##### 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 1934For the fiscal year ended
    July 31, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File No.:
    000-51439
      DIAMOND FOODS, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

20-2556965(State of
    Incorporation)

(IRS Employer Identification
    No.)1050 South Diamond
    Street

95205-7087Stockton, California

(Zip Code)(Address of Principal Executive
    Offices)   209-467-6000
 (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
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  o þ o
  Rule 12b-2).  Yes 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


11Item 2.


Properties


12Item 3.


Legal
    Proceedings


12Item 4.


Submission of
    Matters to a Vote of Security Holders


12PART IIItem 5.


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


12Item 6.


Selected Financial
    Data


13Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


14Item 7A.


Quantitative and
    Qualitative Disclosure About Market Risk


24Item 8.


Financial
    Statements and Supplementary Data


25Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


50Item 9A.


Controls and
    Procedures


50Item 9B.


Other
    Information


50PART IIIItem 10.


Directors and
    Executive Officers of the Registrant


50Item 11.


Executive
    Compensation


50Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


50Item 13.


Certain
    Relationships and Related Transactions


50Item 14.


Principal
    Accountant Fees and Services


51PART IVItem 15.


Exhibits and
    Financial Statement Schedules


51Signatures


54EXHIBIT 23.01EXHIBIT 31.01EXHIBIT 31.02EXHIBIT 32.01EXHIBIT 23.01EXHIBIT 31.01EXHIBIT 31.02EXHIBIT 32.01   2




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##### Table of Contents



CAUTIONARY
    STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
    Form 10-Q
 PART I  Item 1.
    Business  Overview
        
    Culinary.  We sell culinary nuts under the
    Diamond of California brand in grocery store baking 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.
    Snack.  We sell snack products under the
    Emerald and Harmony brands. These products which include
    roasted, glazed and flavored nuts and trail mixes packaged in
    innovative resealable containers, are typically available in
    grocery store snack and produce aisles, mass merchandisers,
    convenience stores, drug stores and other places where snacks
    are sold.
    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.
    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. 3




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Year Ended July 31, 2006


Year Ended July 31, 2005


Year Ended July 31, 2004North


Inter-





North


Inter-





North


Inter-America


national


Total


America


national


Total


America


national


TotalCulinary

$
189.4


$
12.1


$
201.5


$
164.2


$
21.0


$
185.2


$
142.0


$
15.3


$
157.3Snack


40.7







40.7



21.5







21.5



7.1







7.1In-shell


44.7



40.3



85.0



42.8



42.3



85.1



38.4



39.5



77.9Total retail


274.8



52.4



327.2



228.5



63.3



291.8



187.5



54.8



242.3Ingredient/food service


84.5



62.4



146.9



107.0



59.2



166.2



71.0



41.5



112.5Other


3.1







3.1



4.5







4.5



4.9







4.9Total

$
362.4


$
114.8


$
477.2


$
340.0


$
122.5


$
462.5


$
263.4


$
96.3


$
359.7     www.diamondfoods.com.
  Our
    Strategy
    Increase market share in the snack
    industry.
  Improve gross and operating margins.
  Expand and improve our distribution
    channels.
  Pursue external growth opportunities.
  
    introduce new products that are complementary to our existing
    product lines and are capable of being marketed through our
    existing production and distribution systems; 4




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##### Table of Contents




    build our brands value; and
    enhance our processing and distribution capabilities to lower
    our costs.  Principal
    Products
    Category

Products

Product FeaturesCulinary

 Shelled nuts

 Whole, sliced,
    chopped and ground nuts Pegboard nuts

 Package sizes
    ranging from convenient 2.25-ounce pegboard packages to
    three-pound
    bags Glazed nuts Harvest Reserve
    Premium nuts

 Recipe-ready Maximum
    freshness through resealable, atmosphere-controlled packagingSnack

 Glazed nuts

 Unique flavors,
    including Apple Cinnamon, Butter Toffee, Chocolate Brownie and
    Pecan Pie Mixed nuts

 Package sizes
    ranging from 0.5-ounce to 38-ounce in tubes, containers, and
    resealable foil bags Roasted nuts

 Innovative,
    eye-catching packaging and
    on-the-go
    containers Trail mix and
    yogurt enrobed products

 Unique blends
    and nutritionally enriched productsIn-shell

 Various
    uncracked nuts, cleaned
    and/or
    polished

 Packaged in-shell Mixed nuts

 Various package
    sizes ranging from one-pound bags to
    25-kilogram
    sacks, with nut sizes ranging from baby to jumboIngredient/ Food
    Service

 Shelled and
    processed nuts

 Whole, sliced,
    chopped and ground nuts Custom-processed
    nuts

 Food processor
    product of uniform size and consistent color Glazed nuts

 Various large
    package sizes tailored for business usage Flexible
    processing and packaging operations      5




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on-the-go
  Marketing
    point-of-purchase
    Sales and
    Distribution
      Product
    Development and Production
     6




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Competition
    Raw
    Materials and Supplies
        Trademarks
    and Patents
    Seasonality
    Employees
   7




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Item 1A.
    RISK
    FACTORS    We could
    be required to conduct product recalls; concerns with the safety
    and quality of food products could harm our sales or cause
    consumers to avoid our products.
    Our raw
    materials are subject to fluctuations in availability and
    price.
      We face
    intense competition from national and regional competitors and
    snack food industry competitors that could negatively affect our
    results of operations.
   8




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Sales to
    our top customer represented approximately 20% of our net sales.
    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 two quarters.
    Changes
    in the food industry, including changing dietary trends and
    consumer preferences, could reduce demand for our
    products.
     Developments
    in the walnut industry could threaten our position in the
    industry.
  easy-to-crack
  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 will not be able to implement our business
    strategy or operate our business effectively.
    The
    Public Health Security and Bioterrorism Preparedness and
    Response Act of 2002 could disrupt our supply of imported
    nuts.
   9




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Government
    regulation could increase our costs of production and increase
    our legal and regulatory expenditures.
    We are
    subject to risks of doing business internationally.
    
