|
Title
of Each Class of Securities Offered
|
Maximum
Aggregate Offering Price
|
Amount
of Registration
Fee(1)
|
|||||
|
Medium-Term
Notes, Series B
|
$
|
2,750,000
|
$
|
84.43
|
|||
______________
(1) Calculated
in accordance with Rule 457(r) of the Securities Act of 1933, as amended.
The filing fee of $84.43 is being paid in connection with
the registration of
these Reverse Convertible Notes.
Registration
No. 333-136666
PRICING
SUPPLEMENT
(To
Prospectus Dated August 16, 2006 and
Prospectus
Supplement Dated August 16, 2006)
The
Bear Stearns Companies Inc.
$2,750,000
Reverse Convertible Notes
13.10%
Coupon Per Annum, Due December 28, 2007
Linked
to the Common Stock of Apple 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 Inc. (“Apple”), traded on the Nasdaq Stock Market,
Inc. (“NASDAQ”) under the symbol “AAPL.”
|
|
·
|
Principal
amount:
|
$2,750,000.
|
|
·
|
Pricing
Date:
|
September
25, 2007.
|
|
·
|
Original
Issue Date:
|
September
28, 2007.
|
|
·
|
Calculation
Date:
|
December
26, 2007, subject to postponement in the event
of certain Market
Disruption Events.
|
|
·
|
Maturity
Date:
|
December
28, 2007, provided
that if such date is not a Business Day, the Maturity
Date shall be the
next Business Day, and provided
further
that if the Calculation Date is adjusted due to
the occurrence of a Market
Disruption Event, the Maturity Date will be three
Business Days following
the adjusted Calculation Date.
|
|
·
|
Coupon
rate:
|
13.10%
per annum, payable as a single payment in arrears
at maturity equal to
3.275% times the principal amount of the Notes.
Interest will be computed
using a 360-day year of twelve 30-day months,
unadjusted.
|
|
·
|
Interest
Payment Date:
|
The
Maturity Date.
|
|
·
|
Initial
Level:
|
$153.22,
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:
|
75.00%.
|
|
·
|
Contingent
Protection Level:
|
$114.915,
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 Closing Price of
the Reference Asset never
equals or falls below the Contingent Protection
Level on any day 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 on any day 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:
|
6;
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 0.527.
|
|
·
|
CUSIP:
|
073902MF2.
|
|
·
|
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%
|
$2,750,000
|
|
Agent’s
discount
|
0.75%
|
$20,625
|
|
Proceeds,
before expenses, to us
|
99.25%
|
$2,729,375
|
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 $412,500 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.
September
25, 2007
PS-2
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:
|
|
·
|
Prospectus,
dated August 16, 2006:
|
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 Closing Price of the
Reference Asset never equals or
falls below the Contingent Protection Level on
any
day 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 on any day 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. Interest will be computed using a
360-day year of twelve 30-day
months, unadjusted. The interest paid will include
interest accrued from the
Original Issue Date to, but excluding, the Maturity
Date. Interest will be paid
to the person to whom principal is payable and
will include interest accrued to,
but excluding, the stated Maturity Date.
The
following scenarios and graphs generally illustrate
how the Cash Settlement
Value of the Reverse Convertible Note Securities
is
determined:
PS-3
|
Scenario
1
The
price of the underlying shares generally increases over
the term of the
Note. The Contingent Protection Level is never breached.
|
 |
 |
|
Outcome
The
Cash Settlement Value equals 100% of the principal
amount of the Notes.
The share price generally increased over the term
of the Note and never
breached the Contingent Protection
Level.
|
|
Scenario
2
The
price of the underlying shares generally declines over
the term of the
Note. The Contingent Protection Level is never breached.
|
|
 |
|
Outcome
The
Cash Settlement Value equals 100% of the principal
amount of the Notes.
