##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 000-51439
 DIAMOND FOODS, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
(State of Incorporation)
    
    20-2556965
(IRS Employer Identification No.)600 Montgomery Street, 17th Floor 
San Francisco, California
(Address of Principal Executive Offices)
    
    94111-2702
(Zip Code)
 415-912-3180
(Telephone No.)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



TABLE OF CONTENTS
 PagePart I. FINANCIAL INFORMATION
    
    
    4Item 1. Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    18Part II.OTHER INFORMATION
    
    
    19Item 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults Upon Senior Securities
    
    
    19Item 4. Removed and Reserved
    
    
    19Item 5. Other Information
    
    
    20Item 6. Exhibits
    
    
    20SIGNATURES
    
    
    21EX-31.01EX-31.02EX-32.01
  2




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##### Table of Contents



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
   3




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 DIAMOND FOODS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share information)
(Unaudited)
 October 31,
    
    
    July 31,
    
    
    October 31,2010
    
    
    2010
    
    
    2009ASSETSCurrent assets:Cash and cash
equivalents
    
    $
    8,012
    
    
    $
    5,642
    
    
    $
    6,591Trade receivables, net
    
    
    122,660
    
    
    
    65,553
    
    
    
    84,267Inventories
    
    
    205,518
    
    
    
    143,405
    
    
    
    174,397Deferred income taxes
    
    
    10,497
    
    
    
    10,497
    
    
    
    13,234Prepaid income taxes
    
    
    3,055
    
    
    
    9,225
    
    
    
    Prepaid expenses and other current assets
    
    
    10,168
    
    
    
    5,767
    
    
    
    3,394Total current
assets
    
    
    359,910
    
    
    
    240,089
    
    
    
    281,883Property, plant and
equipment, net
    
    
    118,243
    
    
    
    117,816
    
    
    
    51,581Deferred income taxes
    
    
    13,120
    
    
    
    13,625
    
    
    
    5,954Goodwill
    
    
    396,788
    
    
    
    396,788
    
    
    
    75,243Other intangible assets,
net
    
    
    447,052
    
    
    
    449,018
    
    
    
    97,417Other long-term assets
    
    
    7,978
    
    
    
    8,536
    
    
    
    3,786Total assets
    
    $
    1,343,091
    
    
    $
    1,225,872
    
    
    $
    515,864LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of
long-term debt
    
    $
    40,000
    
    
    $
    40,000
    
    
    $
    16,250Accounts payable and accrued liabilities
    
    
    143,180
    
    
    
    92,166
    
    
    
    87,516Payable to growers
    
    
    84,804
    
    
    
    35,755
    
    
    
    114,626Total current
liabilities
    
    
    267,984
    
    
    
    167,921
    
    
    
    218,392Long-term obligations
    
    
    515,000
    
    
    
    516,100
    
    
    
    95,053Deferred income taxes
    
    
    146,265
    
    
    
    144,755
    
    
    
    2,120Other liabilities
    
    
    18,154
    
    
    
    17,153
    
    
    
    12,168Stockholders equity:Preferred stock, $0.001 par value; Authorized: 5,000,000
shares; no shares
issued or
outstanding
    
    
    
    
    
    
    
    
    
    
    Common stock, $0.001 par value; Authorized: 100,000,000
shares; 22,234,131,
22,121,534 and 16,852,947 shares issued and
21,974,522, 21,891,928 and
16,626,540 shares outstanding at October 31,
2010, July 31, 2010 and
October 31,
2009,
respectively
    
    
    22
    
    
    
    22
    
    
    
    17Treasury stock, at cost: 259,609, 229,606 and 226,407
shares held at
October 31, 2010, July 31, 2010 and October 31,
2009, respectively
    
    
    (6,315
    )
    
    
    (5,050
    )
    
    
    (4,930
    )Additional paid-in
capital
    
    
    310,470
    
    
    
    307,032
    
    
    
    123,870Accumulated other
comprehensive loss
    
    
    (522
    )
    
    
    (869
    )
    
    
    (1,067
    )Retained earnings
    
    
    92,033
    
    
    
    78,808
    
    
    
