISSUER: The Bear Stearns Companies Inc.
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ISSUER'S RATING: A1 / A (Moody's / S&P)
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PRINCIPAL AMOUNT: $[2,000,000]
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DENOMINATIONS: $1,000 per Note and $1,000 multiples thereafter.
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REFERENCE ASSET: The common stock of Wheeling-Pittsburgh Corporation, par value $0.01 per share, traded on
the Nasdaq Global Market under the symbol "WPSC"
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PRICING DATE: July [26], 2006
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SETTLEMENT DATE: August [1], 2006
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CALCULATION DATE: July [26], 2007
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MATURITY DATE: August [1], 2007
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COUPON RATE (PER ANNUM): [14.50%], calculated on the basis of a 360 day year of 12 equal 30-day months.
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CONTINGENT PROTECTION PERCENTAGE:54.95% of the Initial Level.
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CONTINGENT PROTECTION LEVEL: $12.09 (Contingent Protection Percentage x Initial Level).
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AGENT'S DISCOUNT: [__]
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CASH SETTLEMENT VALUE: We will pay you 100% of the principal amount of your Notes, in cash, at maturity if either
of the following is true: (i) the Closing Price of the Reference Asset never equals or
falls below the Contingent Protection Level at any time from the Pricing Date up to and
including the Calculation Date; or (ii) the Final Level of the Reference Asset is equal to
or greater than the Initial Level of the Reference Asset.
However, if both of the following are true, the amount of principal you receive at
maturity will be reduced by the percentage decrease in the Reference Asset: (i) the
Closing Price of the Reference Asset ever equals or falls below the Contingent Protection
Level at any time from the Pricing Date up to and including the Calculation Date; and (ii)
the Final Level of the Reference Asset is less than the Initial Level of the Reference
Asset. In that event, we, at our option, will either: (i) physically deliver to you an
amount of the Reference Asset equal to the Exchange Ratio plus the Fractional Share Cash
Amount (which means that you will receive shares with a market value that is less than the
full principal amount of your Notes); or (ii) pay you a cash amount equal to the principal
amount you invested reduced by the percentage decrease in the Reference Asset. It is our
intent to physically deliver the Reference Asset when applicable, but we reserve the right
to settle the Note in cash.
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INTEREST PAYMENT DATES: [November 1, 2006, February 1, 2007, May 1, 2007 and August 1, 2007,] to be disclosed in
the final pricing supplement.
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INITIAL LEVEL: [22.00]
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FINAL LEVEL: The Closing Price of the Reference Asset on the Calculation Date.
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EXCHANGE RATIO: [__]; i.e., $1,000 divided by the Initial Level (rounded down to the nearest whole number,
with fractional shares to be paid in cash).
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FRACTIONAL SHARE CASH AMOUNT: An amount in cash per Note equal to the Final Level multiplied by the difference between (x)
$1,000 divided by the Initial Level (rounded to the nearest three decimal places), and
(y) the Exchange Ratio.
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CUSIP: [073902KS6]
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LISTING: The Note will not be listed on any U.S. securities exchange or quotation system.
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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
--------------------------------------
You should read this document together with the prospectus, dated February
2, 2005 (the "Prospectus"), as supplemented by the prospectus supplement, dated
February 16, 2006 (the "Prospectus Supplement"). You should carefully consider,
among other things, the matters set forth in "Risk Factors" and "Risk Factors -
Additional Risks Relating to Notes with an Equity Security or Equity Index as
the Reference Asset" in the Prospectus 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. The 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/777001/000104746906002070/
a2167609z424b2.htm
SELECTED RISK CONSIDERATIONS
----------------------------
The following highlights some, but not all, of the risk considerations
relevant to investing in the Notes. The following must be read in conjunction
-with the sections "Risk Factors" and "Risk Factors - Additional Risks Relating
to Notes with an Equity Security or Equity Index as the Reference Asset,"
beginning on pages S-5 and S-12, respectively, in the Prospectus Supplement.
o Suitability of Note for Investment -- A person should reach a decision to
invest in the Notes after carefully considering, with his or her advisors,
the suitability of the Notes in light of his or her investment objectives
and the information set out in the Pricing Supplement. Neither the Issuer
nor any dealer participating in the offering makes any recommendation as
to the suitability of the Notes for investment.
