PRICING SUPPLEMENT Filed pursuant to Rule 424(b)(3)
(To Prospectus Dated April 24, 2003 and Registration No. 333-104455
Prospectus Supplement Dated April 24, 2003)
$18,5000,000
THE BEAR STEARNS COMPANIES INC.
MEDIUM-TERM NOTES, SERIES B
o The Medium-Term Notes are unsecured debt o The Medium-Term Notes will be in
securities of The Bear Stearns Companies book-entry form only.
Inc.
o The maturity date is June 12, 2010.
o Interest will be paid annually on June
12, beginning on June 12, 2004. The o Minimum denominations of $100,000
interest rate for the interest payment increased in multiples of $100,000.
due on June 12, 2004 will be 4.00% per
annum. The interest rate for each o The Notes are 100% principal protected
subsequent interest payment will be if held to maturity. On the maturity
reset annually and will be a percentage date, we will pay to you an amount per
equal to: note equal to the principal amount, plus
accrued and unpaid interest, if any.
1.60 + 100 [(CPI (April(n))/CPI (April(n-1)) - 1)]
o The Medium-Term Notes will not be
provided that the interest rate will not be subject to early redemption.
less than zero.
o CPI (April(n)) is the consumer
price index for the April
preceding the interest payment
date, and
o CPI (April(n-1)) is the consumer
price index for the April
preceding the prior interest
payment date.
o The interest rate for a subsequent
interest payment will be less than 1.60%
if the consumer price index decreases in
the period between the April preceding
the prior interest payment date and the
April preceding the interest payment
date and cannot be less than zero.
Investment in the Medium-Term Notes involves certain risks. You should
refer to "Risk Factors" beginning on page PS-5 of this Pricing Supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PRICING SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
We expect that the Medium-Term 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 June 12, 2003 against payment in
immediately available funds. The distribution of the Medium-Term Notes will
conform to the requirements set forth in Rule 2720 of the NASD Conduct Rules.
BEAR, STEARNS & CO. INC.
JUNE 2, 2003
CERTAIN DEFINITIONS
Unless otherwise stated in this pricing supplement:
o the "Company," "we," "us" and "our" refer to The Bear Stearns Companies
Inc. and its subsidiaries;
o "Bear Stearns" refers to Bear, Stearns & Co. Inc.;
o "BSSC" refers to Bear, Stearns Securities Corp.;
o "Exchange Act" refers to the Securities and Exchange Act of 1934, as
amended;
o "SEC" refers to the Securities and Exchange Commission; and
o "US dollars," "dollars," "US $" and "$" refer to the lawful currency of
the United States of America.
PS-2
SUMMARY INFORMATION
WHAT ARE THE MEDIUM-TERM NOTES?
The Medium-Term Notes are our senior debt securities and are not secured
by collateral. The Medium-Term Notes will rank equally with all our other
unsecured and unsubordinated debt. The Medium-Term Notes will mature on June 12,
2010. Because we are a holding company, the Medium-Term Notes will be
effectively subordinated to the claims of creditors of our subsidiaries with
respect to those subsidiaries' assets.
You may only transfer the Medium-Term Notes in denominations of $100,000,
increased in multiples of $100,000. You will not have the right to receive
physical certificates evidencing your ownership. Instead, we will issue the
Medium-Term Notes in the form of a global certificate, which will be held by The
Depository Trust Company ("DTC") or its nominee. Direct and indirect
participants in DTC will record beneficial ownership of the Medium-Term Notes by
individual investors. You should refer to "Description of Notes--Book-Entry
Notes--Registration, Transfer and Payments" in the accompanying Prospectus
Supplement.
WHAT PERIODIC INTEREST PAYMENTS WILL I RECEIVE AND WHEN?
We will pay interest on the principal amount of your Medium-Term Notes
annually on June 12 of each year, beginning June 12, 2004. The interest rate for
the interest payment due on June 12, 2004 will be 4.00% The interest rate will
be reset for each subsequent interest payment and will be expressed as a
percentage according to the following formula:
1.6 + 100 [(CPI (April(n))/CPI (April(n-1)) - 1)]
where:
o CPI (April(n)) is the non-seasonally adjusted U.S. All Urban
Consumer Price Index, which we refer to as the consumer price index,
published by the Bureau of Labor Statistics of the U.S. Department
of Labor for the April preceding the interest payment date, and
o CPI (April(n-1)) is the consumer price index for the April preceding
the prior interest payment date.