    70,241Total
stockholders
equity
    
    
    395,688
    
    
    
    379,943
    
    
    
    188,131Total liabilities and
stockholders equity
    
    $
    1,343,091
    
    
    $
    1,225,872
    
    
    $
    515,864
  4




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DIAMOND FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
(Unaudited)
 Three Months EndedOctober 31,2010
    
    
    2009Net sales
    
    $
    252,566
    
    
    $
    180,641Cost of sales
    
    
    188,970
    
    
    
    135,150Gross profit
    
    
    63,596
    
    
    
    45,491Operating expenses:Selling, general and administrative
    
    
    23,103
    
    
    
    13,497Advertising
    
    
    12,469
    
    
    
    6,292Acquisition and integration related expenses
    
    
    499
    
    
    
    Total operating expenses
    
    
    36,071
    
    
    
    19,789Income from operations
    
    
    27,525
    
    
    
    25,702Interest expense, net
    
    
    6,117
    
    
    
    1,248Income before income taxes
    
    
    21,408
    
    
    
    24,454Income taxes
    
    
    7,194
    
    
    
    9,524Net income
    
    $
    14,214
    
    
    $
    14,930Earnings per share:Basic
    
    $
    0.65
    
    
    $
    0.90Diluted
    
    $
    0.64
    
    
    $
    0.88Shares used to compute earnings per share:Basic
    
    
    21,489
    
    
    
    16,269Diluted
    
    
    21,947
    
    
    
    16,685Dividends declared per share
    
    $
    0.045
    
    
    $
    0.045
  5




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##### Table of Contents



DIAMOND FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months EndedOctober 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    14,214
    
    
    $
    14,930Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    7,472
    
    
    
    2,634Deferred income taxes
    
    
    2,347
    
    
    
    1,088Excess tax benefit from stock option transactions
    
    
    (1,304
    )
    
    
    (253
    )Stock-based compensation
    
    
    1,580
    
    
    
    571Other, net
    
    
    84
    
    
    
    Changes in assets and liabilitiesTrade receivables
    
    
    (57,107
    )
    
    
    (50,775
    )Inventories
    
    
    (62,113
    )
    
    
    (89,370
    )Prepaid expenses, income taxes and other current assets
    
    
    1,769
    
    
    
    159Accounts payable and accrued liabilities
    
    
    51,753
    
    
    
    23,589Payable to growers
    
    
    49,049
    
    
    
    85,477Other, net
    
    
    (156
    )
    
    
    472Net cash provided by (used in) operating activities
    
    
    7,588
    
    
    
    (11,478
    )CASH FLOWS FROM INVESTING ACTIVITIES:Net proceeds from sale of property, plant and equipment
    
    
    8
    
    
    
    133Purchases of property, plant and equipment
    
    
    (4,732
    )
    
    
    (2,085
    )Acquisition of Pop Secret
    
    
    
    
    
    
    (62
    )Net cash used in investing activities
    
    
    (4,724
    )
    
    
    (2,014
    )CASH FLOWS FROM FINANCING ACTIVITIES:Revolving line of credit borrowings under the Secured Credit Facility
    
    
    8,900
    
    
    
    Payment of long-term debt and notes payable
    
    
    (10,032
    )
    
    
    (3,779
    )Dividends paid
    
    
    (989
    )
    
    
    (748
    )Excess tax benefit from stock option transactions
    
    
    1,304
    
    
    
    253Other, net
    
    
    243
    
    
    
    (445
    )Net cash used in financing activities
    
    
    (574
    )
    
    
    (4,719
    )Effect of exchange rate changes on cash
    
    
    80
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    2,370
    
    
    
    (18,211
    )Cash and cash equivalents:Beginning of period
    
    
    5,642
    
    
    
    24,802End of period
    
    $
    8,012
    
    
    $
    6,591Supplemental disclosure of cash flow information:Cash paid (refunded) during the period for:Interest
    
    $
    5,622
    
    
    $
    768Income taxes
    
    $
    (2,929
    )
    
