##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended July 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 No.: 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.)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class:
    
    Name of Exchange on Which Registered:Common Stock, $0.001 par value
    
    NASDAQ Global Select MarketSeries A Junior Preferred Stock Purchase Right
    
    NASDAQ Global Select Market
 Securities registered pursuant to Section 12(g) of the Act:
None
 o þ
 o þ
 þ o
 o o
 þ
  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
  DOCUMENTS INCORPORATED BY REFERENCE:




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##### 



TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    3Item 1A.
    
    Risk Factors
    
    8Item 1B.
    
    Unresolved Staff Comments
    
    16Item 2.
    
    Properties
    
    16Item 3.
    
    Legal Proceedings
    
    16Item 4.
    
    Removed and Reserved
    
    16PART IIItem 5.
    
    Market for
Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    16Item 6.
    
    Selected Financial Data
    
    17Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    18Item 7A.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    23Item 8.
    
    Financial Statements and Supplementary Data
    
    24Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    49Item 9A.
    
    Controls and Procedures
    
    50Item 9B.
    
    Other Information
    
    50PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    51Item 11.
    
    Executive Compensation
    
    51Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    51Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    51Item 14.
    
    Principal Accounting Fees and Services
    
    51PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    51Signatures
    
    54EX-21.01EX-23.01EX-31.01EX-31.02EX-32.01
  2




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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
   
 PART I
 
 Item 1. Business
 Overview
  ® ® ®
  
    
    Snack.We sell snack products under the Emerald, Pop Secret and Kettle brands. Emerald
products include roasted, glazed and flavored nuts, trail mixes, seeds, dried fruit and
similar offerings packaged in innovative resealable containers. In September 2008, we
expanded our snack product line with the acquisition of the Pop Secret microwave popcorn
from General Mills, Inc. Microwave popcorn products are offered in a variety of traditional
flavors, as well as a better-for-you product offering featuring 100-calorie packs. On
March 31, 2010, we complemented our snack portfolio with the acquisition of Kettle Foods, a
leading premium potato chip company. Kettle products are offered in a variety of flavors and
sizes. Our snack products are typically available in grocery store snack, natural and
produce aisles, mass merchandisers, club stores, convenience stores, drug stores, natural
food stores and other places where snacks are sold.
    
    Culinary.We sell culinary nuts under the Diamond of California brand in grocery store
baking aisles and produce aisles and through mass merchandisers and club stores. Culinary
nuts are marketed to individuals who prepare meals or baked goods at home and who value
fresh, high-quality products.
 3




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
    
    Retail In-shell.We sell in-shell nuts under the Diamond of California brand, primarily
during the winter holiday season. These products are typically available in grocery store
produce sections, mass merchandisers and club stores.
    
    International Non-Retail.We market ingredient nuts internationally under the Diamond of
California brand to food processors, restaurants, bakeries and food service companies and
their suppliers. We also sell in-shell nuts under the Diamond of California brand, primarily
during the winter holiday season.
    
    North American Ingredient/Food Service.We market ingredient and food service nuts under
the Diamond of California brand to food processors, restaurants, bakeries and food service
companies and their suppliers. Our institutional and industrial customers use our standard
or customer-specified products to add flavor and enhance nutritional value and texture in
their product offerings.
  Year Ended July 31,2010
    
    
    2009
    
    
    2008Snack
    
    $
    321.4
    
    
    $
    188.9
    
    
    $
    88.6Culinary
    
    
    217.5
    
    
    
    241.9
    
    
    
    239.9In-shell
    
    
    31.5
    
    
    
    34.3
    
    
    
    41.9Total Retail
    
    
    570.4
    
    
    
    465.1
    
    
    
    370.4International Non-Retail
    
    
    69.2
    
    
    
    68.9
    
    
    
    101.6North American Ingredient/Food Service
    
    
    38.0
    
    
    
    34.5
    
    
    
    56.9Other
    
    
    2.6
    
    
    
    2.4
    
    
    
    2.6Total Non-Retail
    
    
    109.8
    
    
    
    105.8
    
    
    
    161.1Total Net Sales
    
    $
    680.2
    
    
    $
    570.9
    
    
    $
    531.5
  www.diamondfoods.com.
 Our Strategy
  Increase market share in the snack industry.
 4




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Improve margins.
 Expand and improve our position in distribution channels.
 Pursue additional growth opportunities.
 
    
    introduce new products that are complementary to our existing product lines and can be
marketed through our existing sales force and leverage our production and distribution
systems;
 
    
    build the value of our brands; and
 
    
    enhance or leverage our processing and distribution capabilities to lower our costs.
 Principal Products
  Category
    
    
    
    Products
    
    
    
    Product FeaturesSnack
    
    
    
    Glazed nuts
    
    
    
    Patented glazing process combined with unique flavors
    
    Roasted and mixed nuts
    
    
    
    Wide variety of natural and roasted nuts in a range of
package formats
    
    Trail mix
    
    
    
    Unique blends and nutritionally dense products, some
featuring unique, patent pending roasted nuts
    
    Breakfast trail mix
    
    
    
    Conveniently packaged trail mix marketed as a nutritional
and convenient option for breakfast, sold in the granola
bar section of retailers
    
    Natural snack products for the
produce aisle
    
    
    
    Nuts and seeds, trail/snack mixes, dried fruits and sweet
snacks sold in the produce aisle
    
    Microwave popcorn
    
    
    
    Packaged in a variety of sizes and flavors including 94%
Fat Free Butter
    
    Potato chips
    
    
    
    Premium, all-natural, kettle-cooked and baked potato chips
packaged in single serve, multi-pack and sharing sizes in
multiple flavors
    
    Tortilla chips
    
    
    
    Premium all-natural tortilla chips made with organic corn
packaged in sharing size in six varieties of all naturally
seasoned flavorsCulinary
    
    
    
    Shelled nuts
    
    
    
    Whole, sliced, slivered, chopped and ground nuts
    
    Pegboard nuts
    
    
    
    Recipe ready packages ranging from
2.25-ounce to 4.0-ounce sizes
    
    Glazed nuts
    
    
    
    Patented glazing process combined with unique flavors
    
    Harvest Reserve Premium nuts
    
    
    
    Premium specialty nuts sold in resealable bags
 5




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Category
    
    
    
    Products
    
    
    
    Product FeaturesRetail In-shell
    
    
    
    Various uncracked nuts, cleaned
and/or polished
    
    
    
    Packaged in clear visible bags, mesh bags and bulk display
units
    
    Mixed nuts
    
    
    
    Various package sizes ranging from one-pound bags to 25-
kilogram sacks, with nut sizes ranging from baby to jumboInternational Non-Retail
    
    
    
    In-shell nuts
    
    
    
    Various uncracked nuts, cleaned and/or polished, packaged
in clear visible bags, mesh bags and bulk display units
    
    Shelled and processed nuts
    
    
    
    Whole, sliced, chopped, diced and ground nuts
    
    Custom-processed nuts
    
    
    
    Food processor product of uniform size and consistent colorNorth American 
Ingredient/Food Service
    
    
    
    Shelled and processed nuts
    
    
    
    Whole, sliced, chopped, diced and ground nuts
    
    Custom-processed nuts
    
    
    
    Food processor product of uniform size and consistent color
    
    Glazed nuts
    
    
    
    Various large package sizes (ranging from 2 pounds to 30
pounds) tailored for business usage, with flexible
processing and packaging operations
   Marketing
   6




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Sales and Distribution
   Product Development and Production
   Competition
  Raw Materials and Supplies
  7




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Trademarks and Patents
  Seasonality
  Employees
  
 Item 1A. Risk Factors
  8




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Risks Related to Our Business
 We may be required to conduct product recalls and concerns with the safety and quality of food
products could harm our sales or cause consumers to avoid our products.
  Government regulations could increase our costs of production and our costs of legal and
regulatory compliance.
  A disruption at any of our production facilities would significantly decrease production,
which could increase our cost of sales and reduce our net sales and income from operations.
  The acquisition of other product lines or businesses could pose risks to our profitability.
  9




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Changes in the food industry, including changing dietary trends and consumer preferences,
could reduce demand for our products.
  Increased costs associated with product processing and transportation, such as water,
electricity, natural gas and fuel costs, could increase our expenses and reduce our profitability.
  Our raw materials are subject to fluctuations in availability and price.
     If we are unable to compete effectively in the markets in which we operate, our results of
operations would be negatively affected.
  10




