UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC  20549





FORM
10-Q


(mark
one)





x           Quarterly
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934





For the
quarterly period ended August 28, 2010





OR





 ̈           Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934





For the
transition period from ____________ to ____________





Commission
file number:  000-04892





CAL-MAINE
FOODS, INC.


(Exact
name of registrant as specified in its charter)





Delaware
            64-0500378(State
      or other Jurisdiction of
            (I.R.S.
      Employer Identification No.)Incorporation
      or Organization)





3320
Woodrow Wilson Avenue, Jackson, Mississippi  39209


(Address
of principal executive offices)  (Zip Code)





(601)
948-6813


(Registrant’s
telephone number, including area code)





Indicate
by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.


Yes xNo ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes  ̈No ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer as defined in Rule 12b-2 of the Exchange
Act.





Large
      Accelerated filer  ̈
              Accelerated
      filer  xNon- Accelerated filer ̈
                (Do
      not check if a smaller reporting company)
              Smaller
      reporting company  ̈





Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).


Yes  ̈      No  x





APPLICABLE
ONLY TO CORPORATE ISSUERS:


Indicate
number of shares outstanding of each of the issuer’s classes of common stock
(exclusive of treasury shares), as of September 27, 2010.





Common
      Stock, $0.01 par value
              21,453,091
      sharesClass
      A Common Stock, $0.01 par value
              2,400,000
      shares





CAL-MAINE
FOODS, INC. AND SUBSIDIARIES





INDEX





PageNumberPart
      I.
                Financial
      InformationItem
      1.
                
                Condensed
      Consolidated Financial Statements (Unaudited)Condensed
      Consolidated Balance Sheets - August 28, 2010 and May 29,
    2010
                3Condensed
      Consolidated Statements of Operations - Thirteen Weeks Ended August 28,
      2010 and August 29, 2009
                4Condensed
      Consolidated Statements of Cash Flow - Thirteen Weeks Ended August 28,
      2010 and August 29, 2009
                5Notes
      to Condensed Consolidated Financial Statements
                6Item
      2.
                
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                12Item
      3.
                
                Quantitative
      and Qualitative Disclosures of Market Risk
                19Item
      4.
                
                Controls
      and Procedures
                19Part
      II.
                Other
      InformationItem
      1.
                
                Legal
      Proceedings
                19Item
      1A.
                
                Risk
      Factors
                21Item
      2.
                
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                21Item
      5.
                
                Other
      Information
                21Item
      6.
                
                Exhibits
                22Signatures
                23




2


PART
I.  FINANCIAL INFORMATION





ITEM
1.   FINANCIAL STATEMENTS





CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(in
thousands, except per share amounts)





August28,2010
                              
                              
                              May29,2010(unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                              
                              $
                              82,452
                              
                              
                              $
                              99,453Investment
      securities available-for-sale
                              
                              
                              87,542
                              
                              
                              
                              76,702Investment
      securities trading
                              
                              
                              -
                              
                              
                              
                              22,900Trade
      and other receivables
                              
                              
                              54,136
                              
                              
                              
                              43,587Inventories
                              
                              
                              92,287
                              
                              
                              
                              93,968Prepaid
      expenses and other current assets
                              
                              
                              2,659
                              
                              
                              
                              1,550Total
      current assets
                              
                              
                              319,076
                              
                              
                              
                              338,160Property,
      plant and equipment, net
                              
                              
                              233,206
                              
                              
                              
                              234,111Goodwill
                              
                              
                              22,117
                              
                              
                              
                              22,117Other
      investments
                              
                              
                              16,673
                              
                              
                              
                              17,708Other
      intangible assets
                              
                              
                              11,935
                              
                              
                              
                              12,523Other
      long-lived assets
                              
                              
                              6,707
                              
                              
                              
                              6,665TOTAL
      ASSETS
                              
                              $
                              609,714
                              
                              
                              $
                              631,284LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                              
                              $
                              59,089
                              
                              
                              $
                              61,011Accrued
      dividends payable
                              
                              
                              1,588
                              
                              
                              
                              7,009Current
      maturities of long-term debt
                              
                              
                              14,724
                              
                              
                              
                              29,974Deferred
      income taxes
                              
                              
                              19,954
                              
                              
                              
                              19,980Total
      current liabilities
                              
                              
                              95,355
                              
                              
                              
                              117,974Long-term
      debt, less current maturities
                              
                              
                              101,507
                              
                              
                              
                              104,699Other
      non-current liabilities
                              
                              
                              3,799
                              
                              
                              
                              3,299Deferred
      income taxes
                              
                              
                              28,613
                              
                              
                              
                              28,356Total
      liabilities
                              
                              
                              229,274
                              
                              
                              
                              254,328Stockholders’
      equity:Common
      stock $0.01 par value per share:Authorized
      shares – 60,000Issued
      35,130 shares and 21,453 shares outstanding atAugust
      28, 2010 and 21,441 shares outstanding at May 29, 2010
                              
                              
                              351
                              
                              
                              
                              351Class
      A common stock $0.01 par value per share, authorized, issued
      andoutstanding
      2,400 shares at August 28, 2010 and May 29, 2010
                              
                              
                              24
                              
                              
                              
                              24Paid-in
      capital
                              
                              
                              33,040
                              
                              
                              
                              32,699Retained
      earnings
                              
                              
                              368,995
                              
                              
                              
                              365,821Accumulated
      other comprehensive income, net of tax
                              
                              
                              159
                              
                              
                              
                              -Common
      stock in treasury at cost – 13,677 shares at August 28,
    2010and
      13,689 shares at May 29, 2010
                              
                              
                              (20,947
                              )
                              
                              
                              (20,966
                              )Total
      Cal-Maine Foods, Inc. stockholders’ equity
                              
                              
                              381,622
                              
                              
                              
                              377,929Noncontrolling
      interests in consolidated entities
                              
                              
                              (1,182
                              )
                              
                              
                              (973
                              )Total
      stockholders’ equity
                              
                              
                              380,440
                              
                              
                              
                              376,956TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                              
                              $
                              609,714
                              
                              
                              $
                              631,284





See notes
to condensed consolidated financial statements.


3


CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(in
thousands, except per share amounts)


(unaudited)




13
      Weeks EndedAugust 28, 2010
                
                
                August 29, 2009Net
      sales
                
                $
                190,403
                
                
                $
                187,666Cost
      of sales
                
                
                157,667
                
                
                
                169,449Gross
      profit
                
                
                32,736
                
                
                
                18,217Selling,
      general and administrative
                
                
                24,695
                
                
                
                23,518Operating
      income (loss)
                
                
                8,041
                
                
                
                (5,301
                )Other
      income (expense):Interest
      expense, net
                
                
                (1,592
                )
                
                
                (1,716
                )Other
                
                
                636
                
                
                
                158(956
                )
                
                
                (1,558
                )Income
      (loss) before income taxes
                
                
                7,085
                
                
                
                (6,859
                )Income
      tax expense (benefit)
                
                
                2,531
                
                
                
                (2,026
                )Consolidated net
      income (loss)
                
                
                4,554
                
                
                
                (4,833
                )Less:
      Net loss attributable to noncontrolling interest
                
                
                (209
                )
                
                
                (1,001
                )Net
      income (loss) attributable to Cal-Maine Foods, Inc.
                
                $
                4,763
                
                
                $
                (3,832
                )Net
      income (loss) per common share attributable to Cal-Maine Foods
      Inc.:Basic
                
                $
                0.20
                
                
                $
                (0.16
                )Diluted
                
                $
                0.20
                
                
                $
                (0.16
                )Dividends
      per common share
                
                $
                0.067
                
                
                $
                -Weighted
      average shares outstanding:Basic
                
                
                23,842
                
                
                
                23,791Diluted
                
                
                23,935
                
                
                
                23,791





See notes to condensed consolidated financial statements.


4


CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(in
thousands)


(unaudited)





13
      Weeks EndedAugust 28, 2010
                          
                          
                          August 29, 2009Operating
      activities:Net
      income (loss) attributable to Cal-Maine Foods, Inc.
                          