    local economic and political conditions, including disruptions
    in trading markets;
    restrictive foreign governmental actions, including restrictions
    on transfers of funds and trade protection measures, including
    export duties and quotas and customs duties and tariffs;
    changes in legal or regulatory requirements affecting foreign
    investment, loans, taxes, imports, and exports;
    currency exchange rate fluctuations which, depending upon the
    nature of the changes, may make our finished products more
    expensive compared to foreign grown products or may increase our
    cost of obtaining foreign-sourced raw materials; and
    earthquakes, tsunamis, floods or other major disasters may limit
    the supply of nuts that we purchase abroad.    Increased
    costs associated with product processing and transportation,
    such as water, electricity, natural gas and fuel, could increase
    our expenses and reduce our profitability.
   10




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A
    disruption at any of our production facilities would
    significantly decrease production, which could increase our cost
    of sales and reduce our income from operations.
    The
    acquisition of other businesses could pose risks to our
    profitability.
    We
    recently acquired certain net assets from Harmony Foods
    Corporation, and it is difficult to determine what the impact of
    the acquisition on our financial results will be.
    
    successful integration of Harmony products and personnel with
    our offerings and business;
    growth in demand for the Harmony products;
    consolidating our Lemont, Illinois operations with operations in
    Fishers, Indiana;
    assimilating acquired assets and operations into our existing
    operations infrastructure; and
    improving profitability of Harmony operations.  Our
    business could be negatively impacted if we fail to maintain
    satisfactory labor relations.
    Item 1B.
    Unresolved
    Staff Comments   11




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Item 2.
    Properties      Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    DividendsHigh


Low


DeclaredYear Ended July 31,
    2006:Fourth Quarter

$
20.04


$
13.85


$
0.03Third Quarter

$
21.80


$
16.52


$
0.03Second Quarter

$
22.00


$
15.45


$
0.03First Quarter

$
22.54


$
16.01


$
Year Ended July 31,
    2005Fourth Quarter

$
23.15


$
20.50


$
      12




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Item 6.
    Selected
    Financial Data    Years Ended July 31,2006


2005


2004


2003


2002(In thousands, except per share information)Statements of operations
    (2006)/ net proceeds data(1):Net sales and other revenues

$
477,205


$
462,548


$
359,683


$
308,450


$
282,158Patronage inventory at beginning
    of period






(101,403
)


(94,701
)


(96,508
)


(68,377
)Patronage inventory at end of
    period






67,152



101,403



94,701



96,508Net sales (2006)/Gross marketing
    pool proceeds


477,205



428,297



366,385



306,643



310,289Total cost of sales


411,809



191,387



142,592



111,483



98,495Gross Margin(2006)/Proceeds before
    operating expenses


65,396



236,910



223,793



195,160



211,794Operating expenses:Selling general and administrative


37,046



33,188



28,169



26,937



26,317Advertising


17,977



22,153



14,673



8,744



9,105Other operating expenses


3,442















Total operating expenses


58,465



55,341



42,842



35,681



35,422Income from operations (2006)
    /Operating proceeds


6,931



181,569



180,951



159,479



176,372Interest, net


295



4,433



3,403



3,282



3,353Conversion costs






697











Early extinguishment of debt






2,028











Other


310















Proceeds before income taxes


6,326



174,411



177,548



156,197



173,019Income tax expense (benefit)


(1,010
)


(8,385
)


(43
)


1,526



1,396Net income (2006)/Net proceeds

$
7,336


$
182,796


$
177,591


$
154,671


$
171,623Earnings per shareBasic

$
0.47















Diluted

$
0.47















Shares used to compute earnings
    per shareBasic


15,634















Diluted


15,653















   Years Ended July 31,2006


2005


2004


2003


2002(In thousands)Balance sheet data:Cash and cash equivalents

$
35,614


$
49,035


$
780


$
306


$
190Working capital


87,689



89,022



72,556



56,343



72,111Total assets


253,032



252,028



205,895



172,168



167,164Total debt, including short-term
    debt


20,000



22,119



79,756



61,239



61,150Total
    members/stockholders equity


110,826



99,462



59,214



44,216



48,204   13




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##### Table of Contents



Years Ended July 31,2006


2005


2004


2003


2002Other data
    (Unaudited):Walnuts sales as a percentage of
    total gross sales


64.7
%


68.7
%


70.6
%


74.1
%


76.6
%     (1)
    
    As an agricultural cooperative association, we derived revenues
    from our patronage business, which consisted of processing and
    marketing walnuts on behalf of Diamond members; and our
    non-patronage business, which consisted of purchasing,
    processing and marketing nut varieties other than walnuts. Our
    financial statements prior to fiscal year 2006 included
    statements of net proceeds prepared in accordance with GAAP for
    agricultural cooperative associations, rather than statements of
    operations. Net proceeds are amounts distributable to member
    growers from the patronage business. Net proceeds also include
    net income or loss from non-patronage business. Net proceeds do
    not include walnut acquisition costs. Effective August 1,
    2005, our financial statements have been prepared in accordance
    with GAAP for companies that are not cooperative associations.
    We were not a public company during fiscal years prior to 2006,
    thus no earnings per share data is presented for those years.
    Also see Note 1 of notes to consolidated financial
    statements.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Summary
         14




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Critical
    Accounting Policies
    Revenue Recognition.
  Inventories. (first-in,
    Valuation of Long-lived and Intangible Assets and
    Goodwill.
     15




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Employee Benefits.
  Income Taxes. Accounting for
    Income Taxes
  Accounting for Stock-Based
    Compensation. Share-Based Payment
  Supplemental
    and Non-GAAP Financial Information
      
    are unable to determine retroactively what we would have paid
    for walnuts in prior years had we not been a cooperative;
    are unable to determine whether what we would have paid for
    walnuts would approximate amounts paid to other growers by other
    processors as reflected in the CASS statistics;
    are limited by the level of detail provided by the CASS
    statistics; and
    cannot ensure that the cost of sales amounts implied by the CASS
    statistics are representative of future cost of sales amounts.   16




