##### 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, 2008
 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.)
 1050 South Diamond StreetStockton, California
    
    95205-7087(Address of Principal Executive Offices)
    
    (Zip Code)
 209-467-6000
(Telephone No.)
 þ 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
    
    
    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. Submission of Matters to a Vote of Security Holders
    
    
    20Item 5. Other Information
    
    
    20Item 6. Exhibits
    
    
    20SIGNATURE
    
    
    21EXHIBIT 31.01EXHIBIT 31.02EXHIBIT 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 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    25,631
    
    
    $
    33,755Trade receivables, net
    
    
    46,346
    
    
    
    50,662Inventories
    
    
    130,038
    
    
    
    90,619Deferred income taxes
    
    
    3,617
    
    
    
    4,805Prepaid income taxes
    
    
    
    
    
    
    1,854Prepaid expenses and other current assets
    
    
    2,759
    
    
    
    2,417Total current assets
    
    
    208,391
    
    
    
    184,112Property, plant and equipment, net
    
    
    34,774
    
    
    
    33,936Investment in CoBank
    
    
    1,480
    
    
    
    1,774Deferred income taxes
    
    
    5,092
    
    
    
    4,922Goodwill
    
    
    5,432
    
    
    
    5,432Other intangible assets, net
    
    
    3,531
    
    
    
    3,707Other assets
    
    
    2,718
    
    
    
    2,520Total assets
    
    $
    261,418
    
    
    $
    236,403LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    33,891
    
    
    $
    26,468Payable to growers
    
    
    57,191
    
    
    
    57,117Total current liabilities
    
    
    91,082
    
    
    
    83,585Long-term obligations
    
    
    20,233
    
    
    
    20,345Other liabilities
    
    
    7,271
    
    
    
    7,132Stockholders 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; 16,273,240
and 15,848,717 shares issued and 16,177,304 and 15,764,647 shares
outstanding at April 30, 2008 and July 31, 2007, respectively
    
    
    16
    
    
    
    16Treasury stock, at cost: 95,936 and 84,070 shares at April 30, 2008 and
July 31, 2007, respectively
    
    
    (1,652
    )
    
    
    (1,436
    )Additional paid-in capital
    
    
    108,862
    
    
    
    101,106Accumulated other comprehensive income
    
    
    2,230
    
    
    
    2,233Retained earnings
    
    
    33,376
    
    
    
    23,422Total stockholders equity
    
    
    142,832
    
    
    
    125,341Total liabilities and stockholders equity
    
    $
    261,418
    
    
    $
    236,403
  4




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DIAMOND FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share information)
(Unaudited)
 Three Months
    
    Nine MonthsEnded April 30,
    
    Ended April 30,2008
    
    2007
    
    2008
    
    2007Net sales
    
    $
    100,009
    
    
    $
    97,016
    
    
    $
    418,344
    
    
    $
    410,150Cost of sales
    
    
    82,685
    
    
    
    83,310
    
    
    
    349,044
    
    
    
    348,163Gross profit
    
    
    17,324
    
    
    
    13,706
    
    
    
    69,300
    
    
    
    61,987Operating expenses:Selling, general and administrative
    
    
    9,931
    
    
    
    9,282
    
    
    
    31,760
    
    
    
    32,327Advertising
    
    
    5,306
    
    
    
    7,273
    
    
    
    17,101
    
    
    
    15,627Restructuring and other costs, net
    
    
    
    
    
    
    532
    
    
    
    
    
    
    
    (322
    )Loss on
termination of defined benefit plan
    
    
    
    
    
    
    4,679
    
    
    
    
    
    
    
    1,640Total operating expenses
    
    
    15,237
    
    
    
    21,766
    
    
    
    48,861
    
    
    
    49,272Income (loss) from operations
    
    
    2,087
    
    
    
    (8,060
    )
    
    
    20,439
    
    
    
    12,715Interest expense, net
    
    
    196
    
    
    
    498
    
    
    
    780
    
    
    
    1,069Other
expense (income)
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    72Income (loss) before income taxes
    
    
    1,891
    
    
    
    (8,548
    )
    
    
    19,659
    
    
    
    11,574Income taxes (tax benefit)
    
    
    785
    
    
    
    (4,536
    )
    
    
    7,537
    
    
    
    3,915Net income (loss)
    
    $
    1,106
    
    
    $
    (4,012
    )
    