                          $
                          4,763
                          
                          
                          $
                          (3,832
                          )Net
      loss attributable to noncontrolling interest
                          
                          
                          (209
                          )
                          
                          
                          (1,001
                          )Depreciation
      and amortization
                          
                          
                          7,857
                          
                          
                          
                          7,412Other
      adjustments, net
                          
                          
                          (10,719
                          )
                          
                          
                          (7,984
                          )Net
      cash provided by (used in) operations
                          
                          
                          1,692
                          
                          
                          
                          (5,405
                          )Investing
      activities:Purchase
      of investments
                          
                          
                          (39,191
                          )
                          
                          
                          -Sales
      of investments
                          
                          
                          51,251
                          
                          
                          
                          9,118Acquisition
      of businesses, net of cash acquired
                          
                          
                          -
                          
                          
                          
                          (508
                          )Purchases
      of property, plant and equipment
                          
                          
                          (6,473
                          )
                          
                          
                          (4,625
                          )Payments
      received on notes receivable and from affiliates
                          
                          
                          1,606
                          
                          
                          
                          195Increase
      in notes receivable and investments in affiliates
                          
                          
                          (516
                          )
                          
                          
                          (705
                          )Net
      proceeds from disposal of property, plant and equipment
                          
                          
                          9
                          
                          
                          
                          809Net
      cash provided by investing activities
                          
                          
                          6,686
                          
                          
                          
                          4,284Financing
      activities:Proceeds
      from issuance of common stock from treasury
                          
                          
                          71
                          
                          
                          
                          262Payment
      of purchase obligation
                          
                          
                          -
                          
                          
                          
                          (8,150
                          )Principal
      payments on long-term debt
                          
                          
                          (18,441
                          )
                          
                          
                          (2,907
                          )Payments
      of dividends
                          
                          
                          (7,009
                          )
                          
                          
                          (3,425
                          )Net
      cash used in financing activities
                          
                          
                          (25,379
                          )
                          
                          
                          (14,220
                          )Net
      change in cash and cash equivalents
                          
                          
                          (17,001
                          )
                          
                          
                          (15,341
                          )Cash
      and cash equivalents at beginning of period
                          
                          
                          99,453
                          
                          
                          
                          66,883Cash
      and cash equivalents at end of period
                          
                          $
                          82,452
                          
                          
                          $
                          51,542





See notes
to condensed consolidated financial statements.


5


CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


Notes to
Condensed Consolidated Financial Statements


(in
thousands, except per share amounts)


August
28, 2010


(unaudited)


1.
            Presentation
      of Interim Information





The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.  In the opinion of management, all
adjustments, consisting of normal recurring adjustments, considered necessary
for a fair presentation have been included. Preparation of condensed
consolidated financial statements requires us to make estimates and
assumptions.  These estimates and assumptions affected reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the condensed consolidated financial statements and
the reported amounts of revenues and expenses during the reporting
period.  Operating results for the thirteen weeks ended August 28,
2010 are not necessarily indicative of the results that may be expected for the
year ending May 28, 2011.





The
condensed consolidated balance sheet at May 29, 2010 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.





For
further information, refer to the consolidated financial statements and
footnotes thereto included in Cal-Maine Foods, Inc.'s annual report on Form 10-K
for the fiscal year ended May 29, 2010.  References to
“we,”  “us,”  “our,” or the “Company” refer to Cal-Maine
Foods, Inc.





2.
            Stock
      Based Compensation




Total
stock based compensation (benefit) expense for the thirteen weeks ended August
28, 2010 and August 29, 2009 was $(158) and $1,301, respectively.  Our
liabilities associated with Stock Appreciation Rights as of August 28, 2010 and
August 29, 2009 were $3,319 and $5,061, respectively.




During
the thirteen weeks ended August 28, 2010, options were exercised for 12 shares
of common stock. Proceeds from the exercise of these options amounted to
$71.  The Company made no stock-based grants during the thirteen weeks
ended August 28, 2010.  Refer to Note 11 of our May 29, 2010 audited
financial statements for further information on our stock compensation
plans.




3.
            Inventories





Inventories consisted of the
following:





August28,2010
                  
                  
                  May29,2010Flocks
                  
                  $
                  60,976
                  
                  
                  $
                  60,387Eggs
                  
                  
                  6,556
                  
                  
                  
                  7,481Feed
      and supplies
                  
                  
                  24,755
                  
                  
                  
                  26,100$
                  92,287
                  
                  
                  $
                  93,968





4.
            Legal
      Proceedings





Please
refer to Part II, Item 1, of this report for a description of certain pending
legal proceedings.


6





5.
            Net
      Income (Loss) per Common Share





Basic net
income per share was calculated by dividing net income by the weighted-average
number of common shares outstanding during the period.  Diluted net
income per share was calculated by dividing net income by the weighted-average
number of common shares outstanding during the period plus the dilutive effects
of options and warrants.  Options representing 74 shares were excluded
from the calculation of diluted earnings per share for the thirteen week period
ended August 29, 2009 because they would be antidilutive.  The
computations of basic and diluted net income (loss) per share attributable to
the Company are as follows:





13
      weeks endedAugust 28, 2010
                        
                        
                        August 29, 2009Net
      income (loss) attributable toCal-Maine
      Foods, Inc.
                        
                        $
                        4,763
                        
                        
                        $
                        (3,832
                        )Basic
      weighted-average common shares
                        
                        
                        23,842
                        
                        
                        
                        23,791Effect
      of dilutive securities:Common
      stock options
                        
                        
                        93
                        
                        
                        
                        -Dilutive
      potential common shares
                        
                        
                        23,935
                        
                        
                        
                        23,791Net
      income (loss) per common share attributable to Cal-Maine Foods,
      Inc.:Basic
                        
                        $
                        0.20
                        
                        
                        $
                        (0.16
                        )Diluted
                        
                        $
                        0.20
                        
                        
                        $
                        (0.16
                        )





6.
            Accrued
      Dividends Payable and Dividends per Common
Share





The Company pays a dividend to
shareholders of its Common Stock and Class A Common Stock on a quarterly basis
for each quarter for which the Company reports net income computed in accordance
with generally accepted accounting principles in an amount equal to one-third
(1/3) of such quarterly income. Dividends are paid to shareholders of record as
of the 60th day following the last day of such quarter, except for the fourth
fiscal quarter.  For the fourth quarter, the Company will pay
dividends to shareholders of record on the 70th day after the quarter end.
Dividends are payable on the 15th day following the record date. Following a
quarter for which the Company does not report net income, the Company shall not
pay a dividend for a subsequent profitable quarter until the Company is
profitable on a cumulative basis computed from the date of the last quarter for
which a dividend was paid.





We make
an accrual of dividends payable at the end of each quarter for which the Company
reports net income computed in accordance with generally accepted accounting
principles in an amount equal to one-third (1/3) of such quarterly
income.  No accrual of dividends payable is made following a quarter
for which the Company does not report net income.  No accrual of
dividends payable shall be made until the Company is profitable on a cumulative
basis computed from the date of the last quarter for which a dividend was
paid.   The amount of the accrual appears on the condensed
consolidated balance sheet as “Accrued dividends payable.”


7





On our
condensed consolidated statement of operations, we determine dividends per
common share in accordance with the computation in the following table (shares
in thousands):





13WeeksEndedAugust28,2010
                  
                  
                  August29,2009Net
      income (loss) attributable to Cal-Maine Foods, Inc.
                  
                  $
                  4,763
                  
                  
                  $
                  (3,832
                  )1/3
      of Net income (loss) attributable to Cal-Maine Foods, Inc.
                  
