Profitability, Risk, and Cash Flow Analysis:
(a) Prepare common-size statements of operations for the past five fiscal years (20072011) and common-size balance sheets on the respective end of fiscal years for Diamond. Based on your review of the common-size financial statements, describe important changes over the years (20072011) in the financials of Diamond.
(b) Apply the DuPont model (which disaggregates the performance of managers into three componentsprofitability, asset utilization, and financial leverage) to analyze the financial performance of Diamond during 20092011
Balance Sheet, July 31 (Amounts in thousand dollars) 2011 2010 2009 2008 2007 2006 ASSETS Current assets: 3,112 5,642 24,802 74,279 33,755 35,614 98,218 33,492 46,256 50,662 49,536 145,575 13,249 2,783 65,553 143,405 10,497 9,225 85,027 13,109 88,526 7,387 90,619 4,805 99,177 4,578 3,147 - 1,854 - 13,102 5,767 3,594 4,261 2,417 1,728 4,182 197,962 240,089 160,024 220,709 184,112 Cash and cash equivalents Trade receivables, net Inventories Deferred income taxes Prepaid income taxes Property held for sale Prepaid expenses and other current assets Total current assets Restricted cash Property, plant and equipment, gross Accum Depn. - Property, plant and equipment Property, plant and equipment, net Deferred income taxes Goodwill Intangible assets not subject to amortization Intangible assets subject to amorization, gross Accum. Amortization - Other intangible assets Intangible assets, subject to amortization, net Other long-term assets Total assets 276,039 15,795 247,645 (120,238) 127,407 3,870 407,587 301,148 163,786 (14,079) 149,707 6,842 1,288,395 220,383 (102,567) 117,816 13,625 396,788 297,500 122,078 (87,472) 34,606 5,802 5,432 117,802 (83,866) 33,936 4,922 5,432 111,100 (76,809) 34,291 4,812 5,077 143,554 (92,439) 51,115 6,230 76,076 62,500 37,300 (1,917) 35,383 3,564 157,300 4,000 4,000 4,000 (527) 3,473 (293) 3,707 (59) 3,941 (5,782) 151,518 8,536 1,225,872 3,245 4,294 6,949 394,892 273,267 236,403 253,032 2011 2010 2009 2008 2007 2006 162 41,700 128,874 15,186 185,760 26,306 57,117 28,371 81,902 40,000 92,166 35,755 167,921 516,100 144,755 15,000 64,453 29,149 108,602 100,085 1,221 42,251 56,942 99,193 20,204 110,273 83,585 20,345 20,000 490,001 131,870 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Current portion of long-term debt Accounts payable and accrued liabilities Payable to growers (Note 1) Total current liabilities Long-term obligations Deferred income taxes Other liabilities Stockholders equity: Common stock, $0.001 par value Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive gain/(loss) Retained earnings Total stockholders equity Total liabilities and stockholders equity 25,969 17,153 11,643 7,647 7,132 11,933 22 22 17 16 16 16 (6,867) 318,083 18,500 125,057 454,795 (5,050) 307,032 (869) 78,808 379,943 (4,256) 122,817 (1,296) 56,059 173,341 394,892 (3,203) 112,550 1,584 35,276 146,223 273,267 (1,436) 101, 106 2,233 23,422 125,341 236,403 93,962 (36) 16,884 110,826 1,288,395 1,225,872 253,032 2006 680,162 477,205 411,809 65,396 37,046 17,977 3,442 - - Statements of Operations for the year ended July 31 (In thousand dollars, except per share amounts) 2011 2010 2009 2008 2007 Net sales 965,922 570,940 531,492 522,585 Cost of sales 714,775 519,161 435,344 443,490 443,945 Gross profit 251,147 161,001 135,596 88,002 78,640 Operating expenses: Selling, general and administrative 96,960 64,301 60,971 43,613 42,541 Advertising 44,415 32,962 28,785 20,508 20,445 Restructuring and other costs, net (15) Loss on termination of defined benefit plan 3,054 Acquisition and integration related expenses 16,792 11,508 Total operating expenses 158,167 108,771 89,756 64,121 66,025 Income from operations 92,980 52,230 45,840 23,881 12,615 Interest expense, net 23,840 10,180 6,255 1,040 1,291 Other 1,849 898 98 Income before income taxes 69,140 40,201 38,687 22,841 11,226 Income taxes (tax benefit) 18,929 13,990 14,944 8,085 2,793 Net income (loss) 50,211 26,211 23,743 14,756 8,433 58,465 6,931 295 310 6,326 (1,010) 7,336 Earnings per share: Basic Diluted 2.28 1.40 1.45 0.92 0.53 0.47 2.22 1.36 1.42 0.91 0.53 0.47 Shares used to compute earnings per share: Basic 21,577 18,313 16,073 16,088 15,786 15,634 Diluted 22,242 18,843 16,391 16,152 15,786 15,653 3,962 3,462 2,960 2,902 1895 