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Year Ended July 31,2006


2005


2004(Unaudited)(in thousands)Net sales and other revenue

$
477,205


$
462,548


$
359,683Cost of sales


409,039



413,750



303,518Gross margin


68,166



48,798



56,165Operating expenses:Selling, general and administrative


33,054



33,188



28,169Advertising


17,977



22,153



14,673Total operating expenses


51,031



55,341



42,842Operating income (loss)


17,135



(6,543
)


13,323Interest expense, net


295



4,433



3,403Other expenses


310



2,725



Income (loss) before income tax
    expense (benefit)

$
16,530


$
(13,701
)

$
9,920  17




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2006


2005


2004GAAP cost of sales

$
411,809


$
191,387


$
142,592Adjustment to remove one time
    impact of accounting for certain inventories on NRV basis


(2,770
)






Adjustment to convert walnut
    inventories from crop year pool and NRV accounting to cost basis
    accounting and to record estimated walnut cost of goods sold






222,363



160,926Non-GAAP/supplemental cost of sales

$
409,039


$
413,750


$
303,518GAAP selling, general and
    administrative expense

$
37,046Adjustment for stock based
    compensation


(3,992
)Non-GAAP selling, general and
    administrative expense

$
33,054GAAP other operating expenses

$
3,442Adjustment to remove
    restructuring, contract termination costs and expenses related
    to income tax credit


(3,442
)Non-GAAP other operating expenses

$
GAAP income (loss) before income
    tax expense (benefit)

$
6,326Adjustment for stock based
    compensation


3,992Adjustment to remove one time
    impact of accounting for certain inventories on NRV basis


2,770Adjustment to remove
    restructuring, contract termination costs and expenses related
    to income tax credit and other adjustments


3,442Non-GAAP income before income tax
    expense (benefit)


16,530GAAP income tax expense (benefit)


(1,010
)Adjustment to reflect tax effect
    of Non-GAAP adjustments


4,286Adjustment to remove benefit of
    one time income tax credits and other adjustments


3,667Non-GAAP income tax expense


6,943Non-GAAP net income

$
9,587   About our
    supplemental and non-GAAP Financial Measures
      
    We exclude share-based compensation expense, including expense
    for stock options under SFAS No. 123(R) primarily
    because they are non-cash expenses that we do not consider part
    of ongoing operating results when assessing the performance of
    the business, and excluding these expenses facilitates
    comparison of results for 18




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fiscal 2006 to prior periods. We believe that because
    share-based compensation is non-cash in nature, excluding these
    amounts from non-GAAP measures provides a more focused view
    of the business operations and improves comparability across
    periods. Share-based compensation is difficult to forecast,
    because the magnitude of the charge depends upon the volume and
    timing of equity grants  which are unpredictable and
    can vary dramatically from period to period  and
    other factors such as interest rates, the trading price and
    volatility of our common stock and employee terminations.  
    We exclude a one-time charge that we incurred in connection with
    our conversion. As an agricultural cooperative association, we
    were required to use net realizable value (NRV) accounting for
    certain inventories; as a for-profit corporation, we are
    required to use the lower of cost or market method to value all
    inventories. As a result of using NRV accounting, certain
    inventories were valued higher than they would have been under
    the lower of cost or market method. Therefore, as these
    inventories were sold, the amount charged to cost of goods sold
    was higher. We excluded this charge because it is non-recurring
    and is not indicative of ongoing operations.
    We exclude the following other operating expenses:
    1) restructuring expenses which are principally related to
    the closure of our Lemont facility and the costs incurred to
    consolidate operations in our Fishers facility; 2) the
    estimated costs of terminating two contracts, one with PG&E
    associated with our cogeneration plant and one associated with a
    former distributor for Germany; and 3) the professional
    service fees associated with the California Enterprise Zone tax
    credits for years prior to 2006 discussed below. Our management
    believes it is useful to investors to exclude these amounts
    since they are non-recurring in nature and are not reflective of
    the operating results of Diamond on an on-going basis.
    We exclude the income tax benefit associated with California
    Enterprise Zone tax credits for years prior to 2006 amounting to
    approximately $5.8 million ($3.8 million net of
    Federal income tax impact) since these credits have a one time
    impact. Our management believes its on-going effective tax rate
    will be approximately 42% and reflects such tax rate in its
    non-GAAP financial information.
    We include the estimated cost of walnuts received from members
    in 2005 and 2004. Our management believes that information is
    useful to investors because our financial statements for periods
    prior to July 31, 2005 did not include walnut acquisition
    costs which are now included in our financial statements.
    Accordingly, gross margins after this date are materially
    different than those reported in the historical cooperative
    financial statements.    Results
    of Operations
  2006
    Compared to 2005
   19




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% Change from2006


2005


2005 to 2006North American Retail (1)

$
274,879


$
228,522



20.3
%International


114,781



122,514



(6.3
)North American Ingredient/Food
    Service


84,475



107,029



(21.1
)Other


3,070



4,483



(31.5
)Total

$
477,205


$
462,548



3.2
%     (1)
    
    North American Retail represents sales of our culinary, snack
    and in-shell nuts in North America.      2006


2005Walnuts


64.7
%


68.7
%Other nuts


35.3
%


31.3
%Total


100.0
%


100.0
%   Gross Margin.
  Selling, General and Administrative.
    Advertising.
  Other operating expenses.
  Interest.
 20




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##### Table of Contents



Income Taxes.
  2005
    Compared to 2004
    % Change from2005


2004


2004 to 2005North American Retail(1)

$
228,522


$
187,451



21.9
%International


122,514



96,312



27.2
%North American Ingredient/Food
    Service


107,029



70,991



50.8
%Other


4,483



4,929



(9.0
)%Total

$
462,548


$
359,683



28.6
%     (1)
    
    North American Retail represents sales of our culinary, snack
    and in-shell nuts in North America.      2005


