THE BEAR STEARNS COMPANIES INC.
IncomeNotes(SM)
With Maturities of Nine Months or More from Date of Issue
Registration No. 333-109793
Filed Pursuant to Rule 424(b)(3)
Pricing Supplement No. 16
(To Prospectus dated November 17, 2003,
and Prospectus Supplement dated November 17, 2003)
Trade Date: March 29, 2004
Issue Date: April 1, 2004
The date of this Pricing Supplement is March 29, 2004
Fixed Rate Notes
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Interest
Maturity Price to Discounts & Payment
CUSIP# Interest Rate Date Public Commissions Reallowance Dealer Frequency
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07387EEK9 4.55% from and including 4/15/2019 100.00% 2.00% 0.350% 98.40% Semi
4/1/04, to but excluding
4/15/09.
5.00% from and including
4/15/09, to but excluding
4/15/14.
6.00% from and including
4/15/14, to but excluding
4/15/19.
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07387EEL7 5.30% 4/15/2029 100.00% 2.50% 0.350% 98.00% Semi
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Subject to Redemption
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First
Interest Aggregate
First Interest Payment Survivor's Yes/No Principal
Payment Date Amount Option Date and Terms of Redemption Amount Net Proceeds
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10/15/2004 $24.52 Yes Yes Commencing on 4/15/2007 and on the interest $1,229,000 $1,204,420
payment dates thereafter until Maturity,
the Notes may be called in whole at par at
the option of the Company on ten calendar
days notice.
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Commencing on 4/15/2009 and on the 15th of
each month thereafter until Maturity, the
10/15/2004 $28.56 Yes Yes Notes may be called in whole at par at the $1,194,000 $1,164,150
option of the Company on ten calendar days
notice.
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Floating Rate Notes*
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Initial Price to Discounts &
CUSIP# Interest Rate Basis Interest Rate Maturity Date Public Commissions Reallowance Dealer
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07387EEM5 Consumer Price 3.32625% 4/10/2014 100.00% 1.50% 0.200% 98.90%
Index-Linked, subject
to the minimum
interest rate
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Subject to Redemption
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First
Interest Interest First Interest Survivor's Date and Terms Aggregate Net
Payment Frequency Payment Date Payment Amount Option Yes/No of Redemption Principal Amount Proceeds
---------------------------------------------------------------------------------------------------------------------
Monthly 4/10/2004 $0.83 Yes No N/A $5,666,000 $5,581,010
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Minimum Interest Rate: 0.00% per year for each interest payment period
Index Maturity: 1 month, year on year
Spread: 1.40%
Interest Reset Dates: The 10th of each month during the term of the
Notes, beginning on April 10, 2004
Interest Reset Period: Monthly
Interest Payment Dates: The 10th of each month during the term of the
Notes, beginning on April 10, 2004
Interest Payment Period: Monthly
Interest Determination Dates: The 5th Business Day prior to the applicable
interest payment date
Day Count Basis: 360-day year of twelve 30-day months
*ADDITIONAL TERMS OF THE NOTES
Calculation of the Interest Rate
The interest rate for the Consumer Price Index-Linked Notes (the
"Notes") being offered by this Pricing Supplement, for each interest payment
period during the term of the Notes following the initial interest payment
period, will be the rate determined as of the applicable interest determination
date pursuant to the following formula:
[(CPIt - CPIt-12) / CPIt-12] + 1.40%
CPIt = Current Index Level of CPI (as defined below), as
published on Bloomberg CPURNSA; and
CPIt-12 = Index Level of CPI 12 months prior to CPIt.
In no case, however, will the interest rate for the Notes be less than the
minimum interest rate. The initial interest rate for the Notes will be 3.32625%.
CPIt for each interest reset date is the CPI for the third calendar
month prior to such interest reset date as published and reported in the second
calendar month prior to such interest reset date. For example, for the interest
period from and including April 10, 2004 to but excluding May 10, 2004, CPIt
will be the CPI for January 2004, which was 185.2, and CPIt-12 will be the CPI
for January 2003, which was 181.7. The CPI for January 2004 was published by BLS
(as defined below) and reported on Bloomberg CPURNSA in February 2004, and the
CPI for January 2003 was published and reported in February 2003.
Consumer Price Index
The amount of interest payable on the Notes on each interest payment
date will be linked to changes in the Consumer Price Index. The Consumer Price
Index for purposes of the Notes is the non-seasonally adjusted U.S. City Average
All Items Consumer Price Index for All Urban Consumers ("CPI"), published
monthly by the Bureau of Labor Statistics of the U.S. Department of Labor
("BLS") and reported on Bloomberg CPURNSA or any successor service. The CPI for
a particular month is published during the following month. The CPI is a measure
of the average change in consumer prices over time for a fixed market basket of
goods and services, including food, clothing, shelter, fuels, transportation,
charges for doctors and dentists services, and drugs. In calculating the index,
price changes for the various items are averaged together with weights that
represent their importance 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 by the BLS to take into
account changes in consumer expenditure patterns. The CPI is expressed in
relative terms in relation to a time base reference period for which the level
is set at 100.0. The base reference period for the Notes is the 1982-1984
average.
If the CPI is not reported on Bloomberg CPURNSA for a particular
month by 3:00 PM on a interest reset date, but has otherwise been published by
the BLS, the Calculation Agent will determine the CPI as published by the BLS
for such month using such other source as it deems appropriate.