                  
                  1,588
                  
                  
                  
                  (1,277
                  )Accrued
      dividends payable
                  
                  $
                  1,588
                  
                  
                  $
                  —Common
      stock outstanding (shares)
                  
                  
                  21,453
                  
                  
                  
                  21,407Class
      A common stock outstanding (shares)
                  
                  
                  2,400
                  
                  
                  
                  2,400Total
      common stock outstanding (shares)
                  
                  
                  23,853
                  
                  
                  
                  23,807Dividends
      per common share*
                  
                  $
                  0.067
                  
                  
                  $
                  -





*Dividends
per common share = 1/3 of Net income (loss) attributable to Cal-Maine Foods,
Inc. ÷ Total common stock outstanding (shares)





7.
            Comprehensive
      Income





A summary
of the components of comprehensive income is as follows:





13WeeksEndedAugust28,2010
                    
                    
                    August29,2009Net
      income (loss) attributable to Cal-Maine Foods, Inc.  and
      noncontrolling interest
                    
                    $
                    4,554
                    
                    
                    $
                    (4,833
                    )Other
      comprehensive income —Unrealized
      gains on investment securities available-for-sale net of
    tax
                    
                    
                    159
                    
                    
                    
                    -Total
      comprehensive income
                    
                    $
                    4,713
                    
                    
                    $
                    (4,833
                    )





8.
            Investment
      Securities





Our
investment securities are accounted for in accordance with Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320
(Investments-Debt and Equity Securities) (“ASC 320”). Our investment securities
are stated at fair value.  They consist of commercial paper,
certificates of deposit, government agency bonds, taxable municipal bonds,
variable rate tax-exempt municipal bonds, tax-exempt municipal bonds, and zero
coupon municipal bonds, which are all classified as available-for-sale. Under
ASC 320, the Company considers all of its debt and equity securities, for which
there is a determinable fair market value and no restrictions on the Company's
ability to sell within the next 12 months, as available-for-sale.
Available-for-sale securities are carried at fair value, with unrealized gains
and losses reported as a separate component of stockholders' equity. For the
year ended May 29, 2010 there were no significant unrealized gains or
losses.  For the thirteen-week period ended August 28, 2010, we
recognized an unrealized gain of $159 (net of tax $101) in the line item
“Accumulated other comprehensive income, net of tax” on our Condensed
Consolidated Balance Sheet as of August 28, 2010. Realized gains and losses are
included in other income. The cost basis for realized gains and losses on
available-for-sale securities is determined on a specific identification
basis.





We
previously held auction rate securities (“ARS”) which were purchased from UBS
Financial Services Inc. (“UBS”).  On June 30, 2010, we exercised a put
option that allowed us to sell our ARS back to UBS at par.  The par
value of these securities was $22,900.  These ARS served as collateral
for a $14,799 line of credit with UBS.   Proceeds received from
the sale of the ARS to UBS were used to settle this debt.


8


At August
28, 2010 and May 29, 2010, we had $87,542 and $76,702,
respectively,  of current investment securities available-for-sale
consisting of commercial paper, certificates of deposit, government agency
bonds, taxable municipal bonds, variable rate tax-exempt municipal bonds,
tax-exempt municipal bonds, and zero coupon municipal bonds with maturities of
three months or longer when purchased. We classified these securities as
current, because amounts invested are available for current
operations.





9.
            Fair
      Value





The
Company is required to categorize both financial and nonfinancial assets and
liabilities based on the following fair value hierarchy.  The fair
value of an asset is the price at which the asset could be sold in an orderly
transaction between unrelated, knowledgeable, and willing parties able to engage
in the transaction. A liability’s fair value is defined as the amount that would
be paid to transfer the liability to a new obligor in a transaction between such
parties, not the amount that would be paid to settle the liability with the
creditor.





·
            Level
      1 - Quoted prices in active markets for identical assets or
      liabilities




·
            Level
      2 - Quoted prices in active markets for similar assets or liabilities,
      quoted prices in markets that are not active, or inputs other than quoted
      prices that are observable for the asset or
  liability




·
            Level
      3 - Unobservable inputs for the asset or liability that are supported by
      little or no market activity and that are significant to the fair value of
      the assets or liabilities




The
disclosure of fair value of certain financial assets and liabilities that are
recorded at cost are as follows:




Cash and cash equivalents:
The carrying amount approximates fair value due to the short maturity of these
instruments.





Long-term debt: The carrying
value of the Company’s long-term debt is at its stated value.  We have
not elected to carry our long-term debt at fair value.  Fair values
for debt are based on quoted market prices or published forward interest rate
curves. The fair value and carrying value of the Company’s borrowings under its
credit facilities and long-term debt were as follows:





August 28, 2010
                    
                    
                    May 29, 2010Fair Value
                    
                    
                    Carrying Value
                    
                    
                    Fair Value
                    
                    
                    Carrying ValueTotal
      Debt
                    
                    $
                    119,735
                    
                    
                    $
                    116,231
                    
                    
                    $
                    135,575
                    
                    
                    $
                    134,673





Assets
Measured at Fair Value on a Recurring Basis





Assets
measured at fair value on a recurring basis consisted of the following types of
instruments as of August 28, 2010:





Fair Value Measurements at Reporting Date UsingQuoted Pricesin Active
                    
                    
                    SignificantMarkets for
                    
                    
                    Other
                    
                    
                    SignificantIdentical
                    
                    
                    Observable
                    
                    
                    UnobservableInstruments
                    
                    
                    Inputs
                    
                    
                    Inputs
                    
                    
                    Total(Level1)
                    
                    
                    (Level2)
                    
                    
                    (Level3)
                    
                    
                    BalanceInvestment
      securities
                      available-for-sale
      (Current)
                    
                    $
                    —
                    
                    
                    $
                    87,542
                    
                    
                    $
                    —
                    
                    
                    $
                    87,542Total
      assets measured at fair value
                    
                    $
                    —
                    
                    
                    $
                    87,542
                    
                    
                    $
                    —
                    
                    
                    $
                    87,542


9





Assets
measured at fair value on a recurring basis consisted of the following types of
instruments as of May 29, 2010:





Fair Value Measurements at Reporting Date UsingQuoted Pricesin Active
                  
                  
                  SignificantMarkets for
                  
                  
                  Other
                  
                  
                  SignificantIdentical
                  
                  
                  Observable
                  
                  
                  UnobservableInstruments
                  
                  
                  Inputs
                  
                  
                  Inputs
                  
                  
                  Total(Level1)
                  
                  
                  (Level2)
                  
                  
                  (Level3)
                  
                  
                  BalanceInvestment
      securities
                    available-for-sale
      (Current)
                  
                  $
                  —
                  
                  
                  $
                  76,702
                  
                  
                  $
                  —
                  
                  
                  $
                  76,702Investment
      securities
                    trading
      (Current) 1
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  22,900
                  
                  
                  
                  22,900Total
      assets measured at fair value
                  
                  $
                  —
                  
                  
                  $
                  76,702
                  
                  
                  $
                  22,900
                  
                  
                  $
                  99,602




1 –
              Investment
      securities trading (Current) is the aggregate fair value of the auction
      rate securities and the UBS put option.   The fair value of
      the ARS is $21,177.   The fair value of the UBS put option
      is $1,723, determined as the difference between the par value and the fair
      value of the ARS.    The combined fair value of the
      ARS and the UBS put option is
$22,900.





The
following is a reconciliation of the beginning and ending balances for assets
measured at fair value on a recurring basis using significant unobservable
inputs (Level 3) during the period ended August 28, 2010.





Investment securities
                    Trading (Current)Beginning
      balance – May 29, 2010
                  
                  $
                  22,900Total
      gains – (realized/unrealized)
                  
                  
                  —Included
      in earnings (or changes in net assets), net
                  
                  
                  —Included
      in other comprehensive income, net
                  
                  
                  —Purchases,
      issuances, and settlements
                  
                  
                  (22,900
                  )Transfers
      in and/or out of Level 3
                  
                  
                  —Ending
      balance – August 28, 2010
                  
                  $
                  —





Level 2:We classified our
current investment securities – available-for-sale as level
2.   These securities consist of commercial paper, certificates
of deposit, government agency bonds, taxable municipal bonds, variable rate tax
exempt municipal bonds, tax exempt municipal bonds, and zero coupon municipal
bonds with maturities of three months or longer when purchased. We classified
these securities as current, because amounts invested are available for current
operations. Observable inputs for these securities are yields, credit risks,
default rates, and volatility.





Level 3:We no longer have
financial or nonfinancial instruments that use level 3 inputs for the purpose of
determining the fair value of those instruments.  Previously,
financial instruments that used level 3 inputs for the purpose of determining
fair value consisted of ARS and the UBS put option.  The value of the
UBS put option was calculated as the difference between the fair value and the
par value of the ARS.  On June 30, 2010, we exercised the UBS put
option and sold all of the ARS to UBS at par value.