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The loss of any major customer could adversely impact our business.
  Because we experience seasonal fluctuations in our sales, our quarterly results will fluctuate
and our annual performance will depend largely on results from our first two quarters.
  We depend on our key personnel and if we lose the services of any of these individuals, or
fail to attract and retain additional key personnel, we may not be able to implement our business
strategy or operate our business effectively.
 .
 Bioterrorism legislation could disrupt our supply of imported nuts.
  The current global economic downturn may materially and adversely affect our business,
financial condition and results of operations.
  11




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Our business could be negatively impacted if we fail to maintain satisfactory labor relations.
  Our business, financial condition and results of operations could be adversely affected by the
political and economic conditions of the countries in which we conduct business and other factors
related to our international operations.
  
    
    negative economic developments in economies around the world and the instability of
governments, including the threat of war, terrorist attacks, epidemic or civil unrest;
    
    adverse changes in laws and governmental policies, especially those affecting trade and
investment;
    
    pandemics, such as the flu, which may adversely affect our workforce as well as our local
suppliers and customers;
    
    earthquakes, tsunamis, floods or other major disasters which may limit the supply of nuts
or other products that we purchase abroad;
    
    import or export licensing requirements imposed by governments;
    
    foreign currency exchange and transfer restrictions;
    
    differing labor standards;
    
    differing levels of protection of intellectual property;
    
    the threat that our operations or property could be subject to nationalization and
expropriation;
    
    varying practices of the regulatory, tax, judicial and administrative bodies in the
jurisdictions where we operate; and
    
    potentially burdensome taxation and changes in foreign tax laws.
  As a private company, Kettle Foods may not have had in place an adequate system of internal
control over financial reporting that we will need to manage that business effectively as part of a
public company.
  12




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A material impairment in the carrying value of acquired goodwill or other intangible assets
could negatively affect our consolidated operating results and net worth.
  Risks Related to Indebtedness
 As a result of our acquisition of Kettle Foods, we are highly leveraged, which could adversely
affect our ability to raise additional capital to fund our operations and limit our ability to
react to changes in the economy or our industry.
   
    
    increasing our vulnerability to adverse economic, industry or competitive developments;
    
    exposing us to the risk of increased interest rates because our secured credit facility
is at variable rates of interest;
    
    making it more difficult to satisfy obligations with respect to our indebtedness, and any
failure to comply with the obligations of any of our debt instruments, including restrictive
covenants and borrowing conditions, could result in an event of default under the agreements
governing the indebtedness;
    
    restricting us from making strategic acquisitions or causing us to make non-strategic
divestitures;
    
    limiting our ability to obtain additional financing for working capital, capital
expenditures, product development, debt service requirements, acquisitions and general
corporate or other purposes; and
    
    placing us at a competitive disadvantage compared to competitors who are less highly
leveraged and who therefore, may be able to take advantage of opportunities that our
leverage prevents us from pursuing.
 13




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Despite our high initial indebtedness level, we may be able to incur significant additional
amounts of debt, which could further exacerbate the risks associated with our substantial
indebtedness.
  The debt agreements contain restrictions that may limit our flexibility in operating our
business.
  
    
    make certain investments or other capital expenditures;
    
    sell assets;
    
    create liens;
    
    acquire other companies and businesses;
    
    borrow additional funds under new revolving credit facilities;
    
    consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
and
    
    enter into certain transactions with our affiliates.
  Risks Related to Our Common Stock
 The market price of our common stock is volatile and may result in investors selling shares of
our common stock at a loss.
  
    
    our operating performance and the performance of other similar companies;
    
    changes in our revenues or earnings estimates or recommendations by any securities
analysts who may decide to follow our stock or our industry;
    
    publication of research reports about us or our industry by any securities analysts who
may decide to follow our stock or our
industry;
    
    speculation in the press or investment community;
    
    terrorist acts; and
    
    general market conditions, including economic factors unrelated to our performance.
 14




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Our ability to raise capital in the future may be limited, and our failure to raise capital
when needed could prevent us from executing our growth strategy.
  
    
    market acceptance of our products;
    
    the need to adapt to changing technologies and technical requirements;
    
    the existence of opportunities for expansion; and
    
    access to and availability of sufficient management, technical, marketing and financial
personnel.
  Anti-takeover provisions could make it more difficult for a third party to acquire us.
    15




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   
 Item 3. Legal Proceedings
   
 Item 4. Removed and Reserved
 
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  16




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DividendsHigh
    
    Low
    
    DeclaredYear Ended July 31, 2010:Fourth Quarter
    
    $
    46.67
    
    
    $
    36.72
    
    
    $
    0.045Third Quarter
    
    $
    46.36
    
    
    $
    34.27
    
    
    $
    0.045Second Quarter
    
    $
    37.24
    
    
    $
    29.10
    
    
    $
    0.045First Quarter
    
    $
    34.07
    
    
    $
    26.21
    
    
    $
    0.045Year Ended July 31, 2009:Fourth Quarter
    
    $
    30.39
    
    
    $
    22.67
    
    
    $
    0.045Third Quarter
    
    $
    29.25
    
    
    $
    19.85
    
    
    $
    0.045Second Quarter
    
    $
    31.94
    
    
    $
    18.39
    
    
    $
    0.045First Quarter
    
    $
    32.14
    
    
    $
    23.50
    
    
    $
    0.045
    
 Item 6. Selected Financial Data
  Year Ended July 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands, except per share information)Statements of operations:Net sales
    
    $
    680,162
    
    
    $
    570,940
    
    
    $
    531,492
    
    
    $
    522,585
    
    
    $
    477,205Cost of sales
    
    
    519,161
    
    
    
    435,344
    
    
    
    443,490
    
    
    
    443,945
    
    
    
    411,809Gross profit
    
    
    161,001
    
    
    
    135,596
    
    
    
    88,002
    
    
    
    78,640
    
    
    
    65,396Operating expenses:Selling, general and administrative
    
    
    64,301
    
    
    
    60,971
    
    
    
    43,613
    
    
    
    42,541
    
    
    
    37,046Advertising
    
    
    32,962
    
    
    
    28,785
    
    
    
    20,508
    
    
    
    20,445
    
    
    
    17,977Restructuring and other costs, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    3,442Loss on termination of defined benefit plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,054
    
    
    
    Acquisition and integration related
expenses
    
    
    11,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    108,771
    
    
    
    89,756
    
    
    
    64,121
    
    
    
    66,025
    
    
    
    58,465Income from operations
    
    
    52,230
    
    
    
    45,840
    
    
    
    23,881
    
    
    
    12,615
    
    
    
    6,931Interest expense, net
    
    
    10,180
    
    
    
    6,255
    
    
    
    1,040
    
    
    
    1,291
    
    
    
    295Other expenses, net
    
    
    1,849
    
    
    
    898
    
    
    
    
    
    
    
    98
    
    
    
    310Income before income taxes
    
    
    40,201
    
    
    
    38,687
    
    
    
    22,841
    
    
    
    11,226
    
    
    
    6,326Income taxes (tax benefits)
    
    
    13,990
    
    
    
    14,944
    
    
    
    8,085
    
    
    
    2,793
    
    
    
    (1,010
    )Net income
    
    $
    26,211
    
    
    $
    23,743
    
    
    $
    14,756
    
    
    $
    8,433
    
    
    $
    7,336Earnings per shareBasic
    
    $
    1.40
    
    
    $
    1.45
    
    
    $
    0.92
    
    
    $
    0.53
    
    
    $
    0.47Diluted
    
    $
    1.36
    
    
    $
    1.42
    
    
    $
    0.91
    
    
    $
    0.53
    
    
    $
    0.47Shares used to compute earnings per shareBasic
    
    
    18,313
    
    
    
    16,073
    
    
    
    15,767
    
    
    
    15,359
    
    
    
    15,069Diluted
    
    
    18,843
    
    
    
    16,391
    
    
    
    15,825
    
    
    
    15,359
    
    
    
    15,069Dividends declared per share
    
    $
    0.18
    
    
    $
    0.18
    
    
    $
    0.18
    
    
    $
    0.12
    
    
    $
    0.09
 17




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Year Ended July 31,2010
    
    2009
    
    2008
    
    2007
    
    2006(In thousands)Balance sheet data:Cash and cash equivalents
    
    $
    5,642
    
    
    $
    24,802
    
    
    $
    74,279
    
    
    $
    33,755
    
    
    $
    35,614Working capital
    
    
    72,168
    
    
    
    51,422
    
    
    
    121,516
    
    
    
    100,527
    
    
    