o Not Principal Protected --The Notes are not principal protected. If both
of the following are true, the amount of principal you receive at maturity
will be reduced by the percentage decrease in the Reference Asset: (i) the
Closing Price of the Reference Asset ever equals or falls below the
Contingent Protection Level at any time from the Pricing Date up to and
including the Calculation Date; and (ii) the Final Level of the Reference
Asset is less than the Initial Level of the Reference Asset. In that
event, we, at our option, will either: (i) physically deliver to you an
amount of the Reference Asset equal to the Exchange Ratio plus the
Fractional Share Cash Amount (which means that you will receive shares
with a market value that is less than the full principal amount of your
Notes); or (ii) pay you a cash amount equal to the principal amount you
invested reduced by the percentage decrease in the Reference Asset.
o Return Limited to Coupon -- Your return is limited to the principal amount
you invested plus the coupon payments. You will not participate in any
appreciation in the value of the Reference Asset.
o No Secondary Market -- Because the Notes will not be listed on any
securities exchange, a secondary trading market is not expected to
develop, and, if such a market were to develop, it may not be liquid.
Bear, Stearns & Co. Inc. intends under ordinary market conditions to
indicate prices for the Notes on request. However, there can be no
guarantee that bids for outstanding Notes will be made in the future; nor
can the prices of those bids be predicted.
o No Interest, Dividend or Other Payments -- You will not receive any
interest or dividend payments or other distributions on the stock
comprising the Reference Asset; nor will such payments be included in the
calculation of the Cash Settlement Value you will receive at maturity.
o Taxes -- We intend to treat the Note as a put option written by you in
respect of the Reference Asset and a deposit with us of cash in an amount
equal to the issue price of the Note to secure your potential obligation
under the put option, and we intend to treat the deposit as a short-term
debt instrument for U.S. federal income tax purposes. Pursuant to the
terms of the Notes, you agree to treat the Notes in accordance with this
characterization for all U.S. federal income tax purposes. However,
because there are no regulations, published rulings or judicial decisions
addressing the characterization for U.S. federal income tax purposes of
securities with terms that are substantially the same as those of the
Notes, other characterizations and treatments are possible. See "Certain
U.S. Federal Income Tax Considerations" below.
o The Notes may be Affected by Certain Corporate Events and you will have
Limited Antidilution Protection. -- Following certain corporate events
relating to the underlying Reference Asset (where the underlying company
is not the surviving entity), you will receive at maturity, cash or a
number of shares of the common stock of a successor corporation to the
underlying company, based on the Closing Price of such successor's common
stock. The Calculation Agent for the Notes will adjust the amount payable
at maturity by adjusting the Initial Level of the Reference Asset,
Contingent Protection Level, Contingent Protection Price and Exchange
Ratio for certain events affecting the Reference Asset, such as stock
splits and stock dividends and certain other corporate events involving an
underlying company. However, the Calculation Agent is not required to make
an adjustment for every corporate event that can affect the Reference
Asset. If an event occurs that is perceived by the market to dilute the
Reference Asset but that does not require the Calculation Agent to adjust
the amount of the Reference Asset payable at maturity, the market value of
the Notes and the amount payable at maturity may be materially and
adversely affected.
- 3 - BEAR, STEARNS & CO. INC.
[BEAR STEARNS LOGO] STRUCTURED PRODUCTS GROUP
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INTEREST AND PAYMENT AT MATURITY
--------------------------------
Interest. The interest rate for the Note is designated on the cover of this
free-writing prospectus. The interest paid will include interest accrued from
the Settlement Date to, but excluding, the relevant Interest Payment Date or
Maturity Date. Interest will be paid to the person in whose name the Note is
registered at the close of business on the Record Date before each Interest
Payment Date. However, interest payable on the Maturity Date will be payable to
the person to whom principal is payable. If the Interest Payment Date is also a
day on which principal is due, the interest payable will include interest
accrued to, but excluding, the stated Maturity Date.
Payment at Maturity. We will pay you 100% of the principal amount of your Notes,
in cash, at maturity if either of the following is true: (i) the Closing Price
of the Reference Asset never equals or falls below the Contingent Protection
Level at any time from the Pricing Date up to and including the Calculation
Date; or (ii) the Final Level of the Reference Asset is equal to or greater than
the Initial Level of the Reference Asset.
However, if both of the following are true, the amount of principal you
receive at maturity will be reduced by the percentage decrease in the Reference
Asset: (i) the Closing Price of the Reference Asset ever equals or falls below
the Contingent Protection Level at any time from the Pricing Date up to and
including the Calculation Date; and (ii) the Final Level of the Reference Asset
is less than the Initial Level of the Reference Asset.