    $
    983Non-cash investing activity:Accrued capital expenditures
    
    $
    1,261
    
    
    $
    848
  6




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##### Table of Contents



DIAMOND FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the quarters ended October 31, 2010 and 2009
(In thousands, except share and per share information)
 (1) Organization and Basis of Presentation
 ® ® ®
    (2) Fair Value Measurements
   7




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Liability Derivatives
    
    Balance Sheet Location
    
    
    Fair Value10/31/10
    
    
    10/31/09Derivatives designated as hedging instruments under ASC 815:Interest rate contracts
    
    Other current liabilities
    
    $
    (655
    )
    
    $
    Interest rate contracts
    
    Other non-current liabilities
    
    
    (326
    )
    
    
    Cash flow forwards
    
    Accounts payable and accrued liabilities
    
    
    (61
    )
    
    
    Total derivatives designated as hedging instruments under ASC 815
    
    
    
    
    
    $
    (1,042
    )
    
    $
    Derivatives not designated as hedging instruments under ASC 815:Interest rate contracts
    
    Accrued interest
    
    $
    
    
    
    $
    (6
    )Interest rate contracts
    
    Other current liabilities
    
    
    
    
    
    
    (388
    )Cash flow forwards
    
    Accounts payable and accrued liabilities
    
    
    (30
    )
    
    
    Total derivatives not designated as hedging instrument under ASC
815
    
    
    
    
    
    $
    (30
    )
    
    $
    (394
    )Total derivatives
    
    
    
    
    
    $
    (1,072
    )
    
    $
    (394
    )
  Derivatives in ASC 815 Cash
Flow Hedging Relationships
    
    Amount of Loss
Recognized in OCI on
Derivative (Effective
Portion)
    
    
    Location of Loss
Reclassified from
Accumulated OCI into
Income (Effective
Portion)
    
    
    Amount of Loss
Reclassified from
Accumulated OCI into
Income (Effective
Portion)
    
    
    Location of Loss
Recognized in Income on
Derivative (Ineffective
Portion)
    
    
    Amount of Loss Recognized
in Income on Derivative
(Ineffective Portion)10/31/10
    
    
    10/31/09
    
    
    
    
    
    10/31/10
    
    
    10/31/09
    
    
    
    
    
    10/31/10
    
    
    10/31/09Interest rate contracts
    
    $
    (490
    )
    
    $
    (240
    )
    
    Interest expense
    
    $
    (176
    )
    
    $
    
    
    
    Interest expense
    
    $
    
    
    
    $
    Cash flow forwards
    
    
    (49
    )
    
    
    
    
    
    Net sales
    
    
    
    
    
    
    
    
    
    Net sales
    
    
    
    
    
    
    Total
    
    $
    (539
    )
    
    $
    (240
    )
    
    
    
    
    
    $
    (176
    )
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
 Derivatives Not Designated as Hedging
Instruments under ASC 815
    
    Location of Loss Recognized in
Income on Derivative
    
    
    Amount of Loss Recognized in
Income on Derivative10/31/10
    
    
    10/31/09Interest rate contracts
    
    Interest expense
    
    $
    
    
    
    $
    (269
    )Cash flow forwards
    
    Interest expense
    
    
    (30
    )
    
    
    Total
    
    
    
    
    
    $
    (30
    )
    
    $
    (269
    )
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Assets and Liabilities Measured at Fair Value on a Recurring Basis
 Fair Value Measurements and Disclosures,
 (3) Stock Plan Information
  Compensation  Stock Compensation
 Stock Option Awards:
 Three Months Ended October 31,2010
    
    2009Average expected life, in years
    
    
    6
    
    
    
    6Expected volatility
    
    
    37.00
    %
    
    
    46.00
    %Risk-free interest rate
    
    
    1.73
    %
    
    
    3.44
    %Dividend rate
    
    
    0.43
    %
    
    
    0.60
    %
  WeightedaverageNumber of
    
    
    Weighted
    
    
    remaining
    
    
    AggregateShares
    
    
    average exercise
    
    
    contractual life
    
    
    intrinsic value (in(in thousands)
    
    
    price per share
    
    
    (in years)
    
    
    thousands)Outstanding at July 31, 2010
    
    
    1,452
    
    
    $
    21.11Granted
    
    
    347
    
    
    
