|
Title
of Each Class of Securities Offered
|
|
Maximum
Aggregate
Offering
Price
|
|
Amount
of
Registration
Fee(1)
|
Medium-Term
Notes, Series B
|
|
$1,350,000
|
|
$144.45
|
____________
(1)
Calculated
in accordance with Rule 457(r) of the Securities Act of 1933, as amended.
The filing fee of $144.45 is being paid in connection with the registration
of
these Reverse Convertible Notes
Filed
pursuant to Rule 424(b)5
Registration
No. 333-136666
PRICING
SUPPLEMENT
(To
Prospectus Dated August 16, 2006 and
Prospectus
Supplement Dated August 16, 2006)
The
Bear Stearns Companies Inc.
$1,350,000
Reverse Convertible Notes
14%
Coupon, Due October 26, 2007
Linked
to the common stock of Apple Computer, Inc.
Terms
used herein are defined in the prospectus supplement. The Notes offered will
have the terms described in the prospectus supplement and the prospectus, as
supplemented or modified by this pricing supplement. THE
NOTES DO NOT GUARANTEE ANY RETURN OF PRINCIPAL AT
MATURITY.
·
|
Reference
Asset:
|
The
common stock of Apple Computer, Inc. (“Apple”), traded on the Nasdaq Stock
Market, Inc. (“NASDAQ”) under the symbol “AAPL”.
|
|
|
|
·
|
Principal
amount:
|
$1,350,000
|
|
|
|
·
|
Pricing
Date:
|
October
23, 2006
|
|
|
|
·
|
Original
Issue Date:
|
October
26, 2006
|
|
|
|
·
|
Calculation
Date:
|
October
23, 2007, subject to postponement in the event of certain Market
Disruption Events.
|
|
|
|
·
|
Maturity
Date:
|
October
26, 2007
|
|
|
|
·
|
Coupon
rate:
|
14%
per annum, payable semi-annually.
|
|
|
|
·
|
Interest
Payment Dates:
|
April
26, 2007 and October 26, 2007.
|
|
|
|
·
|
Initial
Level:
|
$81.46,
the Closing Price of the Reference Asset on the Pricing
Date.
|
|
|
|
·
|
Final
Level:
|
The
Closing Price of the Reference Asset on the Calculation
Date.
|
|
|
|
·
|
Contingent
Protection Percentage:
|
80.00%
of the Initial Level.
|
|
|
|
·
|
Contingent
Protection Level:
|
$65.17,
equal to the product of the Contingent Protection Percentage and
the
Initial Level.
|
|
|
|
·
|
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 Trading Level 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
Trading Level 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.
|
|
|
|
·
|
Exchange
Ratio:
|
12;
i.e., $1,000 divided by the Initial Level (rounded down to the
nearest
whole number, with fractional shares to be paid in
cash).
|
|
|
|
·
|
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.
|
|
|
|
·
|
CUSIP:
|
073902LF3
|
|
|
|
·
|
Listing:
|
The
Notes will not be listed on any U.S. securities exchange or quotation
system.
|
INVESTMENT
IN THE NOTES INVOLVES CERTAIN RISKS. YOU SHOULD REFER TO “RISK FACTORS”
BEGINNING ON PAGE PS-4 BELOW.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of the Notes or determined that this pricing supplement,
or the accompanying prospectus supplement and prospectus, is truthful or
complete. Any representation to the contrary is a criminal
offense.
|
Per
Note
|
Total
|
Initial
public offering price
|
100.00%
|
$1,350,000
|
Agent’s
discount
|
1.00%
|
$13,500
|
Proceeds,
before expenses, to us
|
99.00%
|
$1,336,500
|
We
may
grant the agents a 30-day option from the date of the final pricing supplement,
to purchase from us up to an additional $202,500 of Notes at the public offering
price, less the agent’s discount, to cover any over-allotments. We expect that
the Notes will be ready for delivery in book-entry form only through the
book-entry facilities of The Depository Trust Company in New York, New York,
on
or about the Original Issue Date, against payment in immediately available
funds. The distribution of the Notes will conform to the requirements set forth
in Rule 2720 of the National Association of Securities Dealers, Inc. Conduct
Rules.
Bear,
Stearns & Co. Inc.