The interest rate for a subsequent interest payment will be less than
1.60% if the consumer price index decreases in the period between the April
preceding the prior interest payment date and the April preceding the interest
payment date, but the interest rate for any subsequent interest payment cannot
be less than zero. If the interest rate for any subsequent interest payment is
zero, we will not pay any interest on the notes on the corresponding interest
payment date.
WHAT WILL I RECEIVE AT THE MATURITY DATE OF THE MEDIUM-TERM NOTES?
At the maturity date, you will receive a payment per Medium-Term Note
equal to the principal amount, plus accrued and unpaid interest, if any.
ARE THE MEDIUM-TERM NOTES SUBJECT TO EARLY REDEMPTION?
No. The Medium-Term Notes are not subject to early redemption.
For more specific information about the Medium-Term Notes, you should
refer to "Description of the Medium-Term Notes."
WHAT ARE THE HISTORICAL LEVEL OF THE CONSUMER PRICE INDEX?
We have provided a table showing the consumer price index for each month
since January 1998. You can find this table in the section "Historical Data on
the Consumer Price Index" in this pricing supplement. We have provided this
historical information to help you evaluate the behavior of the consumer price
index in recent years. However, past levels of the consumer price index are not
necessarily indicative of future levels in the consumer price index.
PS-3
WILL THE MEDIUM-TERM NOTES BE LISTED ON A SECURITIES EXCHANGE?
No, the Medium-Term Notes will not be listed on any securities exchange.
The Medium-Term Notes will trade in DTC's Same-Day Funds Settlement System.
Accordingly, settlement of any secondary market trading activity for the
Medium-Term Notes will settle in immediately available funds.
WHAT IS THE ROLE OF OUR SUBSIDIARY, BEAR STEARNS?
Our subsidiary, Bear Stearns, will be our calculation agent (the
"Calculation Agent") for purposes of calculating the annual rate of inflation.
Under certain circumstances, these duties could result in a conflict of interest
between Bear Stearns' status as our subsidiary and its responsibilities as
Calculation Agent. You should refer to "Risk Factors--Potential Conflicts of
Interest Exist because we control Bear Stearns, which will act as
the Calculation Agent."
ARE THERE ANY RISKS ASSOCIATED WITH MY INVESTMENT?
Yes, the Medium-Term Notes are subject to certain risks. You should refer
to "Risk Factors" below.
WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF INVESTING IN THE
MEDIUM-TERM NOTES?
See "Certain U.S. Federal Income Tax Considerations" in this pricing
supplement and "Certain US Federal Income Tax Considerations" in the
accompanying Prospectus Supplement.
PS-4
RISK FACTORS
You should carefully consider the following risk factors before deciding
to invest in the Medium-Term Notes. All disclosure contained in this Pricing
Supplement regarding the risks related to the consumer price index is derived
from publicly available information. Neither we nor Bear Stearns take any
responsibility for the accuracy or completeness of such information. An
investment in the notes entails significant risks not associated with similar
investments in a conventional debt security, including, among other things,
fluctuations in the level of the consumer price index, and other events that are
difficult to predict and beyond our control.
RISKS RELATED TO THE MEDIUM-TERM NOTES
BEGINNING WITH THE INTEREST PAYMENT IN 2005, THE INTEREST RATE APPLICABLE TO ANY
INTEREST PAYMENT COULD BE LESS THAN 1.60% AND COULD BE ZERO.
Beginning with the interest payment in 2005, the interest rate will be
linked to changes in the level of the consumer price index during the period
between the April preceding the prior interest payment date and the April
preceding the interest payment date. If the consumer price index does not
increase during any such year (i.e., if there is no inflation), the interest
rate for the corresponding interest payment will be 1.60%. In addition, if the
consumer price index decreases during any such year (i.e., if there is
deflation), the interest rate for the corresponding interest payment will be
less than 1.60% and could be zero.
