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DIAMOND FOODS INC filed this Form DEFM14A on 09/26/2011

Table of Contents

Packaging—Seasoned crisps are transferred through the line and placed into canisters. Canisters are weighed, scanned, and automatically packed into cases.



Shipping—Cases are automatically packed onto pallets and shipped to the warehouse for storage and distribution to customers.

Manufacturing Facilities

Jackson. The Pringles plant in Jackson, Tennessee was constructed in 1971 and occupies approximately 7.4 million square feet (1.6 million square feet of building). The highly-automated plant is solely dedicated to the preparation and packaging of Pringles products. Fiscal 2011 output of approximately 247 million pounds represented approximately 84% of the plant’s total capacity. As of August 9, 2011, the Jackson facility had 734 employees, including a plant manager and nine managers. The Jackson facility currently operates seven days a week with three shifts per day.

Mechelen. The Pringles plant in Mechelen, Belgium was constructed in 1956 and upgraded in 1995. It occupies approximately 1.7 million square feet (1.4 million square feet of building). This facility, which shares a site with facilities that are used to manufacture other P&G products, is subject to a “split” agreement between Diamond and P&G, so that as of the closing of the Transactions, the Pringles operations and non-Pringles operations will be owned and operated separately. See “Additional Agreements—Split Agreement.” Fiscal 2011 output of approximately 201 million pounds represented approximately 97% of the facility’s total capacity. As of August 9, 2011, the Mechelen facility employed 573 employees, including a plant manager, two dedicated operation and engineering head managers and six additional managers. The Mechelen facility currently operates seven days a week with three shifts per day. The Mechelen facility has a separate area for “one-off” special packaging requirements, which operates five days a week with three shifts per day.

Outsourced Manufacturing

Pringles produces products and supplies Asian markets through co-manufacturing arrangements with third-party suppliers in China and Malaysia. These arrangements reduce up-front capital requirements to develop manufacturing facilities, allowing Pringles to lower its costs to do business in these markets. During fiscal 2011, the production at these facilities was approximately 19.3 million pounds. These outsourced manufacturing arrangements are governed by contracts with terms of three years, expiring on January 31, 2013 (China) and June  30, 2014 (Malaysia).

Sales and Distribution

Pringles sells its products principally to mass merchandisers, grocery retailers, club stores and convenience outlets in nearly every country of the world. In fiscal 2011, the geographic distribution of Pringles sales was as follows: North America (39%); Europe, Middle East and Africa (43%); Asia (14%) and Other (4%). Pringles markets its products through a combination of a direct sales force and a network of brokers and distributors. The majority of its products are shipped from production, warehouse and distribution facilities by contract and common carriers.


As a result of its marketing activities over the last 40 years, Pringles has developed into an iconic brand that P&G believes is synonymous with the stackable potato crisp category. Principal features of the Pringles® brand include the distinctive Pringles logo featuring a mustachioed character named Mr. Pringle® and the Pringles canister packaging, including its foil-lined interior and a resealable plastic lid. In fiscal 2010 and fiscal 2011, Pringles commenced a series of marketing initiatives, including:



redesigned product artwork to increase shelf visibility;



introduction of reduced saturated fat formulation for certain products to meet the growing consumer demand for healthier snacks;