Diamond focuses on financial woes, walnut costs
March 13, 2012
by Eric Schroeder
SAN FRANCISCO — Diamond Foods, Inc. has retained Dean Bradley Osborne Partners L.L.C. as a financial adviser to assist the company in addressing its financial reporting and restatement issues.
In early February, the company announced the results of an internal investigation and that it would be restating its earnings for fiscal years 2010 and 2011 due to certain crop payments made to walnut growers in August 2010 and September 2011. As a result of the investigation, Michael J. Mendes, chief executive officer, and Steven M. Neil, chief financial officer, left the company.
“Since Feb. 8, 2012, Diamond Foods has taken a number of actions to address the issues facing the company and to better position Diamond for the opportunities we see going forward,” said Rick Wolford, interim president and chief executive officer. “The company, working with Mike Murphy and his team from Alix Partners, is progressing well in working with our banks and addressing financial reporting and restatement issues.”
The company did not provide a time-frame for when it will restate its earnings.
Efforts also are under way to restore and strengthen relationships with walnut growers, according to the company. Global demand for walnuts has led to market prices 35% higher than for the previous year’s crop. The company said that as it refocuses on its walnut supply it intends to be competitive in its walnut sourcing activities and it expects its walnut-related cost of sales to rise in line with current walnut pricing trends. Diamond Foods said it will take pricing to address the issue.