THE YIELD ON THE MEDIUM-TERM NOTES MAY BE LOWER THAN THE YIELD ON A STANDARD
DEBT SECURITY OF COMPARABLE MATURITY
The amounts we will pay you on interest payment dates and at maturity may
be less than the return you could have earned on other investments. Because the
level of the consumer price index as of each April during the term of the
Medium-Term Notes may be less than, equal to or only somewhat greater than its
value as of the previous April and because interest payments in 2005 through
2010 are determined by the level of the consumer price index, the effective
yield to maturity on the Medium-Term Notes may be less than that which would be
payable on a conventional fixed-rate, non-callable debt security of the Company
of comparable maturity. In addition, any such return may not fully compensate
you for any opportunity cost to you when other factors relating to the time
value of money are taken into account.
THE HISTORICAL LEVELS OF THE CONSUMER PRICE INDEX ARE NOT AN INDICATION OF THE
FUTURE LEVELS OF THE CONSUMER PRICE INDEX
The historical levels of the consumer price index are not an indication of
the future levels of the consumer price index during the term of the Medium-Term
Notes. Changes in the level of the consumer price index will affect the trading
price of the Medium-Term Notes, but it is impossible to predict whether the
level of the consumer price index will rise or fall. Changes in the level of the
consumer price index are a function of the changes in specified consumer prices
over time, which result from the interaction of many factors over which we have
no control. In addition, changes in the way the consumer price index is
calculated could reduce the level of the consumer price index and lower the
interest payments with respect to the Medium-Term Notes. See "The Consumer Price
Index" in this pricing supplement.
THE TRADING MARKET IS UNCERTAIN AND COULD BE ILLIQUID.
The Medium-Term Notes will not be listed on any securities exchange. There
is currently no secondary market for the Medium-Tern Notes. Bear Stearns will
not be obligated to engage in any market making activities or if it does
commence making a market, it any discontinue such market making activity at any
time. Accordingly, we cannot guarantee that there will be a secondary market in
the Medium-Term Notes, or that Bear Stearns will make a secondary market in the
Medium-Term Notes. If any such secondary market forms, that market may be
illiquid and may not continue for the term of the Medium-term Notes. If the
secondary market for the Medium-term Notes is limited, there may be few buyers
should you choose to sell your Medium-term Notes prior to maturity.
PS-5
POTENTIAL CONFLICTS OF INTEREST EXIST BECAUSE WE CONTROL BEAR STEARNS WHICH WILL
ACT AS THE CALCULATION AGENT.
Bear Stearns will act as the Calculation Agent, which makes certain
determinations and judgments in connection with calculating the amounts due to
you. Because Bear Stearns is our affiliate, conflicts of interest may arise in
connection with Bear Stearns performing its role as Calculation Agent. Rules and
regulations regarding broker-dealers (such as Bear Stearns) require Bear Stearns
to maintain policies and procedures regarding the handling and use of
confidential proprietary information, and such policies and procedures will be
in effect throughout the term of the Medium-Term Notes to restrict the use of
information relating to the calculation of the annual rate of inflation that the
Calculation Agent may be required to make prior to the dissemination of such
annual rate of inflation. Bear Stearns is obligated to carry out its duties and
functions as Calculation Agent in good faith and using its reasonable judgment.
THE VALUE OF THE MEDIUM-TERM NOTES WILL BE AFFECTED BY NUMEROUS FACTORS, SOME OF
WHICH ARE RELATED IN COMPLEX WAYS.
Our creditworthiness and a number of factors, including market interest
rates, are expected to affect any secondary market for the Medium-Term Notes.
You should refer to "Description of the Medium-Term Notes". Some of these
factors are interrelated in complex ways; as a result, the effect of any one
factor may be offset or magnified by the effect of another factor. The following
describes the expected impact on the market value of the Medium-Term Notes given
a change in a specific factor, assuming all other conditions remain constant.
o Interest Rates. We expect that the trading value of the Medium-Term Notes
will be affected by changes in interest rates. In general, and assuming
other factors remain constant, if U.S. interest rates increase, we expect
that the trading value of the Medium-Term Notes will decrease. If U.S.
interest rates decrease, we expect the trading value of the Medium-Term
Notes will increase.
o Our Credit Ratings, Financial Condition and Results. Actual or anticipated
changes in our credit ratings, financial condition or results may
significantly affect the market value of the Medium-Term Notes.