October
23, 2006
WHERE
YOU CAN FIND MORE INFORMATION
We
have
filed a registration statement (including a prospectus, as supplemented by
a
prospectus supplement) with the SEC, for the offering to which this pricing
supplement relates. Before you invest, you should read the prospectus and
prospectus supplement and any other documents relating to this offering that
we
have filed with the SEC for more complete information about us and this
offering. You should carefully consider, among other things, the matters set
forth in “Risk Factors” in 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 get these documents without cost by visiting EDGAR on the SEC
web
site at www.sec.gov. Alternatively, the Agent will arrange to send you the
prospectus and the prospectus supplement if you so request by calling toll-free
866-803-9204.
You
may
access these documents on the SEC web site at www.sec.gov as
follows:
|
·
|
Prospectus
Supplement, dated August 16, 2006, and Prospectus, dated August 16,
2006:
|
http://www.sec.gov/Archives/edgar/data/777001/000104746906011011/a2172742z424b5.htm
RETURN
ON THE NOTES
The
Notes are not principal protected and you may lose some or all of your
principal.
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 Trading Level 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 Trading
Level
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, as applicable, to be
delivered, and (ii) deliver such cash or shares of the Reference Asset (and
cash in respect of coupon and any fractional shares of the Reference Asset),
if
applicable, to the Trustee for delivery to you. The Calculation Agent shall
determine the Exchange Ratio.
Interest
The
interest rate for the Notes is designated on the cover of this pricing
supplement. The interest paid will include interest accrued from the Original
Issue 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.
RISK
FACTORS
You
will
be subject to significant risks not associated with conventional fixed-rate
or
floating-rate debt securities. Prospective purchasers of the Notes should
understand the risks of investing in the Notes and should reach an investment
decision only after careful consideration, with their advisers, of the
suitability of the Notes in light of their particular financial circumstances,
the following risk factors and the other information set forth in this pricing
supplement and the accompanying prospectus supplement and
prospectus.
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-7 and S-14,
respectively, in the Prospectus Supplement.
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.
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 Trading
Level
of the Reference Asset ever equals or falls below the Contingent Protection
Level at any time from the Pricing Date 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.
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.
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.
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.
Taxes
—
We
intend to treat each 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
principal amount of the Note to secure your potential obligation under the
put
option. 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.
The
Notes are Subject to Equity Market Risks — The
Notes
involve exposure to price movements in the equity securities to which they
are
linked. Equity securities price movements are difficult to predict, and equity
securities may be subject to volatile increases or decreases in
value.
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 Percentage, Contingent Protection Level 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.
ILLUSTRATIVE
EXAMPLES
The
following are illustrative examples demonstrating the hypothetical amount
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 tables as an indication of the expected
performance of the Notes. Some amounts are rounded and actual returns may be
different.
Assumptions:
|
·
|
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.
|
|
·
|
Contingent
Protection Percentage: 80%
|
|
·
|
Contingent
Protection Level: $64.00 ($80.00 x
80%)
|
|
·
|
Exchange
Ratio: 12 ($1,000/$80.00)
|
|
·
|
Coupon:
14.00% per annum, payable
semi-annually.
|
|
·
|
The
reinvestment rate on any interest payments made during the term of
the
Notes is assumed to be 0%. The one-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 the incurrence of any brokerage fees or charges, would increase
the total return on the Notes relative to the total return of the
Reference Asset.
|
|
·
|
Dividend
and dividend yield on the Reference Asset: No dividend distributed.
|
Example
1
- On the
Calculation Date, the Final Level of $96.00 is greater than the Initial Level,
resulting in a principal payment at maturity of $1,000.00, regardless of whether
the Contingent Protection Level was ever reached or breached, plus two interest
payments of $70.00, for payments totaling $1,140.00. 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 14.00% 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 $72.00 is below the Initial Level, but
the
Trading Level never equaled or fell below the Contingent Protection Level.
As
discussed in example 1 above, an investor would receive total payment of
$1,140.00, earning a 14.00% 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 $900.00 (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 14.00% return with an investment in the Notes
and
incurred a loss of 10.00% with a direct investment in the Reference
Asset.