The share price decreased over the term of the
Note and at maturity was
below the Initial Level, but never breached the
Contingent Protection
Level.
|
|
Scenario
3
The
price of the underlying shares declines over the
term of the Note. The
Contingent Protection Level is
breached.
|
|
 |
|
Outcome
The
Cash Settlement Value is less than the principal
amount of the Notes,
reflecting the percentage decline in the underlying
shares below the
Initial Level. The Contingent Protection Level
is breached so there is no
principal protection.
|
|
Scenario
4
The
price of the underlying shares declines below the
Contingent Protection
Level, but ultimately recovers to finish above its
Initial Level.
|
|
 |
|
Outcome
The
Cash Settlement Value equals 100% of the principal
amount of the Notes.
Even though the share price decreased below the Contingent
Protection
Level during the term of the Note, by the Calculation
Date the underlying
share price was above the Initial Level.
|
PS-4
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 Closing
Price
of the Reference Asset ever equals or falls below the Contingent Protection
Level on any day 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, and we intend to treat the deposit as a short-term obligation
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.
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.
PS-5
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 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.
|
|
·
|
Initial
Level: $ 142.00
|
|
·
|
Contingent
Protection Percentage: 75%
|
|
·
|
Contingent
Protection Level: $ 106.50 ($142.00 x
75%)
|
|
·
|
Exchange
Ratio: 7 ($1,000/$142.00)
|
|
·
|
Coupon:
13.10% per annum, paid as a single payment at maturity equal
to
one-quarter of the coupon, in
arrears.
|
|
·
|
The
reinvestment rate on any interest payments made during the
term of the
Notes is assumed to be 0%. The 3-month 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.
|
|
·
|
Assumes
cash settlement at maturity.
|
|
·
|
Maturity:
Three months.
|
|
·
|
Dividend
and dividend yield on the Reference Asset: No dividend
distributed.
|
Example
1
- On the
Calculation Date, the Final Level of $170.40 is greater than the Initial
Level,
resulting in a payment at maturity of $1,000, regardless of whether the
Contingent Protection Level was ever reached or breached, plus one interest
payment of $32.75, for payments totaling $1,032.75. If you had invested
directly
in the Reference Asset for the same three-month 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 3.28% 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 $127.80 is below the Initial Level,
but the
Closing Price never equaled or fell below the Contingent Protection Level.
As
discussed in example 1 above, an investor would receive total payments
of
$1,032.75, earning a 3.28% return over the term of the Notes. A direct
investment in the Reference Asset during that same three-month 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 3.28% 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 $92.30 is below the Initial Level
