(10) Asset Write Down  (11) Notes Payable  3 4 During 1999, the Company re p u rchased notes with a face value of DM 22.0 million and 65,850 warrants for a total purchase price of $5.2 million. This re p u rchase was accounted for as an extinguishment of debt with a resulting $2.7 million (net of income taxes of $0) re c o g n i z e d as an extraord i n a ry gain on such extinguishment. The extinguishment gain re p resents the diff e rence between the allocated carrying value of the debt extinguished ($8.1 million) and the consideration paid ($5.0 million), offset by the write-off of the allocated unamortized deferre d financing costs ($300,000). Of the total purchase price of $5.2 million, $176,000 was allocated to the warrants based on their fair market value at the time of purchase and re c o rded as an adjustment to additional paid-in capital. Of the total extinguishment gain, $803,000 was re c o rded in the fourth quarter of 1999 relating to the purchase of notes with a face value of DM 7.6 million on December 13, 1999.  Pursuant to the Company’s indenture, the Company is subject to certain restrictions and covenants, including, without limitation, covenants with respect to the following matters: (i) limitation on additional indebtedness; (ii) limitation on restricted payments; (iii) limitation on issuance and sales of capital stock of restricted subsidiaries; (iv) limitation on transactions with affiliates; (v) limitation on liens; (vi) limitation on guarantees of indebtedness by restricted subsidiaries; (vii) purchase of Euronet notes upon a change of control; (viii) limitation on sale of assets; (ix) limitation on dividends and other payment restrictions affecting restricted subsidiaries; (x) limitation on investments in u n restricted subsidiaries; (xi) limitation on lines of business; and (xii) provision of financial statements and re p o rts. The Company is in compliance with these covenants at December 31, 2000.  On June 22, 1998, the Company sold 243,211 units in a public offering, each consisting of DM 1,000 principal amount at maturity of 12 3/8% senior discount notes due on July 1, 2006 and 729,633 warrants to purchase 766,114 shares of common stock. Each warrant entitles the holder to purchase, on or after June 22, 1998 and prior to July 1, 2006, 1.05 shares of common stock at an exercise price of $5.00 per share. Cash i n t e rest on the notes will not be payable prior to July 1, 2002. Commencing January 1, 2003, cash interest will be payable semi-annually on J a n u a ry 1 and July 1 of each year. The notes and the warrants are separately transferable. The gross proceeds to the Company was DM 150.0 million (approximately $83.1 million) re p resenting an issue price of DM 616.75 per DM 1,000 principal amount at maturity. Of this amount, $1.7 million has been allocated to the warrants within stockholders' equity to reflect their fair market value on the date of issuance. Net p roceeds to the Company after underwriting discount and offering expenses were DM 145.1 million (approximately $81.3 million).  The Company periodically reviews the re c o rded values of its long-lived assets to determine if future cash flows to be derived from these assets will be sufficient to recover the remaining re c o rded asset values. A portion of the ATM hard w a re assets acquired with the Budapest Bank and S e rvice Bank ATM network purchases were deemed technologically inferior relative to the Company’s standards. Specifically, these assets w e re not technologically advanced to support the entire current and future set of transactions the Company typically offers to users of its ATM network. As a result of this analysis, the Company re c o rded a non-cash charge of $800,000 related to a reduction in the carrying value of ATM hard w a re, adjusting to its net realizable value.  The asset write-down is disclosed as a separate operating expense item in the Company’s Consolidated Statements of Operations and C o m p rehensive Loss.  In order to determine the extent of the asset impairment and the related asset write-down, the Company estimated the discounted cash flows of the Software Solutions Segment products and services in determining the fair value of the goodwill and related identifiable intangible assets. The Company’s estimate was based on historical results which have shown re c u rring operating losses since acquisition, curre n t p rojections, and internal earnings targets, net of applicable taxes. The Company’s discounted cash flow analysis indicated that the carry i n g value of intangible assets related to Euronet USA should be reduced to zero as of September 30, 2000. The net book value of the intangible assets prior to the write down was $11.2 million.  As a result of the Company’s inability to achieve operating improvements, including software license and service orders for Euronet USA’s traditional core product (ITM) and cost reductions, the Software Solutions Segment continued operating at a loss through the first thre e q u a rters of 2000. The Company calculated the expected cash flows of the Company’s Software Solutions Segment, which identified an i m p a i rment of its long-lived assets. Accord i n g l y, in the third quarter of 2000, the Company re c o rded an impairment charge based on the p resent value of expected cash flows of $11.2 million for the write-down of goodwill and other identifiable intangible assets re c o rded upon the acquisition of Euronet USA. The Company considers the rapidly changing business environment surrounding electronic transaction payment systems software to be a primary indicator of any potential impairment of goodwill and other identifiable intangible assets related to the Company’s Software Solutions Segment. The Company is in the process of repositioning Euronet USA in the market thro u g h development and release of a new set of products that are independent of Euronet USA’s traditional core product lines, including a new, p l a t f o rm independent Java based transaction processing software package with wireless banking and messaging modules and a set of mobile phone prepaid re c h a rge solutions. It has become apparent, based on market reaction to these new products, that these new products and solutions rather than Euronet USA’s traditional ITM solution will be the primary source of software solutions revenues in the future.  During the third quarter of 2000, the Company reduced the carrying value of certain assets in accordance with SFAS No.121. The asset write-downs totaled $12.0 million, of which $11.2 million related to goodwill and other identifiable intangible assets associated with the C o m p a n y ’s acquisition of Arkansas Systems, Inc. (“Euronet USA”) in December 1998. The remaining $800,000 write-down related to the C o m p a n y ’s ATM hard w a re inventory acquired associated with the Company's acquisition of the SBK ATM network in Germany and the Budapest Bank ATM network in Hungary. 