2004Walnuts


68.7
%


70.6
%Other nuts


31.3
%


29.4
%Total


100.0
%


100.0
%   Proceeds Before Operating Expenses.
  Selling, General and Administrative.
 21




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##### Table of Contents



Advertising.
  Interest.
  Income Taxes.
  Net Proceeds.
  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 YearsLong-term obligations(a)

$
20.0


$



$



$
8.0


$
12.0Interest on long-term obligations


8.0



1.5



3.0



2.3



1.2Operating leases, net of sublease
    income


16.0



2.1



4.0



3.3



6.6Purchase commitments(b)


1.6



1.6











Retirement benefits(c)


23.8



1.4



3.9



4.4



14.1Total

$
69.4


$
6.6


$
10.9


$
18.0


$
33.9     (a)
    
    Excludes $2.1 million in total letters of credit
    outstanding related to normal business transactions.(b)
    
    Commitments to purchase new equipment. Excludes purchase
    commitments under Walnut Purchase Agreements.(c)
    
    See note 13 of notes to consolidated financial statements.  Off-Balance
    Sheet Arrangements
    Effects
    of Inflation
   23




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Recent
    Accounting Pronouncements
  Accounting
    for Inventory Costs
        Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Market Risk.
  Commodities Risk.
  Interest Rate Risk.
   24




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Item 8.
    Financial
    Statements and Supplementary Data  MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rule 13a-15(f)
        /s/  Michael J. Mendes

/s/  Seth HalioPresident and

Executive Vice President andChief Executive officer

Chief Financial Officer    25




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control  Integrated Framework
       26




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##### Table of Contents



Internal
    Control  Integrated Framework Internal Control 
    Integrated Framework
  Share-Based Payment
      27




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##### Table of Contents



DIAMOND
    FOODS, INC.
  CONSOLIDATED
    BALANCE SHEETS
  July 31,2006


2005(In thousands, except share and per share information)ASSETSCurrent assets:Cash and cash equivalents

$
35,614


$
49,035Trade receivables, less allowance
    for doubtful accounts of $598 and $515, at July 31, 2006
    and 2005, respectively


49,536



42,246Inventories


99,177



111,270Deferred income taxes


4,578



2,726Property held for sale


1,728



Prepaid expenses and other current
    assets


7,329



5,169Total current assets


197,962



210,446Property, plant and equipment


34,291



27,658Investment in CoBank


2,191



2,269Deferred income taxes


4,812



5,133Goodwill


5,077



Identifiable intangible assets, net


3,941



Other assets


4,758



6,522Total assets

$
253,032


$
252,028LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Notes payable  members

$



$
2,119Payable to members for membership
    interest






17,329Accounts payable and accrued
    liabilities


28,371



29,422Payable to growers


81,902



72,554Total current liabilities


110,273



121,424Long-term obligations


20,000



20,000Other liabilities


11,933



11,142Commitments 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;15,737,194 and
    15,555,506 shares issued and outstanding at July 31,
    2006 and 2005, respectively


16



16Additional paid-in capital


93,962



88,491Accumulated other comprehensive
    loss


(36
)


Retained earnings


16,884



10,955Total stockholders equity


110,826



99,462Total liabilities and
    stockholders equity

$
253,032


$
252,028    28




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  CONSOLIDATED
    STATEMENT OF OPERATIONS (2006)
 CONSOLIDATED
    STATEMENTS OF NET PROCEEDS (2005 AND 2004)
  Year Ended July 31,2006


2005


2004(In thousands, except per share information)Net sales and other revenues

$
477,205


$
462,548


$
359,683Patronage inventory at beginning
    of period






(101,403
)


(94,701
)Patronage inventory at end of
    period






67,152



101,403Net sales (2006)/Gross marketing
    pool proceeds (2005 and 2004)


477,205



428,297



366,385Cost of sales


409,039



191,387



142,592Cost of sales  NRV
    amount


2,770







Total cost of sales


411,809



191,387



142,592Gross margin (2006)/Proceeds
    before operating expenses (2005 and 2004)


65,396



236,910



223,793Operating expenses:Selling, general and
    administrative (including $3,992 of stock-based compensation in
    2006)


37,046



33,188



28,169Advertising


17,977



22,153



14,673Other operating expenses


3,442







Total operating expenses


58,465



55,341



42,842Income from operations
    (2006)/Operating proceeds (2005 and 2004)


6,931



181,569



180,951Interest expense, net


295



4,433



3,403Conversion costs






697



Other expenses


310







Early extinguishments of debt






2,028



Income before income tax benefit
    (2006)/Proceeds before income tax benefit
    (2005 and 2004)


6,326



174,411



177,548Income tax benefit


(1,010
)


(8,385
)


(43
)Net income (2006)/Net proceeds
    (2005 and 2004)

$
7,336


$
182,796


$
177,591Earnings per shareBasic

$
0.47Diluted

$
0.47Shares used to compute earnings
    per shareBasic


15,634Diluted


15,653    29




---



##### Table of Contents



DIAMOND
    FOODS, INC
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS/MEMBERS EQUITY
  Accumulated


TotalAdditional


Working





Other


Stockholders/Common Stock


Paid-In


Capital


Retained


Comprehensive


MembersShares


Amount


Capital


Retains


Earnings


Loss


Equity(In thousands, except share information)Balance, July 31,
    2003





$



$



$
26,676


$
17,540


$



$
44,216Nonpatronage loss


















(40
)






(40
)Working capital retains














41,714











41,714Revolvement of working capital
    retains














(26,676
)










(26,676
)Balance, July 31,
    2004














41,714



17,500







59,214Nonpatronage loss


















(6,545
)






(6,545
)Working capital retains














38,500











38,500Initial Public Offering of common
    stock, net of underwriting and offering expenses and amounts due
    former members electing cash in lieu of common stock


15,555,506



16



88,491



(38,500
)










50,007Revolvement of working capital
    retains














(41,714
)