10.
            Recent
      Accounting Pronouncements




In July
2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses,” (ASU 2010-20) which
amends ASC 310, “Receivables,” to require further disaggregated disclosures that
improve financial statement users’ understanding of (1) the nature of an
entity’s credit risk associated with its financing receivables and (2) the
entity’s assessment of that risk in estimating its allowance for credit losses
as well as changes in the allowance and the reasons for those changes. The new
and amended disclosures as of the end of a reporting period are effective for
interim and annual reporting periods ending on or after December 15, 2010.
The adoption of ASU 2010-20 will only impact disclosures and is not expected to
have a material impact on the Company’s consolidated financial
statements.


10





11.
            Financial
      Statement Impact of the Farwell, TX
Fire





The
Company maintains insurance for both property damage and business interruption
relating to catastrophic events, such as the fire at the Farwell, TX complex on
July 9, 2009. Business interruption insurance covers lost profits and other
costs incurred during the loss period.





Insurance
recoveries received for property damage and business interruption in excess of
the net book value of damaged assets, clean-up and demolition costs, and
post-event costs are recognized as income in the period received or committed
when all contingencies associated with the recoveries are resolved. Gains on
insurance recoveries related to business interruption are recorded within “Cost
of sales” and any gains related to property damage will be recorded within
“Other income (expense).” Insurance recoveries related to business interruption
are classified as operating cash flows and recoveries related to property damage
are classified as investing cash flows in the statement of cash
flows.





The
Company has not settled its final claim with its insurance carriers related to
the Farwell, TX fire.  As of August 28, 2010 the Company has received
$11,857 from insurance carriers as partial settlement of the Farwell
claim.   The Company believes the business interruption claim
will not be finalized until the third quarter of fiscal 2011. We and the
insurance carriers have agreed on a provisional amount that represents a portion
of the total business interruption claim.  The Company believes that
there are no contingencies related to the provisional amount of $4,000, which
has been recorded as a reduction to “Cost of sales” and represents business
interruption losses through April, 2010.  During the first quarter of
fiscal 2011, there were no gains recognized related to the property damage
claim. The Company believes the property damage claim will not be finalized
until the third quarter of fiscal 2011.





12.
            Financial
      Statement Impact of the Shady Dale, GA
Fire





In the
first quarter of fiscal 2011, the Shady Dale, GA complex was damaged by a fire.
The fire completely destroyed one of the twelve layer houses, which was empty at
the time. There was an additional loss of laying hens at three adjoining layer
houses due to smoke inhalation.   The Company intends to seek
reimbursement for all of its insured losses, including lost profits and
expenses. The Company believes the effects of lost production and additional
expenses related to the fire that will be incurred will be substantially covered
by the Company’s insurance policies.  Any gain resulting from
recoveries from the insurance carriers will be recognized when the claim is
ultimately settled.





13.
            Guarantee





The
Company owns 50% of the membership interests in Delta Egg Farm, LLC (“Delta
Egg”). The Company is a guarantor of 50% of Delta Egg’s long-term debt, which
totaled approximately $11,875 at August 28, 2010.  Delta Egg’s
long-term debt is secured by substantially all of the fixed assets of Delta Egg
and is due in monthly installments through fiscal 2018.  Delta Egg is
engaged in the production, processing, and distribution of shell
eggs.  The other 50% owner also guarantees 50% of the
debt.  The guarantee arose when Delta Egg borrowed funds to construct
its production and processing facility in 1999.  The guarantee would
be required if Delta Egg is not able to pay the debt.  Management of
the Company believes that payment under the guarantee will be unlikely because
Delta Egg is now well capitalized.  On July 11, 2008, this debt was
refinanced for a term of ten years.  There were additional borrowings
under this refinancing due to the construction of an organic egg production and
distribution facility near Chase, Kansas costing approximately $13.0
million.





14.
            Egg
      Recall





In
August, 2010 there was a nationwide recall for eggs produced by two egg
producers in Iowa.  None of the eggs recalled were produced at
Cal-Maine facilities, however, we had purchased for resale a very limited amount
of eggs from the affected facilities.  The recall had minimal effect
on Cal-Maine’s results for the quarter.  While egg prices initially
moved higher in late August, prices have since dropped back below levels prior
to the recall.  Consumer demand was also negatively impacted by the
recall; however, it is still too soon to predict the long-term effect, if any,
of the recall on demand trends.


11




15.
            Noncontrolling
      Interest





The
following reflects the equity activity, including our noncontrolling interest,
for the thirteen-week period ended August 28, 2010:




Cal-Maine Foods, Inc.Common Stock(in thousands)
                  
                  Amount
                  
                  
                  Class A
                    Amount
                  
                  
                  Treasury
                    Amount
                  
                  
                  Paid in
                    Capital
                  
                  
                  Accumulated
                    Other
                    Comprehensive
                    Income
                  
                  
                  Retained
                    Earnings
                  
                  
                  Noncontrolling
                    Interest
                  
                  
                  Total EquityBalance
      at May 29, 2010
                  
                  $
                  351
                  
                  
                  $
                  24
                  
                  
                  $
                  (20,966
                  )
                  
                  $
                  32,699
                  
                  
                  $
                  —
                  
                  
                  $
                  365,821
                  
                  
                  $
                  (973
                  )
                  
                  $
                  376,956Dividends*
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (1,589
                  )
                  
                  
                  
                  
                  
                  
                  (1,589
                  )Issuance
      of common stock from treasury
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  19
                  
                  
                  
                  52
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  71Vesting
      of stock based compensation
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  55
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  55Tax
      benefit on non-qualifying disposition of incentive stock
      options
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  234
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  234Unrealized
      gain on available-for-sale securities (net of tax $101)
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  159
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  159Net
      income (loss)
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4,763
                  
                  
                  
                  (209
                  )
                  
                  
                  4,554Total
      comprehensive income
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4,713Balance
      at August 28, 2010
                  
                  $
                  351
                  
                  
                  $
                  24
                  
                  
                  $
                  (20,947
                  )
                  
                  $
                  33,040
                  
                  
                  $
                  159
                  
                  
                  $
                  368,995
                  
                  
                  $
                  (1,182
                  )
                  
                  $
                  380,440





* -
Dividends are calculated as 1/3 of net income (includes adjustment for actual
dividends paid based on accrual from previous period).





ITEM
      2.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





This
report contains numerous forward-looking statements relating to our shell egg
business, including estimated production data, expected operating schedules,
expected capital costs and other operating data. Such forward-looking statements
are identified by the use of words such as "believes," "intends," "expects,"
"hopes," "may," "should," "plan," "projected," "contemplates," "anticipates" or
similar words. Actual production, operating schedules, results of operations and
other projections and estimates could differ materially from those projected in
the forward-looking statements. The factors that could cause actual results to
differ materially from those projected in the forward-looking statements include
(i) the risk factors set forth under Item 1A of our Annual Report on Form 10-K
for the fiscal year ended May 29, 2010, (ii) the risks and hazards inherent in
the shell egg business (including disease, pests, weather conditions and
potential for recall), (iii) changes in the market prices of shell eggs, (iv)
changes or obligations that could result from our future acquisition of new
flocks or businesses, and (v) adverse results in pending litigation matters.
Readers are cautioned not to place undue reliance on forward-looking statements.
We disclaim any intent or obligation to update publicly these forward-looking
statements, whether because of new information, future events or
otherwise.


12





OVERVIEW





Cal-Maine
Foods, Inc. (“we,” “us,” “our,” or the “Company”) is primarily engaged in the
production, grading, packaging, marketing and distribution of fresh shell
eggs.  Our fiscal year end is the Saturday closest to May
31.





Our
operations are fully integrated.  At our facilities we hatch chicks,
grow and maintain flocks of pullets (young female chickens, usually under 20
weeks of age), layers (mature female chickens) and breeders (male or female
birds used to produce fertile eggs to be hatched for egg production flocks),
manufacture feed, and produce, process and distribute shell eggs. We are the
largest producer and marketer of shell eggs in the United States.  We
market the majority of our shell eggs in 29 states, primarily in the
southwestern, southeastern, mid-western, and mid-Atlantic regions of the United
States.  We market our shell eggs through our extensive distribution
network to a diverse group of customers, including national and regional grocery
store chains, club stores, foodservice distributors, and egg product
manufacturers.





