1320947--10/12/2007--Diamond_Foods

related topics

{cost, regulation, environmental}

{product, market, service}

{gas, price, oil}

{cost, operation, labor}

{customer, product, revenue}

{competitive, industry, competition}

{operation, international, foreign}

{personnel, key, retain}

{stock, price, operating}

{acquisition, growth, future}

We face intense competition from national and regional competitors and snack food industry competitors that could negatively affect our results of operations. Sales to our top customer represented approximately 19% 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. 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. Government regulation could increase our costs of production and increase our legal and regulatory expenditures. We are subject to risks of doing business internationally. Increased costs associated with product processing and transportation, such as water, electricity, natural gas and fuel, could increase our expenses and reduce our profitability. 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.

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1320947--10/12/2007--Diamond_Foods_Inc