    $
    12,122
    
    
    $
    7,659Earnings (loss) per share:Basic
    
    $
    0.07
    
    
    $
    (0.25
    )
    
    $
    0.76
    
    
    $
    0.49Diluted
    
    $
    0.07
    
    
    $
    (0.25
    )
    
    $
    0.75
    
    
    $
    0.49Shares used to compute earnings (loss) per
share:Basic
    
    
    16,111
    
    
    
    15,808
    
    
    
    16,050
    
    
    
    15,773Diluted
    
    
    16,120
    
    
    
    15,808
    
    
    
    16,072
    
    
    
    15,773
  5




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DIAMOND FOODS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months Ended April 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    12,122
    
    
    $
    7,659Adjustments to reconcile net income to net cash used in
operating activities:Depreciation and amortization
    
    
    4,760
    
    
    
    5,429Deferred income taxes
    
    
    1,188
    
    
    
    (621
    )Loss on
termination of defined benefit plan
    
    
    
    
    
    
    1,640Tax benefit related to stock-based compensation
    
    
    65
    
    
    
    41Excess tax benefit from ESPP and stock option transactions
    
    
    (65
    )
    
    
    (41
    )Stock-based compensation
    
    
    4,873
    
    
    
    3,840Gain on sale of property held for sale
    
    
    
    
    
    
    (1,193
    )(Gain) loss on disposal of property, plant and equipment
    
    
    9
    
    
    
    (9
    )(Gain) loss on foreign currency
    
    
    (3
    )
    
    
    36CoBank patronage dividend
    
    
    (5
    )
    
    
    Changes in assets and liabilities:Trade receivables
    
    
    4,316
    
    
    
    7,407Inventories
    
    
    (39,419
    )
    
    
    (40,989
    )Prepaid expenses and other current assets
    
    
    1,512
    
    
    
    (880
    )Other assets
    
    
    (198
    )
    
    
    1,617Accounts payable and accrued liabilities
    
    
    7,506
    
    
    
    4,878Payable to growers
    
    
    74
    
    
    
    (24,169
    )Other liabilities
    
    
    (31
    )
    
    
    (424
    )Net cash used in operating activities
    
    
    (3,296
    )
    
    
    (35,779
    )CASH FLOWS FROM INVESTING ACTIVITIES:Capital revolvement from CoBank
    
    
    299
    
    
    
    417Net proceeds from sale of property, plant and equipment
    
    
    12
    
    
    
    2,941Purchases of property, plant and equipment
    
    
    (5,497
    )
    
    
    (5,224
    )Payment of Harmony acquisition costs
    
    
    
    
    
    
    (197
    )Net cash used in investing activities
    
    
    (5,186
    )
    
    
    (2,063
    )CASH FLOWS FROM FINANCING ACTIVITIES:Notes payable borrowing (repayment), net
    
    
    (135
    )
    
    
    4,975Issuance of common stock under stock plans
    
    
    211
    
    
    
    387Dividends paid
    
    
    (2,168
    )
    
    
    (1,421
    )Stock options exercised
    
    
    2,601
    
    
    
    544Excess tax benefit from ESPP and stock option transactions
    
    
    65
    
    
    
    41Purchase of treasury stock
    
    
    (216
    )
    
    
    (238
    )Net cash provided by financing activities
    
    
    358
    
    
    
    4,288Net decrease in cash and cash equivalents
    
    
    (8,124
    )
    
    
    (33,554
    )Cash and cash equivalents:Beginning of period
    
    
    33,755
    
    
    
    35,614End of period
    
    $
    25,631
    
    
    $
    2,060Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    1,004
    
    
    $
    1,343Income taxes
    
    
    3,424
    
    
    
    3,844Non-cash investing activity:Accrued capital expenditures
    
    
    34
    
    
    
    57
  6




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DIAMOND FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine month periods ended April 30, 2008 and 2007
(In thousands, except share and per share information)
 (1) Organization and Basis of Presentation
    (2) Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an amendment of FASB Statement No. 115
 Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards.
 7




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##### Table of Contents



Business Combinations, Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No. 51.
 Disclosures about Derivative Instruments and
Hedging Activities
 (3) Stock Plan Information
 Share-Based Payment. Accounting for Stock Issued to
Employees Accounting for Stock-Based Compensation-Transition and
Disclosure, an amendment of FASB Statement No. 123
 Accounting for Stock-Based Compensation
 Three Months
    