    87,689Total assets
    
    
    1,225,872
    
    
    
    394,892
    
    
    
    273,267
    
    
    
    236,403
    
    
    
    253,032Total debt, including short-term debt
    
    
    556,100
    
    
    
    115,085
    
    
    
    20,204
    
    
    
    20,507
    
    
    
    20,000Total stockholders equity
    
    
    379,943
    
    
    
    173,341
    
    
    
    146,223
    
    
    
    125,341
    
    
    
    110,826
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Summary
 ® ® ®
  Critical Accounting Policies
  Revenue Recognition.
 18




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Inventories.
  Valuation of Long-lived and Intangible Assets and Goodwill. Property, Plant, and Equipment Intangibles  Goodwill and Other,
      Employee Benefits.
 19




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Income Taxes. Income Taxe
 Accounting for Stock-Based Compensation. Compensation  Stock Compensation
 Results of Operations
 2010 Compared to 2009
   Year Ended July 31,
    
    
    % Change from2010
    
    
    2009
    
    
    2009 to 2010Retail (1)
    
    $
    570,416
    
    
    $
    465,126
    
    
    
    22.6
    %International Non-Retail
    
    
    69,206
    
    
    
    68,890
    
    
    
    0.5
    %North American Ingredient/Food Service
    
    
    37,953
    
    
    
    34,504
    
    
    
    10.0
    %Other
    
    
    2,587
    
    
    
    2,420
    
    
    
    6.9
    %Total
    
    $
    680,162
    
    
    $
    570,940
    
    
    
    19.1
    %
 
 (1)
    
    Retail represents sales of our culinary, snack and in-shell products.  Gross profit.
 Selling, general and administrative.
 Advertising.
 20




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Acquisition and integration related expenses.
 Interest expense, net.
 Other expense, net
 Income taxes.
 2009 Compared to 2008
   Year Ended July 31,
    
    
    % Change from2009
    
    
    2008
    
    
    2008 to 2009Retail (1)
    
    $
    465,126
    
    
    $
    370,411
    
    
    
    25.6
    %International Non-Retail
    
    
    68,890
    
    
    
    101,640
    
    
    
    -32.2
    %North American Ingredient/Food Service
    
    
    34,504
    
    
    
    56,869
    
    
    
    -39.3
    %Other
    
    
    2,420
    
    
    
    2,572
    
    
    
    -5.9
    %Total
    
    $
    570,940
    
    
    $
    531,492
    
    
    
    7.4
    %
 
 (1)
    
    Retail represents sales of our culinary, snack and in-shell products.  Gross profit.
 Selling, general and administrative.
 Advertising.
 21




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Interest expense, net.
 Other expense, net
 Income taxes.
 Liquidity and Capital Resources
         22




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Contractual Obligations and Commitments
  Payments Due by PeriodLess than
    
    1-3
    
    3-5
    
    More thanTotal
    
    1 Year
    
    Years
    
    Years
    
    5 YearsRevolving line of credit
    
    $
    166.1
    
    
    $
    
    
    
    $
    
    
    
    $
    166.1
    
    
    $
    Long-term obligations
    
    
    390.0
    
    
    
    40.0
    
    
    
    80.0
    
    
    
    270.0
    
    
    
    Interest on long-term obligations (a)
    
    
    54.5
    
    
    
    14.3
    
    
    
    24.0
    
    
    
    16.2
    
    
    
    Operating leases
    
    
    18.7
    
    
    
    4.6
    
    
    
    6.7
    
    
    
    3.8
    
    
    
    3.6Purchase commitments (b)
    
    
    76.5
    
    
    
    76.5
    
    
    
    
    
    
    
    
    
    
    
    Pension liability
    
    
    24.2
    
    
    
    0.5
    
    
    
    4.3
    
    
    
    1.4
    
    
    
    18.0Long-term deferred tax liabilities (c)
    
    
    144.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144.8Other long-term liabilities (d)
    
    
    9.3
    
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    8.6Total
    
    $
    884.1
    
    
    $
    136.0
    
    
    $
    115.3
    
    
    $
    457.8
    
    
    $
    175.0
 
 (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 July 31, 2010.(b)
    
    Commitments to purchase inventory and equipment. Excludes purchase commitments under Walnut
Purchase Agreements due to uncertainty of pricing and quantity.(c)
    
    Primarily relates to intangible assets of Kettle Foods.(d)
    
    Excludes $0.6 million in deferred rent liabilities, $0.5 million in deferred income and $0.1
million of other non-current liabilities. Additionally, the liability for uncertain tax
positions ($2.6 million at July 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. Off-Balance Sheet Arrangements
  Effects of Inflation
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk.
 Commodities Risk.
 23




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##### Table of Contents



Interest Rate Risk.
   Foreign Currency Exchange Risk.
 
 Item 8. Financial Statements and Supplementary Data
 24




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal Control  Integrated Framework
     
 25




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##### Table of Contents



DIAMOND FOODS, INC.
 CONSOLIDATED BALANCE SHEETS
 July 31,2010
    
    
    2009(In thousands, except share andper share information)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    5,642
    
    
    $
    24,802Trade receivables, net
    
    
    65,553
    
    
    
    33,492Inventories
    
    
    143,405
    
    
    
    85,027Deferred income taxes
    
    
    10,497
    
    
    
    13,109Prepaid income taxes
    
    
    9,225
    
    
    
    Prepaid expenses and other current assets
    
    
    5,767
    
    
    
    3,594Total current assets
    
    
    240,089
    
    
    
    160,024Property, plant and equipment, net
    
    
    117,816
    
    
    
    51,115Deferred income taxes
    
    
    13,625
    
    
    
    6,230Goodwill
    
    
    396,788
    
    
    
    76,076Other intangible assets, net
    
    
    449,018
    
    
    
    97,883Other long-term assets
    
    
    8,536
    
    
    
    3,564Total assets
    
    $
    1,225,872
    
    
    $
    394,892LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    40,000
    
    
    $
    15,000Accounts payable and accrued liabilities
    
    
    92,166
    
    
    
    64,453Payable to growers
    
    
    35,755
    
    
    
    29,149Total current liabilities
    
    
    167,921
    
    
    
    108,602Long-term obligations
    
    
    516,100
    
    
    
    100,085Deferred income taxes
    
    
    144,755
    
    
    
    1,221Other liabilities
    
    
    17,153
    
    
    
    11,643Commitments and contingenciesStockholders 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; 22,121,534
and
16,753,796 shares issued and 21,891,928 and 16,552,019 shares outstanding
at July 31, 2010 and 2009, respectively
    
    
    22
    
    
    
    17Treasury stock, at cost: 229,606 and 201,777 shares at July 31, 2010 and 2009
    
    
    (5,050
    )
    
    
    (4,256
    )Additional paid-in capital
    
    
    307,032
    
    
    
    122,817Accumulated other comprehensive loss
    
    
    (869
    )
    
    
    (1,296
    )Retained earnings
    
    
    78,808
    
    
    
    56,059Total stockholders equity
    
    
    379,943
    
    
    
    173,341Total liabilities and stockholders equity
    
    $
    1,225,872
    
    
    $
    394,892
  26




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##### Table of Contents



DIAMOND FOODS, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended July 31,2010
    
    
    2009
    
    
    2008(In thousands, except per share information)Net sales
    
    $
    680,162
    
    
    $
    570,940
    
    
    $
    531,492Cost of sales
    
    
    519,161
    
    
    
    435,344
    
    
    
    443,490Gross profit
    
    
    161,001
    
    
    
    135,596
    
    
    
    88,002Operating expenses:Selling, general and administrative
    
    
    64,301
    
    
    
    60,971
    
    
    
    43,613Advertising
    
    
    32,962
    
    
    
    28,785
    
    
    
    20,508Acquisition and integration
related expenses
    
    
    11,508
    
    
    
    
    
    
    
    Total operating expenses
    
    
    108,771
    
    
    
    89,756
    
    
    
    64,121Income from operations
    
    
    52,230
    
    
    
    45,840
    
    
    
    23,881Interest expense, net
    
    
    10,180
    
    
    
    6,255
    
    
    
    1,040Other expense, net
    
    
    1,849
    
    
    
    898
    
    
    
    Income before income taxes
    
    
    40,201
    
    
    
    38,687
    
    
    
    22,841Income taxes
    
    
    13,990
    
    
    
    14,944
    
    
    
