The opinion of the court was delivered by: WILLIAM C. CONNER
Gestetner is a company incorporated under the laws of England and Wales, with its principal place of business in London, England. Gestetner is engaged in, inter alia, the business of selling office machines and office products. Petition para. 3.
Nashua is a corporation organized under the laws of the state of Delaware, with its principal place of business in Nashua, New Hampshire. Nashua is engaged in manufacturing coated products and photographic processing. Petition para. 4.
The Petition alleges that since December 1990, Gestetner and Nashua have had a dispute about what adjustment should be made in the purchase price under the Purchase Agreement. Petition para. 2. Pursuant to the Purchase Agreement, Gestetner purchased from Nashua the stock or assets relating to office machine and office product businesses in 16 foreign countries (the "Foreign Businesses") for $ 148.1 million in cash, plus other consideration, for a total price of $ 152.2 million, exclusive of net debt. Petition paras. 7, 9.
Pursuant to Section 1.5(a) of the Purchase Agreement, Nashua had delivered to Gestetner an unaudited December 31, 1989, balance sheet before the Purchase Agreement was signed (the "Unaudited Balance Sheet"). Petitioner alleges that the initial $ 152.2 million purchase price was based on the net book value of the Foreign Businesses as shown on the Unaudited Balance sheet plus $ 30 million. Petition para. 9.
Pursuant to Section 1.5 of the Purchase Agreement, the purchase price was subject to adjustment after the closing of the sale of the Foreign Businesses and the preparation of an audited balance sheet. Petition para. 19.
Pursuant to Section 1.5(b), within 90 days after the closing, Nashua was required to deliver to Gestetner a balance sheet as of the closing date, audited with respect to the Foreign Businesses by Nashua's independent accountants, Price Waterhouse. Section 1.5(c) provides that the difference between the net book value of the Foreign Businesses as shown in the Closing Balance Sheet (the "Closing Date Net Book Value") and the net book value as shown in the Unaudited Balance Sheet is to be added to or subtracted from the purchase price. Petition para. 11. Thus, the final purchase price would be the Closing Date Net Book Value plus $ 30 million.
Under Section 1.5(b), Gestetner had the right to object to the Closing Date Net Book Value before the purchase price adjustment was finalized. Section 1.5(b) requires the Closing Balance sheet to be prepared in accordance with United States generally accepted accounting principles ("GAAP"), and consistent with the accounting principles applied in the preparation of the Unaudited Balance Sheet. GAAP compliance is not required, however, with respect to non-GAAP matters that were disclosed both in the notes to the Unaudited Balance Sheet as of year-end 1989 and in the notes to the Closing Balance Sheet. Petition para. 12.
The closing date of the sale of the Foreign Businesses was April 2, 1990. Nashua delivered the Closing Balance Sheet to Gestetner on or about September 10, 1990. It showed a Closing Date Net Book Value for the Foreign Businesses of $ 124,188,000, or $ 1,961,000 more than the net book value of $ 122,227,000 in the Unaudited Balance Sheet. Petition para. 17.
By agreement of the parties, Gestetner's 90-day period to deliver its objections began to run on September 24, 1990, so that Gestetner had until December 8, 1990, to make its objections. On December 7, 1990, Gestetner delivered to Nashua extensive objections to the Closing Balance Sheet, including 187 objections in 18 categories, totalling $ 24,313,000. Petition para. 19. The objections raise numerous technical accounting issues. Certain of the objections have been revised, based on ...