In that event, we, at our option, will either: (i) physically deliver to
you an amount of the Reference Asset equal to the Exchange Ratio plus the
Fractional Share Cash Amount (which means that you will receive shares with a
market value that is less than the full principal amount of your Notes); or (ii)
pay you a cash amount equal to the principal amount you invested reduced by the
percentage decrease in the Reference Asset. It is our intent to physically
deliver the Reference Asset when applicable, but we reserve the right to settle
the Note in cash.
We will (i) provide written notice to the Trustee and to the Depositary,
on or prior to the Business Day immediately prior to the Maturity Date of the
amount of cash or number of shares of the Reference Asset (and cash in respect
of coupon and cash in respect of any fractional shares of the Reference Asset),
as applicable, to be delivered, and (ii) deliver such cash or shares of the
Reference Asset (and cash in respect of coupon and cash in respect of any
fractional shares of the Reference Asset), if applicable, to the Trustee for
delivery to you. The Calculation Agent shall determine the Exchange Ratio.
REFERENCE ASSET INFORMATION
---------------------------
We urge you to read the section "Sponsors or Issuers and Reference Asset"
on page S-20 in the Prospectus Supplement. Companies with securities registered
under the Exchange Act are required to file periodically certain financial and
other information specified by the SEC. Information provided to or filed with
the SEC electronically can be accessed through a website maintained by the SEC.
The address of the SEC's website is http://www.sec.gov. Information provided to
or filed with the SEC pursuant to the Exchange Act by a company issuing a
Reference Asset can be located by reference to the SEC file number provided
below.
The summary information below regarding the company issuing the stock
comprising the Reference Asset comes from the issuer's SEC filings and has not
been independently verified by us. We do not make any representations as to the
accuracy or completeness of such information or of any filings made by the
issuer of the Reference Asset with the SEC. Investors are urged to refer to the
SEC filings made by the issuer and to other publicly available information (such
as the issuer's annual report) to obtain an understanding of the issuer's
business and financial prospects. The summary information contained below is not
designed to be, and should not be interpreted as, an effort to present
information regarding the financial prospects of the issuer or any trends,
events or other factors that may have a positive or negative influence on those
prospects or as an endorsement of the issuer.
Wheeling-Pittsburgh Corporation ("WPSC")
Wheeling-Pittsburgh Corporation's ("WPSC") common stock, par value $0.01 per
share, trades on the Nasdaq Global Market. WPSC is engaged in the production of
steel and various steel products using both integrated and electric arc furnace
technology. WPSC's SEC file number is 000-50300.
- 4 - BEAR, STEARNS & CO. INC.
[BEAR STEARNS LOGO] STRUCTURED PRODUCTS GROUP
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ILLUSTRATIVE EXAMPLES & HISTORICAL TABLES
-----------------------------------------
The following are illustrative examples demonstrating the hypothetical
amounts payable at maturity based on the assumptions outlined below. These
examples do not purport to be representative of every possible scenario
concerning increases or decreases in the Reference Asset or of the movements
that are likely to occur with respect to the relevant Reference Asset. You
should not construe these examples or the data included in the tables set forth
below as an indication of the expected performance of the Notes. Some amounts
are rounded and actual returns may be different.
Assumptions:
o Investor purchases $1,000 principal amount of Notes on the Pricing
Date at the initial offering price of 100% and holds the Notes to
maturity. No Market Disruption Events or Events of Default occur
during the term of the Notes.
o Initial Level: $22
o Contingent Protection Percentage: 54.95%
o Contingent Protection Level: $12.09 ($22 x 54.95%)
o Exchange Ratio: 45 ($1,000/$22)
o Coupon: 14.50% per annum, paid quarterly ($36.25 per quarter) in
arrears.
o The reinvestment rate on any interest payments made during the term
of the Notes is assumed to be 0%. The 1-year total return on a
direct investment in the Reference Asset is calculated below prior
to the deduction of any brokerage fees or charges. Both a positive
reinvestment rate, or if any brokerage fees or charges were
incurred, would increase the total return on the Notes relative to
the total return of the Reference Asset.
o Maturity: 1 year
o Dividend and dividend yield on the Reference Asset: $0 and 0% per
annum
Example 1 - On the Calculation Date, the Final Level of $26.40 is greater
than the Initial Level, resulting in a payment at maturity of $1,000, regardless
of whether the Contingent Protection Price was ever reached or breached, plus
four interest payments of $36.25 each, for payments totaling $1,145.00. If you
had invested directly in the Reference Asset for the same one-year period, you
would have received total cash payments of $1,200.00 (number of shares of the
Reference Asset multiplied by the Final Level), assuming liquidation of shares
at the Final Level. You would have earned a 14.5% return with an investment in
the Notes and a 20.00% return with a direct investment in the Reference Asset.