    8,085Net income
    
    $
    26,211
    
    
    $
    23,743
    
    
    $
    14,756Earnings per shareBasic
    
    $
    1.40
    
    
    $
    1.45
    
    
    $
    0.92Diluted
    
    $
    1.36
    
    
    $
    1.42
    
    
    $
    0.91Shares used to compute earnings
per shareBasic
    
    
    18,313
    
    
    
    16,073
    
    
    
    15,767Diluted
    
    
    18,843
    
    
    
    16,391
    
    
    
    15,825Dividends declared per share
    
    $
    0.18
    
    
    $
    0.18
    
    
    $
    0.18
  27




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##### Table of Contents



DIAMOND FOODS, INC.
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    TotalCommon Stock
    
    
    Treasury
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersShares
    
    
    Amount
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Equity(In thousands, except share information)Balance, July 31, 2007
    
    
    15,764,647
    
    
    $
    16
    
    
    $
    (1,436
    )
    
    $
    101,106
    
    
    $
    23,422
    
    
    $
    2,233
    
    
    $
    125,341Shares issued under ESPP and upon
stock option exercises
    
    
    233,710
    
    
    
    
    
    
    
    
    
    
    
    3,972
    
    
    
    
    
    
    
    
    
    
    
    3,972Stock compensation expense
    
    
    257,649
    
    
    
    
    
    
    
    
    
    
    
    6,893
    
    
    
    
    
    
    
    
    
    
    
    6,893Tax benefit from ESPP and stock
option transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    579
    
    
    
    
    
    
    
    
    
    
    
    579Treasury stock repurchased
    
    
    (75,235
    )
    
    
    
    
    
    
    (1,767
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,767
    )Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,902
    )
    
    
    
    
    
    
    (2,902
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,756
    
    
    
    
    
    
    
    14,756Change in pension liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (646
    )
    
    
    (646
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Total comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,107Balance, July 31, 2008
    
    
    16,180,771
    
    
    
    16
    
    
    
    (3,203
    )
    
    
    112,550
    
    
    
    35,276
    
    
    
    1,584
    
    
    
    146,223Shares issued under ESPP and upon
stock option exercises
    
    
    298,133
    
    
    
    1
    
    
    
    
    
    
    
    5,299
    
    
    
    
    
    
    
    
    
    
    
    5,300Stock compensation expense
    
    
    115,587
    
    
    
    
    
    
    
    
    
    
    
    3,901
    
    
    
    
    
    
    
    
    
    
    
    3,901Tax benefit from ESPP and stock
option transactions.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,067
    
    
    
    
    
    
    
    
    
    
    
    1,067Treasury stock repurchased
    
    
    (42,472
    )
    
    
    
    
    
    
    (1,053
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,053
    )Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,960
    )
    
    
    
    
    
    
    (2,960
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,743
    
    
    
    
    
    
    
    23,743Change in pension liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,743
    )
    
    
    (2,743
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    (137
    )Total comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,863Balance, July 31, 2009
    
    
    16,552,019
    
    
    
    17
    
    
    
    (4,256
    )
    
    
    122,817
    
    
    
    56,059
    
    
    
    (1,296
    )
    
    
    173,341Shares issued upon stock option
exercises
    
    
    44,574
    
    
    
    
    
    
    
    
    
    
    
    818
    
    
    
    
    
    
    
    
    
    
    
    818Stock compensation expense
    
    
    148,164
    
    
    
    
    
    
    
    
    
    
    
    3,231
    
    
    
    
    
    
    
    
    
    
    
    3,231Tax benefit from stock option
transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    434
    
    
    
    
    
    
    
    
    
    
    
    434Shares issued for equity offering
    
    
    5,175,000
    
    
    
    5
    
    
    
    
    
    
    
    191,470
    
    
    
    
    
    
    
    
    
    
    
    191,475Equity offering costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,738
    )
    
    
    
    
    
    
    
    
    
    
    (11,738
    )Treasury stock repurchased
    
    
    (27,829
    )
    
    
    
    
    
    
    (794
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (794
    )Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,462
    )
    
    
    
    
    
    
    (3,462
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,211
    
    
    
    
    
    
    
    26,211Change in pension liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (773
    )
    
    
    (773
    )Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,477
    
    
    
    1,477Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (277
    )
    
    
    (277
    )Total comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,638Balance, July 31, 2010
    
    
    21,891,928
    
    
    $
    22
    
    
    $
    (5,050
    )
    
    $
    307,032
    
    
    $
    78,808
    
    
    $
    (869
    )
    
    $
    379,943
  28




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##### Table of Contents



DIAMOND FOODS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended July 31,2010
    
    
    2009
    
    
    
    2008(In thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    26,211
    
    
    $
    23,743
    
    
    $
    14,756Adjustments to reconcile net income to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    17,154
    
    
    
    11,362
    
    
    
    6,420Deferred income taxes
    
    
    7,072
    
    
    
    (2,800
    )
    
    
    (3,022
    )Excess tax benefit from ESPP and stock option transactions
    
    
    (434
    )
    
    
    (1,067
    )
    
    
    (579
    )Stock-based compensation
    
    
    3,231
    
    
    
    3,901
    
    
    
    6,893Other, net
    
    
    1,109
    
    
    
    858
    
    
    
    4Changes in assets and liabilities (excluding business acquired):Trade receivables
    
    
    (2,873
    )
    
    
    12,764
    
    
    
    4,406Inventories
    
    
    (45,852
    )
    
    
    10,316
    
    
    
    2,093Prepaid expenses and income taxes and other current assets
    
    
    (6,437
    )
    
    
    1,053
    
    
    
    10Accounts payable and accrued liabilities
    
    
    (12,068
    )
    
    
    21,231
    
    
    
    16,054Payable to growers
    
    
    6,606
    
    
    
    (27,793
    )
    
    
    (175
    )Other, net
    
    
    4,693
    
    
    
    (200
    )
    
    
    216Net cash provided by (used in) operating activities
    
    
    (1,588
    )
    
    
    53,368
    
    
    
    47,076CASH FLOWS FROM INVESTING ACTIVITIES:Net proceeds from sale of property, plant and equipment
    
    
    289
    
    
    
    129
    
    
    
    12Purchases of property, plant, and equipment
    
    
    (11,790
    )
    
    
    (7,994
    )
    
    
    (6,583
    )Acquisition of Pop Secret
    
    
    833
    
    
    
    (190,224
    )
    
    
    Acquisition of Kettle Foods, net of cash acquired
    
    
    (616,222
    )
    
    
    
    
    
    
    Other
    
    
    329
    
    
    
    4
    
    
    
    299Net cash used in investing activities
    
    
    (626,561
    )
    
    
    (198,085
    )
    
    
    (6,272
    )CASH FLOWS FROM FINANCING ACTIVITIES:Revolving line of credit borrowings under the Secured Credit Facility
    
    
    176,000
    
    
    
    
    
    
    
    Repayment of revolving line of credit under the Secured Credit Facility
    
    
    (9,900
    )
    
    
    
    
    
    
    Proceeds from issuance of long-term debt
    
    
    400,000
    
    
    
    125,000
    
    
    
    Debt issuance costs
    
    
    (8,852
    )
    
    
    (1,973
    )
    
    
    Payment of long-term debt and notes payable
    
    
    (125,119
    )
    
    
    (30,141
    )
    
    
    (162
    )Gross proceeds from equity offering
    
    
    191,475
    
    
    
    
    
    
    
    Equity offering costs
    
    
    (11,738
    )
    
    
    
    
    
    
    Dividends paid
    
    
    (3,462
    )
    
    
    (2,960
    )
    
    
    (2,902
    )Excess tax benefit from ESPP and stock option transactions
    
    
    434
    
    
    
    1,067
    
    
    
    579Other, net
    
    
    24
    
    
    
    4,247
    
    
    
    2,205Net cash provided by (used in) financing activities
    
    
    608,862
    
    
    
    95,240
    
    
    
    (280
    )Effect of exchange rate changes on cash
    
    
    127
    
    
    
    
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    (19,160
    )
    
    
    (49,477
    )
    
    
    40,524Cash and cash equivalents:Beginning of period
    
    
    24,802
    
    
    
    74,279
    
    
    
    33,755End of period
    
    $
    5,642
    
    
    $
    24,802
    
    
    $
    74,279Supplemental disclosure of cash flow information:Cash paid during the period for:Interest
    
    $
    9,088
    
    
    $
    5,989
    
    
    $
    1,183Income taxes
    
    
    11,113
    
    
    
    19,438
    
    
    
    5,945Non-cash investing activities:Accrued capital expenditures
    
    
    1,076
    
    
    