You should understand that the impact of one of the factors specified
above, such as an increase in interest rates, may offset some or all of any
change in the trading value of the Medium-Term Notes attributable to another
factor. In general, assuming all relevant factors are held constant, the effect
on the trading value of the Medium-Term Notes of a given change in most of the
factors listed above will be less if it occurs later than if it occurs earlier
in the term of the Medium-Term Notes. However, we expect that the effect on the
trading value of the Medium-Term Notes of a given increase or decrease in the
CPI will be greater if it occurs later in the term of the Medium-Term Notes than
if it occurs earlier in the term of the Medium-Term Notes.
PS-6
DESCRIPTION OF THE MEDIUM-TERM NOTES
The following description of the Medium-Term Notes (referred to in the
accompanying Prospectus Supplement as the "Other Indexed Notes") supplements the
description of the notes in the accompanying Prospectus Supplement and
Prospectus. This is a summary and is not complete. You should read the
indenture, dated as of May 31, 1991, as amended (the "Indenture"), between us
and JPMorgan Chase Bank (formerly, The Chase Manhattan Bank), as trustee (the
"Trustee"). We have provided definitions for certain capitalized terms used in
this section below, under "Certain Definitions."
GENERAL
The Medium-Term Notes are part of a single series of debt securities under
the Indenture described in the accompanying Prospectus designated as Medium-Term
Notes, Series B. The aggregate principal amount of the Medium-Term Notes will be
$18,500,000. The Medium-Term Notes will mature on June 12, 2010 and will be our
general unsecured obligations. The Medium-Term Notes will be issued only in
fully registered form and in minimum denominations of $100,000, increased in
multiples of $100,000. Initially, the Medium-Term Notes will be issued in the
form of one or more global securities registered in the name of DTC or its
nominee as described in the accompanying Prospectus Supplement and Prospectus.
You should refer to "Certain U.S. Federal Income Tax Considerations" below
for a discussion of certain federal income tax considerations to you as a holder
of the Medium-Term Notes.
PAYMENTS OF INTEREST
Interest on the Medium-Term Notes will be payable annually each June 12,
beginning with June 12, 2004, and ending on the Maturity Date (which will be the
final Interest Payment Date) to the Holder of record on such Interest Payment
Date. The interest rate for the interest payment due on June 12, 2004 will be
4.00% per annum. The interest rate will be reset annually for each subsequent
interest payment and will be paid at an interest rate of 1.60 plus the number
obtained by multiplying 100 by the number obtained by subtracting 1 from a
fraction, the numerator of which is the consumer price index for the April
preceding the interest payment date, and the denominator of which is the
consumer price index for the April preceding the prior interest payment date,
expressed as the following formula:
1.60 + 100 [(CPI (April(n))/CPI (April(n-1)) - 1)]
where:
- CPI (April(n)) is the consumer price index for the April preceding
the interest payment date, and
- CPI (April(n-1)) is the consumer price index for the April preceding
the prior interest payment date.
ILLUSTRATIVE EXAMPLES
Set forth below are two examples of interest rate calculations.
EXAMPLE 1:
The hyprothetical CPI (April(n)) = 183.8
The hyprothetical CPI (April(n)) = 179.8
Interest rate per Medium-Term Note =
1.60 + 100 [(183.8/179.8) - 1)] =
1.60 + 2.22 = 3.82%
EXAMPLE 2:
The hyprothetical CPI (April(n)) = 183.8
The hyprothetical CPI (April(n)) = 185.8
Interest rate per Medium-Term Note =
1.60 + 100 [(183.8/185.8) - 1)] =
1.60 + (-1.08) = 0.52%
The interest rate for a subsequent interest payment will be less than 1.60%
if the consumer price index decreases in the period between the April preceding
the prior interest payment date and the April preceding the interest payment
date, but the interest rate for any subsequent interest payment cannot be less
than zero. If the interest rate for any subsequent interest payment is zero, we
will not pay any interest on the Medium-Term Notes on the corresponding interest
payment date.
