##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended April 30, 2009
 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, 17thFloor 
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
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 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
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20Part II.OTHER INFORMATION
    
    
    21Item 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults Upon Senior Securities
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    22SIGNATURE
    
    
    23EX-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)
 April 30,
    
    
    July 31,
    
    
    April 30,2009
    
    
    2008
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,508
    
    
    $
    74,279
    
    
    $
    25,631Trade receivables, net
    
    
    41,703
    
    
    
    46,256
    
    
    
    46,346Inventories
    
    
    120,238
    
    
    
    88,526
    
    
    
    130,038Deferred income taxes
    
    
    7,374
    
    
    
    7,387
    
    
    
    3,617Prepaid income taxes
    
    
    5,683
    
    
    
    
    
    
    
    Prepaid expenses and other current
assets
    
    
    2,660
    
    
    
    4,261
    
    
    
    2,759Total current assets
    
    
    179,166
    
    
    
    220,709
    
    
    
    208,391Property, plant and equipment, net
    
    
    50,034
    
    
    
    34,606
    
    
    
    34,774Deferred income taxes
    
    
    2,731
    
    
    
    5,802
    
    
    
    5,092Goodwill
    
    
    77,916
    
    
    
    5,432
    
    
    
    5,432Other intangible assets, net
    
    
    99,607
    
    
    
    3,473
    
    
    
    3,531Other long-term assets
    
    
    4,170
    
    
    
    3,245
    
    
    
    4,198Total assets
    
    $
    413,624
    
    
    $
    273,267
    
    
    $
    261,418LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Revolving line of credit
    
    $
    8,000
    
    
    $
    
    
    
    $
    Current portion of long-term debt
    
    
    13,750
    
    
    
    
    
    
    
    Accounts payable and accrued
liabilities
    
    
    64,130
    
    
    
    42,251
    
    
    
    33,891Payable to growers
    
    
    46,789
    
    
    
    56,942
    
    
    
    57,191Total current liabilities
    
    
    132,669
    
    
    
    99,193
    
    
    
    91,082Long-term obligations
    
    
    103,875
    
    
    
    20,204
    
    
    
    20,233Other liabilities
    
    
    7,719
    
    
    
    7,647
    
    
    
    7,271Stockholders 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; 16,678,158,
16,340,076 and 16,273,240 shares issued and 16,482,508, 16,180,771
and 16,177,304
shares outstanding at April 30, 2009, July 31, 2008 and April 30, 2008,
respectively
    
    
    17
    
    
    
    16
    
    
    
    16Treasury stock, at cost: 195,650, 159,305 and 95,936 shares at April 30, 2009,
July 31, 2008
and April 30, 2008,
respectively
    
    
    (4,090
    )
    
    
    (3,203
    )
    
    
    (1,652
    )Additional paid-in capital
    
    
    119,943
    
    
    
    112,550
    
    
    
    108,862Accumulated other comprehensive
income
    
    
    890
    
    
    
    1,584
    
    
    
    2,230Retained earnings
    
    
    52,601
    
    
    
    35,276
    
    
    
    33,376Total stockholders equity
    
    
    169,361
    
    
    
    146,223
    
    
    
    142,832Total liabilities and stockholders
equity
    
    $
    413,624
    
    
    $
    273,267
    
    
    $
    261,418
  4




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##### Table of Contents



DIAMOND FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
(Unaudited)
 Three Months
    
    Nine MonthsEnded April 30,
    
    Ended April 30,2009
    
    2008
    
    2009
    
    2008Net sales
    
    $
    111,010
    
    
    $
    100,009
    
    
    $
    457,124
    
    
    $
    418,344Cost of sales
    
    
    83,366
    
    
    
    82,685
    
    
    
    354,445
    
    
    
    349,044Gross profit
    
    
    27,644
    
    
    
    17,324
    
    
    
    102,679
    
    
    
    69,300Operating expenses:Selling, general and administrative
    
    
    12,545
    
    
    
    9,931
    
    
    
    44,231
    
    
    
    31,760Advertising
    
    
    9,045
    
    
    
    5,306
    
    
    
    21,105
    
    
    
    17,101Total operating expenses
    
    
    21,590
    
    
    
    15,237
    
    
    
    65,336
    
    
    
    48,861Income from operations
    
    
    6,054
    
    
    
    2,087
    
    
    