    40.56Exercised
    
    
    (33
    )
    
    
    16.78Cancelled
    
    
    (1
    )
    
    
    17.73Outstanding at October 31, 2010
    
    
    1,765
    
    
    
    25.01
    
    
    
    6.9
    
    
    $
    33,861Exercisable at October 31, 2010
    
    
    1,207
    
    
    
    18.45
    
    
    
    5.6
    
    
    
    31,077
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##### Table of Contents



WeightedNumber of
    
    
    average grantShares
    
    
    date fair value(in thousands)
    
    
    per shareNonvested at July 31, 2010
    
    
    234
    
    
    $
    15.28Granted
    
    
    347
    
    
    
    14.89Vested
    
    
    (23
    )
    
    
    8.86Cancelled
    
    
    
    
    
    
    Nonvested at October 31, 2010
    
    
    558
    
    
    
    15.30
  Restricted Stock Awards:
 WeightedNumber of
    
    
    average grantShares
    
    
    date fair value(in thousands)
    
    
    per shareOutstanding at July 31, 2010
    
    
    408
    
    
    $
    26.78Granted
    
    
    82
    
    
    
    40.56Vested
    
    
    (74
    )
    
    
    20.92Cancelled
    
    
    (3
    )
    
    
    26.37Outstanding at October 31, 2010
    
    
    413
    
    
    
    30.58
   (4) Earnings Per Share
 Earnings Per Share
 10




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##### Table of Contents



Three Months EndedOctober 31,2010
    
    
    2009Numerator:Net income
    
    $
    14,214
    
    
    $
    14,930Less: income allocated to participating securities
    
    
    (266
    )
    
    
    (309
    )Income attributable to common shareholders  basic
    
    
    13,948
    
    
    
    14,621Add: undistributed income attributable to
participating securities
    
    
    248
    
    
    
    293Less: undistributed income reallocated to
participating securities
    
    
    (242
    )
    
    
    (286
    )Income attributable to common shareholders  diluted
    
    $
    13,954
    
    
    $
    14,628Denominator:Weighted average shares outstanding  basic
    
    
    21,489
    
    
    
    16,269Dilutive shares  stock options
    
    
    458
    
    
    
    416Weighted average shares outstanding  diluted
    
    
    21,947
    
    
    
    16,685Income per share attributable to common shareholders (1):Basic
    
    $
    0.65
    
    
    $
    0.90Diluted
    
    $
    0.64
    
    
    $
    0.88
 
 (1)
    
    Computations may reflect rounding adjustments.  (5) Acquisition of Kettle Foods
 Business Combinations
  Accounts receivable
    
    $
    29,188Inventory
    
    
    12,526Deferred tax asset
    
    
    2,119Prepaid expenses and other assets
    
    
    3,617Property, plant and equipment
    
    
    66,289Brand intangibles
    
    
    235,000Customer relationships
    
    
    120,000Goodwill
    
    
    321,545Assumed liabilities
    
    
    (39,211
    )Deferred tax liabilities
    
    
    (134,851
    )Purchase price
    
    $
    616,222
 11




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##### Table of Contents



(6) Balance Sheet Items
  October 31,
    
    
    July 31,
    
    
    October 31,2010
    
    
    2010
    
    
    2009Raw materials and supplies
    
    $
    132,447
    
    
    $
    64,660
    
    
    $
    109,932Work in process
    
    
    14,937
    
    
    
    23,768
    
    
    
    14,268Finished goods
    
    
    58,134
    
    
    
    54,977
    
    
    
    50,197Total
    
    $
    205,518
    
    
    $
    143,405
    
    
    $
    174,397
  October 31,
    
    
    July 31,
    
    
    October 31,2010
    
    
    2010
    
    
    2009Accounts payable
    
    $
    91,283
    
    
    $
    42,784
    
    
    $
    50,964Accrued salaries and benefits
    
    
    12,565
    
    
    
    17,587
    
    
    
    6,083Accrued promotion
    
    
    25,811
    
    
    
    22,787
    
    
    
    19,385Income taxes payable
    
    
    623
    
    
    
    
    
    
    
    7,049Other
    
    
    12,898
    
    
    
