e x p e n d i t u res are made in or are denominated in U.S. Dollars the Company is also striving to achieve more of its expenses in local currencies to
match its revenues. 
The Company estimates that a further 10% depreciation in foreign exchange rates of the Deutsche Mark, Hungarian Forint, Polish Zloty and the
British Pound Sterling against the U.S. dollar, would have the combined effect of a $7.1 million decrease in the r e p o rted net loss. This was
estimated using 10% of the Company’s net losses after adjusting for unusual impairment and other items including U.S. dollar denominated or
indexed expenses. The Company believes that this quantitative measure has inherent limitations. It does not take into account any govern m e n t a l
actions or changes in either customer purchasing patterns or the Company’s financing or operating strategies. 
As a result of continued European economic convergence, including the increased influence of the Deutsche Mark, as opposed to the U.S. Dollar,
on the Central European currencies, the Company expects that the currencies of the markets where it invests will fluctuate less against the
Deutsche Mark than against the Dollar. Accord i n g l y, the Company believes that its Deutsche Mark denominated debt provides, in the medium to
long term, for a closer matching of assets and liabilities than would Dollar denominated debt. 
Inflation and Functional Currencies
In recent years, Hungary, Poland and the Czech Republic have experienced high levels of inflation. Consequently, these countries’ currencies have
continued to decline in value against the major currencies of the OECD over this time period. However, due to the significant reduction in the
inflation rate of these countries in recent years, none of these countries are considered to have a hyper- i n f l a t i o n a ry economy. Furt h e r, the majority
of all three subsidiaries’ revenues are denominated in the local curr e n c y. Thus all three subsidiaries use their local currency as the functional
c u rre n c y. The Polish and Czech subsidiaries changed their functional currency to the respective local currency as of January 1, 1998 and January
1, 1999, re s p e c t i v e l y, and the Hungarian subsidiary changed as of July 1, 1999. 
G e rm a n y, France and the United Kingdom have experienced relatively low and stable inflation rates in recent years. There f o re, the local curre n c y
in each of these markets is the functional curre n c y. Although Croatia, like Germany and France, has maintained relatively stable inflation and
exchange rates, the functional currency of the Croatian company is the U.S. dollar due to the significant level of U.S. dollar denominated re v e n u e s
and expenses. Due to the factors mentioned above, the Company does not believe that inflation will have a significant effect on results of operations
or financial condition. The Company continually reviews inflation and the functional currency in each of the countries that it operates in.
Interest Rate Risk
The fair market value of the Company's long-term fixed interest rate debt is subject to interest rate risk. Generally, the fair market value of fixed
i n t e rest rate debt will increase as interest rates fall and decrease as interest rates rise. The estimated fair value of the Company's notes payable at
December 31, 2000 was $37.5 million compared to a carrying value of $77.2 million. A 1% increase from prevailing interest rates at December
31, 2000 would result in a decrease in fair value of notes payable by approximately $1.5 million. Fair values were determined from quoted
market prices and from investment bankers considering credit ratings and the remaining term to maturity. (See Note 20 to the Consolidated
Financial Statements - Financial Instruments) 
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