Our
operating results are directly tied to egg prices, which are highly volatile and
subject to wide fluctuations, and are outside of our control. The shell egg
industry has traditionally been subject to periods of high profitability
followed by periods of significant loss. In the past, during periods of high
profitability, shell egg producers have tended to increase the number of layers
in production with a resulting increase in the supply of shell eggs, which
generally has caused a drop in shell egg prices until supply and demand return
to balance.  As a result, our financial results from year to year may
vary significantly.   Shorter term, retail sales of shell eggs
historically have been greatest during the fall and winter months and lowest
during the summer months.  Our need for working capital generally is
highest in the last and first fiscal quarters ending in May and August,
respectively, when egg prices are normally at seasonal
lows.   Prices for shell eggs fluctuate in response to seasonal
factors and a natural increase in shell egg production during the spring and
early summer.  Shell egg prices tend to increase with the start of the
school year and are highest prior to holiday periods, particularly Thanksgiving,
Christmas, and Easter.  Consequently, we generally experience lower
sales and net income in our first and fourth fiscal quarters ending in August
and May, respectively. Because of these seasonal and quarterly fluctuations,
comparisons of our sales and operating results between different quarters within
a single fiscal year are not necessarily meaningful comparisons.





For the
quarter ended August 28, 2010, we produced approximately 80% of the total number
of shell eggs sold by us, with approximately 8% of such total shell egg
production being provided by contract producers.  Contract producers
operate under agreements with us for the use of their facilities in the
production of shell eggs by layers owned by us. We own the shell eggs produced
under these arrangements.  Approximately 20% of the total number of
shell eggs sold by us was purchased from outside producers.





Our cost
of production is materially affected by feed costs, which currently averages
about 60% of our total farm egg production cost.  Changes in market
prices for corn and soybean meal, the primary ingredients of the feed we use,
result in changes in our cost of goods sold.   The cost of our
feed ingredients, which are commodities, are subject to factors over which we
have little or no control such as volatile price changes caused by weather, size
of harvest, transportation and storage costs, demand and the agricultural and
energy policies of the United States and foreign governments.  The
corn and soybean crops were large for the 2010 crop year. Feed ingredient
prices have continued to increase sharply since July
2010.    Market prices for corn remain higher in part
because of increases in export demand and increases in demand from ethanol
producers. Market prices for soybean meal remain high because of competition for
planted acres for other grain production. The prospective outlook is for
feed costs to remain high and increasingly volatile in the year
ahead.





In
August, 2010 there was a nationwide recall for eggs produced by two egg
producers in Iowa.  None of the eggs recalled were produced at
Cal-Maine facilities, however, we had purchased for resale a very limited amount
of eggs from the affected facilities.  The recall had minimal effect
on Cal-Maine’s results for the quarter.  While egg prices initially
moved higher in late August, prices have since dropped back below levels prior
to the recall.  Consumer demand was also negatively impacted by the
recall; however, it is still too soon to predict the long-term effect, if any,
of the recall on demand trends.


13





RESULTS
OF OPERATIONS





The
following table sets forth, for the periods indicated, certain items from our
Condensed Consolidated Statements of Operations expressed as a percentage of net
sales.





Percentage of Net Sales13 Weeks EndedAugust28,2010
                      
                      
                      August29,2009Net sales
                      
                      
                      100.0
                      %
                      
                      
                      100.0
                      %Cost of sales
                      
                      
                      82.8
                      
                      
                      
                      90.3Gross
      profit
                      
                      
                      17.2
                      
                      
                      
                      9.7Selling,
      general and administrative
                      
                      
                      13.0
                      
                      
                      
                      12.5Operating
      income (loss)
                      
                      
                      4.2
                      
                      
                      
                      (2.8
                      )Other
      income (expense):Interest
      expense, net
                      
                      
                      (0.8
                      )
                      
                      
                      (0.9
                      )Other
                      
                      
                      0.3
                      
                      
                      
                      0.1(0.5
                      )
                      
                      
                      (0.8
                      )Income
      (loss) before income taxes
                      
                      
                      3.7
                      
                      
                      
                      (3.6
                      )Income
      tax expense (benefit)
                      
                      
                      1.3
                      
                      
                      
                      (1.1
                      )Consolidated  net
      income (loss)
                      
                      
                      2.4
                      
                      
                      
                      (2.5
                      )Less:
      Net loss attributable to noncontrolling interest
                      
                      
                      (0.1
                      )
                      
                      
                      (0.5
                      )Net
      income (loss) attributable to Cal-Maine Foods, Inc.
                      
                      
                      2.5
                      %
                      
                      
                      (2.0
                      )
       %





NET
SALES





Approximately
95% of our net sales consisted of shell egg sales and approximately 3% was for
sales of egg products, with the 2% balance consisting of sales of incidental
feed and feed ingredients. Net sales for the first quarter of fiscal 2011 were
$190.4 million, an increase of $2.7 million, or 1.4 %, as compared to net sales
of $187.7 million for the first quarter of fiscal 2010.  Total dozen
eggs sold and egg selling prices increased in the current fiscal 2011 quarter as
compared to the same fiscal 2010 quarter.  Dozens sold for the 2011
current quarter were 194.0 million dozen, an increase of 1.0 million dozen, or
0.5%, as compared to 193.0 million dozen sold for the first quarter of fiscal
2010. Our net average selling price per dozen for the fiscal 2011 first quarter
was $.930, compared to $.922 for the first quarter of fiscal 2010, an increase
of 0.9%.  Our net average selling price is the blended price for all
sizes and grades of shell eggs, including non-graded egg sales, breaking stock
and undergrades.





The table
below represents an analysis of our non-specialty and specialty shell egg
sales.  Following the table is a discussion of the information
presented in the table.





13 weeks ended(Amounts in thousands)
                    
                    August 28,
                      2010
                    
                    
                    August 29,
                      2009Total
      net sales
                    
                    $
                    190,403
                    
                    
                    $
                    187,666Non-specialty
      shell egg sales
                    
                    $
                    134,116
                    
                    
                    $
                    137,852Specialty
      shell egg sales
                    
                    
                    46,222
                    
                    
                    
                    40,196Other
                    
                    
                    864
                    
                    
                    
                    821Net
      shell egg sales
                    
                    $
                    181,202
                    
                    
                    $
                    178,869Net
      shell egg sales as a percent  of total net sales
                    
                    
                    95
                    %
                    
                    
                    95
                    %Non-specialty
      shell egg dozens sold
                    
                    
                    165,156
                    
                    
                    
                    167,608Specialty
      shell egg dozens sold
                    
                    
                    28,831
                    
                    
                    
                    25,439Total
      dozens sold
                    
                    
                    193,987
                    
                    
                    
                    193,047





Our
non-specialty shell eggs include all shell egg sales not specifically identified
as specialty shell egg sales.   The non-specialty shell egg
market is characterized by an inelasticity of demand, and small increases in
production or decreases in demand can have a large adverse effect on prices and
vice-versa.  For the thirteen-week period ended August 28, 2010,
non-specialty shell eggs represented approximately 74.0% of our shell egg dollar
sales, as compared to 77.1% for the thirteen-week period ended August 29,
2009.   For the thirteen-week period ended August 28, 2010,
non-specialty shell eggs accounted for approximately 85.1% of the total shell
egg dozen volume, as compared to 86.8% for the thirteen-week period ended August
29, 2009.


14


We
continue to increase our sales volume of specialty eggs, which include
nutritionally enhanced, cage free and organic eggs. Specialty egg retail prices
are less cyclical than standard shell egg prices and are generally higher due to
consumer willingness to pay for the increased benefits from these products. For
the thirteen-week period ended August 28, 2010, specialty shell eggs represented
approximately 25.5% of our shell egg dollar sales, as compared to 22.5% for the
thirteen-week period ended August 29, 2009. For the thirteen-week period ended
August 28, 2010, specialty shell eggs accounted for approximately 14.9% of the
total shell egg dozen volume, as compared to 13.2% for the thirteen-week period
ended August 29, 2009.





The shell
egg sales classified as “Other” represent sales of hard cooked eggs, hatching
eggs, and baby chicks, which are included with our shell egg
operations.  For the thirteen-week periods ended August 28, 2010 and
August 29, 2009, shell egg sales classified as “Other” represented approximately
..5% of shell egg dollar sales.





Our egg
product sales represent approximately 3% of our net sales. For the thirteen
weeks ended August 28, 2010, egg product sales were $6.6 million, an increase of
$600,000, or 10%, as compared to $6.0 million for the same thirteen week period
last year.   Egg products are primarily sold into the
institutional and food service sectors.  Although there was a slight
improvement in our egg product sales, there continues to be weakness in the
institutional and food service sectors.