The interest payment date with respect to the Medium-Term Notes is June
12 of each year, beginning June 12, 2004. The record date with respect to any
interest payment date will be the date (whether or not a Business Day)
immediately preceding the interest payment date. "Business Day" means any day
that is not a Saturday, a Sunday or a day on which the stock exchanges or
PS-7
banking institutions or trust companies in the City of New York are authorized
or obligated by law or executive order to close.
In calculating the interest rate for any interest payment date subsequent
to June 12, 2004, the Calculation Agent will use the most recently available
level of the consumer price index for the preceding April, even if that level
has been adjusted from a previously reported level. If a level of the consumer
price index that has been used by the calculation agent to determine the
interest rate is revised by the Bureau of Labor Statistics, the calculation
agent will continue to use the previously reported level and the interest rate
determined will not be revised.
If the consumer price index is rebased to a different year, the
Calculation Agent will continue to use the consumer price index based on the
base reference period in effect on the date the notes were issued for such
purposes, as long as that consumer price index continues to be published. For
more information about rebasing of the consumer price index, see "The Consumer
Price Index"" in this pricing supplement.
If the consumer price index for April 2004 or April of any subsequent year
is not reported by five Business Days before the relevant interest payment date,
the Calculation Agent will determine the interest rate for the next interest
payment based on the last available twelve-month change in the consumer price
index.
If, while the Medium-Term Notes are outstanding, the consumer price index
is:
o discontinued;
o in the judgment of the U.S. Secretary of the Treasury, fundamentally
altered in a manner materially adverse to the interests of an
investor in the U.S. Treasury's inflation-indexed securities; or
o in the judgment of the U.S. Secretary of the Treasury, altered by
legislation or executive order in a manner materially adverse to the
interests of an investor in the U.S. Treasury's inflation-indexed
securities;
the Treasury has stated that it will, after consulting with the Bureau of Labor
Statistics or any successor agency, substitute an appropriate alternative index
for the consumer price index. The Treasury will then notify the public of the
alternative index and how it will be applied to the Treasury's inflation-indexed
securities, and the Calculation Agent will apply this alternative index in the
same manner for all purposes with regard to the Medium-Term Notes and all
references in this pricing supplement to the consumer price index will be deemed
to be references to this alternative index.
PAYMENT AT MATURITY
At Maturity, investors will receive for each Medium-Term Note held on the
maturity date the principal amount, plus accrued and unpaid interest.
DEFEASANCE
The Medium-Term Notes are not subject to the defeasance provisions
described in the section entitled "Description of Debt Securities--Defeasance"
in the accompanying Prospectus.
EVENTS OF DEFAULT
If an Event of Default (as defined in the accompanying Prospectus) with
respect to any of the Medium-Term Notes has occurred and is continuing, then the
amount payable to you, as a beneficial owner of an Medium-Term Note, upon any
acceleration permitted by the Medium-Term Notes will be equal to the maturity
payment plus accrued interest. For these purposes, the consumer price index used
in the numerator of the fraction used to calculate the interest rate (as
described above under "Description of the Medium-Term Notes - Payments of
Interest") will be the most recent consumer price index published by the Bureau
of Labor Statistics and the consumer price index used in the denominator of the
PS-8
fraction used to calculate the interest rate will be the consumer price index
for the previous April.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Medium-Term Notes will be made by Bear Stearns in
immediately available funds. All payments of principal and interest will be made
by us in immediately available funds so long as the Medium-Term Notes are
maintained in book-entry form.
CALCULATION AGENT
The Calculation Agent for the Medium-Term Notes will be Bear Stearns. All
determinations made by the Calculation Agent will be at the sole discretion of
the Calculation Agent and will, in the absence of manifest error, be conclusive
for all purposes and binding on you and the Company. Because the Calculation
Agent is an affiliate of the Company, potential conflicts of interest may exist
between you and the Calculation Agent, including with respect to certain
determinations and judgments that the Calculation Agent must make in determining
amounts due to you. Bear Stearns is obligated to carry out its duties and
functions as Calculation Agent in good faith and using its reasonable judgment.