    37,343
    
    
    
    20,439Interest expense
    
    
    1,294
    
    
    
    196
    
    
    
    4,900
    
    
    
    780Other expense, net
    
    
    
    
    
    
    
    
    
    
    898
    
    
    
    Income before income taxes
    
    
    4,760
    
    
    
    1,891
    
    
    
    31,545
    
    
    
    19,659Income taxes
    
    
    2,060
    
    
    
    785
    
    
    
    12,005
    
    
    
    7,537Net income
    
    $
    2,700
    
    
    $
    1,106
    
    
    $
    19,540
    
    
    $
    12,122Earnings per share:Basic
    
    $
    0.16
    
    
    $
    0.07
    
    
    $
    1.19
    
    
    $
    0.76Diluted
    
    $
    0.16
    
    
    $
    0.07
    
    
    $
    1.17
    
    
    $
    0.75Shares used to compute earnings per share:Basic
    
    
    16,410
    
    
    
    16,111
    
    
    
    16,365
    
    
    
    16,050Diluted
    
    
    16,733
    
    
    
    16,120
    
    
    
    16,692
    
    
    
    16,072Dividends declared
    
    $
    0.045
    
    
    $
    0.045
    
    
    $
    0.135
    
    
    $
    0.135
  5




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##### Table of Contents



DIAMOND FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months Ended April 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    19,540
    
    
    $
    12,122Adjustments to reconcile net income to net cash provided by (used
in) operating activities:Depreciation and amortization
    
    
    7,509
    
    
    
    4,760Stock-based compensation
    
    
    2,998
    
    
    
    4,873Deferred income taxes
    
    
    3,084
    
    
    
    1,188Changes in assets and liabilities (excluding business acquired):Trade receivables
    
    
    4,553
    
    
    
    4,316Inventories
    
    
    (24,895
    )
    
    
    (39,419
    )Accounts payable and accrued liabilities
    
    
    17,891
    
    
    
    7,506Payable to growers
    
    
    (10,153
    )
    
    
    74Other, net
    
    
    (3,256
    )
    
    
    1,284Net cash provided by (used in) operating activities
    
    
    17,271
    
    
    
    (3,296
    )CASH FLOWS FROM INVESTING ACTIVITIES:Capital revolvement from CoBank
    
    
    4
    
    
    
    299Proceeds from sale of assets
    
    
    122
    
    
    
    12Purchase of property, plant and equipment
    
    
    (4,651
    )
    
    
    (5,497
    )Acquisition of Pop Secret business
    
    
    (190,224
    )
    
    
    Net cash used in investing activities
    
    
    (194,749
    )
    
    
    (5,186
    )CASH FLOWS FROM FINANCING ACTIVITIES:Revolving line of credit borrowings, net
    
    
    8,000
    
    
    
    Proceeds from issuance of long-term debt
    
    
    125,000
    
    
    
    Payment of long-term debt
    
    
    (27,613
    )
    
    
    (135
    )Debt issuance costs
    
    
    (1,973
    )
    
    
    Other, net
    
    
    1,293
    
    
    
    493Net cash provided by financing activities
    
    
    104,707
    
    
    
    358Net decrease in cash and cash equivalents
    
    
    (72,771
    )
    
    
    (8,124
    )Cash and cash equivalents:Beginning of period
    
    
    74,279
    
    
    
    33,755End of period
    
    $
    1,508
    
    
    $
    25,631Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    4,957
    
    
    $
    1,004Income taxes
    
    
    16,551
    
    
    
    3,424Non-cash investing activity:Accrued capital expenditures
    
    
    220
    
    
    
    34Liabilities related to Pop Secret acquisition
    
    
    3,500
    
    
    
    
  6




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##### Table of Contents



DIAMOND FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine month periods ended April 30, 2009 and 2008
(In thousands, except share and per share information)
 (1) Organization and Basis of Presentation
    (2) Recent Accounting Pronouncements
 Employers Disclosures about
Postretirement Benefit Plan Assets
 Determining Whether Instruments Granted in
Share-Based Payment Transactions are Participating Securities.
 (3) Fair Value Measurements
 Fair Value Measurements The
Effective Date of FASB Statement No. 157
 7




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##### Table of Contents



Determining the Fair Value of a Financial
Asset When the Market for That Asset Is Not Active
   Level 1
 Level 2
 Level 3
   (4) Stock Plan Information
 Share-Based Payment Accounting for Stock Issued to
Employees
 Stock Option Awards:
 8