and also
is below the Contingent Protection Level. At our election, an investor
would
receive a cash payment in the amount of $650.00 plus one interest payment
of
$32.75, for payments totaling $682.75. If you had invested directly in
the
Reference Asset for the same three-month period, you would have received
total
cash payments of $650.00 (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 31.73%, while
a direct
investment in the Reference Asset would have resulted in a loss of
35.00%.
Table
of Hypothetical Cash Settlement Values
Assumes
the Closing Price 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)
|
3-Month
Total
Return
|
Percentage
Change in
Value
of Reference
Asset
|
Dividend
Yield
|
3-Month
Total Return
|
|
|
142.00
|
184.60
|
$1,000.00
|
3.28%
|
3.28%
|
|
30.00%
|
0.00%
|
30.00%
|
|
142.00
|
177.50
|
$1,000.00
|
3.28%
|
3.28%
|
|
25.00%
|
0.00%
|
25.00%
|
|
142.00
|
170.40
|
$1,000.00
|
3.28%
|
3.28%
|
|
20.00%
|
0.00%
|
20.00%
|
|
142.00
|
163.30
|
$1,000.00
|
3.28%
|
3.28%
|
|
15.00%
|
0.00%
|
15.00%
|
|
142.00
|
156.20
|
$1,000.00
|
3.28%
|
3.28%
|
|
10.00%
|
0.00%
|
10.00%
|
|
142.00
|
149.10
|
$1,000.00
|
3.28%
|
3.28%
|
|
5.00%
|
0.00%
|
5.00%
|
|
142.00
|
142.00
|
$1,000.00
|
3.28%
|
3.28%
|
|
0.00%
|
0.00%
|
0.00%
|
|
142.00
|
134.90
|
$1,000.00
|
3.28%
|
3.28%
|
|
-5.00%
|
0.00%
|
-5.00%
|
|
142.00
|
127.80
|
$1,000.00
|
3.28%
|
3.28%
|
|
-10.00%
|
0.00%
|
-10.00%
|
|
142.00
|
120.70
|
$1,000.00
|
3.28%
|
3.28%
|
|
-15.00%
|
0.00%
|
-15.00%
|
PS-6
Table
of Hypothetical Cash Settlement Values
Assumes
the Closing Price 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)
|
3-Month
Total
Return
|
Percentage
Change in
Value
of Reference
Asset
|
Dividend
Yield
|
3-Month
Total Return
|
|
|
142.00
|
177.50
|
$1,000.00
|
3.28%
|
3.28%
|
|
25.00%
|
0.00%
|
25.00%
|
|
142.00
|
170.40
|
$1,000.00
|
3.28%
|
3.28%
|
|
20.00%
|
0.00%
|
20.00%
|
|
142.00
|
163.30
|
$1,000.00
|
3.28%
|
3.28%
|
|
15.00%
|
0.00%
|
15.00%
|
|
142.00
|
156.20
|
$1,000.00
|
3.28%
|
3.28%
|
|
10.00%
|
0.00%
|
10.00%
|
|
142.00
|
149.10
|
$1,000.00
|
3.28%
|
3.28%
|
|
5.00%
|
0.00%
|
5.00%
|
|
142.00
|
142.00
|
$1,000.00
|
3.28%
|
3.28%
|
|
0.00%
|
0.00%
|
0.00%
|
|
142.00
|
134.90
|
$950.00
|
3.28%
|
-1.73%
|
|
-5.00%
|
0.00%
|
-5.00%
|
|
142.00
|
127.80
|
$900.00
|
3.28%
|
-6.73%
|
|
-10.00%
|
0.00%
|
-10.00%
|
|
142.00
|
120.70
|
$850.00
|
3.28%
|
-11.73%
|
|
-15.00%
|
0.00%
|
-15.00%
|
|
142.00
|
113.60
|
$800.00
|
3.28%
|
-16.73%
|
|
-20.00%
|
0.00%
|
-20.00%
|
|
142.00
|
106.50
|
$750.00
|
3.28%
|
-21.73%
|
|
-25.00%
|
0.00%
|
-25.00%
|
|
142.00
|
99.40
|
$700.00
|
3.28%
|
-26.73%
|
|
-30.00%
|
0.00%
|
-30.00%
|
|
142.00
|
92.30
|
$650.00
|
3.28%
|
-31.73%
|
|
-35.00%
|
0.00%
|
-35.00%
|
|
142.00
|
85.20
|
$600.00
|
3.28%
|
-36.73%
|
|
-40.00%
|
0.00%
|
-40.00%
|
|
142.00
|
78.10
|
$550.00
|
3.28%
|
-41.73%
|
|
-45.00%
|
0.00%
|
-45.00%
|
|
142.00
|
71.00
|
$500.00
|
3.28%
|
-46.73%
|
|
-50.00%
|
0.00%
|
-50.00%
|
|
142.00
|
63.90
|
$450.00
|
3.28%
|
-51.73%
|
|
-55.00%
|
0.00%
|
-55.00%
|
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.