CUSIP
The CUSIP number for the Medium-Term Notes is 073928ZS5.
PS-9
THE CONSUMER PRICE INDEX
All disclosure contained in this Pricing Supplement regarding the consumer
price index is derived from publicly available information. Neither we nor Bear
Stearns takes any responsibility for the accuracy or completeness of such
information.
GENERAL
The consumer price index is the non-seasonally adjusted U.S. All Urban
Consumers Consumer Price Index published monthly by the Bureau of Labor
Statistics of the U.S. Department of Labor. The Bureau of Labor Statistics makes
available almost all consumer price index data and press releases immediately at
the time of release. This material may be accessed electronically by means of
the Bureau of Labor Statistics' home page on the Internet at http://www.bls.gov.
According the publicly-available information provided by the Bureau of
Labor Statistics, the consumer price index is a measure of the average change in
consumer prices over time in a fixed market basket of goods and services,
including food, clothing, shelter, fuels, transportation, drugs and charges for
the services of doctors and dentists. User fees (such as water and sewer
service) and sales and excise taxes paid by the consumer are also included.
Income taxes and investment items such as stocks, bonds and life insurance are
not included. The consumer price index includes expenditures by urban wage
earners and clerical workers, professional, managerial and technical workers,
the self-employed, short-term workers, the unemployed, retirees and others not
in the labor force. In calculating the consumer price index, price changes for
the various items are averaged together with weights that represent their
significance in the spending of urban households in the United States.
The contents of the market basket of goods and services and the weights
assigned to the various items are updated periodically to take into account
changes in consumer expenditure patterns. The consumer price index is expressed
in relative terms based on a reference period for which the level is set at 100
(currently the base reference period used by the Bureau of Labor Statistics is
1982-1984). For example, because the CPI for the 1982-1984 reference period is
100, an increase of 16.5 percent from that period would be shown as 116.5.
The Bureau of Labor Statistics has made numerous technical and
methodological changes to the consumer price index over the last 25 years, and
it is likely to continue to do so. Examples of recent methodological changes
include:
o the use of regression models to adjust for the quality improvements
in various goods (televisions, personal computers, etc.);
o the introduction of geometric averages to account for consumer
substitution within consumer price index categories; and
o changing the housing/shelter formula to improve rental equivalence
estimation.
These changes and any future changes could reduce the level of the
consumer price index and therefore lower the interest payable on the Medium-Term
Notes.
The Bureau of Labor Statistics occasionally rebases the consumer price
index. The current standard reference base period is 1982-1984 = 100. The
consumer price index was last rebased in January 1988. Prior to the release of
the consumer price index for January 1988, the standard reference base was 1967
= 100. If the Bureau of Labor Statistics rebases the consumer price index during
the time the Medium-Term Notes are outstanding, the Calculation Agent will
continue to calculate inflation using the existing base year in effect for the
consumer price index at the time of issuance of the Medium-Term Notes as long as
the old consumer price index is still published. The conversion to a new
reference base does not affect the measurement of the percent changes in a given
index series from one time period to another, except for rounding differences.
Thus, rebasing might affect the published "headline" number often quoted in the
financial press; however, the inflation calculation for the Medium-Term Notes
should not be adversely affected by any such rebasing because the old-based
consumer price index can be calculated by using the percent changes of the new
rebased consumer price index to calculate the levels of the old consumer
PS-10
price index (because the two series should have the same percent changes).
The U.S. government is not involved in any way in this offering and has no
obligation relating to the Medium-Term Notes or to the holders of the
Medium-Term Notes.
HISTORICAL DATA ON THE CONSUMER PRICE INDEX
The table below sets forth the consumer price index as published by the
Bureau of Labor Statistics for the months listed. Historical fluctuations in the
consumer price index are not necessarily indicative of future fluctuations,
which may be greater or less than those that have occurred historically.