Example
3
- On the
Calculation Date, the Final Level of $56.00 is below the Initial Level and
also
is below the Contingent Protection Level. At our election, an investor would
receive a number of shares equal to the Exchange Ratio, plus the Fractional
Share Cash Amount plus two interest payments of $70.00, which is 12 shares
(worth $56.00 each) plus $28.00 (the Fractional Share Cash Amount) plus $140.00.
The cash equivalent equals $840.00. 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 16.00%, while a direct investment
in the Reference Asset would have resulted in a loss of 30.00%.
Table
of Hypothetical Cash Settlement Values
Assumes
the Trading Level Never
Equals
or Falls Below the Contingent Protection Level Before the Calculation
Date
|
|
Investment
in the Notes
|
|
Direct
Investment in the Reference Asset
|
Initial
Level
|
Hypothetical
Final
Level
|
Cash
Settlement
Value
|
Total
Coupon
Payments
(in %
Terms)
|
1-year
Total
Return
|
|
Percentage
Change in
Value
of Reference
Asset
|
1-year
Dividend
Yield
|
1-year
Total Return
|
80.00
|
100.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
25.00%
|
0.00%
|
25.00%
|
80.00
|
96.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
20.00%
|
0.00%
|
20.00%
|
80.00
|
92.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
15.00%
|
0.00%
|
15.00%
|
80.00
|
88.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
10.00%
|
0.00%
|
10.00%
|
80.00
|
84.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
5.00%
|
0.00%
|
5.00%
|
80.00
|
80.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
0.00%
|
0.00%
|
0.00%
|
80.00
|
76.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
-5.00%
|
0.00%
|
-5.00%
|
80.00
|
72.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
-10.00%
|
0.00%
|
-10.00%
|
Table
of Hypothetical Cash Settlement Values
Assumes
the Trading Level Does
Equal or
Fall Below the Contingent Protection Level Before the Calculation
Date
|
|
Investment
in the Notes
|
|
Direct
Investment in the Reference Asset
|
Initial
Level
|
Hypothetical
Final
Level
|
Cash
Settlement
Value
|
Total
Coupon
Payments
(in %
Terms)
|
1-year
Total
Return
|
|
Percentage
Change in
Value
of Reference
Asset
|
1-year
Dividend
Yield
|
1-year
Total Return
|
80.00
|
100.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
25.00%
|
0.00%
|
25.00%
|
80.00
|
96.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
20.00%
|
0.00%
|
20.00%
|
80.00
|
92.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
15.00%
|
0.00%
|
15.00%
|
80.00
|
88.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
10.00%
|
0.00%
|
10.00%
|
80.00
|
84.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
5.00%
|
0.00%
|
5.00%
|
80.00
|
80.00
|
$1,000.00
|
14.00%
|
14.00%
|
|
0.00%
|
0.00%
|
0.00%
|
80.00
|
76.00
|
$950.00
|
14.00%
|
9.00%
|
|
-5.00%
|
0.00%
|
-5.00%
|
80.00
|
72.00
|
$900.00
|
14.00%
|
4.00%
|
|
-10.00%
|
0.00%
|
-10.00%
|
80.00
|
68.00
|
$850.00
|
14.00%
|
-1.00%
|
|
-15.00%
|
0.00%
|
-15.00%
|
80.00
|
64.00
|
$800.00
|
14.00%
|
-6.00%
|
|
-20.00%
|
0.00%
|
-20.00%
|
80.00
|
60.00
|
$750.00
|
14.00%
|
-11.00%
|
|
-25.00%
|
0.00%
|
-25.00%
|
80.00
|
56.00
|
$700.00
|
14.00%
|
-16.00%
|
|
-30.00%
|
0.00%
|
-30.00%
|
80.00
|
52.00
|
$650.00
|
14.00%
|
-21.00%
|
|
-35.00%
|
0.00%
|
-35.00%
|
80.00
|
48.00
|
$600.00
|
14.00%
|
-26.00%
|
|
-40.00%
|
0.00%
|
-40.00%
|
80.00
|
44.00
|
$550.00
|
14.00%
|
-31.00%
|
|
-45.00%
|
0.00%
|
-45.00%
|
80.00
|
40.00
|
$500.00
|
14.00%
|
-36.00%
|
|
-50.00%
|
0.00%
|
-50.00%
|
REFERENCE
ASSET
Additional
Information Regarding the Reference Asset
We
urge
you to read the section “Sponsors or Issuers and Reference Asset” on
page S-25 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.