PS-7
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
Inc. (“AAPL”)
Apple
Inc. (“Apple”) common stock, no par value per share, trades on the NASDAQ 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, television
shows and
movies. 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
|
|
|
June
28, 2002
|
13.09
|
7.99
|
8.86
|
|
March
31, 2005
|
45.44
|
31.30
|
41.67
|
|
September
30, 2002
|
9.40
|
6.90
|
7.25
|
|
June
30, 2005
|
44.44
|
33.11
|
36.81
|
|
December
31, 2002
|
8.69
|
6.68
|
7.17
|
|
September
30, 2005
|
54.56
|
36.29
|
53.61
|
|
March
31, 2003
|
7.69
|
6.78
|
7.07
|
|
December
30, 2005
|
75.46
|
47.87
|
71.89
|
|
June
30, 2003
|
9.85
|
6.36
|
9.56
|
|
March
31, 2006
|
87.05
|
57.67
|
62.72
|
|
September
30, 2003
|
11.66
|
9.26
|
10.32
|
|
June
30, 2006
|
73.38
|
55.41
|
57.12
|
|
December
31, 2003
|
12.50
|
9.63
|
10.69
|
|
September
29, 2006
|
77.78
|
50.35
|
77.03
|
|
March
31, 2004
|
14.07
|
10.59
|
13.53
|
|
December
29, 2006
|
93.15
|
72.60
|
84.84
|
|
June
30, 2004
|
17.10
|
12.75
|
16.27
|
|
March
30, 2007
|
97.80
|
81.90
|
92.91
|
|
September
30, 2004
|
19.64
|
14.37
|
19.38
|
|
June
29, 2007
|
127.60
|
89.60
|
122.04
|
|
December
31, 2004
|
34.79
|
18.83
|
32.20
|
|
July
2, 2007 to September 17, 2007
|
148.91
|
111.62
|
138.41
|
PS-8
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
Inc.
|
3
months
|
13.10%
|
5.44%
|
7.66%
|
CERTAIN
ERISA CONSIDERATIONS
Section
4975 of the Internal Revenue Code of 1986 (the “Code”) prohibits the borrowing
of money, the sale of property and certain other transactions involving
the
assets of plans that are qualified under the Code ("Qualified Plans")
or
individual retirement accounts ("IRAs") and persons who have certain
specified
relationships to them. Section 406 of the Employee Retirement Income
Security
Act of 1974, as amended ("ERISA"), prohibits similar transactions involving
employee benefit plans that are subject to ERISA ("ERISA Plans"). Qualified
Plans, IRAs and ERISA Plans are referred to as "Plans."
Persons
who have such specified relationships are referred to as "parties in
interest"
under ERISA and as "disqualified persons" under the Code. "Parties in
interest"
and "disqualified persons" encompass a wide range of persons, including
any
fiduciary (for example, investment manager, trustee or custodian) of
a Plan, any
person providing services (for example, a broker) to a Plan, the Plan
sponsor,
an employee organization any of whose members are covered by the Plan,
and
certain persons related to or affiliated with any of the foregoing.
The
purchase and/or holding of securities by a Plan with respect to which
we, Bear,
Stearns & Co. Inc. (“Bear Stearns”) and/or certain of our affiliates is a
fiduciary and/or a service provider (or otherwise is a "party in interest"
or
"disqualified person") would constitute or result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code, unless such securities
are acquired or held pursuant to and in accordance with an applicable
statutory
or administrative exemption. Each of us and Bear Stearns is considered
a
"disqualified person" under the Code or "party in interest" under ERISA
with
respect to many Plans, although neither we nor Bear Stearns can be a
"party in
interest" to any IRA other than certain employer-sponsored IRAs, as only
employer-sponsored IRAs are covered by ERISA.
PS-9
Applicable
administrative exemptions may include certain prohibited transaction
class
exemptions (for example, Prohibited Transaction Class Exemption ("PTCE")
84-14
relating to qualified professional asset managers, PTCE 96−23 relating to
certain in-house asset managers, PTCE 91-38 relating to bank collective
investment funds, PTCE 90−1 relating to insurance company separate accounts and
PTCE 95-60 relating to insurance company general accounts).
It
should
also be noted that the recently enacted Pension Protection Act of 2006
contains
a new statutory exemption from the prohibited transaction provisions
of Section
406 of ERISA and Section 4975 of the Code for transactions involving
certain
parties in interest or disqualified persons who are such merely because
they are
a service provider to a Plan, or because they are related to a service
provider.