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##### Table of Contents



Three Months
    
    Nine MonthsEnded April 30,
    
    Ended April 30,2009
    
    2008
    
    2009
    
    2008Average expected life, in years
    
    
    6
    
    
    
    4
    
    
    
    6
    
    
    
    5Expected volatility
    
    
    36.00
    %
    
    
    32.00
    %
    
    
    36.00
    %
    
    
    31.20
    %Risk-free interest rate
    
    
    2.85
    %
    
    
    3.16
    %
    
    
    3.13
    %
    
    
    3.74
    %Dividend rate
    
    
    0.72
    %
    
    
    0.94
    %
    
    
    0.71
    %
    
    
    0.94
    %
  Weighted averageWeighted average
    
    
    remaining
    
    
    Aggregate intrinsicNumber of Shares
    
    
    exercise price per
    
    
    contractual life (in
    
    
    value (in(in thousands)
    
    
    share
    
    
    years)
    
    
    thousands)Outstanding at July 31, 2008
    
    
    1,510
    
    
    $
    17.74
    
    
    
    
    
    
    $
    Granted
    
    
    58
    
    
    
    27.09
    
    
    
    
    
    
    
    Exercised
    
    
    (201
    )
    
    
    18.01
    
    
    
    
    
    
    
    Cancelled
    
    
    (9
    )
    
    
    17.02
    
    
    
    
    
    
    
    Outstanding at April 30, 2009
    
    
    1,358
    
    
    
    18.10
    
    
    
    6.6
    
    
    
    11,191Exerciseable at April 30, 2009
    
    
    1,116
    
    
    
    17.29
    
    
    
    6.2
    
    
    
    10,062
   WeightedNumber of
    
    
    average grantShares
    
    
    date fair value(in thousands)
    
    
    per shareNonvested at July 31, 2008
    
    
    298
    
    
    $
    6.74Granted
    
    
    58
    
    
    
    10.20Vested
    
    
    (107
    )
    
    
    6.14Cancelled
    
    
    (7
    )
    
    
    5.79Nonvested at April 30, 2009
    
    
    242
    
    
    
    7.86
  Restricted Stock Awards:
 9




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##### Table of Contents



WeightedNumber of
    
    
    average grantShares
    
    
    date fair value(in thousands)
    
    
    per shareOutstanding at July 31, 2008
    
    
    332
    
    
    $
    17.74Granted
    
    
    194
    
    
    
    25.81Vested
    
    
    (95
    )
    
    
    18.29Cancelled
    
    
    (77
    )
    
    
    19.93Outstanding at April 30, 2009
    
    
    354
    
    
    
    21.53
   (5) Earnings Per Share
   Three Months
    
    
    Nine MonthsEnded April 30,
    
    
    Ended April 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    2,700
    
    
    $
    1,106
    
    
    $
    19,540
    
    
    $
    12,122Weighted average common shares outstanding:Basic
    
    
    16,410
    
    
    
    16,111
    
    
    
    16,365
    
    
    
    16,050Effect of dilutive securities:Options to purchase common stock
    
    
    323
    
    
    
    9
    
    
    
    327
    
    
    
    22Diluted
    
    
    16,733
    
    
    
    16,120
    
    
    
    16,692
    
    
    
    16,072Earnings Per Common Share (1):Diluted
    
    $
    0.16
    
    
    $
    0.07
    
    
    $
    1.17
    
    
    $
    0.75Basic
    
    $
    0.16
    
    
    $
    0.07
    
    
    $
    1.19
    
    
    $
    0.76
 
 (1)
    
    Certain computations may reflect rounding adjustments.  10




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##### Table of Contents



(6) Acquisition of Pop Secret
  Business Combinations
  Inventory
    
    $
    6,817Property, plant and equipment
    
    
    17,023Brand intangibles
    
    
    62,500Customer relationships
    
    
    34,900Goodwill
    
    
    72,484Acquisition liabilities
    
    
    (3,500
    )Purchase price
    
    $
    190,224
     Pro Forma  Financial Information
  Three Months Ended April 30,
    