Example 2 - On the Calculation Date, the Final Level of $17.60 is below
the Initial Level, but the Closing Price never equaled or fell below the
Contingent Protection Price. As discussed in example 1 above, an investor would
receive total payments of $1,145.00, earning a 14.5% return over the term of the
Notes. A direct investment in the Reference Asset during that same one-year time
period would have generated a return of $800.00 (number of shares of the
Reference Asset multiplied by the Final Level), assuming liquidation of shares
at the Final Level. You would have earned a 14.5% return with an investment in
the Notes and incurred a loss of 20% with a direct investment in the Reference
Asset.
Example 3 - During the term of the Note, the Closing Price at one point
falls below the Contingent Protection Level, and on the Calculation Date, the
Final Level of $15.40 is below the Initial Level. At our election, an investor
would receive a number of shares equal to the Exchange Ratio, plus the
Fractional Share Cash Amount plus the four interest payments of $36.25, which is
45 shares (worth $15.40 each) plus $7.00 (the Fractional Share Cash Amount) plus
$145.00 (four interest payments of $36.25 each). The cash equivalent equals
$845.00. If you had invested directly in the Reference Asset for the same
one-year period, you would have received total cash payments of $700.00 (number
of shares of the Reference Asset multiplied by the Final Level), assuming
liquidation of shares at the Final Level. An investment in the Notes would have
resulted in a loss of 15.50%, while a direct investment in the Reference Asset
would have resulted in a loss of 30.00%.
- 5 - BEAR, STEARNS & CO. INC.
[BEAR STEARNS LOGO] STRUCTURED PRODUCTS GROUP
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Table of Hypothetical Cash Settlement Values
Assumes the Closing Price Never Equals or Falls Below the
Contingent Protection Price On or Before the Calculation Date
Investment in the Notes Direct Investment in the Reference Asset
------------------------------ ------------------------------------------
Total
Coupon
Cash Payments 1-Year Percentage Change in
Hypothetical Settlement (in % Total Value of Reference
Initial Level Final Level Value Terms) Return Asset 1-Year Total Return
------------- ------------ ---------- -------- ------ -------------------- -------------------
22.00 30.80 $ 1,000.00 14.50% 14.50% 40.00% 40.00%
22.00 28.60 $ 1,000.00 14.50% 14.50% 30.00% 30.00%
22.00 26.40 $ 1,000.00 14.50% 14.50% 20.00% 20.00%
22.00 24.20 $ 1,000.00 14.50% 14.50% 10.00% 10.00%
22.00 22.00 $ 1,000.00 14.50% 14.50% 0.00% 0.00%
22.00 19.80 $ 1,000.00 14.50% 14.50% -10.00% -10.00%
22.00 17.60 $ 1,000.00 14.50% 14.50% -20.00% -20.00%
Table of Hypothetical Cash Settlement Values
Assumes the Closing Price Does Equal or Fall Below the
Contingent Protection Price On or Before the Calculation Date
Investment in the Notes Direct Investment in the Reference Asset
------------------------------ ----------------------------------------------
Total
Coupon
Cash Payments 1-Year
Hypothetical Settlement (in % Total Percentage Change in
Initial Level Final Level Value Terms) Return Value of Reference Asset 1-Year Total Return
------------- ------------ ---------- -------- ------ ------------------------ -------------------
22.00 39.60 $ 1,000.00 14.50% 14.50% 80.00% 80.00%
22.00 37.40 $ 1,000.00 14.50% 14.50% 70.00% 70.00%
22.00 35.20 $ 1,000.00 14.50% 14.50% 60.00% 60.00%
22.00 33.00 $ 1,000.00 14.50% 14.50% 50.00% 50.00%
22.00 30.80 $ 1,000.00 14.50% 14.50% 40.00% 40.00%
22.00 28.60 $ 1,000.00 14.50% 14.50% 30.00% 30.00%
22.00 26.40 $ 1,000.00 14.50% 14.50% 20.00% 20.00%
22.00 24.20 $ 1,000.00 14.50% 14.50% 10.00% 10.00%
22.00 22.00 $ 1,000.00 14.50% 14.50% 0.00% 0.00%
------------- ------------ ---------- -------- ------ ------------------------ -------------------
22.00 19.80 $ 900.00 14.50% 4.50% -10.00% -10.00%
22.00 17.60 $ 800.00 14.50% -5.50% -20.00% -20.00%
22.00 15.40 $ 700.00 14.50% -15.50% -30.00% -30.00%
22.00 13.20 $ 600.00 14.50% -25.50% -40.00% -40.00%
22.00 11.00 $ 500.00 14.50% -35.50% -50.00% -50.00%
22.00 8.80 $ 400.00 14.50% -45.50% -60.00% -60.00%
- 6 - BEAR, STEARNS & CO. INC.