COST OF
SALES





The following table presents an
analysis of our cost of sales.





13weeksended(Amountsinthousands)
                    
                    August28,2010
                    
                    
                    August29,2009Cost
      of sales
                    
                    $
                    157,667
                    (1)
                    
                    $
                    169,449Dozens
      produced
                    
                    
                    155,344
                    
                    
                    
                    156,143Dozens
      purchased outside*
                    
                    
                    38,643
                    
                    
                    
                    36,904Dozens
      sold
                    
                    
                    193,987
                    
                    
                    
                    193,047Feed
      cost (price per dozen produced)
                    
                    $
                    0.33
                    
                    
                    $
                    0.36Farm
      production cost (price per dozen produced)
                    
                    $
                    0.56
                    
                    
                    $
                    0.60Outside
      egg purchases (average price paid per dozen)
                    
                    $
                    0.97
                    
                    
                    $
                    1.03







* - Net
of processing loss and inventory adjustments





(1)   
      -
            We
      reduced cost of sales by $4.0 million for proceeds received under our
      business interruption coverage related to the Farwell, Texas fire
      (See note 11 in the notes to financial
  statements)





Cost of sales consists of costs
directly related to production and processing of shell eggs, including feed
costs, and purchases of shell eggs from outside egg producers. Cost of sales for
the first quarter of fiscal 2011 was $157.7 million, a decrease of $11.7
million, or 6.9%, as compared to cost of sales of $169.4 million for the first
quarter of fiscal 2010. The decrease is due to the recognition of business
interruption proceeds received from our insurance carriers, decreases in feed
costs and decreases in the cost of egg purchases from outside egg
producers.   Egg purchases from outside egg producers were lower
due to lower average Urner Barry quoted prices for eggs during the quarter and a
change in the mix of outside eggs purchased.   Feed cost per
dozen for the fiscal 2011 first quarter was $.334, compared to $.357 per dozen
for the comparable fiscal 2010 first quarter, a decrease of 6.4%. The decreases
in feed costs and decreases in costs for outside egg purchases in addition to
the reduction of cost of sales for the business interruption proceeds received
from our insurance carriers resulted in an increase in gross profit from 9.7% of
net sales for the quarter ended August 29, 2009 to 17.2% of net sales for the
current quarter ended August 28, 2010.


15


SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES





The
following table presents an analysis of our selling, general and administrative
expenses.





13weeksended(Amountsinthousands)
                  
                  August28,
                    2010
                  
                  
                  August29,
                    2009
                  
                  
                  ChangeStock
      compensation expense
                  
                  $
                  (158
                  )
                  
                  $
                  1,301
                  
                  
                  $
                  (1,459
                  )Specialty
      egg expense
                  
                  
                  6,123
                  
                  
                  
                  4,266
                  
                  
                  
                  1,857Payroll
      and overhead
                  
                  
                  6,484
                  
                  
                  
                  5,256
                  
                  
                  
                  1,228Other
      expenses
                  
                  
                  4,818
                  
                  
                  
                  5,746
                  
                  
                  
                  (928
                  )Delivery
      expense
                  
                  
                  7,428
                  
                  
                  
                  6,949
                  
                  
                  
                  479Total
                  
                  $
                  24,695
                  
                  
                  $
                  23,518
                  
                  
                  $
                  1,177





Selling, general and administrative
expenses include costs of marketing, distribution, accounting and corporate
overhead. Selling, general and administrative expense for the first quarter of
fiscal 2010 was $24.7 million, an increase of $1.2 million, or 5.1%, as compared
to the expense of $23.5 million for the first quarter of fiscal 2010. Stock
based compensation plans expense decreased.  The calculation of the
stock based compensation plans expense is dependent on the closing stock price
of the Company’s stock.  From the fiscal year ended May 29, 2010 to
August 28, 2010, the stock price declined from $32.37 at May 29, 2010 to $31.50
at August 28, 2010, which is a 2.7% decrease.   From the fiscal
year ended May 30, 2009 to August 29, 2009, the stock price increased from
$24.37 at May 30, 2009 to $28.95 at August 29, 2009, which is an 18.8%
increase.   The increase in specialty egg expense is attributable
to the increase in the dozens of specialty eggs sold this year as compared to
last fiscal year and additional promotional expenses.  Payroll and
overhead increased as compared to the same period the prior year due to higher
performance based bonuses in the current period.  Other expenses,
which include expenses for supplies, repairs, professional fees, and other
expenses, decreased from the same period of the prior year.  Delivery
expense increased slightly due to increased fuel costs and the increased costs
paid for the use of outside trucking companies. As a percent of net sales,
selling, general and administrative expense increased from 12.5% for the fiscal
2010 first quarter to 13.0% for the fiscal 2011 first quarter.





OPERATING
INCOME (LOSS)





As a result of the above, operating
income was $8.0 million for the first quarter of fiscal 2011, as compared to an
operating loss of $5.3 million for the fiscal 2010 first quarter.  As
a percent of net sales, the first fiscal 2011 quarter had operating income of
4.2% of net sales, compared to an operating loss of 2.8% of net sales for the
first quarter of fiscal 2010.





OTHER
INCOME (EXPENSE)





Other
income (expense) consists of income (expenses) not directly charged to, or
related to, operations such as interest expense and equity in income (loss) of
affiliates for equity method investments.  Other expense for the first
quarter ended August 28, 2010 was $956,000, a decrease of $602,000, as compared
to $1.6 million for the quarter ended August 29, 2009. For the first quarter of
fiscal 2010, net interest expense decreased $124,000. For the first quarter of
fiscal 2011, other income increased $478,000, as compared to the first quarter
of fiscal 2010.   This increase is attributable to increased
equity in income of affiliates. In connection with our
ongoing construction activities, for the thirteen weeks ended August 28, 2010,
we capitalized $84,000 of interest expense, and we capitalized $57,000 of
interest expense for the same period ended August 29, 2009. As a percent of net
sales, other expense decreased from .8% for the fiscal 2010 first quarter to .5%
for the fiscal 2011 first quarter.





INCOME
TAXES





As a result of the above, we had
pre-tax income of $7.1 million for the quarter ended August 28, 2010, as
compared to a pre-tax loss of $6.9 million for the quarter ended August 29,
2009. For the fiscal 2011 first quarter, an income tax expense of $2.5 million
was recorded with an effective tax rate of 35.7%, as compared to income tax
benefit of $2.0 million recorded with an effective tax rate of 29.5% for the
fiscal 2010 first quarter.





Our
effective rate differs from the federal statutory income tax rate of 35% due to
state income taxes and certain items included in income or loss for financial
reporting purposes that are not included in taxable income or loss for income
tax purposes, including tax exempt interest income, the domestic manufacturers
deduction, and net income or loss attributable to noncontrolling
interest.




16





NET LOSS
ATTRIBUTABLE TO NONCONTROLLING INTEREST





Net loss
attributable to noncontrolling interest for the first quarter of fiscal 2011 was
$209,000 as compared to $1.0 million for the first quarter of fiscal
2010.


NET
INCOME (LOSS) ATTRIBUTABLE TO CAL-MAINE FOODS, INC





As a result of the above, net income
attributable to the Company for the first quarter ended August 28, 2010 was $4.8
million, or $.20 per basic and diluted share, as compared to net loss of $3.8
million, or $.16 per basic and diluted share for the quarter ended August 29,
2009. As a percent of net sales, net income attributable to the Company was 2.5%
for the quarter ended August 28, 2010, compared to net loss attributable to the
Company of 2.0% for the quarter ended August 29, 2009.





CAPITAL RESOURCES AND
LIQUIDITY





Our
working capital at August 28, 2010 was $223.7 million compared to $220.2 million
at May 29, 2010. The calculation of working capital is defined as current assets
less current liabilities.  Our current ratio was 3.35 at August 28,
2010 as compared with 2.87 at May 29, 2010. The current ratio is calculated by
dividing current assets by current liabilities. Our need for working capital
generally is highest in the last and first fiscal quarters ending in May and
August, respectively, when egg prices are normally at seasonal
lows.  Seasonal borrowing needs frequently are higher during these
quarters than during other fiscal quarters. We have $5.1 million in standby
letters of credit outstanding, which are collateralized with cash. Our long-term
debt at August 28, 2010, including current maturities, amounted to $116.2
million, as compared to $134.7 million at May 29, 2010.