    Nine Months Ended April 30,2009
    
    2008
    
    2009
    
    2008Net sales
    
    $
    111,010
    
    
    $
    127,459
    
    
    $
    470,633
    
    
    $
    500,309Net income
    
    $
    2,700
    
    
    $
    2,872
    
    
    $
    21,973
    
    
    $
    15,265Diluted earnings per share
    
    $
    0.16
    
    
    $
    0.18
    
    
    $
    1.32
    
    
    $
    0.95
  11




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##### Table of Contents



(7) Balance Sheet Items
  April 30,
    
    
    July 31,
    
    
    April 30,2009
    
    
    2008
    
    
    2008Raw materials and supplies
    
    $
    57,821
    
    
    $
    33,501
    
    
    $
    71,508Work in process
    
    
    23,406
    
    
    
    19,084
    
    
    
    20,139Finished goods
    
    
    39,011
    
    
    
    35,941
    
    
    
    38,391Total
    
    $
    120,238
    
    
    $
    88,526
    
    
    $
    130,038
   April 30,
    
    
    July 31,
    
    
    April 30,2009
    
    
    2008
    
    
    2008Accounts payable
    
    $
    36,281
    
    
    $
    21,848
    
    
    $
    21,698Accrued promotion
    
    
    17,900
    
    
    
    8,695
    
    
    
    4,740Accrued salaries and benefits
    
    
    8,823
    
    
    
    7,886
    
    
    
    5,506Other
    
    
    1,126
    
    
    
    3,822
    
    
    
    1,947Total
    
    $
    64,130
    
    
    $
    42,251
    
    
    $
    33,891
 (8) Intangible Assets and Goodwill
  April 30,
    
    
    July 31,
    
    
    April 30,2009
    
    
    2008
    
    
    2008Goodwill
    
    $
    77,916
    
    
    $
    5,432
    
    
    $
    5,432Brand intangibles (not subject to amortization)
    
    
    62,500
    
    
    
    
    
    
    
    Intangible assets subject to amortization:Customer contracts and related relationships
    
    
    37,300
    
    
    
    2,400
    
    
    
    2,400Trademarks and trade names
    
    
    1,600
    
    
    
    1,600
    
    
    
    1,600Total intangible assets subject to amortization
    
    
    38,900
    
    
    
    4,000
    
    
    
    4,000Total goodwill and intangible assets, gross
    
    
    179,316
    
    
    
    9,432
    
    
    
    9,432Less accumulated amortization on intangible assets:Customer contracts and related relationships
    
    
    (1,450
    )
    
    
    (270
    )
    
    
    (240
    )Trademarks and trade names
    
    
    (343
    )
    
    
    (257
    )
    
    
    (229
    )Total amortization
    
    
    (1,793
    )
    
    
    (527
    )
    
    
    (469
    )Total goodwill and intangible assets, net
    
    $
    177,523
    
    
    $
    8,905
    
    
    $
    8,963
 12




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##### Table of Contents



(9) Credit Facilities
    (10) Retirement Plans
   Pension Benefits
    
    
    Other BenefitsThree Months ended
    
    
    Nine Months ended
    
    
    Three Months ended
    
    
    Nine Months endedApril 30,
    
    
    April 30,
    
    
    April 30,
    
    
    April 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    60
    
    
    $
    155
    
    
    $
    356
    
    
    $
    483
    
    
    $
    25
    
    
    $
    25
    
    
    $
    77
    
    
    $
    76Interest cost
    
    
    256
    
    
    
    239
    
    
    
    796
    
    
    
    720
    
    
    
    71
    
    
    
    70
    
    
    
    213
    
    
    
    209Expected return on plan assets
    
    
    (264
    )
    
    
    (286
    )
    
    
    (794
    )
    
    
    (860
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    6
    
    
    
    7
    
    
    
    20
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of net loss / (gain)
    
    
    2
    
    
    
    1
    
    
    
    28
    
    
    
    4
    
    
    
    (134
    )
    
    
    (132
    )
    
    
    (404
    )
    
    
    (397
    )Net periodic benefit cost / (income)
    
    $
    60
    
    
    $
    116
    
    
    $
    406
    
    
    $
    367
    
    
    $
    (38
    )
    
    $
    (37
    )
    
    $
    (114
    )
    
    $
    (112
    )
  13




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##### Table of Contents



(11) Derivatives
  Accounting for Derivative Instruments and Hedging Activities Accounting for
Certain Derivative Instruments and Hedging Activities,
 Disclosures about Derivative
Instruments and Hedging Activities
 Balance Sheet Location
    