    9,008
    
    
    
    4,035Total
    
    $
    143,180
    
    
    $
    92,166
    
    
    $
    87,516
 (7) Intangible Assets and Goodwill
  Balance as of July 31, 2010
    
    $
    396,788Acquisitions/other activities
    
    
    Balance as of October 31, 2010
    
    $
    396,788
 12




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##### Table of Contents



October 31,
    
    
    July 31,
    
    
    October 31,2010
    
    
    2010
    
    
    2009Brand intangibles (not subject to amortization)
    
    $
    297,500
    
    
    $
    297,500
    
    
    $
    62,500Intangible assets subject to amortization:Customer contracts and related relationships
    
    
    157,300
    
    
    
    157,300
    
    
    
    37,300Total other intangible assets, gross
    
    
    454,800
    
    
    
    454,800
    
    
    
    99,800Less accumulated amortization on intangible
assets:Customer contracts and related relationships
    
    
    (7,748
    )
    
    
    (5,782
    )
    
    
    (2,383
    )Total other intangible assets, net
    
    $
    447,052
    
    
    $
    449,018
    
    
    $
    97,417
  (8) Credit Facilities and Long-Term Obligations
    (9) Retirement Plans
   Pension Benefits
    
    
    Other Benefits2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    20
    
    
    $
    161
    
    
    $
    16
    
    
    $
    16Interest cost
    
    
    316
    
    
    
    299
    
    
    
    27
    
    
    
    33Expected return on plan assets
    
    
    (258
    )
    
    
    (238
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    4
    
    
    
    6
    
    
    
    
    
    
    
    Amortization of net loss / (gain)
    
    
    165
    
    
    
    128
    
    
    
    (199
    )
    
    
    (206
    )Net periodic benefit cost / (income)
    
    $
    247
    
    
    $
    356
    
    
    $
    (156
    )
    
    $
    (157
    )
 13




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##### Table of Contents



(10) Contingencies
    
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
 ® ® ®
  14




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##### Table of Contents



Results of Operations
   October 31,
    
    
    % Change from2010
    
    
    2009
    
    
    2009 to 2010Retail (1)
    
    $
    227,751
    
    
    $
    144,156
    
    
    
    58.0
    %International Non-Retail
    
    
    21,015
    
    
    
    23,119
    
    
    
    -9.1
    %North American
Ingredient/Food Service
and Other
    
    
    3,800
    
    
    
    13,366
    
    
    
    -71.6
    %Total
    
    $
    252,566
    
    
    $
    180,641
    
    
    
    39.8
    %
 
 (1)
    
    Retail represents sales of our culinary, snack and in-shell products.   Gross profit.
 Selling, general and administrative.
 Acquisition and integration related expenses.
 Advertising.
 Interest expense, net.
 Income taxes.
 Liquidity and Capital Resources
   15




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##### Table of Contents



Contractual Obligations and Commitments
  Payments Due by PeriodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 Year (e)
    
    
    Years
    
    
    Years
    
    
    5 YearsRevolving line of credit
    
    $
    175.0
    
    
    $
    
    
    
    $
    
    
    
    $
    175.0
    
    
    $
    Long-term obligation
    
    
    380.0
    
    
    
    30.0
    
    
    
    80.0
    
    
    
    270.0
    
    
    
    Interest on long-term obligations (a)
    
    
    49.8
    
    
    
    10.4
    
    
    
    23.6
    
    
    
    15.8
    
    
    
    Operating leases
    
    
    17.2
    
    
    
    3.3
    
    
    
    7.1
    
    
    
    3.7
    
    
    
    3.1Purchase commitments (b)
    
    
    61.5
    
    
    
    61.5
    
    
    
    
    
    
    
    
    
    
    
    Pension liability
    
    
    23.8
    
    
    
    0.4
    
    
    
    4.2
    
    
    
    1.4
    
    
    
    17.8Long-term deferred tax liabilities (c)
    
    
    146.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    146.3Other long-term liabilities (d)
    
    
    3.1
    
    
    
    0.1
    
    
    
    1.3
    
    
    
    0.3
    
    
    