(41,714
)Balance, July 31,
    2005


15,555,506



16



88,491







10,955







99,462Shares issued under
    Employee Stock Purchase Plan (ESPP)


57,872







802















802Stock compensation expense


123,816







3,992















3,992ESPP disqualifying dispositions










37















37Conversion of Long Term Incentive
    Plan










640















640Dividends paid


















(1,407
)






(1,407
)Comprehensive income


























Net income


















7,336







7,336Other comprehensive loss






















(36
)


(36
)Total comprehensive Income


























7,300Balance, July 31,
    2006


15,737,194


$
16


$
93,962


$



$
16,884


$
(36
)

$
110,826    30




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended July 31,2006


2005


2004(In thousands)CASH FLOWS FROM OPERATING
    ACTIVITIESNet income (2006)/Net proceeds
    (2005 and 2004)

$
7,336


$
182,796


$
177,591Adjustments to reconcile net income
    (2006)/net proceeds (2005 and 2004) to net cash provided by
    operating activities:Depreciation and amortization


5,532



4,717



4,896Deferred taxes


(1,531
)


(6,593
)


Tax benefit related to stock-based
    compensation plans


37







Excess tax benefit from ESPP
    transactions


(37
)






Stock-based compensation


3,992







Loss on disposal of equipment


442







Early extinguishment of debt






233CoBank patronage dividend paid in
    stock


(47
)


(119
)


(75
)Changes in assets and liabilities
    (net of effects of acquisition):Trade receivables


(4,805
)


(9,470
)


(15,131
)Inventories


17,278



24,346



(19,327
)Prepaid expenses and other current
    assets


(1,957
)


(1,482
)


612Other assets


1,764



1,310



(95
)Accounts payable and accrued
    liabilities


(4,419
)


8,106



4,460Payable to growers


9,348







Other liabilities


1,027



811



947Adjustment to current member
    account for change in prepaid inventory costs






7,216



(52
)Cash payments to members






(201,415
)


(167,411
)Net cash provided by (used in)
    operating activities


33,960



10,456



(13,585
)CASH FLOWS FROM INVESTING
    ACTIVITIES:Capital revolvement from CoBank


126



100



372Proceeds from sales of property,
    plant and equipment


49







Acquisition of Harmony


(19,186
)






Purchase of property, plant, and
    equipment


(8,352
)


(10,500
)


(4,830
)Net cash used in investing
    activities


(27,363
)


(10,400
)


(4,458
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Note payable borrowings
    (repayments), net


(2,119
)


(42,173
)


28,517Net proceeds from initial public
    offering






105,836



Payment to members of membership
    interest


(17,329
)






Issuance of common stock under
    stock plans


802







Dividends paid


(1,407
)






Excess tax benefit from ESPP
    transactions


37







Additions to long-term obligation






10,000



Payments of long-term obligations






(25,464
)


(10,000
)Net cash provided by (used in)
    financing activities


(20,016
)


48,199



18,517Net increase (decrease) in cash
    and cash equivalents


(13,421
)


48,255



474Cash and cash
    equivalents:Beginning of period


49,035



780



306End of period

$
35,614


$
49,035


$
780Supplemental disclosure of cash
    flow information:Cash paid (received) during the
    period for:Interest

$
696


$
4,580


$
3,226Income taxes


2,178



(296
)


(41
)Non-cash investing activities:Liabilities assumed in Harmony
    acquisition


3,404







Accrued capital expenditures


380



420



Non-cash financing activities:Net proceeds from initial public
    offering payable to members






17,329



Accrued liability exchanged for
    options to acquire common stock


640







    31




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 July 31, 2006, 2005 and 2004
 (In thousands, except share and per share information)
  (1)
    Conversion
    and Initial Public Offering    (2)
    Organization
    and Significant Accounting Policies  Business
    Basis
    of Presentation
  (first-in,
  Use of
    Estimates
     32




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Certain
    Risks and Concentrations
    Principles
    of Consolidation
    Cash
    and Cash Equivalents
    Inventories
  (first-in,
  Crop
    Accounting Policy
    Investment
    in CoBank
    Property,
    Plant and Equipment
    Slotting
    and Other Contractual Arrangements
   33




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Impairment
    of Long-Lived and Intangible Assets and Goodwill
  Accounting for the Impairment or Disposal of Long-lived
    Assets. Goodwill and Other Intangible Assets.
    Revenue
    Recognition
    Promotion
    and Advertising Costs
  No. 01-09, Accounting for Consideration Given by a Vendor to a
    Customer.
  Shipping
    and Handling Costs
    Income
    Taxes
     34




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Fair
    Value of Financial Instruments
    Foreign
    Currency Hedging
  Derivative Financial
    Instruments and Hedging.
    At July 31, 2005

$
Net change on cash flow hedges


(60
)Reclassification to other income


24At July 31, 2006

$
(36
)   Stock-Based
    Compensation
  Share-Based Payment, Accounting for
    Stock-Based Compensation. Accounting for Stock Issued to
    Employees,
  Recent
    Accounting Pronouncements
  Accounting
    for Inventory Costs
  Accounting Changes and Error
    Corrections
 35




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting for Certain Hybrid Financial
    Instruments
  Accounting
    for Uncertainty in Income Taxes Accounting for Income Taxes.
  (3)
    Stock-Based
    Compensation          Accounting for Stock Issued to Employees.
 36




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting for
    Stock-Based Compensation-Transition and Disclosure, an amendment
    of FASB Statement No. 123 Accounting for Stock-Based Compensation,
  2006Net income, as reported

$
7,336Total stock-based compensation
    recorded in the statement of operations, net of related tax
    effects


2,388Total stock-based compensation
    expense determined under fair value based method for all awards,
    net of related tax effects


(3,514
)Pro forma net income

$
6,210Net income per common equivalent
    share:Basic  as reported

$
0.47Basic  pro forma

$
0.40Diluted  as reported

$
0.47Diluted  pro forma

$
0.40     Stock Option Awards:
  2006Average expected life, in years


6Expected volatility


27.5
%Risk-free interest rate


4.61
%Dividend rate


0.67
%  37




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     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, 2005