    
    Fair Value of Derivative Instruments(unaudited)Liability DerivativesDerivatives designated as
hedging instruments under
SFAS 133:Interest rate contracts
    
    Interest Payable
    
    $
    4Interest rate contracts
    
    Other Current Liabilities
    
    
    211Interest rate contracts
    
    Other Non-Current Liabilities
    
    
    Total
    
    
    
    
    
    $
    215
  Location of Gain or
    
    
    Amount of Gain or (Loss)Amount of Gain or
    
    
    (Loss) Reclassified from
    
    
    Reclassified from
    
    
    Location of Gain or (Loss)
    
    
    Amount of Gain or (Loss)Derivatives in Statement 133
    
    (Loss) Recognized in
    
    
    Accumulated OCI into
    
    
    Accumulated OCI into
    
    
    Recognized in Income on
    
    
    Recognized in Income onCash Flow Hedging
    
    OCI on Derivative
    
    
    Income
    
    
    Income
    
    
    Derivative
    
    
    DerivativeRelationships
    
    (Effective Portion)
    
    
    (Effective Portion)
    
    
    (Effective Portion)
    
    
    (Ineffective Portion)
    
    
    (Ineffective Portion)2009
    
    
    
    
    
    
    2009
    
    
    
    
    
    
    2009Interest rate contracts
    
    $
    (151
    )
    
    Interest Expense
    
    $
    (101
    )
    
    Interest Expense
    
    $
    Total
    
    $
    (151
    )
    
    
    
    
    
    $
    (101
    )
    
    
    
    
    
    $
    
 14




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##### Table of Contents



Location of Gain or
    
    
    Amount of Gain or (Loss)Amount of Gain or
    
    
    (Loss) Reclassified from
    
    
    Reclassified from
    
    
    Location of Gain or (Loss)
    
    
    Amount of Gain or (Loss)Derivatives in Statement 133
    
    (Loss) Recognized in
    
    
    Accumulated OCI into
    
    
    Accumulated OCI into
    
    
    Recognized in Income on
    
    
    Recognized in Income onCash Flow Hedging
    
    OCI on Derivative
    
    
    Income
    
    
    Income
    
    
    Derivative
    
    
    DerivativeRelationships
    
    (Effective Portion)
    
    
    (Effective Portion)
    
    
    (Effective Portion)
    
    
    (Ineffective Portion)
    
    
    (Ineffective Portion)2009
    
    
    
    
    
    
    2009
    
    
    
    
    
    
    2009Interest rate contracts
    
    $
    (761
    )
    
    Interest Expense
    
    $
    (67
    )
    
    Interest Expense
    
    $
    Total
    
    $
    (761
    )
    
    
    
    
    
    $
    (67
    )
    
    
    
    
    
    $
    
 (12) Contingencies
   
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
   15




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##### Table of Contents



Critical Accounting Policies
  Revenue Recognition.
 Inventories.
  Valuation
of Long-lived, Intangible Assets and Goodwill. Accounting for the Impairment or Disposal of Long-lived Assets Goodwill and Other Intangible Assets,
    16




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##### Table of Contents



Employee Benefits.
 Income Taxes. Accounting for
Income Taxes, Accounting for Uncertainty in Income Taxes.
 Accounting for Stock-Based Compensation. Share-Based Payment
 Results of Operations
  17




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##### Table of Contents



Three Months ended
    
    
    
    
    
    
    Nine Months endedApril 30,
    
    
    % Change from
    
    
    April 30,
    
    
    % Change from2009
    
    
    2008
    
    
    2008 to 2009
    
    
    2009
    
    
    2008
    
    
    2008 to 2009North American Retail (1)
    
    $
    90,975
    
    
    $
    66,422
    
    
    
    37.0
    %
    
    $
    372,258
    
    
    $
    291,139
    
    
    
    27.9
    %International
    
    
    13,014
    
    
    
    18,794
    
    
    
    -30.8
    %
    
    
    57,211
    
    
    
    83,133
    
    
    
    -31.2
    %North
American Ingredient/Food Service
    
    
    6,526
    
    
    
    14,221
    
    
    
    -54.1
    %
    
    
    25,732
    
    
    
    42,106
    
    
    
    -38.9
    %Other
    
    
    495
    
    
    