For the
thirteen weeks ended August 28, 2010, $1.7 million in net cash was provided by
operating activities.  This compares to net cash used in operations of
$5.4 million for the thirteen weeks ended August 29, 2009. In the first 2011
fiscal quarter, approximately $51.3 million was provided from the sale of
short-term investments, $39.2 million was used for the purchase of short-term
investments and net $1.1 million was provided by notes receivable and
investments in nonconsolidated subsidiaries. Approximately $9,000 was provided
from disposal of property, plant and equipment and $6.5 million was used for
purchases of property, plant and equipment.  Approximately $7.0
million was used for payment of dividends on common stock and $18.4 million was
used for principal payments on long-term debt.  Approximately $71,000
was received from the issuance of common stock from treasury after the exercise
of 12,000 stock options having a strike price of $5.93 per share.  The
net result of these activities was a decrease in cash of approximately $17.0
million since May 29, 2010.





Property,
plant, and equipment collateralize our notes payable and senior secured notes.
Unless otherwise approved by our lenders, we are required by provisions of our
loan agreements to (1) maintain minimum levels of working capital (ratio of not
less than 1.25 to 1) and net worth (minimum of $90.0 million tangible net worth,
plus 45% of cumulative net income); (2) limit dividends paid in any given
quarter to not exceed an amount equal to one third of the previous quarter’s
consolidated net income (allowed if no events of default), capital expenditures
to an amount not to exceed $60.0 million in any twelve month period, and lease
obligations and additional long-term borrowings (total funded debt to total
capitalization not to exceed 55%); and (3) maintain various current and
cash-flow coverage ratios (1.25 to 1), among other restrictions. At August 28,
2010, we were in compliance with the financial covenant requirements of all loan
agreements. Under certain of the loan agreements, the lenders have the option to
require the prepayment of any outstanding borrowings in the event we undergo a
change in control, as defined in the applicable loan agreement. Our debt
agreements also require the Chief Executive Officer of the Company, or his
family, to maintain ownership of not less than 50% of the outstanding voting
stock of the Company.





Capital
expenditure requirements are expected to be for the normal repair and
replacement of our facilities. We are constructing a new integrated layer
production complex in Farwell, Texas to replace our Albuquerque, New Mexico
complex, which ceased egg production in fiscal 2007. The facility was expected
to cost approximately $32.0 million, and was estimated to be complete in January
2010. As of August 28, 2010, capital expenditures related to construction of
this complex were approximately $39.5 million (including replacement capital
expenditures related to the fire mentioned below).


17


On July
9, 2009, the Farwell, Texas egg production complex was damaged by a fire. The
700-acre facility includes a processing plant, feed mill, two pullet houses, and
nine layer houses. The fire completely destroyed four of the nine layer houses,
with additional loss of laying hens at a fifth house due to smoke inhalation.
The Company believes the effects of lost production and additional expenses
related to the fire will be substantially reimbursed by the Company’s insurance
carriers.  The Company has received $11.8 million in proceeds from its
insurance carriers through August 28, 2010 and anticipates additional insurance
proceeds to cover its losses due to the fire. The Company intends to seek
reimbursement for all of its insured losses, including lost profits and
expenses. The book value of assets written off and expenses incurred, net of
amounts reclassified to construction in progress and other assets, as the result
of the fire totaled $9.1 million through August 28, 2010. Insurance proceeds
have been recognized in the consolidated income statement for fiscal 2010 to
offset the assets written off and expenses incurred.





The
Company believes that the fire at the Farwell, Texas facility will have minimal
financial impact on our operations and does not expect any long-term disruption
to our customers. Construction to rebuild the destroyed houses is substantially
complete.  In addition, the Company is adding a tenth layer house at
the complex which will add capacity above the original design.  Due to
this casualty and expansion, maximum operations at the Farwell facility will
likely be delayed to December 2010.  Future capital expenditures will
be funded by cash flows from operations and insurance recoveries.





In the
first quarter of fiscal 2011, the Shady Dale, GA complex was damaged by a fire.
The fire completely destroyed one of the twelve layer houses, which was empty at
the time. There was an additional loss of laying hens at three adjoining layer
houses due to smoke inhalation.   The Company intends to seek
reimbursement for all of its insured losses, including lost profits and
expenses. The Company believes the effects of lost production and additional
expenses related to the fire that will be incurred will be substantially covered
by the Company’s insurance policies.  Any gain resulting from
recoveries from the insurance carriers will be recognized when the claim is
ultimately settled.





Delta Egg
Farm, LLC, an unconsolidated affiliate, has constructed an organic egg
production and distribution facility near our Chase, Kansas location. In
connection with this project, we are a pro rata guarantor, with the other Delta
Egg Farm, LLC owners, of the additional debt that was undertaken to fund
construction of this facility. We are currently a guarantor of approximately
$5.9 million of long-term debt of Delta Egg Farm, LLC.





We
previously held auction rate securities (“ARS”) which were purchased from UBS
Financial Services Inc. (“UBS”).  On June 30, 2010 we exercised a put
option that allowed us to sell our ARS back to UBS at par.  The par
value of these securities was $22,900.  These ARS served as collateral
for a $14,799 line of credit with UBS.   Proceeds received from
the sale of the ARS to UBS were used to settle this debt.





We
currently have a $1.3 million deferred tax liability due to a subsidiary’s
change from a cash basis to an accrual basis taxpayer on May 29, 1988. The
Taxpayer Relief Act of 1997 provides that this liability is payable ratably over
the 20 years beginning in fiscal 1999. However, such taxes will be due in their
entirety in the first fiscal year in which there is a change in ownership
control. We are currently making annual payments of approximately $150,000
related to this liability. However, while these current payments reduce cash
balances, payment of the $1.3 million deferred tax liability would not affect
our consolidated statement of income or stockholders’ equity, as these taxes
have been accrued and are reflected on our consolidated balance
sheet.





Looking
forward, we believe that our current cash balances, borrowing capacity, and cash
flows from operations will be sufficient to fund our current and projected
capital needs.





Impact of
Recently Issued Accounting Standards.  Please refer
to Item 7, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report Form 10-K for the year ended May 29,
2010 for a discussion of the impact of recently issued accounting standards.
There were no accounting standards issuedduring the quarter ended
August 28, 2010 that we expect will have a material impact on our consolidated
financial statements.





Critical
Accounting Policies. We
suggest that our Summary of Significant Accounting Policies, as described in
Note 1 of the Notes to Consolidated Financial Statements included in Cal-Maine
Foods, Inc. and Subsidiaries annual report on Form10-K for the fiscal year ended
May 29, 2010, be read in conjunction with this Management’s Discussion and
Analysis of Financial Condition and Results of Operations. There have been no
changes to critical accounting policies identified in our Annual Report on Form
10-K for the year ended May 29, 2010.


18


ITEM
3.  QUANTATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK





There have been no material changes in
the market risk reported in the Company's Annual Report on Form 10-K for the
fiscal year ended May 29, 2010.





ITEM
4.  CONTROLS  AND  PROCEDURES





Our disclosure controls and procedures
are designed to provide reasonable assurance that information we are required to
disclose in our periodic reports filed with the Securities and Exchange
Commission is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms.  Based on an
evaluation of our disclosure controls and procedures conducted by our Chief
Executive Officer and Chief Financial Officer, together with other financial
officers, such officers concluded that our disclosure controls and procedures
are effective as of the end of the period covered by this report.There were no changes in our internal
control over financial reporting identified in connection with the evaluation
that occurred during our last fiscal quarter that have significantly affected or
are reasonably likely to materially affect our internal control over financial
reporting.





PART
II.        OTHER
INFORMATION





ITEM
1.  LEGAL PROCEEDINGS





Except as
noted below, there have been no new matters or changes to matters identified in
our Annual Report on Form 10-K for the year ended May 29, 2010.