1,123


$
17.00Granted


657



18.15Exercised






Cancelled


(132
)


17.44Outstanding at July 31, 2006


1,648



17.43



9.2


$
Exercisable at July 31, 2006


341



17.00



9.0


$
       Weighted AverageNumber of


Grant Date Fair ValueShares


per Share(In thousands)Nonvested at July 31, 2005


1,123


$
5.18Granted


657



6.13Vested


(341
)


5.18Cancelled


(132
)


5.66Nonvested at July 31, 2006


1,307



5.80     Restricted Stock Awards:
  Weighted AverageNumber of


Grant Date Fair ValueShares


per Share(In thousands)Outstanding at July 31, 2005


598


$
17.00Granted


149



18.94Vested


(193
)


17.00Cancelled


(25
)


17.65Outstanding at July 31, 2006


529



17.52       Employee Stock Purchase Plan:
 38




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2006Average expected life, in years


0.75Expected volatility


27.5
%Risk-free interest rate


4.30
%Dividend rate


0.71
%     (4)
    Earnings
    Per Share    (5)
    Acquisition
    of Assets of Harmony Foods Corporation    Business
    Combinations.
    Accounts receivable

$
2,485Inventory


5,185Prepaid expenses


203Property, plant and equipment


5,640Customers contracts and related
    relationships


2,400Trademark and trade names


1,600Goodwill


5,077Liabilities assumed


(3,404
)Purchase Price

$
19,186  39




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Identifiable
    intangible assets
        Goodwill
    2006Goodwill

$
5,077Intangible assets subject to
    amortization (net of accumulated amortization of $59)


3,941Total

$
9,018   Pro
    Forma  Financial Information
    2006


2005Net sales

$
502,503


$
522,649Net loss

$
(397
)

$
(14,667
)Diluted earnings per share

$
(0.03
)


*     *
    
    As a cooperative association prior to the conversion, Diamond
    had no shares outstanding; therefore earnings per share is not
    meaningful.  (6)
    Notes Payable
    and Long-Term Obligations     40




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        (7)
    Balance
    sheet items    July 31,2006


2005Raw materials and supplies

$
32,484


$
33,949Work in process


16,148



30,732Finished goods


50,545



46,589Total

$
99,177


$
111,270     July 31,2006


2005Accounts payable

$
15,819


$
15,679Accrued salaries and benefits


4,496



3,686Accrued promotion


3,477



5,241Accrued other


4,579



4,816Total

$
28,371


$
29,422   (8)
    Property,
    Plant and Equipment    July 31,2006


2005Land and improvements

$
1,569


$
1,955Buildings and improvements


17,451



19,421Machinery, equipment and software


86,182



74,407Construction in progress


5,898



6,270Total


111,100



102,053Less accumulated depreciation


(76,809
)


(74,395
)Property, plant and equipment, net

$
34,291


$
27,658  41




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (9)
    Income
    Taxes    Year Ended July 31,2006


2005


2004CurrentFederal

$
688


$
(1,684
)

$
(107
)State


(167
)


(108
)


(38
)Deferred


(1,531
)


(6,593
)


102Total

$
(1,010
)

$
(8,385
)

$
(43
)       Year Ended July 31,2006


2005


2004Federal tax computed at the
    statutory rate

$
2,214


$
61,044


$
60,360Benefit for payments to members






(66,322
)


(60,593
)Stock-based compensation


114







Change in valuation allowance






(19
)


264Recognition of net deferred tax
    assets resulting from the conversion, net of valuation allowance
    of $799






(1,912
)


State taxes, net of federal impact


(3,503
)


(746
)


(76
)Other items, net


165



(430
)


2Income tax benefit

$
(1,010
)

$
(8,385
)

$
(43
)  42




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     At July 31, 2006


At July 31, 2005Valuation








ValuationGross


Allowance


Net


Gross


Allowance


NetDeferred tax assets:Current:Inventories

$
873


$



$
873


$
1,178


$



$
1,178Receivables


240







240



205







205Accruals


2,881







2,881



1,928







1,928Net operating loss


168







168











Other


416







416



100







100Total current


4,578







4,578



3,411







3,411Non-current:Net operating loss














4,207







4,207Enterprise Zone Credits


3,692







3,692











AMT Credits


67







67











Retirement benefits


4,636



(1,044
)


3,592



4,512



(1,044
)


3,468Total non-current


8,395



(1,044
)


7,351



8,719



(1,044
)


7,675Deferred tax liabilities:Current:Retirement benefits














685







685Non-current:Retirement benefits


2,355







2,355



2,386







2,386Property, plant and equipment


157







157



156







156Other


27







27











Total non-current


2,539







2,539



2,542







2,542Total deferred income taxes

$
10,434


$
(1,044
)

$
9,390


$
8,903


$
(1,044
)

$
7,859Composed of:Net current deferred income taxes









$
4,578










$
2,726Net long-term deferred income taxes










4,812











5,133$
9,390










$
7,859       (10)
    Commitments
    and Contingencies   43




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            2007

$
2,0732008


2,0862009


1,8852010


1,8892011


1,455Thereafter


6,570Total

$
15,958   (11)
    Segment
    Disclosures    2006


2005


2004United States

$
342,369


$
322,461


$
249,494Europe


57,734



70,526



56,462Other


77,102



69,561



53,727Total

$
477,205


$
462,548


$
359,683    44




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2006


2005


2004North American Retail

$
274,879


$
228,522


$
187,451International


114,781



122,514



96,312North American Ingredient/Food
    Service


84,475



107,029



70,991Other


3,070



4,483



4,929Total

$
477,205


$
462,548


$
359,683   (12)
    Valuation
    Reserves and Qualifying Accounts  AmountBeginning


Charged


Charged to


End ofof Period


to Expense


Reserve


PeriodAllowance for Doubtful
    AccountsYear ended July 31, 2004

$
776


$
200


$
(93
)