    572
    
    
    
    -13.5
    %
    
    
    1,923
    
    
    
    1,966
    
    
    
    -2.2
    %Total
    
    $
    111,010
    
    
    $
    100,009
    
    
    
    11.0
    %
    
    $
    457,124
    
    
    $
    418,344
    
    
    
    9.3
    %
 
 (1)
    
    North American Retail represents sales of our culinary, snack and in-shell nuts in North
America.   Three Months ended
    
    Nine Months endedApril 30,
    
    April 30,2009
    
    2008
    
    2009
    
    2008Walnuts
    
    
    43.0
    %
    
    
    60.4
    %
    
    
    48.7
    %
    
    
    61.1
    %Other nuts and popcorn products
    
    
    57.0
    %
    
    
    39.6
    %
    
    
    51.3
    %
    
    
    38.9
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  Gross profit.
 Selling, general and administrative.
 Advertising.
 18




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##### Table of Contents



Interest expense.
 Income Taxes.
 Liquidity and Capital Resources
        19




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##### Table of Contents



Contractual Obligations and Commitments
  Payments Due by PeriodLess than
    
    1-3
    
    3-5
    
    More thanTotal
    
    1 Year (d)
    
    Years
    
    Years
    
    5 YearsRevolving line of credit
    
    $
    8.0
    
    
    $
    
    
    
    $
    8.0
    
    
    $
    
    
    
    $
    Long-term obligations
    
    
    117.7
    
    
    
    2.5
    
    
    
    47.7
    
    
    
    67.5
    
    
    
    Interest on long-term obligations (a)
    
    
    6.6
    
    
    
    0.6
    
    
    
    4.8
    
    
    
    1.2
    
    
    
    Operating leases
    
    
    11.4
    
    
    
    0.6
    
    
    
    5.3
    
    
    
    3.1
    
    
    
    2.4Purchase commitments (b)
    
    
    1.2
    
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities (c)
    
    
    6.9
    
    
    
    0.1
    
    
    
    0.5
    
    
    
    0.6
    
    
    
    5.7Total
    
    $
    151.8
    
    
    $
    5.0
    
    
    $
    66.3
    
    
    $
    72.4
    
    
    $
    8.1
 
 (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 April 30, 2009.(b)
    
    Commitments to purchase equipment. Excludes purchase commitments under Walnut and Corn
Purchase Agreements.(c)
    
    Excludes $0.6 million in deferred rent liabilities, $0.1 million of non-current FIN 48 tax
liabilities and $0.1 million of other non-current liabilities.(d)
    
    Represents obligations and commitments for the remaining three months of fiscal year 2009. Effects of Inflation
  Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   20




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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 February 1 - February 28, 2009
    
    
    420
    
    
    $
    25.21
    
    
    
    
    
    
    $
    Repurchases from March 1 - March 31, 2009
    
    
    4,281
    
    
    $
    21.08
    
    
    
    
    
    
    $
    Repurchases from April 1 - April 30, 2009
    
    
    144
    
    
    $
    28.02
    
    
    
    
    
    
    $
    Total
    
    
    4,845
    
    
    $
    21.65
    
    
    
    
    
    
    $
    
 
 (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. 21




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##### Table of Contents



Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  Filed with this
    
    Incorporated by referenceNumber
    
    Exhibit Title
    
    10-Q
    
    Form
    
    File No.
    
    Date Filed31.01
    
    Certification of
Chief Executive
Officer pursuant to
Exchange Act Rules
13a-14(a) and
15d-14(a), as
adopted pursuant to
Section 302 of the
Sarbanes-Oxley Act
of 2002
    
    X31.02
    
    Certification of
Chief Financial
Officer pursuant to
Exchange Act Rules
13a-14(a) and
15d-14(a), as
adopted pursuant to
Section 302 of the
Sarbanes-Oxley Act
of 2002
    
    X32.01
    
    Certifications of
Chief Executive
Officer and Chief
Financial Officer
pursuant to 18
U.S.C. Section
1350, as adopted
pursuant to Section
906 of the
Sarbanes-Oxley Act
of 2002
    
    X
 22




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##### Table of Contents



SIGNATURES
  DIAMOND FOODS, INC.Date: May 27, 2009
    By:
    /s/ Steven M. NeilSteven M. NeilChief Financial and Administrative Officer
and duly authorized officer 23