Diamond Foods Names New Finance Chief, Restates Results

Diamond Foods Inc. named a permanent chief financial officer and said it will revise fiscal second-quarter earnings per share after a restatement last year derailed its effort to buy the Pringles potato-chip brand.

Raymond Silcock, 62, starts today as CFO, Diamond said yesterday in a statement. He succeeds Michael Murphy, who served as interim CFO since February 2012. At that time, Diamond said it would restate earnings for the previous two years and replace its chief executive officer and CFO after an internal probe found the company had booked payments to walnut growers in the wrong periods.

Separately, the maker of Kettle Chips and Diamond walnuts said yesterday that it restated fiscal second-quarter results to a loss of 37 cents a share, compared with a profit of 43 cents. For the six months ended Jan. 31, the loss widened to 50 cents a share from 3 cents before the restatement.

The results are “still very messy with little visibility,” Tim Ramey, an analyst at D.A. Davidson & Co. in Lake Oswego, Oregon, wrote yesterday in a note. He rates the shares neutral, the equivalent of a hold recommendation.

Diamond said it revised the results, based on generally accepted accounting principles, because it had miscalculated the dilutive effect of a change in fair value of a warrant liability to Oaktree Capital Management LP. The company agreed to a $225 million investment from Oaktree last year to strengthen its balance sheet.

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Brian Driscoll, named CEO last year, is cutting food-processing costs and spending more on advertising as part of a plan to turn around Diamond. After last year’s restatement, Procter & Gamble Co. terminated a deal to sell its Pringles unit to Diamond and instead sold the potato chip business to Kellogg Co. for $2.7 billion.

Silcock was previously CFO of Great Atlantic & Pacific Tea Co. after serving as finance chief of UST Inc., a snuff maker acquired by Altria Group Inc. in 2009. He started a career in the food and beverage industry with Campbell Soup Co. in 1979.

Diamond advanced 9.4 percent to $19.18 at the close in New York, its highest price in almost seven months. The shares have climbed 40 percent this year compared with a gain of 14 percent for the Standard & Poor’s 500 Index.

The company said a technical breakdown led to a delay in the release of third-quarter financial results. It started a conference call with analysts later than originally planned.

Diamond said its third-quarter loss narrowed to $15.6 million, or 71 cents a share, from $44 million, or $2.02, a year earlier. Revenue in the period ended April 30 declined 11 percent to $184.9 million.

(Updates with closing share price in eighth paragraph.)
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