Beginning in 2005, the interest payable on the Medium-Term Notes on any interest
payment date will be reduced in the event that the consumer price index for the
preceding April is less than the consumer price index was for the April
preceding the prior interest payment date.
LEVEL OF THE CONSUMER PRICE INDEX
(AS PUBLISHED BY THE BUREAU OF LABOR STATISTICS)
January February March April May June July August September October November December
1998 161.6 161.9 162.2 162.5 162.8 163.0 163.2 163.4 163.6 164.0 164.0 163.9
1999 164.3 164.5 165.0 166.2 166.2 166.2 166.7 167.1 167.9 168.2 168.3 168.3
2000 168.8 169.8 171.2 171.3 171.5 172.4 172.8 172.8 173.7 174.0 174.1 174.0
2001 175.1 175.8 176.2 176.9 177.7 178.0 177.5 177.5 178.3 177.7 177.4 176.7
2002 177.1 177.8 178.8 179.8 179.8 179.9 180.1 180.7 181.0 181.3 181.3 180.9
2003 181.7 183.1 184.2 183.8
PS-11
CERTAIN U. S. FEDERAL INCOME TAX CONSIDERATIONS
Set forth below is a summary of certain US federal income tax
considerations relevant to the beneficial owner of Medium-Term Notes that is a
US Holder (as defined in the accompanying Prospectus Supplement). This summary
does not address investors that may be subject to special tax rules or investors
that hold Medium-Term Notes as part of an integrated investment. This summary
supplements the discussion contained in the accompanying Prospectus Supplement
under the heading "Certain US Federal Income Tax Considerations."
We intend to treat the Medium-Term Notes as "variable rate debt
instruments" for federal income tax purposes. Assuming the Medium-Term Notes are
so treated, under the Treasury regulations governing variable rate debt
instruments that bear interest that is unconditionally payable at least annually
at a single objective rate, payments of interest on the Medium-Term Notes will
be taxable to a US Holder as ordinary interest income at the time that such
payments are accrued or received, in accordance with the US Holder's method of
tax accounting. In the case of a US Holder that uses the accrual method of tax
accounting, the amount of interest accrued during an accrual period will be
determined by assuming that the Medium-Term Notes bear interest at a fixed
interest rate that reflects the yield that is reasonably expected for the
Medium-Term Notes, and the interest allocable to the accrual period will be
adjusted to reflect the interest actually paid during the accrual period. A US
Holder may submit a written request to the address set forth under "Where You
Can Find More Information" in the accompanying Prospectus to obtain the
"reasonably expected" rate for the Medium-Term Notes. Assuming the Medium-Term
Notes are treated as variable rate debt instruments, upon the disposition of a
Medium-Term Note by sale, exchange, redemption, or repayment of principal at
maturity, a US Holder will generally recognize taxable gain or loss equal to the
difference between the amount realized on the disposition (other than amounts
attributable to accrued interest) and the US Holder's adjusted tax basis in the
Medium-Term Notes. Prospective investors should consult the discussion under the
heading "Certain US Federal Income Tax Considerations - Variable Rate Debt
Instruments" and "Certain US Federal Income Tax Considerations - Sale, Exchange,
Redemption, or Repayment of the Notes" in the accompanying Prospectus
Supplement.
Alternatively, it is possible that the Medium-Term Notes could be treated
as "contingent payment debt instruments" ("CPDIs") for federal income tax
purposes. The federal income tax treatment of contingent payment debt
instruments is summarized in the accompanying Prospectus Supplement under the
heading "Certain US Federal Income Tax Considerations - Contingent Payment Debt
Instruments."
THE PRECEDING DISCUSSION IS ONLY A SUMMARY OF CERTAIN OF THE TAX
IMPLICATIONS OF AN INVESTMENT IN MEDIUM-TERM NOTES. PROSPECTIVE INVESTORS ARE
URGED TO CONSULT WITH THEIR OWN TAX ADVISORS PRIOR TO INVESTING TO DETERMINE THE
TAX IMPLICATIONS OF SUCH INVESTMENT IN LIGHT OF EACH SUCH INVESTOR'S PARTICULAR
CIRCUMSTANCES.