1,407 Total dividends on common stock: Annual dividend per share: 0.18 0.18 0.18 0.18 0.12 0.09 Supplementary information (from annual report) Depreciation on Property, Plant and Equipment Amortization of Intangible assets 6,186 7,327 5,473 21,600 7,865 13,289 3,865 9,601 1,761 234 234 59 Balance Sheet, July 31 (Amounts in thousand dollars) 2011 2010 2009 2008 2007 2006 ASSETS Current assets: 3,112 5,642 24,802 74,279 33,755 35,614 98,218 33,492 46,256 50,662 49,536 145,575 13,249 2,783 65,553 143,405 10,497 9,225 85,027 13,109 88,526 7,387 90,619 4,805 99,177 4,578 3,147 - 1,854 - 13,102 5,767 3,594 4,261 2,417 1,728 4,182 197,962 240,089 160,024 220,709 184,112 Cash and cash equivalents Trade receivables, net Inventories Deferred income taxes Prepaid income taxes Property held for sale Prepaid expenses and other current assets Total current assets Restricted cash Property, plant and equipment, gross Accum Depn. - Property, plant and equipment Property, plant and equipment, net Deferred income taxes Goodwill Intangible assets not subject to amortization Intangible assets subject to amorization, gross Accum. Amortization - Other intangible assets Intangible assets, subject to amortization, net Other long-term assets Total assets 276,039 15,795 247,645 (120,238) 127,407 3,870 407,587 301,148 163,786 (14,079) 149,707 6,842 1,288,395 220,383 (102,567) 117,816 13,625 396,788 297,500 122,078 (87,472) 34,606 5,802 5,432 117,802 (83,866) 33,936 4,922 5,432 111,100 (76,809) 34,291 4,812 5,077 143,554 (92,439) 51,115 6,230 76,076 62,500 37,300 (1,917) 35,383 3,564 157,300 4,000 4,000 4,000 (527) 3,473 (293) 3,707 (59) 3,941 (5,782) 151,518 8,536 1,225,872 3,245 4,294 6,949 394,892 273,267 236,403 253,032 2011 2010 2009 2008 2007 2006 162 41,700 128,874 15,186 185,760 26,306 57,117 28,371 81,902 40,000 92,166 35,755 167,921 516,100 144,755 15,000 64,453 29,149 108,602 100,085 1,221 42,251 56,942 99,193 20,204 110,273 83,585 20,345 20,000 490,001 131,870 LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Current portion of long-term debt Accounts payable and accrued liabilities Payable to growers (Note 1) Total current liabilities Long-term obligations Deferred income taxes Other liabilities Stockholders equity: Common stock, $0.001 par value Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive gain/(loss) Retained earnings Total stockholders equity Total liabilities and stockholders equity 25,969 17,153 11,643 7,647 7,132 11,933 22 22 17 16 16 16 (6,867) 318,083 18,500 125,057 454,795 (5,050) 307,032 (869) 78,808 379,943 (4,256) 122,817 (1,296) 56,059 173,341 394,892 (3,203) 112,550 1,584 35,276 146,223 273,267 (1,436) 101, 106 2,233 23,422 125,341 236,403 93,962 (36) 16,884 110,826 1,288,395 1,225,872 253,032 2006 680,162 477,205 411,809 65,396 37,046 17,977 3,442 - - Statements of Operations for the year ended July 31 (In thousand dollars, except per share amounts) 2011 2010 2009 2008 2007 Net sales 965,922 570,940 531,492 522,585 Cost of sales 714,775 519,161 435,344 443,490 443,945 Gross profit 251,147 161,001 135,596 88,002 78,640 Operating expenses: Selling, general and administrative 96,960 64,301 60,971 43,613 42,541 Advertising 44,415 32,962 28,785 20,508 20,445 Restructuring and other costs, net (15) Loss on termination of defined benefit plan 3,054 Acquisition and integration related expenses 16,792 11,508 Total operating expenses 158,167 108,771 89,756 64,121 66,025 Income from operations 92,980 52,230 45,840 23,881 12,615 Interest expense, net 23,840 10,180 6,255 1,040 1,291 Other 1,849 898 98 Income before income taxes 69,140 40,201 38,687 22,841 11,226 Income taxes (tax benefit) 18,929 13,990 14,944 8,085 2,793 Net income (loss) 50,211 26,211 23,743 14,756 8,433 58,465 6,931 295 310 6,326 (1,010) 7,336 Earnings per share: Basic Diluted 2.28 1.40 1.45 0.92 0.53 0.47 2.22 1.36 1.42 0.91 0.53 0.47 Shares used to compute earnings per share: Basic 21,577 18,313 16,073 16,088 15,786 15,634 Diluted 22,242 18,843 16,391 16,152 15,786 15,653 3,962 3,462 2,960 2,902 1895 1,407 Total dividends on common stock: Annual dividend per share: 0.18 0.18 0.18 0.18 0.12 0.09 Supplementary information (from annual report) Depreciation on Property, Plant and Equipment Amortization of Intangible assets 6,186 7,327 5,473 21,600 7,865 13,289 3,865 9,601 1,761 234 234 59
