iHeartMedia 2000 Annual Report Download - page 27

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27
could make us vulnerable to an increase in interest rates or a downturn in the operating performance of
our radio broadcast, outdoor advertising or live entertainment properties or a decline in general economic
conditions. At December 31, 2000, we had debt outstanding of approximately $10.7 billion and
shareholders’ equity of $30.3 billion. We expect to continue to borrow funds to finance acquisitions of
radio broadcasting, outdoor advertising and live entertainment properties, as well as for other purposes.
We may borrow up to $3.0 billion under credit facilities at floating rates currently equal to the London
InterBank Offered Rate plus .625% and an additional $1.9 billion under a credit facility at floating rates
currently equal to the London InterBank Offered Rate plus .4%.
Dependence on Key Personnel
Our business is dependent upon the performance of certain key employees, including our chief
executive officer and other executive officers. We also employ or independently contract with several on-
air personalities with significant loyal audiences in their respective markets. Although we have entered
into long-term agreements with certain of our executive officers and key on-air talent to protect our
interests, we can give no assurance that all such key personnel will remain with us or will retain their
audiences.
International Business Risks
Doing business in foreign countries carries with it certain risks that are not found in doing
business in the U.S. We currently derive a portion of our revenues from international radio broadcasting,
outdoor advertising and live entertainment operations in Europe, Asia, Mexico, South America, Canada,
Australia and New Zealand. The risks of doing business in foreign countries which could result in losses
against which we are not insured include:
• potential adverse changes in the diplomatic relations of foreign countries with the U.S.;
• hostility from local populations;
• the adverse effect of currency exchange controls;
• restrictions on the withdrawal of foreign investment and earnings;
• government policies against businesses owned by foreigners;
• expropriations of property;
• the potential instability of foreign governments;
• the risk of insurrections;
• risks of renegotiation or modification of existing agreements with governmental authorities;
• foreign exchange restrictions; and
• changes in taxation structure.
Exchange Rate Risk
Because we own assets overseas and derive revenues from our international operations, we may
incur currency translation losses due to changes in the values of foreign currencies and in the value of the
U.S. dollar. We cannot predict the effect of exchange rate fluctuations upon future operating results. To
reduce a portion of our exposure to the risk of international currency fluctuations, we maintain a hedge by
incurring debt in various other currencies. We review this hedge position monthly. We currently
maintain no other derivative instruments to reduce the exposure to translation and/or transaction risk, but
may adopt other hedging strategies in the future.
Our Acquisition Strategy Could Pose Risks