ERISA CONSIDERATIONS
Section 4975 of the Internal Revenue Code of 1986, as amended (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),
any person providing services (for example, a broker), 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 a Medium-Term Note by a Plan with respect
to which the Company and/or Bear Stearns is a fiduciary and/or a service
provider (or otherwise is a "party in interest" or "disqualified person") would
PS-12
constitute or result in a prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code, unless such Medium-Term Notes are acquired or held
pursuant to and in accordance with an applicable statutory or administrative
exemption. The Bear Stearns Companies Inc. and several of its subsidiaries, such
as Bear Stearns, are each considered a "disqualified person" under the Code or
"party in interest" under ERISA with respect to many Plans, although The Bear
Stearns Companies Inc. is not a "disqualified person" with respect to an IRA
simply because the IRA is established with Bear Stearns or because Bear Stearns
provides brokerage to the IRA, and The Bear Stearns Company cannot be a "party
in interest" to any IRA other than certain employer-sponsored IRAs as only
employer-sponsored IRAs are covered by ERISA.
Applicable 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. A fiduciary of a Plan
purchasing Medium-Term Notes, or in the case of certain IRAs, the grantor or
other person directing the purchase of the Medium-Term Notes for the IRA, shall
be deemed to represent that its purchase, holding, and disposition of the
Medium-Term Notes will not constitute a prohibited transaction under ERISA or
Section 4975 of the Code for which an exemption is not available.
A fiduciary who causes an ERISA Plan to engage in a non-exempt prohibited
transaction may be subject to a penalty under ERISA. Code Section 4975 generally
imposes an excise tax on Disqualified Persons who engage, directly or
indirectly, in similar types of transactions with the assets of Plans subject to
such Section.
In accordance with ERISA's general fiduciary requirement, a fiduciary with
respect to any ERISA Plan who is considering the purchase of Medium-Term Notes
on behalf of such plan 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. Plans established with, or for which services are provided by,
the Company and/or Bear Stearns should consult with counsel prior to making any
such acquisition.
VALIDITY OF MEDIUM-TERM NOTES
The validity of the Medium-Term Notes will be passed upon for us by
Cadwalader, Wickersham & Taft LLP, New York, New York.
PS-13
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YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED IN THIS
PRICING SUPPLEMENT, THE ACCOMPANYING PROSPECTUS $18,500,000
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 THE BEAR STEARNS
PRICING SUPPLEMENT, THE ACCOMPANYING PROSPECTUS SUPPLEMENT COMPANIES INC.
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. Madison-Term Notes,
Series B
-------------------
TABLE OF CONTENTS
PRICING SUPPLEMENT
PAGE
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Certain Definitions......................................PS-2
Summary Information......................................PS-3
Risk Factors.............................................PS-5
Description of the Medium-Term Notes.....................PS-7
The Consumer Price Index................................PS-10
Certain U.S. Federal Income Tax Considerations..........PS-12
ERISA Considerations....................................PS-12
Validity of the Medium-Term Notes.......................PS-13
PROSPECTUS SUPPLEMENT --------------------------------------------
Risk Factors..............................................S-3 PRICING SUPPLEMENT
Pricing Supplement........................................S-5 --------------------------------------------
Description of Notes......................................S-6
Certain United States Federal Income Tax Considerations..S-23
Supplemental Plan of Distribution........................S-34
Validity of the Notes....................................S-35 BEAR, STEARNS & CO. INC.
Glossary.................................................S-36
PROSPECTUS
Where You Can Find More Information.........................3
Certain Definitions.........................................4
The Bear Stearns Companies Inc..............................4
Use of Proceeds.............................................5
Ratio Information...........................................5
Description of Debt Securities..............................6
Description of Warrants....................................13
Limitations on Issuance of Bearer Debt
Securities and Bearer Warrants.............................16
Description of Preferred Stock.............................17
Description of Depositary Shares...........................20
Book-Entry Procedures and Settlement.......................23
Plan of Distribution.......................................25 JUNE 2, 2003
ERISA Considerations.......................................27
Experts....................................................28
Validity of the Securities.................................28
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