[BEAR STEARNS LOGO] STRUCTURED PRODUCTS GROUP
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The following table sets forth on a per share basis the high and low
Closing Prices, as well as end-of-quarter closing prices, for the Reference
Asset during the periods indicated below. We obtained the information in the
tables below from Bloomberg Financial Markets, without independent verification.
Quarterly Quarterly Quarterly
Quarter Ending High Low Close
---------------------------------------------------------------
March 30, 2004 25.50 17.79 21.97
June 30, 2004 23.20 12.06 20.86
September 30, 2004 32.07 19.26 31.31
December 31, 2004 42.00 26.04 38.54
March 31, 2005 44.82 29.42 31.05
June 30, 2005 33.10 15.29 15.38
September 30, 2005 20.82 14.62 16.73
December 31, 2005 16.70 8.03 9.02
March 31, 2006 20.74 8.57 18.36
June 30, 2006 27.50 15.50 19.89
July 1, 2006 to July
27, 2006 22.97 17.19 21.93
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
----------------------------------------------
You should carefully consider, among other things, the matters set forth
in "Certain U.S. Federal Income Tax Considerations" in the Prospectus
Supplement. In the opinion of Cadwalader, Wickersham & Taft LLP, special U.S.
tax counsel to us, the following discussion summarizes certain of the material
U.S. federal income tax consequences of the purchase, beneficial ownership, and
disposition of each of the Notes.
There are no regulations, published rulings or judicial decisions
addressing the characterization for U.S. federal income tax purposes of
securities with terms that are substantially the same as those of the Notes.
Under one approach, each Note should be treated for federal income tax purposes
as a put option written by you (the "Put Option") that permits us to (1) sell
the Reference Asset to you at the maturity date for an amount equal to the
Deposit (as defined below), or (2) "cash settle" the Put Option (i.e., require
you to pay us at the maturity date the difference between the Deposit and the
value of the Reference Asset at such time), and a deposit with us of cash in an
amount equal to the principal amount you invested (the "Deposit") to secure your
potential obligation under the Put Option. We intend to treat the Notes
consistent with this approach. Pursuant to the terms of the Notes, you agree to
treat the Notes as cash deposits and put options with respect to the Reference
Asset for all U.S. federal income tax purposes. We also intend to treat the
Deposits as "short-term obligations" for U.S. federal income tax purposes.
Please see the discussion under the heading "Certain U.S. Federal Income Tax
Considerations-Tax Treatment of U.S. Holders-Short-Term Deposits" in the
accompanying Prospectus Supplement for certain U.S. federal income tax
considerations applicable to short-term obligations.
The chart below indicates the yield on the Deposit and the Put Premium, as
described in the Prospectus Supplement under the heading "Certain U.S. Federal
Income Tax Considerations." If the Internal Revenue Service (the "IRS") were
successful in asserting an alternative characterization for the Notes, the
timing and character of income on the Notes might differ. We do not plan to
request a ruling from the IRS regarding the tax treatment of the Notes, and the
IRS or a court may not agree with the tax treatment described in this pricing
supplement.
PROSPECTIVE PURCHASERS OF NOTES SHOULD CONSULT THEIR TAX ADVISORS AS TO
THE FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF NOTES.
- 7 -
[BEAR STEARNS LOGO] STRUCTURED PRODUCTS GROUP
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Coupon Rate, per Yield on the Put Premium, per
Reference Asset Term to Maturity Annum Deposit, per Annum Annum
--------------- ---------------- ----- ------------------ -----
Wheeling-Pittsburg Corporation 1-year [14.50%] [5.593]% [8.907]%
- 8 - BEAR, STEARNS & CO. INC.