I was excited to try the Diamond brand wet food bc my cats liked the Diamond dry food. It seems alright food in regards to ingredients, texture, and price. It is kinda stinky.
By Nanette Byrnes, P. Huffstutter and Mihir Dalal March 19 Reuters - The accounting scandal at snack maker Diamond Foods in recent months may have shocked shareholders and some California walnut farmers.
But a number of accounting and industry experts spotted red flags some time before. A close examination of business practices at Diamond Foodsthe nation's largest walnut processor and maker of Emerald nuts, points up a number of warning signs, including unusual timing of payments to growers, a leap in profit margins, and volatile inventories and cash flows.
The picture that emerges is of a company that for years seemed to push hard on every lever to meet increasingly ambitious earning targets and allowed top executives to pull in big bonuses, according to interviews with former Diamond employees and board members, rivals, suppliers and consultants, in addition to reviews of public and non-public Diamond records.
The company declined to make executives or board members available for this story, or to answer any specific questions, but made this statement through a spokesperson: Attempts to reach those executives at their homes were unsuccessful.
Nick Feakins was among those who early on noticed something strange going on at Diamond. He teaches forensic accounting at San Jose State University and does some work for Bevmark, a food and beverage consultant that was watching Diamond because it is a competitor to a Bevmark client, PepsiCo's Frito Lay.
The head-turner for Feakins was the relentless climb in Diamond's profit margins. Boosted in part by acquisitions of two high-margin snack brands, net income rose to more than 5 percent of net sales in fiscal from 1.
No competitors were improving like that, even with rising Asian demand. By mid others were asking questions, too.
Questions accelerated after unusual payments to growers in September. Barnhill said he twice talked to Eric Heidman, Diamond's director of field operations, on whether the check was a final payment for his crop or pre-payment for the harvest. Heidman did not reply to Reuters email and voicemail messages seeking a comment on this, and Diamond declined to make him available.
Diamond growers are paid in installments, with final payment for the prior fall's crop coming late the following year. Though it was SeptemberBarnhill was still waiting for full payment for the walnuts he had sent Diamond in Not long after he got the check, he saw news stories quoting analysts and the company saying it was an advance payment for the next crop.
But Heidman told Barnhill the opposite, that the payment was for the crop, part of fiscalbut that it would be "budgeted into the next year," as Barnhill recalled. Barnhill remembered telling Heidman that, under accounting rules, you cannot legitimately pay in a future fiscal year for a prior year's crop.
If Diamond was moving grower payments into different periods, "that really is a huge issue," said Charles Mulford, an accounting professor at Georgia Institute of Technology.
But later, after having paid growers, Diamond would report significantly lower actual inventories, leaving Barnhill suspicious. A delay in booking payments from one fiscal year to the next could artificially reduce the company's costs and boost earnings in that period.
The company will restate its earnings for the two years, but by how much is unknown. Citing professional standards, a Deloitte spokesman declined to make any comment.
More accounting issues may yet surface, Diamond has said in U. Securities and Exchange Commission filings. Its chief executive, Michael Mendes, and chief financial officer, Steven Neil, have been replaced, and two new directors now sit on the audit committee.
The company's cash flow trends are among areas that may still raise questions.
Net income growth is generally reflected in operating cash flow increases, but at Diamond, cash generation was sluggish in fiscal when earnings were strong. That raises questions about those earnings, said Mulford, who has written books on how to spot accounting issues through cash flow and other financial statements.
BONUSES Maximizing earnings is crucial for any company, but for Diamond executives whose bonuses were largely tied to earnings per share, it was especially so. In SeptemberMendes boldly promised EPS growth of 15 percent to 20 percent each year for the next five years.
Predictions of further growth helped drive up the stock price, which Mendes used as currency to acquire snack foods businesses and diversify beyond the Emerald nuts line.
That acquisition would have made Diamond the world's No. It ultimately fell apart. Outsiders question whether proper checks and balances were in place during this aggressive growth spurt. In the s, when it was a cooperative, Diamond had an earlier accounting issue.
Untilit used a second audit firm, Moss Adams, to check inventory and confirm grower payments, said a board member at that time, Jeff Colombini. Moss Adams did not reply to requests for a comment.DIAMOND FOODS is the owner, manufacturer and distributor of the Products, and is the company that created and/or authorized the unlawful, fraudulent, unfair, misleading and/or deceptive advertising and statements for the Products.
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Begin with 25% of the recommended daily portion of the new food mixed with 75% of the recommended daily portion of the previous diet. Diamond of California, the century-old producer of “Made for Homemade” recipe nuts, has launched a brand new package design featuring its premium, recipe nuts in a bold red package adorned with captivating facts about the history of the company, origins of its family-owned nut farms, and classic recipes for homemade meals.
Jan 09, · Jan 9 (Reuters) - San Francisco-based snack food company Diamond Foods Inc will pay $5 million to settle civil charges that the company and two former top . Read this title for free and explore over 1 million titles, thousands of audiobooks, and current magazines with Kindle Unlimited.