    497
    
    
    
    391
  29




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##### Table of Contents



DIAMOND FOODS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2010, 2009 and 2008
(In thousands, except share and per share information)
 (1) Organization and Significant Accounting Policies
 Business
  Basis of Presentation
  Use of Estimates
   Certain Risks and Concentrations
  Principles of Consolidation
  30




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##### Table of Contents



Cash and Cash Equivalents
  Inventories
  Property, Plant and Equipment
  Slotting and Other Contractual Arrangements
  Impairment of Long-Lived and Intangible Assets and Goodwill
 Property, Plant, and Equipment Intangibles  Goodwill and Other,
     31




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##### Table of Contents



Revenue Recognition
  Promotion and Advertising Costs
 Revenue Recognition
 Customer Payments and Incentives
 Shipping and Handling Costs
  Income Taxes
 Income Taxe
 Fair Value of Financial Instruments
  Stock-Based Compensation
 Compensation  Stock Compensation
 32




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##### Table of Contents



(2) Fair Value of Financial Instruments
      33




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##### Table of Contents



Balance Sheet Location
    
    
    Fair ValueLiability DerivativesDerivatives designated as
hedging instruments under
ASC 815:Interest rate contracts
    
    Interest payable
    
    $
    (2
    )Interest rate contracts
    
    Other current liabilities
    
    
    (666
    )Cash flow forwards
    
    Accounts payable and accrued liabilities
    
    
    (12
    )Total
    
    
    
    
    
    $
    (680
    )
  Location of Loss
    
    
    Amount of LossAmount of Loss
    
    
    Reclassified from
    
    
    Reclassified from
    
    
    Location of Loss
    
    
    Amount of LossRecognized in OCI on
    
    
    Accumulated OCI into
    
    
    Accumulated OCI into
    
    
    Recognized in Income on
    
    
    Recognized in Income onDerivatives in ASC 815 Cash
    
    Derivative (Effective
    
    
    Income (Effective
    
    
    Income (Effective
    
    
    Derivative (Ineffective
    
    
    Derivative (IneffectiveFlow Hedging Relationships
    
    Portion)
    
    
    Portion)
    
    
    Portion)
    
    
    Portion)
    
    
    Portion)Interest rate contracts
    
    $
    (479
    )
    
    Interest Expense
    
    $
    (52
    )
    
    Interest Expense
    
    $
    Cash flow forwards
    
    
    (12
    )
    
    Revenue
    
    
    
    
    
    Revenue
    
    
    Total
    
    $
    (491
    )
    
    
    
    
    
    $
    (52
    )
    
    
    
    
    
    $
    
 Fair Value
Measurements and Disclosures,
  Level 1
 Level 2
 Level 3
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
  Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    July 31, 2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Cash equivalents
    
    $
    586
    
    
    $
    586
    
    
    $
    
    
    
    $
    Total
    
    $
    586
    
    
    $
    586
    
    
    $
    
    
    
    $
    Derivative liabilities:Interest rate contracts
    
    $
    (668
    )
    
    $
    
    
    
    $
    (668
    )
    
    $
    Cash flow forwards
    
    
    (12
    )
    
    
    
    
    
    
    (12
    )
    
    
    Total
    
    $
    (680
    )
    
    $
    
    
    
    $
    (680
    )
    
    $
    
 Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    July 31, 2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Cash equivalents
    
    $
    24,500
    
    
    $
    24,500
    
    
    $
    
    
    
    $
    Total
    
    $
    24,500
    
    
    $
    24,500
    
    
    $
    
    
    
    $
    Derivative liabilities:Interest rate contracts
    
    $
    (250
    )
    
    $
    
    
    
    $
    (250
    )
    
    $
    Total
    
    $
    (250
    )
    
    $
    
    
    
    $
    (250
    )
    
    $
    
 34




---



##### Table of Contents



(3) Equity Offering and Stock-Based Compensation
    Compensation  Stock Compensation,
 Stock Option Awards:
 2010
    
    2009
    
    2008Average expected life, in years
    
    
    6
    
    
    
    6
    
    
    
    5Expected volatility
    
    
    46.00
    %
    
    
    38.50
    %
    
    
    32.57
    %Risk-free interest rate
    
    
    3.04
    %
    
    
    3.23
    %
    
    
    3.71
    %Dividend rate
    
    
    0.50
    %
    
    
    0.70
    %
    
    
    0.91
    %
 35




---



##### Table of Contents



Weighted
    
    Weighted AverageNumber of
    
    Average Exercise
    
    Remaining
    
    AggregateShares
    
    Price Per Share
    
    Contractual Life
    
    Intrinsic Value(In thousands)
    
    
    
    
    
    (In years)
    
    (In thousands)Outstanding at July 31, 2007
    
    
    1,621
    
    
    $
    17.37
    
    
    
    8.3
    
    
    $
    226Granted
    
    
    140
    
    
    
    21.43Exercised
    
    
    (207
    )
    
    
    17.31Cancelled
    
    
    (44
    )
    
    
    17.87Outstanding at July 31, 2008
    
    
    1,510
    
    
    
    17.74
    
    
    
    7.5
    
    
    $
    9,979Granted
    
    
    128
    
    
    
    26.06Exercised
    
    
    (294
    )
    
    
    17.78Cancelled
    
    
    (12
    )
    
    
    17.24Outstanding at July 31, 2009
    
    
    1,332
    
    
    
    18.54
    
    
    
    6.9
    
    
    $
    12,871Granted
    
    
    191
    
    
    
    40.79Exercised
    
    
    (45
    )
    
    
    18.35Cancelled
    
    
    (26
    )
    
    
    38.64Outstanding at July 31, 2010
    
    
    1,452
    
    
    
    21.11
    
    
    
    6.4
    
    
    $
    34,027Exercisable at July 31, 2008
    
    
    1,212
    
    
    
    17.32
    
    
    
    7.3
    
    
    $
    8,483Exercisable at July 31, 2009
    
    
    1,107
    
    
    
    17.76
    
    
    
    6.6
    
    
    $
    11,562Exercisable at July 31, 2010
    
    
    1,218
    
    
    
    18.32
    
    
    
    5.9
    
    
    $
    31,939
   Weighted AverageGrant Date FairNumber of Shares
    
    Value Per Share(In thousands)Nonvested at July 31, 2009
    
    
    225
    
    
    $
    8.62Granted
    
    
    191
    
    
    
    18.18Vested
    
    
    (157
    )
    
    
    8.78Cancelled
    
    
    (25
    )
    
    
    18.12Nonvested at July 31, 2010
    
    
    234
    
    
    
    15.28
  36




---



##### Table of Contents



Restricted Stock Awards:
 WeightedAverage GrantNumber of
    
    Date Fair ValueShares
    
    Per Share(In thousands)Outstanding at July 31, 2007
    
    
    310
    
    
    $
    17.50Granted
    
    
    318
    
    
    
    17.73Vested
    
    
    (235
    )
    
    
    17.33Cancelled
    
    
    (61
    )
    
    
    17.28Outstanding at July 31, 2008
    
    
    332
    
    
    
    17.74Granted
    
    
    194
    
    
    
    25.80Vested
    
    
    (111
    )
    
    
    18.02Cancelled
    
    
    (79
    )
    
    
    19.94Outstanding at July 31, 2009
    
    
    336
    
    
    
    21.79Granted
    
    
    193
    
    
    
    34.29Vested
    
    
    (76
    )
    
    
    20.92Cancelled
    
    
    (45
    )
    
    
    31.60Outstanding at July 31, 2010
    
    
    408
    
    
    
    26.78
   Employee Stock Purchase Plan:
 (4) Earnings Per Share
 Earnings Per Share
 37




---



##### Table of Contents



Year Ended July 31,2010
    
    
    2009
    
    
    2008Numerator:Net income
    
    $
    26,211
    
    
    $
    23,743
    
    
    $
    14,756Less: income allocated to participating securities
    
    
    (520
    )
    
    
    (486
    )
    
    
    (301
    )Income attributable to common shareholders  basic
    
    
    25,691
    
    
    
    23,257
    
    
    
    14,455Add: undistributed income attributable to participating securities
    
    
    505
    
    
    
    469
    
    
    
    280Less: undistributed income reallocated to participating securities
    
    
    (490
    )
    
    
    (460
    )
    
    
    (279
    )Income attributable to common shareholders  diluted
    
    $
    25,706
    
    
    $
    23,266
    
    
    $
    14,456Denominator:Weighted average shares outstanding  basic
    
    
    18,313
    
    
    
