In the second quarter of 1994, the Company received a letter of intent for the purchase of its 80% interest in HGC, however, the proposed transaction was not consummated, due to the potential buyer's inability to obtain financing. Consequently, the Company ceased funding HGC's operations in the third quarter of 1994, effectively closing down the UK operation. The one time charges for severance pay, the balance due under the subsidiary's lease agreement and the write-off of the subsidiary's net assets, related to the termination of that operation, totaled approximately $724,000. These charges were accrued in the third quarter, and are included in the "Unusual items" caption in the accompanying consolidated statements of income. The UK operations are reported in the Membership and Other category in the accompanying table.
As discussed previously, the Company's membership and related revenues were negatively affected by the decrease in new and renewal members and in the related fees generated by the Company's membership. In 1995, the Company continued to provide its Affiliates with various discounted membership options. The Company's cash flow from membership operations continued to be significantly impacted. However, the Company expects that cash flow generated from its warranty and other operations, in combination with the cost saving measures implemented, will be sufficient to meet its operating needs on an ongoing basis.
5. Property and Equipment - -------------------------------------------------------------------------------- Property and equipment consists of the following at December 31:
In the second quarter of 1994, the Company received a letter of intent for the purchase of its 80% interest in HGC, however, the proposed transaction was not consummated, due to the inability of the buyer to obtain financing. The Company, in the third quarter of 1994 ceased funding the subsidiary, which has effectively closed down its operations. One time charges for severance pay, the balance due under the subsidiary's lease agreements and write-off of the subsidiary's net assets, totaled approximately $724,000, and is included in the 'Unusual items' caption in the accompanying consolidated statements of income.
In 1990, the Company declared a dividend of one right for each share of common stock outstanding as of November 12, 1990. The rights will be distributed and become immediately exercisable upon the earlier of 10 days following a public announcement that a person or group of affiliated persons has acquired the rights to acquire beneficial ownership of 20% or more of the Company's outstanding shares or 10 days following the commencement of a tender offer or exchange offer that would result in a person or affiliated group beneficially owning 30% or more of the outstanding shares. Each right permits the holder to acquire one share of common stock for a price of $30 per share. The rights may be redeemed by the Company at any time prior to the tenth day after the acquisition of 20% of the outstanding shares or the announcement of an offer for 30% of the outstanding shares. Upon the occurrence of certain events after the rights become exercisable, each right would, subject to certain adjustments and alternatives, entitle the holder to purchase common stock of the Company or the acquiring entity having a market value of twice the $30 exercise price of the right (except that acquiring persons would not be able to exercise the rights).
The fourth quarter 1995 results include a charge of $5,156,022, related to the Acceleration trial judgment rendered against a wholly owned subsidiary of the Company. See also Note 10.