Apple
Computer, Inc. (“AAPL”)
Apple
Computer, Inc.’s (“Apple”) common stock, no par value, trades on the NASDAQ
Stock Market under the symbol “AAPL.” Apple designs, manufactures, and markets
personal computers and related software, services, peripherals, and networking
solutions. It also designs, develops, and markets a line of portable digital
music players along with related accessories and services including the online
distribution of third-party music, audio books, music videos, short films,
and
television shows. Apple’s
SEC file number is 000-10030.
Historical
Performance of the Reference Asset
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 table below
from
Bloomberg Financial Markets, without independent verification.
Quarter
Ending
|
Quarterly
High
|
Quarterly
Low
|
Quarterly
Close
|
|
Quarter
Ending
|
Quarterly
High
|
Quarterly
Low
|
Quarterly
Close
|
March
28, 2002
|
12.99
|
10.13
|
11.84
|
|
September
30, 2004
|
19.64
|
14.37
|
19.38
|
June
28, 2002
|
13.09
|
7.99
|
8.86
|
|
December
31, 2004
|
34.79
|
18.83
|
32.20
|
September
30, 2002
|
9.40
|
6.90
|
7.25
|
|
March
31, 2005
|
45.44
|
31.30
|
41.67
|
December
31, 2002
|
8.69
|
6.68
|
7.165
|
|
June
30, 2005
|
44.45
|
33.11
|
36.81
|
March
31, 2003
|
7.69
|
6.78
|
7.07
|
|
September
30, 2005
|
54.56
|
36.29
|
53.61
|
June
30, 2003
|
9.85
|
6.36
|
9.53
|
|
December
30, 2005
|
75.46
|
47.87
|
71.89
|
September
30, 2003
|
11.66
|
9.26
|
10.36
|
|
March
31, 2006
|
86.40
|
57.67
|
62.72
|
December
31, 2003
|
12.51
|
9.63
|
10.69
|
|
June
30, 2006
|
73.80
|
55.41
|
57.27
|
March
31, 2004
|
14.07
|
10.59
|
13.52
|
|
September
29, 2006
|
77.78
|
50.16
|
76.98
|
June
30, 2004
|
17.10
|
12.75
|
16.27
|
|
October
1, 2006 to
October
20, 2006
|
79.99
|
72.60
|
79.95
|
CERTAIN
U.S. FEDERAL INCOME TAX CONSIDERATIONS
This
summary supplements the section entitled “Certain U.S. Federal Income Tax
Considerations” in the prospectus supplement and supersedes it to the extent
inconsistent therewith but is subject to the limitations and qualifications
set
forth therein. In the opinion of Cadwalader, Wickersham & Taft LLP, special
U.S. tax counsel to us, the following discussion, when read together with the
section entitled, “Certain U.S. Federal Income Tax Considerations” in the
prospectus supplement, summarizes certain of the material U.S. federal income
tax consequences of the purchase, beneficial ownership, and disposition of
the
Notes.
There
are
no statutory provisions, 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, the Note should be treated as a put option written by you
(the “Put Option”) that permits us to (1) sell the Reference Assets to you at
maturity for an amount equal to the principal amount of the Note, or (2) “cash
settle” the Put Option (i.e., require you to pay to us at maturity the
difference between the principal amount of the Note and the value of the
Reference Assets otherwise deliverable under the Put Option), and a deposit
with
us of cash (the “Deposit”) in an amount equal to the “issue price” (as described
in the prospectus supplement) of your Notes to secure your potential obligation
under the Put Option. We intend to treat the Notes consistent with this approach
and pursuant to the terms of the Notes, you agree to treat the Notes under
this
approach for all U.S. federal income tax purposes. The description below of
the
Reference Asset includes a chart that indicates the portion of each interest
payment that represents the yield on the Deposit and the Put Premium, assuming
that the issue price of the Notes is par. You may contact Bill Bamber at (212)
272-6635 for the issue price of the Notes.