    1.4Total
    
    $
    856.7
    
    
    $
    105.7
    
    
    $
    116.2
    
    
    $
    466.2
    
    
    $
    168.6
 
 (a)
    
    Amounts represent the expected cash interest payments on our long-term debt. Interest on our
variable rate debt was forecasted using a LIBOR forward curve analysis as of October 31, 2010.(b)
    
    Commitments to purchase inventory and equipment. Excludes purchase commitments under Walnut
Purchase Agreements due to uncertainty of pricing and quantity. 16




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##### Table of Contents



(c)
    
    Primarily relates to intangible assets of Kettle Foods.(d)
    
    Excludes $0.6 million in deferred rent liabilities, $0.4 million in deferred income and 0.1
million of other non-current liabilities. Additionally, the liability for uncertain tax
positions ($2.6 million at October 31, 2010, excluding associated interest and penalties) has
been excluded from the contractual obligations table because a reasonably reliable estimate of
the timing of future tax settlements cannot be determined.(e)
    
    Represents obligations and commitments for the remaining nine months of fiscal year 2011. Effects of Inflation
  Critical Accounting Policies
  Revenue Recognition.
 Inventories.
  Valuation of Long-lived and Intangible Assets and Goodwill. Property, Plant, and Equipment Intangibles  Goodwill and Other,
    17




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##### Table of Contents



Employee Benefits.
 Income Taxes. Income Taxe
 Accounting for Stock-Based Compensation. Compensation  Stock Compensation
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
  18




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Total number of
    
    Approximate dollarTotal number
    
    
    Average price
    
    
    shares repurchased as
    
    value of sharesof shares
    
    
    paid per
    
    
    part of publicly
    
    that may yet be purchasedPeriod
    
    repurchased (1)
    
    
    share
    
    
    announced plans
    
    under the plansRepurchases from August 1 - August 31, 2010
    
    
    26,948
    
    
    $
    42.23
    
    
    
    
    $
    Repurchases from September 1 - September 30, 2010
    
    
    3,036
    
    
    $
    41.55
    
    
    
    
    $
    Repurchases from October 1 - October 31, 2010
    
    
    19
    
    
    $
    43.83
    
    
    
    
    $
    Total
    
    
    30,003
    
    
    $
    42.17
    
    
    
    
    $
    
 
 (1)
    
    All of the shares in the table above were originally granted to employees as restricted
stock pursuant to our 2005 Equity Incentive Plan (EIP). Pursuant to the EIP, all of the
shares reflected above were relinquished by employees in exchange for Diamonds agreement to
pay federal and state withholding obligations resulting from the vesting of the restricted
stock. The repurchases reflected above were not made pursuant to a publicly announced plan. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Removed and Reserved
 19




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##### Table of Contents



Item 5. Other Information
  As previouslyreported
    
    
    As corrected2009 net sales
    
    $
    787,349
    
    
    $
    828,8632009 net income
    
    $
    22,363
    
    
    $
    28,6432009 diluted earnings per share
    
    $
    1.02
    
    
    $
    1.31
  
 Item 6. Exhibits
  Filed with this
    
    Incorporated by referenceNumber
    
    Exhibit Title
    
    10-Q
    
    Form
    
    File No.
    
    Date Filed3.01
    
    Certificate of Incorporation, as amended
    
    
    
    S1
    
    333-123576
    
    July 15, 20053.02
    
    Restated Bylaws
    
    
    
    S1
    
    333-123576
    
    March 25, 20054.01
    
    Form of Certificate for common stock
    
    
    
    S1
    
    333-123576
    
    July 18, 200531.01
    
    Certification of Chief Executive Officer pursuant to
    
    XExchange Act Rules 13a-14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.02
    
    Certification of Chief Financial Officer pursuant to
    
    XExchange Act Rules 13a-14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.01
    
    Certifications of Chief Executive Officer and Chief
    
    XFinancial Officer pursuant to 18 U. S. C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
 20




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##### Table of Contents



SIGNATURES
  DIAMOND FOODS, INC.Date: December 8, 2010
    By:
    /s/ Steven M. NeilSteven M. NeilChief Financial and Administrative Officer 
and duly authorized officer 21