1320947--10/5/2010--Diamond_Foods

related topics

{cost, regulation, environmental}

{debt, indebtedness, cash}

{competitive, industry, competition}

{acquisition, growth, future}

{cost, operation, labor}

{stock, price, share}

{stock, price, operating}

{customer, product, revenue}

{provision, law, control}

{control, financial, internal}

{product, market, service}

{condition, economic, financial}

{tax, income, asset}

{product, liability, claim}

{operation, international, foreign}

{personnel, key, retain}

{gas, price, oil}

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. 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. 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. 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. 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. A material impairment in the carrying value of acquired goodwill or other intangible assets could negatively affect our consolidated operating results and net worth. 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. 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. 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 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. Anti-takeover provisions could make it more difficult for a third party to acquire us.

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1320947--10/5/2010--Diamond_Foods_Inc