    16,073
    
    
    
    15,767Dilutive shares  stock options
    
    
    530
    
    
    
    318
    
    
    
    58Weighted average shares outstanding  diluted
    
    
    18,843
    
    
    
    16,391
    
    
    
    15,825Income per share attributable to common shareholders (1):Basic
    
    $
    1.40
    
    
    $
    1.45
    
    
    $
    0.92Diluted
    
    $
    1.36
    
    
    $
    1.42
    
    
    $
    0.91
 
 (1)
    
    Computations may reflect rounding adjustments.  (5) Acquisition of Kettle Foods
  Business Combinations
 38




---



##### Table of Contents



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
     Pro Forma  Financial Information
  Year Ended July 31,2010
    
    2009Net sales
    
    $
    854,579
    
    
    $
    787,349Net income
    
    $
    36,474
    
    
    $
    22,363Diluted earnings per share
    
    $
    1.63
    
    
    $
    1.02
   39




---



##### Table of Contents



(6) Intangible Assets and Goodwill
  Balance as of July 31, 2008:
    
    $
    5,432Acquisition of Pop Secret
    
    
    70,644Balance as of July 31, 2009:
    
    
    76,076Pop Secret purchase price allocation changes
    
    
    (833
    )Acquisition of Kettle Foods
    
    
    321,545Balance as of July 31, 2010:
    
    $
    396,788
  2010
    
    
    2009Brand intangibles (not subject to amortization)
    
    $
    297,500
    
    
    $
    62,500Intangible assets subject to amortization:Customer contracts and related relationships
    
    
    157,300
    
    
    
    37,300Total other intangible assets, gross
    
    
    454,800
    
    
    
    99,800Less accumulated amortization on intangible assets:Customer contracts and related relationships
    
    
    (5,782
    )
    
    
    (1,917
    )Total other intangible assets, net
    
    $
    449,018
    
    
    $
    97,883
     (7) Notes Payable and Long-Term Obligations
   40




---



##### Table of Contents



(8) Balance Sheet Items
  2010
    
    
    2009Raw materials and supplies
    
    $
    64,660
    
    
    $
    25,678Work in process
    
    
    23,768
    
    
    
    13,217Finished goods
    
    
    54,977
    
    
    
    46,132Total
    
    $
    143,405
    
    
    $
    85,027
  2010
    
    
    2009Investment in CoBank
    
    $
    1,147
    
    
    $
    1,476Other
    
    
    7,389
    
    
    
    2,088Total
    
    $
    8,536
    
    
    $
    3,564
  2010
    
    
    2009Accounts payable
    
    $
    42,784
    
    
    $
    32,222Accrued salaries and benefits
    
    
    17,587
    
    
    
    11,034Accrued promotion
    
    
    22,787
    
    
    
    19,511Other
    
    
    9,008
    
    
    
    1,686Total
    
    $
    92,166
    
    
    $
    64,453
 (9) Property, Plant and Equipment
  2010
    
    
    2009Land and improvements
    
    $
    10,012
    
    
    $
    1,531Buildings and improvements
    
    
    38,231
    
    
    
    19,518Machinery, equipment and software
    
    
    164,926
    
    
    
    115,211Construction in progress
    
    
    7,214
    
    
    
    7,294Total
    
    
    220,383
    
    
    
    143,554Less accumulated depreciation
    
    
    (102,567
    )
    
    
    (92,439
    )Property, plant and equipment, net
    
    $
    117,816
    
    
    $
    51,115
 41




---



##### Table of Contents



(10) Income Taxes
  2010
    
    
    2009
    
    
    2008CurrentFederal
    
    $
    5,895
    
    
    $
    14,831
    
    
    $
    10,711State
    
    
    (665
    )
    
    
    2,913
    
    
    
    947Foreign
    
    
    1,688
    
    
    
    
    
    
    
    Total current
    
    
    6,918
    
    
    
    17,744
    
    
    
    11,658DeferredFederal
    
    
    7,324
    
    
    
    (2,830
    )
    
    
    (3,201
    )State
    
    
    1,216
    
    
    
    30
    
    
    
    (372
    )Foreign
    
    
    (1,468
    )
    
    
    
    
    
    
    Total deferred
    
    
    7,072
    
    
    
    (2,800
    )
    
    
    (3,573
    )Total tax provision
    
    $
    13,990
    
    
    $
    14,944
    
    
    $
    8,085
  2010
    
    
    2009
    
    
    2008Federal tax computed at the statutory rate
    
    $
    14,071
    
    
    $
    13,540
    
    
    $
    7,993Stock-based compensation
    
    
    (16
    )
    
    
    3
    
    
    
    264Domestic production activities deduction
    
    
    (371
    )
    
    
    (894
    )
    
    
    (691
    )State taxes, net of federal impact
    
    
    361
    
    
    
    1,908
    
    
    
    244Acquisition costs
    
    
    2,282
    
    
    
    
    
    
    
    Foreign income tax rate differential
    
    
    (2,811
    )
    
    
    
    
    
    
    Other items, net
    
    
    474
    
    
    
    387
    
    
    
    275Income tax expense
    
    $
    13,990
    
    
    $
    14,944
    
    
    $
    8,085
 42




---



##### Table of Contents



2010
    
    
    2009Deferred tax assets:Current:Inventories
    
    $
    940
    
    
    $
    803Receivables
    
    
    378
    
    
    
    203Accruals
    
    
    4,974
    
    
    
    7,702Employee stock compensation benefits
    
    
    3,661
    
    
    
    3,383State tax
    
    
    258
    
    
    
    943Other
    
    
    380
    
    
    
    75Total current
    
    
    10,591
    
    
    
    13,109Non-current:State tax credits
    
    
    5,524
    
    
    
    3,723Retirement benefits
    
    
    4,341
    
    
    
    5,275Employee stock compensation benefits
    
    
    2,025
    
    
    
    1,498Other
    
    
    2,706
    
    
    
    168Total non-current
    
    
    14,596
    
    
    
    10,664Deferred tax liabilities:Current
    
    
    14
    
    
    
    Non-current:Retirement benefits
    
    
    4,951
    
    
    
    872Property, plant and equipment
    
    
    6,895
    
    
    
    1,291Intangibles
    
    
    127,884
    
    
    
    3,492Other
    
    
    6,076
    
    
    
    Total non-current
    
    
    145,806
    
    
    
    5,655Total deferred taxes, net
    
    $
    (120,633
    )
    
    $
    18,118Composed of:Net current deferred taxes
    
    $
    10,577
    
    
    $
    13,109Net non-current deferred taxes
    
    
    (131,210
    )
    
    
    5,009Total deferred taxes, net
    
    $
    (120,633
    )
    
    $
    18,118
   2010
    
    
    2009
    
    
    2008Balance, beginning of year
    
    $
    313
    
    
    $
    233
    
    
    $
    220Tax position related to current year:Additions
    
    
    2,586
    
    
    
    
    
    
    
    Tax positions related to prior years:Additions
    
    
    10
    
    
    
    227
    
    
    
    13Settlements
    
    
    (269
    )
    
    
    (46
    )
    
    
    Statute of limitations closures
    
    
    (29
    )
    
    
    (101
    )
    
    
    Balance, end of year
    
    $
    2,611
    
    
    $
    313
    
    
    $
    233
  43




---



##### Table of Contents



(11) Commitments and Contingencies
      2011
    
    $
    4,5742012
    
    
    3,8272013
    
    
    2,8582014
    
    
    2,0512015
    
    
    1,758Thereafter
    
    
    3,654Total
    
    $
    18,722
 (12) Segment Reporting
  2010
    
    
    2009
    
    
    2008United States
    
    $
    553,977
    
    
    $
    486,614
    
    
    $
    412,522Europe
    
    
    64,909
    
    
    
    33,743
    
    
    
    42,787Other
    
    
    61,276
    
    
    
    50,583
    
    
    
    76,183Total
    
    $
    680,162
    
    
    $
    570,940
    
    
    $
    531,492
 44




---



##### Table of Contents



2010
    
    
    2009
    
    
    2008Snack
    
    $
    321,422
    
    
    $
    188,900
    
    
    $
    88,629Culinary
    
    
    217,506
    
    
    
    241,893
    
    
    
    239,897In-shell
    
    
    31,488
    
    
    
    34,333
    
    
    
    41,885Total Retail
    
    
    570,416
    
    
    
    465,126
    
    
    