    
    Nine MonthsEnded April 30,
    
    
    Ended April 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income (loss), as reported
    
    $
    1,106
    
    
    $
    (4,012
    )
    
    $
    12,122
    
    
    $
    7,659Total stock-based compensation expense recorded in the statement
of operations, net of related tax effects
    
    
    1,039
    
    
    
    576
    
    
    
    3,007
    
    
    
    2,543Total stock-based compensation expense determined under fair
value based method for all awards, net of related tax effects
    
    
    (1,246
    )
    
    
    (769
    )
    
    
    (3,740
    )
    
    
    (3,417
    )Pro forma net income (loss)
    
    $
    899
    
    
    $
    (4,205
    )
    
    $
    11,389
    
    
    $
    6,785Net income (loss) per common equivalent share:Basic  as reported
    
    $
    0.07
    
    
    $
    (0.25
    )
    
    $
    0.76
    
    
    $
    0.49Basic  pro forma
    
    $
    0.06
    
    
    $
    (0.27
    )
    
    $
    0.71
    
    
    $
    0.43Diluted  as reported
    
    $
    0.07
    
    
    $
    (0.25
    )
    
    $
    0.75
    
    
    $
    0.49Diluted  pro forma
    
    $
    0.06
    
    
    $
    (0.27
    )
    
    $
    0.71
    
    
    $
    0.43
 Stock Option Awards:
 8




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##### Table of Contents



Three Months
    
    Nine MonthsEnded April 30,
    
    Ended April 30,2008
    
    2007
    
    2008
    
    2007Average expected life,
in years
    
    
    4
    
    
    
    6
    
    
    
    5
    
    
    
    6Expected volatility
    
    
    32.00
    %
    
    
    30.00
    %
    
    
    31.20
    %
    
    
    30.00
    %Risk-free interest rate
    
    
    3.16
    %
    
    
    4.65
    %
    
    
    3.74
    %
    
    
    4.68
    %Dividend rate
    
    
    0.94
    %
    
    
    0.70
    %
    
    
    0.94
    %
    
    
    0.73
    %
  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, 2007
    
    
    1,621
    
    
    $
    17.37
    
    
    
    
    
    
    $
    Granted
    
    
    70
    
    
    
    17.99
    
    
    
    
    
    
    
    Exercised
    
    
    (150
    )
    
    
    17.31
    
    
    
    
    
    
    
    Cancelled
    
    
    (40
    )
    
    
    17.91
    
    
    
    
    
    
    
    Outstanding at April 30, 2008
    
    
    1,501
    
    
    
    17.39
    
    
    
    7.6
    
    
    
    5,961Exerciseable at April 30, 2008
    
    
    1,090
    
    
    
    17.33
    
    
    
    7.3
    
    
    
    4,393
   Weighted averageNumber of Shares
    
    grant date fair(in thousands)
    
    value per shareNonvested at July 31, 2007
    
    
    744
    
    
    $
    5.89Granted
    
    
    70
    
    
    
    5.13Vested
    
    
    (375
    )
    
    
    5.71Cancelled
    
    
    (28
    )
    
    
    5.86Nonvested at April 30, 2008
    
    
    411
    
    
    
    5.92
  9




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##### Table of Contents



Restricted Stock Awards:
 Weighted averageNumber of Shares
    
    grant date fair(in thousands)
    
    value per shareOutstanding at July 31, 2007
    
    
    310
    
    
    $
    17.50Granted
    
    
    318
    
    
    
    17.73Vested
    
    
    (56
    )
    
    
    18.57Cancelled
    
    
    (59
    )
    
    
    17.25Outstanding at April 30, 2008
    
    
    513
    
    
    
    17.46
   Employee Stock Purchase Plan:
 Nine Months Ended April 30,2008
    
    2007Average expected life, in years
    
    
    0.75
    
    
    
    0.75Expected volatility
    
    
    30.00
    %
    
    
    29.17
    %Risk-free interest rate
    
    
    4.63
    %
    
    
    4.80
    %Dividend rate
    
    
    0.76
    %
    
    
    0.68
    %
 Suspension of the ESPP Program:
 (4) Earnings Per Share
  10




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##### Table of Contents



(5) Balance Sheet Items
  April 30,
    
    
    July 31,2008
    
    
    2007Raw materials and supplies
    
    $
    71,508
    
    
    $
    19,653Work in process
    
    
    20,139
    
    
    
