Sec Form 20-F - Registration Statement/annual Report/transition Report/shell Company Report Page 37
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69disclose the existence of that exposure.
2.
For purposes of disclosure under Item 11(b), registrants should describe primary market risk exposures that exist as of
the end of the latest fiscal year, and how those exposures are managed.
General Instructions to Items 11(a) and 11(b).
1.
The disclosures called for by Items 11(a) and 11(b) are intended to clarify the registrant’s exposures to market risk
associated with activities in derivative financial instruments, other financial instruments, and derivative commodity
instruments.
2.
In preparing the disclosures under Items 11(a) and 11(b), registrants are required to include derivative financial
instruments, other financial instruments, and derivative commodity instruments.
3.
For purposes of Items 11(a) and 11(b), derivative financial instruments, other financial instruments, and derivative
commodity instruments (collectively referred to as “market risk sensitive instruments”) are defined as follows:
A.
Derivative financial instruments has the same meaning as defined by generally accepted accounting principles (see,
e.g., FASB, Statement of Financial Accounting Standards No. 119, “Disclosure about Derivative Financial
Instruments and Fair Value of Financial Instruments,” (“FAS 119”) paragraphs 5-7 (October 1994)), and includes
futures, forwards, swaps, options, and other financial instruments with similar characteristics;
B.
Other financial instruments means all financial instruments as defined by generally accepted accounting principles
for which fair value disclosures are required (see, e.g., FASB, Statement of Financial Accounting Standards No. 107,
“Disclosures about Fair Value of Financial Instruments,” (“FAS 107”) paragraphs 3 and 8 (December 1991)),
except for derivative financial instruments, as defined above;
C.
i.
Other financial instruments include, but are not limited to, trade accounts receivable, investments, loans,
structured notes, mortgage-backed securities, trade accounts payable, indexed debt instruments, interest-only
and principal-only obligations, deposits, and other debt obligations;
ii.
Other financial instruments exclude employers and plans obligations for pension and other post-retirement
benefits, substantively extinguished debt, insurance contracts,lease contracts, warranty obligations and
rights, unconditional purchase obligations, investments accounted for under the equity method, minority
interests in consolidated enterprises, and equity instruments issued by the registrant and classified in
stockholders’ equity in the statement of financial position (see, e.g., FAS 107, paragraph 8 (December 1991)).
For purposes of this item, trade accounts receivable and trade accounts payable need not be considered other
financial instruments when their carrying amounts approximate fair value; and
D.
Derivative commodity instruments include, to the extent such instruments are not derivative financial
instruments,commodity futures, commodity forwards, commodity swaps, commodity options, and other commodity
instruments with similar characteristics that are permitted by contract or business custom to be settled in cash or
with another financial instrument. For purposes of this paragraph, settlement in cash includes settlement in cash
of the net change in value of the derivative commodity instrument (e.g., net cash settlement based on changes in the
price of the underlying commodity).
4.
A.
In addition to providing required disclosures for the market risk sensitive instruments defined in instruction 2. of
the General Instructions to Items 11(a) and 11(b), registrants are encouraged to include other market risk sensitive
instruments, positions, and transactions within the disclosures required under Items 11(a) and 11(b). Such
instruments, positions, and transactions might include commodity positions, derivative commodity instruments that
are not permitted by contract or business custom to be settled in cash or with another financial instrument, cash
flows from anticipated transactions, and certain financial instruments excluded under instruction 3.C.ii. of the
General Instructions to Items 11(a) and 11(b).
B.
Registrants that voluntarily include other market risk sensitive instruments, positions and transactions within their
quantitative disclosures about market risk under the sensitivity analysis or value at risk disclosure alternatives are
not required to provide separate market risk disclosures for any voluntarily selected instruments, positions, or
transactions. Instead, registrants selecting the sensitivity analysis and value at risk disclosure alternatives are
permitted to present comprehensive market risk disclosures, which reflect the combined market risk exposures
inherent in both the required and any voluntarily selected instruments, position, or transactions. Registrants that
37
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