    370,411International Non-Retail
    
    
    69,206
    
    
    
    68,890
    
    
    
    101,640North American Ingredient/Food Service
    
    
    37,953
    
    
    
    34,504
    
    
    
    56,869Other
    
    
    2,587
    
    
    
    2,420
    
    
    
    2,572Total
    
    $
    680,162
    
    
    $
    570,940
    
    
    $
    531,492
  (13) Valuation Reserves and Qualifying Accounts
 Beginning
    
    Charged to
    
    Charged to
    
    End ofof Period
    
    Expense
    
    Reserve
    
    PeriodAllowance for Doubtful AccountsYear ended July 31, 2008
    
    $
    348
    
    
    $
    150
    
    
    $
    (57
    )
    
    $
    441Year ended July 31, 2009
    
    
    441
    
    
    
    269
    
    
    
    (210
    )
    
    
    500Year ended July 31, 2010
    
    
    500
    
    
    
    106
    
    
    
    
    
    
    
    606
 (14) Retirement Plans
  Compensation 
Retirement Benefits
  Pension Benefits
    
    
    Other BenefitsChange in Benefit Obligation
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Benefit obligation at beginning of year
    
    $
    20,832
    
    
    $
    15,666
    
    
    $
    2,360
    
    
    $
    4,158Service cost
    
    
    728
    
    
    
    475
    
    
    
    63
    
    
    
    103Interest cost
    
    
    1,198
    
    
    
    1,062
    
    
    
    133
    
    
    
    284Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    95Plan amendments
    
    
    (412
    )
    
    
    
    
    
    
    
    
    
    
    Actuarial loss (gain)
    
    
    2,253
    
    
    
    3,990
    
    
    
    (267
    )
    
    
    (1,991
    )Benefits paid
    
    
    (413
    )
    
    
    (361
    )
    
    
    (159
    )
    
    
    (289
    )Benefit obligation at end of year
    
    $
    24,186
    
    
    $
    20,832
    
    
    $
    2,204
    
    
    $
    2,360
 45




---



##### Table of Contents



Pension Benefits
    
    
    Other BenefitsChange in Plan Assets
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Fair value of plan assets at beginning of year
    
    $
    12,120
    
    
    $
    13,424
    
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    1,320
    
    
    
    (943
    )
    
    
    
    
    
    
    Employer contribution
    
    
    117
    
    
    
    
    
    
    
    85
    
    
    
    194Plan participants contributions
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    95Benefits paid
    
    
    (413
    )
    
    
    (361
    )
    
    
    (159
    )
    
    
    (289
    )Fair value of plan assets at end of year
    
    $
    13,144
    
    
    $
    12,120
    
    
    $
    
    
    
    $
    Funded status at end of year
    
    $
    (11,042
    )
    
    $
    (8,712
    )
    
    $
    (2,204
    )
    
    $
    (2,360
    )
  Pension Benefits
    
    
    Other Benefits2010
    
    
    2009
    
    
    2010
    
    
    2009Current liabilities
    
    $
    
    
    
    $
    
    
    
    $
    (117
    )
    
    $
    (130
    )Noncurrent liabilities
    
    
    (11,042
    )
    
    
    (8,712
    )
    
    
    (2,087
    )
    
    
    (2,230
    )Total
    
    $
    (11,042
    )
    
    $
    (8,712
    )
    
    $
    (2,204
    )
    
    $
    (2,360
    )
  Pension
    
    
    OtherBenefits
    
    
    BenefitsNet loss (gain)
    
    $
    9,120
    
    
    $
    (5,942
    )Prior service cost
    
    
    102
    
    
    
    Total
    
    $
    9,222
    
    
    $
    (5,942
    )
   2010
    
    2009Projected benefit obligation
    
    $
    24,186
    
    
    $
    20,832Accumulated benefit obligation
    
    
    21,772
    
    
    
    18,333Fair value of plan assets
    
    
    13,144
    
    
    
    12,120
  Pension Benefits
    
    
    Other BenefitsNet Periodic Benefit Cost / (Income)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Service cost
    
    $
    728
    
    
    $
    475
    
    
    $
    645
    
    
    $
    63
    
    
    $
    103
    
    
    $
    101Interest cost
    
    
    1,198
    
    
    
    1,062
    
    
    
    961
    
    
    
    133
    
    
    
    284
    
    
    
    279Expected return on plan assets
    
    
    (952
    )
    
    
    (1,059
    )
    
    
    (1,147
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    26
    
    
    
    26
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    Amortization of net (gain) loss
    
    
    517
    
    
    
    37
    
    
    
    5
    
    
    
    (824
    )
    
    
    (539
    )
    
    
    (530
    )Curtailment cost
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost / (income)
    
    $
    1,520
    
    
    $
    541
    
    
    $
    490
    
    
    $
    (628
    )
    
    $
    (152
    )
    
    $
    (150
    )
 46




---



##### Table of Contents



Assumptions
  Pension Benefits
    
    Other Benefits2010
    
    2009
    
    2008
    
    2010
    
    2009
    
    2008Discount rate
    
    
    5.28
    %
    
    
    5.80
    %
    
    
    7.00
    %
    
    
    5.00
    %
    
    
    5.80
    %
    
    
    7.00
    %Rate of compensation increase
    
    
    5.50
    
    
    
    5.50
    
    
    
    5.50
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
  Pension Benefits
    
    Other Benefits2010
    
    2009
    
    2008
    
    2010
    
    2009
    
    2008Discount rate
    
    
    5.80
    %
    
    
    7.00
    %
    
    
    6.40
    %
    
    
    5.80
    %
    
    
    7.00
    %
    
    
    6.40
    %Expected long-term return on plan assets
    
    
    8.00
    
    
    
    8.00
    
    
    
    8.00
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ARate of compensation increase
    
    
    5.50
    
    
    
    5.50
    
    
    
    5.50
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
   2010
    
    2009
    
    2008Health care cost trend rate assumed for next year
    
    
    9.5
    %
    
    
    10.0
    %
    
    
    10.5
    %Rate to which the cost trend rate assumed to
decline (the ultimate trend rate)
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %Year the rate reaches ultimate trend rate
    
    
    2020
    
    
    
    2020
    
    
    
    2020
  One
    
    OnePercentage
    
    PercentagePoint
    
    PointIncrease
    
    DecreaseEffect on total of service and interest cost
    
    $
    27
    
    
    $
    (22
    )Effect on post-retirement benefit obligation
    
    
    262
    
    
    
    (221
    )
 47




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##### Table of Contents



Plan Assets
  Fair Value Measurements at July 31, 2010Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Asset Category:Cash and cash equivalents
    
    $
    178
    
    
    $
    
    
    
    $
    178
    
    
    $
    Mutual funds
    
    
    12,966
    
    
    
    
    
    
    
    12,966
    
    
    
    Total
    
    $
    13,144
    
    
    $
    
    
    
    $
    13,144
    
    
    $
    
   Cash Flows
  Pension
    
    OtherBenefits
    
    Benefits2011
    
    $
    515
    
    
    $
    1172012
    
    
    536
    
    
    
    1322013
    
    
    3,728
    
    
    
    1432014
    
    
    633
    
    
    
    1592015
    
    
    727
    
    
    
    1632016 - 2020
    
    
    4,250
    
    
    
    798
 Defined Contribution Plan
  48




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##### Table of Contents



(15) Quarterly Financial Information (unaudited)
 First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    QuarterYear ended July 31, 2010Net sales and other revenues
    
    $
    180,641
    
    
    $
    184,169
    
    
    $
    138,734
    
    
    $
    176,618Gross profit (1)
    
    
    45,491
    
    
    
    40,578
    
    
    
    31,093
    
    
    
    43,839Operating expenses (2)
    
    
    19,789
    
    
    
    27,488
    
    
    
    32,991
    
    
    
    28,503Net income (loss)
    
    
    14,930
    
    
    
    8,814
    
    
    
    (4,273
    )
    
    
    6,740Basic earnings (loss) per share
    
    
    0.90
    
    
    
    0.53
    
    
    
    (0.22
    )
    
    
    0.31Basic shares (in thousands)
    
    
    16,269
    
    
    
    16,280
    
    
    
    19,313
    
    
    
    21,503Diluted earnings (loss) per share
    
    
    0.88
    
    
    
    0.52
    
    
    
    (0.22
    )
    
    
    0.30Diluted shares (in thousands)
    
    
    16,685
    
    
    
    16,764
    
    
    
    19,313
    
    
    