$
883Year ended July 31, 2005


883



196



(564
)


515Year ended July 31, 2006


515



204



(121
)


598Deferred Tax Asset Valuation
    AllowanceYear ended July 31, 2004






264







264Year ended July 31, 2005


264



780







1,044Year ended July 31, 2006


1,044











1,044   (13)
    Retirement
    Plans      Pension Benefits


Other BenefitsChange in Benefit Obligation:

2006


2005


2006


2005Benefit obligation at beginning of
    year

$
34,901


$
30,417


$
10,575


$
10,038Service cost


2,234



2,013



253



273Interest cost


1,726



1,845



543



589Plan participants
    contributions










287



185Actuarial loss (gain)


(3,417
)


4,426



(5,756
)


103Benefits paid


(2,863
)


(3,800
)


(623
)


(613
)Benefit obligation at end of year

$
32,581


$
34,901


$
5,279


$
10,575   45




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Pension Benefits


Other BenefitsChange in Plan Assets:

2006


2005


2006


2005Fair value of plan assets at
    beginning of year

$
30,522


$
29,099


$



$
Actual return on plan assets


1,386



3,733







Employer contributions






1,490



336



428Plan participants
    contributions










287



185Benefits paid


(2,863
)


(3,800
)


(623
)


(613
)Fair value of plan assets at end
    of year

$
29,045


$
30,522


$



$
Funded status (under funded)

$
(3,535
)

$
(4,379
)

$
(5,279
)

$
(10,575
)Unrecognized net actuarial loss
    (gain)


10,743



14,055



(4,606
)


1,170Unrecognized prior service cost
    (benefit)


(2,995
)


(3,281
)






Net amount recognized

$
4,213


$
6,395


$
(9,885
)

$
(9,405
)     Pension Benefits


Other Benefits2006


2005


2006


2005Prepaid benefit cost

$
5,857


$
7,688


$



$
Accrued benefit liability


(1,644
)


(1,293
)


(9,885
)


(9,405
)Net amount recognized

$
4,213


$
6,395


$
(9,885
)

$
(9,405
)       2006


2005Projected benefit obligation

$
2,395


$
2,141Accumulated benefit obligation


1,556



1,328     Pension Benefits


Other Benefits2006


2005


2004


2006


2005


2004Service cost

$
2,234


$
2,013


$
1,688


$
253


$
273


$
300Interest cost


1,726



1,845



1,720



543



589



603Expected return on plan assets


(2,300
)


(2,299
)


(2,190
)










Amortization of prior service cost


(287
)


(287
)


(287
)










Amortization of net loss


809



699



507



21



35



48Net periodic benefit cost

$
2,182


$
1,971


$
1,438


$
817


$
897


$
951    46




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Assumptions
    Pension Benefits


Other Benefits2006


2005


2004


2006


2005


2004Discount rate


5.91
%


5.25
%


6.00
%


6.00
%


5.25
%


6.00
%Rate of compensation increase


5.50



5.50



5.50



N/A



N/A



N/A     Pension Benefits


Other Benefits2006


2005


2004


2006


2005


2004Discount rate


5.25
%


6.00
%


6.50
%


5.25
%


6.00
%


6.50
%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       2006


2005


2004Health care cost trend rate
    assumed for next year


8.0
%


8.5
%


9.0
%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


2013



2013



2013     One


OnePercentage


PercentagePoint


PointIncrease


DecreaseEffect on total of service and
    interest cost

$
149


$
(118
)Effect on postretirement benefit
    obligation


786



(645
)   Plan
    Assets
    2006


2005


2004Asset category:Equity securities


78.5
%


75.0
%


74.7
%Debt securities


20.7



25.0



25.3Cash and equivalents


0.8



0.0



0.0Total


100.0
%


100.0
%


100.0
%  47




---



##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Cash
    Flows
    Pension


OtherBenefits


Benefits2007

$
1,145


$
2402008


1,270



2342009


2,156



2662010


1,300



2732011


2,549



3062012  2016


12,271



1,750   Medicare
    Modernization Act
    Defined
    Contribution Plan
    Termination
    of Defined Benefit Plan
   48




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##### Table of Contents



DIAMOND
    FOODS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (14)
    Other
    Operating Expenses      (15)
    Subsequent
    Event    (16)
    Quarterly
    Financial Information (unaudited)  First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterYear ended July 31,
    2006Net sales and other revenues

$
178,060


$
124,157


$
67,798


$
107,190Gross margin


22,811



18,570



8,428



15,587Operating expenses


15,784



13,291



13,567



15,823Net income (loss)


4,074



3,077



(3,175
)


3,360Diluted earnings per share


0.26



0.20



(0.20
)


0.21Diluted shares (in thousands)


15,634



15,587



15,668



15,722Year ended July 31,
    2005Net sales and other revenues

$
172,758


$
112,488


$
79,633


$
97,669Proceeds before operating expenses


209,225



12,929



8,736



6,020Operating expenses


17,639



14,661



11,303



11,738Net proceeds (loss)


191,293



(2,252
)


(3,232
)


(3,013
)Year ended July 31,
    2004Net sales and other revenues

$
142,236


$
90,832


$
56,425


$
70,190Proceeds before operating expenses


189,962



16,123



8,689



9,019Operating expenses


10,550



14,236



9,793



8,263Net proceeds (loss)


176,630



1,137



(341
)


165  49




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rule 13a-15(e)
    Rule 13a-15(f)
  Item 9B.
    Other
    Information   PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    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   50




---



##### Table of Contents



Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Financial Statements.
              Financial Statement Schedules.
    Exhibits.
    Filed with

Incorporated by ReferenceNumber

Exhibit Title

This 10-K

Form

File No.

Date Filed2
.01

Form of Amended and Restated
    Agreement and Plan of Conversion



Form S-1

333-123576

July 18, 20053
.01

Certificate of Incorporation, as
    amended



Form S-1

333-123576

July 15, 20053
.02

Restated Bylaws.



