Diamond Foods Ousts CEO, CFO after Audit

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Snack food company Diamond Foods (DMND) plunged 43% after hours after announcing that the board has removed its CEO and CFO following an internal audit that revealed accounting problems.

Diamond had started the investigation after questions arose about payments the company made to walnut growers; critics charged that the company had shifted costs into future periods to boost results in advance of acquiring Pringles from Procter & Gamble (PG).

Chairman and CEO Michael Mendes and CFO Steven Neil are out. Rick Wolford, a director and the former CEO of Del Monte Foods, will take over as CEO and Michael Murphy of Alix Partners will come on as CFO.

The company will have to restate its financial statements.

“The Audit Committee has concluded that a “continuity” payment made to growers in August 2010 of approximately $20 million and a “momentum” payment made to growers in September 2011 of approximately $60 million were not accounted for in the correct periods, and the Audit Committee identified material weaknesses in the Company’s internal control over financial reporting,” the company said.



Original Article Source by Barrons.com