In calculating CPIt and CPIt-12 the Calculation Agent will use the
most recently available value of the CPI for any month, determined as described
above on the applicable interest reset date, even if such value has been
adjusted from a prior reported value for the relevant month. However, if a value
of CPIt and CPIt-12 used by the Calculation Agent on any interest reset date to
determine the interest rate on the Notes (an "Initial CPI") is subsequently
revised by the BLS, the Calculation Agent will continue to use the Initial CPI,
and the interest rate determined will not be revised. If the CPI is rebased to a
different year or period, the base reference period for the Notes will continue
to be the 1982-1984 reference period as long as the 1982-1984 CPI continues to
be published.
If, while the Notes are outstanding, the CPI is discontinued or
substantially altered, as determined in the sole discretion of the Calculation
Agent, the applicable substitute index for the Notes will be that chosen by the
Secretary of the Treasury for the Department of Treasury's Inflation-Linked
Treasuries as described at 62 Federal Register 846-874 (January 6, 1997). If no
such securities are outstanding, the Calculation Agent will determine a
substitute index for the Notes in accordance with general market practice at the
time.
The Calculation Agent for the Notes will be Bear, Stearns & Co. Inc.
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 holders of the Notes and the Company.
Because the Calculation Agent is an affiliate of the Company, potential
conflicts of interest may exist between holders of the Notes and the Calculation
Agent, including with respect to certain determinations and judgments that the
Calculation Agent must make in determining amounts due to holders. Bear Stearns
is obligated to carry out its duties and functions as Calculation Agent in good
faith and using its reasonable judgment.
Historical Data on the Consumer Price Index
The table below sets forth the CPI as published by the BLS for the
months listed. Historical fluctuations in the CPI are not necessarily
indicative of future fluctuations, which may be greater or less than those
that have occurred historically.
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
------- -------- ----- ----- --- ---- ---- ------ --------- ------- -------- --------
2004 185.2 186.2
2003 181.7 183.1 184.2 183.8 183.5 183.7 183.9 184.6 185.2 185.0 184.5 184.3
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
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
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
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
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
Risk Factors
The Notes are subject to special considerations. The accompanying
Prospectus, Prospectus Supplement and this Pricing Supplement do not describe
all of the risks and other ramifications of an investment in the Notes. An
investment in Notes indexed to the CPI entails significant risks that are not
associated with similar investments in conventional floating rate or fixed-rate
debt securities. Accordingly, prospective investors should consult their
financial and legal advisors as to the risks entailed by an investment in the
Notes and the suitability of the Notes in light of their particular
circumstances.
The Interest Rate on the Notes may be less than the Spread and, in Some Cases,
Could be Zero.
Interest payable on the Notes is linked to changes in the level of
the CPI during twelve-month measurement periods. If the CPI does not increase
during a relevant measurement period, which is likely to occur when there is
little or no inflation, holders of the Notes will receive interest payments for
that interest period equal to 1.40%, which is the spread. If the CPI decreases
during a relevant period, which is likely to occur when there is deflation,
holders of the Notes will receive interest payments for that interest period
less than the spread. In some cases, holders of the Notes could receive only the
minimum interest rate, which is 0.00%.
The Interest Rate on the Notes may be Below the Rate Otherwise Payable on
Similar Fixed or Floating Rate Debt Securities Issued by Us.
The interest rate on the Notes, if equal to the spread or lower,
including the minimum interest rate, is below what we would currently expect to
pay as of the date of this Pricing Supplement if we issued non-callable senior
debt securities with a fixed or floating rate and similar maturity to that of
the Notes. Any interest payable in excess of the minimum interest rate on the
Notes will be based upon the difference in the level of the CPI determined as of
the measurement dates specified in the formula listed above, plus the spread.
Your Interest Rate is Based upon the CPI. The CPI Itself and the way the BLS
Calculates the CPI may Change in the Future.
There can be no assurance that the BLS will not change the method by
which it calculates the CPI. In addition, changes in the way the CPI is
calculated could reduce the level of the CPI and lower the interest payment with
respect to the Notes. Accordingly, the amount of interest, if any, payable on
the Notes, and therefore the value of the Notes, may be significantly reduced.
If the CPI is substantially altered (as determined in the sole discretion of the
Calculation Agent), a substitute index will be employed to calculate the
interest payable on the Notes as described above. The Historical Levels of the
CPI are not an Indication of the Future Levels of the CPI.
The historical levels of the CPI are not an indication of the future
levels of the CPI during the term of the Notes. In the past, the CPI has
experienced periods of volatility, and such volatility may occur in the future.
Fluctuations and trends in the CPI that have occurred in the past are not
necessarily indicative, however, of fluctuations that may occur in the future.
Holders of the Notes will receive interest payments that will be
affected by changes in the CPI. Such changes may be significant. Changes in the
CPI 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.
Certain US Federal Income Tax Considerations
Set forth below is a summary of certain US federal income tax
considerations relevant to the beneficial owner of 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 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 Notes as "variable rate debt instruments" for
federal income tax purposes. Assuming the 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 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 Notes
bear interest at a fixed interest rate that reflects the yield that is
reasonably expected for the 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 Notes. Assuming the Notes are treated as
variable rate debt instruments, upon the disposition of a 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 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 Internal Revenue Service (the
"IRS") could assert that the Notes are subject to special rules governing
"contingent payment debt instruments" ("CPDIs"). If the IRS were successful in
this assertion, US Holders would be required to accrue original issue discount
income, subject to adjustments, at the "comparable yield" of the Notes and any
gain recognized with respect to the Notes generally would be treated as ordinary
income. Prospective investors are urged to consult their tax advisors regarding
the tax consequences to them of purchasing the Notes, including the possibility
that the Notes could be treated as CPDIs.
The preceding discussion is only a summary of certain of the tax
implications of an investment in 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.
***
The distribution of IncomeNotes will conform to the requirements set forth in
Rule 2720 of the NASD Conduct Rules.