    14,043Finished goods
    
    
    38,391
    
    
    
    56,923Total
    
    $
    130,038
    
    
    $
    90,619
  April 30,
    
    
    July 31,2008
    
    
    2007Accounts payable
    
    $
    21,698
    
    
    $
    15,151Accrued salaries and benefits
    
    
    5,506
    
    
    
    4,082Accrued promotion
    
    
    4,740
    
    
    
    5,882Accrued other
    
    
    1,947
    
    
    
    1,353Total
    
    $
    33,891
    
    
    $
    26,468
 (6) Credit Facilities
     (7) Retirement Plans
  11




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Pension Benefits
    
    
    Other BenefitsThree Months ended
    
    
    Nine Months ended
    
    
    Three Months ended
    
    
    Nine Months endedApril 30,
    
    
    April 30,
    
    
    April 30,
    
    
    April 30,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    155
    
    
    $
    190
    
    
    $
    483
    
    
    $
    998
    
    
    $
    25
    
    
    $
    29
    
    
    $
    76
    
    
    $
    86Interest cost
    
    
    239
    
    
    
    412
    
    
    
    720
    
    
    
    1,331
    
    
    
    70
    
    
    
    77
    
    
    
    209
    
    
    
    232Expected return on plan assets
    
    
    (286
    )
    
    
    (533
    )
    
    
    (860
    )
    
    
    (1,677
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    7
    
    
    
    5
    
    
    
    20
    
    
    
    (62
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of net loss
    
    
    1
    
    
    
    100
    
    
    
    4
    
    
    
    358
    
    
    
    (132
    )
    
    
    (113
    )
    
    
    (397
    )
    
    
    (340
    )Net periodic benefit cost / (income)
    
    
    116
    
    
    
    174
    
    
    
    367
    
    
    
    948
    
    
    
    (37
    )
    
    
    (7
    )
    
    
    (112
    )
    
    
    (22
    )Gain on curtailment of defined benefit plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,039
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss on settlement of defined benefit plan
    
    
    
    
    
    
    4,545
    
    
    
    
    
    
    
    4,545
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total benefit cost / (income)
    
    $
    116
    
    
    $
    4,719
    
    
    $
    367
    
    
    $
    2,454
    
    
    $
    (37
    )
    
    $
    (7
    )
    
    $
    (112
    )
    
    $
    (22
    )
 Termination of Defined Benefit Plan
  Defined Contribution Plan
  (8) Restructuring and Other Costs, Net
  (9) Income Taxes
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
   12




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(10) Contingencies
    13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
    Critical Accounting Policies
  Revenue Recognition.
 Inventories.
  Valuation of Long-lived and Intangible Assets and Goodwill. Accounting for
 14




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##### Table of Contents



the Impairment or Disposal of Long-lived Assets Goodwill and Other Intangible Assets
  Employee Benefits.
 Income Taxes. Accounting for
Income Taxes, Accounting for Income Taxes
 Accounting for Stock-Based Compensation. Share-Based Payment
 Results of Operations
   Three Months ended
    
    
    
    
    
    Nine Months endedApril 30,
    
    % Change from
    
    April 30,
    
    % Change from2008
    
    2007
    
    2007 to 2008
    
    2008
    
    2007
    
    2007 to 2008North American Retail (1)
    
    $
    66,422
    
    
    $
    57,421
    
    
    
    15.7
    %
    
    $
    291,139
    
    
    $
    269,062
    
    
    
    8.2
    %International
    
    
    18,794
    
    
    
    23,868
    
    
    
    -21.3
    %
    
    
    83,133
    
    
    
    84,116
    
    
    
    -1.2
    %North
American Ingredient/Food Service
    
    
    14,221
    
    
    
    14,943
    
    
    
    -4.8
    %
    
    
    42,106
    
    
    
    54,718
    
    
    
    -23.0
    %Other
    
    
    572
    
    
    
    784
    
    
    
    -27.0
    %
    
    
    1,966
    
    
    
    2,254
    
    
    
    -12.8
    %Total
    
    $
    100,009
    
    
    $
    97,016
    
    
    
    3.1
    %
    
    $
    418,344
    
    
    $
    410,150
    
    
    
    2.0
    %
 
 (1)
    
    North American Retail represents sales of our culinary, snack and in-shell nuts in North
America. 15