    22,097Year ended July 31, 2009Net sales and other revenues
    
    $
    195,526
    
    
    $
    150,588
    
    
    $
    111,010
    
    
    $
    113,816Gross profit (3)
    
    
    41,069
    
    
    
    33,966
    
    
    
    27,644
    
    
    
    32,917Operating expenses
    
    
    21,622
    
    
    
    22,124
    
    
    
    21,590
    
    
    
    24,420Net income
    
    
    10,696
    
    
    
    6,144
    
    
    
    2,700
    
    
    
    4,203Basic earnings per share
    
    
    0.66
    
    
    
    0.38
    
    
    
    0.16
    
    
    
    0.25Basic shares (in thousands)
    
    
    15,925
    
    
    
    15,950
    
    
    
    16,022
    
    
    
    16,188Diluted earnings per share
    
    
    0.64
    
    
    
    0.37
    
    
    
    0.16
    
    
    
    0.25Diluted shares (in thousands)
    
    
    16,273
    
    
    
    16,260
    
    
    
    16,345
    
    
    
    16,524
 
 (1)
    
    Diamond adjusted certain inventoried input costs to reflect change in market conditions.
Accordingly, cost of sales were reduced by approximately $1.1 million and $2.6 million in the
quarters ended April 30, 2010 and January 31, 2010, respectively, reflecting the impact
primarily on walnut sales recognized during the previous quarters of fiscal year 2010. There
was no change in the quarter ended July 31, 2010.(2)
    
    Includes acquisition and integration related expenses of $10.2 million and $1.3 million for
the quarters ended April 30, 2010 and July 31, 2010, respectively.(3)
    
    Diamond adjusted certain inventoried input costs to reflect change in market conditions.
Accordingly, cost of sales were reduced by approximately $10.2 million, $9.6 million and $2.5
million in the quarters ended July 31, 2009, April 30, 2009 and January 31, 2009,
respectively, reflecting the impact primarily on walnut sales recognized during the previous
quarters of fiscal year 2009. 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  49




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##### Table of Contents



Item 9A. Controls and Procedures
   MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
      /s/ Michael J. Mendes
    
    
    
    /s/ Steven M. NeilChairman of the Board, President and
Chief Executive Officer
    
    
    
    Chief Financial and Administrative OfficerOctober 5, 2010
 
 Item 9B. Other Information
  50




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
  Financial Statements.
       51




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##### Table of Contents



Financial Statement Schedules.
  Exhibits.
  Filed with
    
    Incorporated by ReferenceNumber
    
    Exhibit Title
    
    This Report
    
    Form
    
    File No.
    
    Date Filed2.01
    
    Form of Amended and Restated Agreement and Plan of
Conversion
    
    
    
    S-1
    
    333-123576
    
    July 18, 20052.02
    
    Share Purchase Agreement, dated as of February 25,
2010, by and among Diamond Foods, Inc., DFKA Ltd and
Lion/Stove Luxembourg Investment S.a.r.l.
    
    
    
    8-K/A
    
    000-51439
    
    March 1, 20103.01
    
    Certificate of Incorporation, as amended
    
    
    
    S-1
    
    333-123576
    
    July 15, 20053.02
    
    Restated Bylaws
    
    
    
    S-1
    
    333-123576
    
    March 25, 20054.01
    
    Form of Certificate for common stock
    
    
    
    S-1
    
    333-123576
    
    July 18, 200510.01
    
    Form of Indemnity Agreement between Registrant and
each of its directors and executive officers
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.02*
    
    2005 Equity Incentive Plan and forms of stock option
agreement, stock option exercise agreement and
restricted stock purchase agreement
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.03*
    
    2005 Employee Stock Purchase Plan and form of
subscription agreement
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.04*
    
    Diamond Walnut Growers, Inc. 401(k) Plan
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.05*
    
    Diamond Walnut Growers, Inc. Retirement Restoration
Plan
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.06*
    
    Diamond of California Management Pension Plan
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.07
    
    Diamond Walnut Growers, Inc. Pension Plan, as restated
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.08*
    
    Employment Agreement, dated March 25, 1997, between
Registrant and Michael J. Mendes
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.09*
    
    Description of Director Compensation Arrangements
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.10
    
    Form of Walnut Purchase Agreement
    
    
    
    S-1
    
    333-123576
    
    May 3, 200510.11
    
    Trademark Agreement, dated July 1, 2002, between
Registrant and Blue Diamond Growers
    
    
    
    S-1
    
    333-123576
    
    March 25, 200510.12
    
    Rights Agreement, dated as of April 29, 2005, by and
between Registrant and EquiServe Trust Company, N.A
    
    
    
    S-1
    
    333-123576
    
    May 3, 200510.13*
    
    Form of Change of Control and Retention Agreement
between Registrant and each of its executive officers
    
    
    
    S-1
    
    333-123576
    
    May 3, 200510.14
    
    Amendment to Diamond Foods, Inc. Pension Plan
    
    
    
    8-K
    
    000-51439
    
    September 20, 200610.15*
    
    Form of Tax Withholding Agreement
    
    
    
    8-K
    
    000-51439
    
    July 20, 200710.16*
    
    Form of Stock Withholding Agreement
    
    
    
    8-K
    
    000-51439
    
    January 10, 200710.17*
    
    Offer Letter between Steven M. Neil and Diamond
Foods, Inc.
    
    
    
    10-Q
    
    000-51439
    
    March 11, 2008
 52




---



##### Table of Contents



Filed with
    
    Incorporated by ReferenceNumber
    
    Exhibit Title
    
    This Report
    
    Form
    
    File No.
    
    Date Filed10.18*
    
    Offer Letter between Lloyd Johnson and Diamond Foods,
Inc.
    
    
    
    10-K
    
    000-51439
    
    July 31, 200810.19
    
    Credit Agreement between Diamond Foods, Inc. and Bank
of America, N.A., dated September 15, 2008
    
    
    
    8-K
    
    000-51439
    
    September 17, 200810.20*
    
    Offer Letter between Linda Segre and Diamond Foods,
Inc.
    
    
    
    10-K
    
    000-51439
    
    July 31, 200910.21
    
    Credit Agreement, dated as of February 25, 2010, by
and among Diamond Foods, Inc., the Lenders party
thereto, Bank of America, N.A., Banc of America
Securities LLC and Barclays Capital
    
    
    
    8-K/A
    
    000-51439
    
    March 1, 201021.01
    
    List of Subsidiaries of Diamond Foods, Inc.
    
    X23.01
    
    Consent of Independent Registered Public Accounting
Firm
    
    X31.01
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief
Executive Officer
    
    X31.02
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief
Financial Officer
    
    X32.01
    
    Section 1350 Certifications of Chief Executive
Officer and Chief Financial Officer
    
    X
 
 *
    
    Indicates management contract or compensatory plan or arrangement  53




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##### Table of Contents



SIGNATURES
  DIAMOND FOODS, INC.By:
    /s/ Steven M. NeilSteven M. NeilChief Financial and Administrative OfficerDate: October 5, 2010  Name
    
    Title
    
    Signature Date/s/ Michael J. Mendes

Michael J. Mendes
    
    Chairman of the Board, President and Chief
Executive Officer and Director (principal
executive officer)
    
    September 24, 2010/s/ Steven M. Neil

Steven M. Neil
    
    Chief Financial and Administrative Officer
and Director (principal financial officer
and principal accounting officer)
    
    September 24, 2010/s/ Laurence M. Baer

Laurence M. Baer
    
    Director
    
    September 24, 2010/s/ Edward A. Blechschmidt

Edward A. Blechschmidt
    
    Director
    
    September 24, 2010/s/ John J. Gilbert

John J. Gilbert
    
    Director
    
    September 24, 2010/s/ Robert M. Lea

Robert M. Lea
    
    Director
    
    September 24, 2010/s/ Dennis Mussell

Dennis Mussell
    
    Director
    
    September 24, 2010/s/ Joseph P. Silveira

Joseph P. Silveira
    
    Director
    
    September 24, 2010/s/ Glen C. Warren, Jr.

Glen C. Warren, Jr.
    
    Director
    
    September 24, 2010/s/ Robert J. Zollars

Robert J. Zollars
    
    Director
    
    September 24, 2010
 54




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Exhibit Description21.01
    
    List of Subsidiaries of Diamond Foods, Inc.23.01
    
    Consent of Independent Registered Public Accounting Firm31.01
    
    Certification of Chief Executive Officer31.02
    
    Certification of Chief Financial Officer32.01
    
    Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer
 55