Form S-1

333-123576

March 25, 20054
.01

Form of Certificate for common
    stock



Form S-1

333-123576

July 18, 200510
.01

Form of Indemnity Agreement
    between Registrant and each of its directors and executive
    officers



Form 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



Form S-1

333-123576

March 25, 200510
.03*

2005 Employee Stock Purchase Plan
    and form of subscription agreement



Form S-1

333-123576

March 25, 200510
.04*

Diamond Walnut Growers, Inc.
    401(k) Plan



Form S-1

333-123576

March 25, 200510
.05*

Diamond Foods, Inc. Annual Bonus
    Program



Form 8-K

000-51439

October 25, 200510
.06*

Diamond Walnut Growers, Inc.
    Retirement Restoration Plan



Form S-1

333-123576

March 25, 2005 51




---



##### Table of Contents



Filed with

Incorporated by ReferenceNumber

Exhibit Title

This 10-K

Form

File No.

Date Filed10
.07*

Diamond of California Management
    Pension Plan



Form S-1

333-123576

March 25, 200510
.08

Diamond Walnut Growers, Inc.
    Pension Plan, as restated



Form S-1

333-123576

March 25, 200510
.09*

Employment Agreement, dated
    March 25, 1997, between Registrant and Michael J. Mendes



Form S-1

333-123576

March 25, 200510
.10*

Description of Compensation
    Arrangement for Gary K. Ford



Form S-1

333-123576

March 25, 200510
.11*

Offer Letter, dated
    October 11, 2004, for Seth Halio



Form S-1

333-123576

March 25, 200510
.12*

Description of Compensation
    Arrangement for Samuel J. Keiper



Form S-1

333-123576

March 25, 200510
.13*

Description of Director
    Compensation Arrangements



Form S-1

333-123576

March 25, 200510
.14

Preferred Securities Purchase
    Agreement and accompanying agreements, dated August 20,
    1998, between Registrant, DW Capital Trust I and The
    Prudential Insurance Company of America, as amended



Form S-1

333-123576

March 25, 200510
.15

Note Purchase Agreement,
    dated July 17, 2001, between Registrant, Teachers Insurance
    and Annuity Association of America and Connecticut General Life
    Insurance Company, as amended



Form S-1

333-123576

March 25, 200510
.16

Intercreditor Agreement, dated
    September 11, 2002, between Bank of the West and CoBank, ACB



Form S-1

333-123576

March 25, 200510
.17

Master Loan Agreement, dated
    February 23, 2004, between Registrant and CoBank, ACB, as
    amended



Form S-1

333-123576

March 25, 200510
.18

Credit Agreement, dated
    December 2, 2004, between Registrant and Bank of the West



Form S-1

333-123576

March 25, 200510
.19

Form of Walnut Purchase Agreement.



Form S-1

333-123576

May 3, 200510
.20

Trademark Agreement, dated
    July 1, 2002, between Registrant and Blue Diamond Growers



Form S-1

333-123576

March 25, 200510
.21

Rights Agreement, dated as of
    April 29, 2005, by and between Registrant and EquiServe
    Trust Company, N.A.



Form S-1

333-123576

May 3, 200510
.22

Second Amendment to
    Note Purchase Agreement, dated April 8, 2005, between
    Registrant, Teachers Insurance and Annuity Association of
    America and Pru & Co.



Form S-1

333-123576

May 3, 200510
.23

Consent of Bank of the West, dated
    March 17, 2005, relating to Credit Agreement, dated
    December 2, 2004, between Registrant and Bank of the West



Form S-1

333-123576

May 3, 2005 52




---



##### Table of Contents



Filed with

Incorporated by ReferenceNumber

Exhibit Title

This 10-K

Form

File No.

Date Filed10
.24

Form of Change of Control and
    Retention Agreement between Registrant and each of its executive
    officers



Form S-1

333-123576

May 3, 200510
.25

Waiver regarding 7.20% Cumulative
    Recourse Offered Preferred Securities, dated as of June 1,
    2005, by Wilmington Trust Co., as Property Trustee and Delaware
    Trustee of the DW Capital Trust I, The Prudential Insurance
    Company of America and Diamond Walnut Growers, Inc.



Form S-1

333-123576

July 15, 200510
.26

Amendment of Credit Agreement
    dated December 2,2004 between Registrant and Bank of the
    West



Form 8-K

000-51439

September 8, 200610
.27

Amendment to Diamond Foods, Inc.
    Pension Plan



Form 8-K

000-51439

September 20, 200621
.01

List of Subsidiaries



Form S-1

333-123576

March 25, 200523
.01

Consent of Independent Registered
    Public Accounting Firm

X31
.01

Certification of Chief Executive
    Officer

X31
.02

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




---



##### Table of Contents



SIGNATURES    DIAMOND FOODS, INC.
  By:
    /s/Seth
    Halio  Seth Halio
  Chief Financial Officer
    Name

Title

Signature Date/s/  Michael
    J. MendesMichael
    J. Mendes

President and Chief Executive
    Officer and Director (principal executive officer)

October 12, 2006/s/  Seth
    HalioSeth
    Halio

Executive Vice President, Chief
    Financial Officer (principal financial officer
    and principal accounting officer)

October 12, 2006/s/  Laurence
    M. BaerLaurence
    M. Baer

Director

October 12, 2006/s/  John
    J. GilbertJohn
    J. Gilbert

Director

October 12, 2006/s/  Robert
    M. LeaRobert
    M. Lea

Director

October 12, 2006/s/  Dennis
    MussellDennis
    Mussell

Director

October 12, 2006/s/  Steven
    M. NeilSteven
    M. Neil

Director

October 12, 2006/s/  Joseph
    P. SilveiraJoseph
    P. Silveira

Director

October 12, 2006/s/  Glen
    C. Warren, Jr.Glen
    C. Warren, Jr.

Director

October 12, 2006/s/  Robert
    J. ZollarsRobert
    J. Zollars

Director

October 12, 2006  54




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Exhibit Description23
.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