Generally, the new exemption would be applicable if the party to the
transaction
with the Plan is a party in interest or a disqualified person to the
Plan but is
not (i) an employer, (ii) a fiduciary who has or exercises any discretionary
authority or control with respect to the investment of the Plan assets
involved
in the transaction, (iii) a fiduciary who renders investment advice (within
the
meaning of ERISA and Section 4975 of the Code) with respect to those
assets, or
(iv) an affiliate of (i), (ii) or (iii). Any Plan fiduciary relying on
this new
statutory exemption (Section 408(b)(17) of ERISA and Section 4975(d)(20)
of the
Code) and purchasing securities on behalf of a Plan will be deemed to
represent
that (x) the fiduciary has made a good faith determination that the Plan
is
paying no more than, and is receiving no less than, adequate consideration
in
connection with the transaction and (y) neither we, Bear Stearns nor
any of our
affiliates directly or indirectly exercises any discretionary authority
or
control or renders investment advice (as defined above) with respect
to the
assets of the Plan which such fiduciary is using to purchase the Notes,
both of
which are necessary preconditions to utilizing this new exemption. Any
purchaser
that is a Plan is encouraged to consult with counsel regarding the application
of the new exemption.
A
fiduciary that causes a Plan to engage, directly or indirectly, in a
non-exempt
prohibited transaction may be subject to a penalty under ERISA, and may
be
liable for any losses to the Plan resulting from such transaction. Code
Section
4975 generally imposes an excise tax on disqualified persons who engage,
directly or indirectly, in non-exempt transactions with the assets of
Plans
subject to such Section. If an IRA engages in a prohibited transaction,
the
assets of the IRA are deemed to have been distributed to the IRA
beneficiaries.
In
accordance with ERISA’s general fiduciary requirements, a fiduciary with respect
to any ERISA Plan who is considering the purchase of securities on behalf
of
such plan should consider the foregoing information and the information
set
forth in the applicable prospectus supplement and any applicable pricing
supplement, and should determine whether such purchase is permitted under
the
governing plan document and is prudent and appropriate for the ERISA
Plan in
view of its overall investment policy and the composition and diversification
of
its portfolio. Fiduciaries of Plans established with, or for which services
are
provided by, us, Bear Stearns and/or certain of our affiliates should
consult
with counsel before making any acquisition. Each purchaser of any securities,
the assets of which constitute the assets of one or more Plans, and each
fiduciary that directs such purchaser with respect to the purchase or
holding of
such securities, will be deemed to represent that the purchase, holding
and
disposition of the securities does not and will not constitute a prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code for
which an
exemption is not available.
Certain
employee benefit plans, such as governmental plans (as defined in Section
3(32)
of ERISA) and, if no election has been made under Section 410(d) of the
Code,
church plans (as defined in Section 3(33) of ERISA), are not subject
to Section
406 of ERISA or Section 4975 of the Code. However, such plans may be
subject to
the provisions of applicable federal, state or local law ("Similar Law")
similar
to the foregoing provisions of ERISA or the Code. Fiduciaries of such
plans
("Similar Law Plans") should consider applicable Similar Law when investing
in
the securities. Each fiduciary of a Similar Law Plan will be deemed to
represent
that the Similar Law Plan’s acquisition and holding of the securities will not
result in a non-exempt violation of applicable Similar Law.
The
sale
of any security to a Plan or a Similar Law Plan is in no respect a
representation by us or any of our affiliates that such an investment
meets all
relevant legal requirements with respect to investments by Plans or Similar
Law
Plans generally or any particular Plan or Similar Law Plan, or that such
an
investment is appropriate for a Plan or a Similar Law Plan generally
or any
particular Plan or Similar Law Plan.
PS-10
|
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.
$2,750,000
Medium-Term
Notes, Series B
Reverse
Convertible Notes, 13.10%
Coupon
Per Annum, Due December 28,
2007
Linked
to the Common Stock of Apple Inc.
September
25, 2007
PRICING
SUPPLEMENT
|
||
|
___________________
TABLE
OF CONTENTS
|
|||
|
Pricing
Supplement
|
|||
|
|
Page
|
||
|
Where
You Can Find More Information
|
PS-3
|
||
|
Return
on the Notes
|
PS-3
|
||
|
Risk
Factors
|
PS-5
|
||
|
Illustrative
Examples
|
PS-6
|
||
|
Reference
Asset
|
PS-7
|
||
|
Certain
U.S. Federal Income Tax Considerations
|
PS-9
|
||
|
Certain
ERISA Considerations
|
PS-9
|
||
|
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
|
||
|
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
|
||
|
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
|
||