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##### Table of Contents



Three Months ended
    
    Nine Months endedApril 30,
    
    April 30,2008
    
    2007
    
    2008
    
    2007Walnuts
    
    
    60.4
    %
    
    
    63.2
    %
    
    
    61.1
    %
    
    
    59.9
    %Other nuts
    
    
    39.6
    %
    
    
    36.8
    %
    
    
    38.9
    %
    
    
    40.1
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  Gross profit.
 Selling, General and Administrative.
 Advertising.
 Loss on termination of defined benefit plan.
 Income Taxes.
 16




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##### Table of Contents



Liquidity and Capital Resources
          17




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##### Table of Contents



Contractual Obligations and Commitments
  Payments Due by PeriodLess than
    
    1-3
    
    3-5
    
    More thanTotal
    
    1 Year (c)
    
    Years
    
    Years
    
    5 YearsLong-term obligation (a)
    
    $
    20.3
    
    
    $
    
    
    
    $
    8.2
    
    
    $
    8.1
    
    
    $
    4.0Interest on
long-term obligations
    
    
    5.4
    
    
    
    0.4
    
    
    
    3.8
    
    
    
    1.1
    
    
    
    0.1Operating leases
    
    
    12.4
    
    
    
    0.5
    
    
    
    3.9
    
    
    
    3.7
    
    
    
    4.3Purchase commitments (b)
    
    
    1.0
    
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilites (d)
    
    
    6.7
    
    
    
    0.1
    
    
    
    0.5
    
    
    
    0.6
    
    
    
    5.5Total
    
    $
    45.8
    
    
    $
    2.0
    
    
    $
    16.4
    
    
    $
    13.5
    
    
    $
    13.9
 
 (a)
    
    Excludes $2.1 million in letters of credit outstanding related to normal business
transactions.(b)
    
    Commitments to purchase equipment. Excludes purchase commitments under Walnut Purchase
Agreements.(c)
    
    Represents obligations and commitments for the remaining three months of fiscal 2008.(d)
    
    Excludes $0.4 million in deferred rent liabilities and $0.2 million of non-current FIN
48 tax liabilities. Effects of Inflation
  Recent Accounting Pronouncements
  
 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 February 1
through February 29, 2008
    
    
    286
    
    
    $
    19.12
    
    
    
    
    
    
    $
    Repurchases from March 1
through March 31, 2008
    
    
    1,190
    
    
    
    17.98
    
    
    
    
    
    
    
    Repurchases from April 1
through April 30, 2008
    
    
    1,909
    
    
    
    19.21
    
    
    
    
    
    
    
    Total
    
    
    3,385
    
    
    $
    18.77
    
    
    
    
    
    
    $
    
 
 (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
  19




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    To elect three Class III directors, each to serve until our 2011 annual meeting of
stockholders and until his successor has been elected and qualified or until his earlier
resignation, death or removal.
  VotesFor
    
    Withheld
    
    Broker Non-VotesJohn J. Gilbert
    
    
    12,274,107
    
    
    
    491,249
    
    
    
    Steven M. Neil
    
    
    12,264,142
    
    
    
    501,214
    
    
    
    Robert J. Zollars
    
    
    12,340,843
    
    
    
    424,513
    
    
    
    
 2.
    
    To ratify the appointment of Deloitte & Touche LLP as our independent registered public
accounting firm for the fiscal year ending July 31, 2008
  VotesFor
    
    Against
    
    Abstentions
    
    Broker Non-Votes12,531,247
    
    
    196,277
    
    
    
    37,832
    
    
    
    
  
 Item 5. Other Information
  
 Item 6. Exhibits
  Filed with this
    
    
    
    Incorporated by referenceNumber
    
    Exhibit Title
    
    10-Q
    
    Form
    
    File No.
    
    Exhibit
    
    Date Filed10.01
    
    Revolving Term Loan Supplement to Master Loan Agreement,
effective as of March 31, 2008, between Diamond Foods,
Inc. and CoBank, ACB
    
    
    
    8-K
    
    000-51439
    
    
    99.01
    
    
    4/3/200831.01
    
    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
 20




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##### Table of Contents



SIGNATURES
  DIAMOND FOODS, INC.Date: June 3, 2008
    By:
    /s/ Steven M. NeilSteven M. NeilChief Financial and Administrative Officer
and duly authorized officer 21