We
also
intend to treat the Deposits as “short-term obligations” for U.S. federal income
tax purposes. See “Certain U.S. Federal Income Tax Considerations —Tax Treatment
of the Deposit on Notes with a Term of One Year or Less” in the prospectus
supplement for certain U.S. federal income tax considerations applicable to
short-term obligations.
Because
there are no statutory provisions, 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 and the timing and character
of income in respect of the Notes might differ from the treatment described
above. For example, the Notes could be treated as short-term obligations
rather
than a Put Option and a Deposit.
Reference
Asset
|
Term
to Maturity
|
Coupon
Rate, per
Annum
|
Yield
on the Deposit,
per
Annum
|
Put
Premium, per
Annum
|
Apple
Computer, Inc.
|
1-year
|
14%
|
5.394%
|
8.606%
|
CERTAIN
ERISA CONSIDERATIONS
Investors
subject to Section 406 of the Employee Retirement Income Security Act of 1974,
as amended, Section 4975 of the Internal Revenue Code of 1986, as amended or
to
any federal, state or local law materially similar to the foregoing provisions
should carefully consider, among other things, the matters set forth in “ERISA
Considerations” in the Prospectus.
|
|
|
|
|
|
You
should only rely on the information contained in this pricing supplement,
the accompanying prospectus supplement and prospectus. We have not
authorized anyone to provide you with information or to make any
representation to you that is not contained in this pricing supplement,
the accompanying prospectus supplement and prospectus. If anyone
provides
you with different or inconsistent information, you should not rely
on it.
This pricing supplement, the accompanying prospectus supplement and
prospectus are not an offer to sell these securities, and these documents
are not soliciting an offer to buy these securities, in any jurisdiction
where the offer or sale is not permitted. You should not under any
circumstances assume that the information in this pricing supplement,
the
accompanying prospectus supplement and prospectus is correct on any
date
after their respective dates.
|
|
The
Bear Stearns
Companies
Inc.
|
_______________
|
|
|
TABLE
OF CONTENTS
|
|
|
|
|
|
|
Pricing
Supplement
|
|
$1,350,000
|
|
Page
|
|
|
Where
You Can Find More Information Return on the Notes
|
|
|
Medium-Term
Notes, Series B
|
Risk
Factors
|
PS-4
|
|
|
Illustrative
Examples
|
PS-5
|
|
|
Reference
Asset
|
PS-5
|
|
|
Certain
U.S. Federal Income Tax Considerations
|
PS-7
|
|
|
Certain
ERISA Considerations
|
PS-8
|
|
Reverse
Convertible Notes, 14% Coupon,
due
October 26, 2007
Linked
to the common stock of Apple
Computer,
Inc.
|
|
|
|
Prospectus
Supplement
|
|
Summary
|
S-2
|
|
Illustrative
Examples
|
S-4
|
|
Risk
Factors
|
S-7
|
|
Pricing
Supplement
|
S-20
|
|
Description
of Notes
|
S-21
|
|
|
Sponsors
or Issuers and Reference Asset
|
S-25
|
|
|
Antidilution
Adjustments
|
S-26
|
|
|
Use
of Proceeds and Hedging
|
S-30
|
|
|
Certain
U.S. Federal Income Tax Considerations
|
S-31
|
|
|
Supplemental
Plan of Distribution
|
S-40
|
|
|
Validity
of the Notes
|
S-41
|
|
|
Definitions
|
S-41
|
|
|
|
|
|
October
23, 2006
|
Prospectus
|
|
|
Where
You Can Find More Information
|
1
|
|
|
The
Bear Stearns Companies Inc.
|
2
|
|
|
Use
of Proceeds
|
4
|
|
|
Description
of Debt Securities
|
4
|
|
|
Description
of Warrants
|
16
|
|
PRICING
SUPPLEMENT
|
Description
of Preferred Stock
|
21
|
|
|
Description
of Depositary Shares
|
25
|
|
|
Description
of Purchase Contracts
|
28
|
|
|
Description
of Units
|
31
|
|
|
Book-Entry
Procedures and Settlement
|
33
|
|
|
Limitations
on Issuance of Bearer Debt Securities and Bearer Warrants
|
43
|
|
|
Plan
of Distribution
|
44
|
|
|
ERISA
Considerations
|
48
|
|
|
Legal
Considerations
|
48
|
|
|
Experts
|
49
|
|
|
|
|
|