Personal Injury Chicken
Litter Litigation





Cal-Maine Farms, Inc. is presently a
defendant in two personal injury cases in the Circuit Court of Washington
County, Arkansas.  Those cases are styled, McWhorter vs. Alpharma,
Inc.,et
al., and
Carroll,et
al.vs.
Alpharma, Inc.,et
al.Cal-Maine Farms, Inc.
was named as a defendant in the McWhorter case on
February 3, 2004.  It was named as a defendant in the Carroll case on May
2, 2005.  Co-defendants in both cases include other integrated poultry
companies such as Tyson Foods, Inc., Cargill, Incorporated, George’s Farms,
Inc., Peterson Farms, Inc., Simmons Foods, Inc., and Simmons Poultry Farms,
Inc.  The manufacturers of an additive for broiler feed are also
included as defendants.  Those defendants are Alpharma, Inc. and
Alpharma Animal Health, Co.





Both cases allege that the plaintiffs
have suffered medical problems resulting from living near land upon which
“litter” from the defendants’ flocks was spread as fertilizer.  The
McWhorter case
focuses on mold and fungi allegedly created by the application of
litter.  The Carroll case also
alleges injury from mold and fungi, but focuses primarily on the broiler feed
ingredient as the cause of the alleged medical injuries.  No trial
date for either the Carroll or McWhorter case has
been set.





Several other separate, but related,
cases were prosecuted in the same venue by the same attorneys.  The
same theories of liability were prosecuted in all of the cases.  No
Cal-Maine company was named as a defendant in any of those other
cases.  The plaintiffs selected one of those cases, Green,et
al.vs.
Alpharma, Inc.,et
al.,as a
bellwether case to go to trial first.  All of the poultry defendants
were granted summary judgment in the Green case on August
2, 2006.  On May 8, 2008, however, the Arkansas Supreme Court reversed
the summary judgment in favor of the poultry defendants and remanded the case
for trial.  Green was re-tried,
and again resulted in a defense verdict.  The plaintiffs have appealed
this judgment.  The appeal was noticed in July 2009.  The
appeal is pending.


19


There has been no effort by the
plaintiffs in the McWhorter and Carroll cases to set
those cases for trial.  Whether the plaintiffs in those cases will
prosecute those cases to trial is not known, and their likelihood of success if
they do cannot be gauged at this time.





State of Oklahoma Watershed
Pollution Litigation





On June
18, 2005, the State of Oklahoma filed suit, in the United States District Court
for the Northern District of Oklahoma, against a number of companies, including
Cal-Maine Foods, Inc. and Cal-Maine Farms, Inc.  We and Cal-Maine
Farms filed our joint answer and motion to dismiss the suit on October 3,
2005.  The State of Oklahoma claims that through the disposal of
chicken litter the defendants have polluted the Illinois River
Watershed.  This watershed provides water to eastern
Oklahoma.  The Complaint seeks injunctive relief and monetary
damages.  The parties participated in a series of mediation meetings
without success.  Cal-Maine Foods, Inc. no longer operates in the
watershed.  Accordingly, we do not anticipate that Cal-Maine Foods,
Inc. will be materially affected by the request for injunctive
relief.  Cal-Maine Foods, Inc. owns 100% of Benton County Foods, LLC,
which is an ongoing commercial shell egg operation within the Illinois River
Watershed.  Benton County Foods, LLC is not a defendant in the
litigation.





The
district court has dismissed all damages claims against all
defendants.  The basis for that ruling was the absence of a necessary
party plaintiff, the Cherokee Nation.  The Cherokee Nation owns part
of the land and water in the watershed.  After the dismissal of the
damages claims, the Cherokee Nation attempted to intervene as a
plaintiff.  This attempt was rejected by the district
court.  The Cherokee Nation appealed that denial to the 10th Circuit
Court of Appeals, which affirmed the district court’s ruling.





The
remaining claims relate to the State of Oklahoma’s request for injunctive
relief, and the State of Oklahoma’s request for statutory penalties against the
defendants for alleged polluting activities.   The trial of these
remaining claims began on September 25, 2009.   The trial of this
matter has been concluded and the judge has heard final arguments.  No
decision has been rendered, but one is expected in the near future.





Egg Antitrust
Litigation





Between
September 25, 2008 and January 8, 2009, the Company was named as one of several
defendants in sixteen antitrust cases involving the United States shell egg
industry.  In all sixteen cases, the named plaintiffs sued on behalf of
themselves and a putative class of others who claim to be similarly
situated.  In fourteen of the cases, the named plaintiffs allege that they
are retailers or distributors that purchased shell eggs and egg products
directly from one or more of the defendants.  In the other two cases, the
named plaintiffs are individuals who allege that they purchased shell eggs and
egg products indirectly from one or more of the defendants - that is, they
purchased from retailers that had previously purchased from defendants or other
parties.




The
Judicial Panel on Multidistrict Litigation consolidated all of these cases (as
well as certain other cases in which the Company was not a named defendant) for
pretrial proceedings in the United States District Court for the Eastern
District of Pennsylvania.  The Pennsylvania court has organized the cases
around two groups (direct purchasers and indirect purchasers) and has named
interim lead counsel for the named plaintiffs in each group.




The Direct Purchaser
Case.The named plaintiffs in the direct purchaser case filed
a consolidated complaint on January 30, 2009.  On April 30, 2009, the
Company filed motions to dismiss the direct purchasers’ consolidated
complaint.  The direct purchaser plaintiffs did not respond to those
motions.  Instead, the direct purchaser plaintiffs announced a
potential settlement with one defendant.  That settlement is still
subject to court approval, but if it is approved, the settlement would not
require the settling party to pay any money.  Instead, the settling
defendant, while denying all liability, would provide cooperation in the form of
documents and witness interviews to the plaintiffs’ attorneys.  After
announcing this potential settlement with one defendant, the direct purchaser
plaintiffs filed an amended complaint on December 11, 2009.  On
February 5, 2010, the Company joined with other defendants in moving to dismiss
the direct purchaser plaintiffs’ claims for damages outside the four-year
statute of limitations period and claims arising from a supposed conspiracy in
the egg products sector.  On February 26, 2010, the Company filed its
answer and affirmative defenses to the direct purchaser plaintiffs’ amended
complaint.  On June 4, 2010, the direct purchaser plaintiffs announced
a potential settlement with a second defendant.  This settlement is
still subject to court approval.  If this settlement is approved, then
the defendant would pay a total of $25 million and would provide other
consideration in the form of documents, witness interviews, and
declarations.  This settling defendant denied all liability in its
potential agreement with the direct purchaser plaintiffs and stated publicly
that it settled merely to avoid the cost and uncertainty of continued
litigation.


20


The Indirect Purchaser
Case.The named plaintiffs in the indirect purchaser case
filed a consolidated complaint on February 27, 2009.  On April 30,
2009, the Company filed motions to dismiss the indirect purchasers’ consolidated
complaint.  The indirect purchaser plaintiffs did not respond to those
motions.  Instead, the indirect purchaser plaintiffs filed an amended
complaint on April 8, 2010.  On May 7, 2010, the Company joined with
other defendants in moving to dismiss the indirect purchaser plaintiffs’ claims
for damages outside the four-year statute of limitations period, claims arising
from a supposed conspiracy in the egg products sector, claims arising under
certain state antitrust and consumer frauds statutes, and common-law claims for
unjust enrichment.  On June 4, 2010, the Company filed its answer and
affirmative defenses to the indirect purchaser plaintiffs’ amended
complaint.




Allegations in Each
Case.In both consolidated complaints, the named plaintiffs
allege that the Company and certain other large domestic egg producers conspired
to reduce the domestic supply of eggs in a concerted effort to raise the price
of eggs to artificially high levels.  In both consolidated complaints,
plaintiffs allege that all defendants agreed to reduce the domestic supply of
eggs by (a) manipulating egg exports and (b) implementing industry-wide animal
welfare guidelines that reduced the number of hens and eggs.




Both
groups of named plaintiffs seek treble damages and injunctive relief on behalf
of themselves and all other putative class members in the United States. 
Both groups of named plaintiffs allege a class period starting on January 1,
2000 and running “through the present.”  The direct purchaser consolidated
case alleges two separate sub-classes – one for direct purchasers of shell eggs
and one for direct purchasers of egg products.  The direct purchaser
consolidated case seeks relief under the Sherman Act.  The indirect
purchaser consolidated case seeks relief under the Sherman Act and the statutes
and common-law of various states, the District of Columbia, and Puerto
Rico.




The
Pennsylvania court has entered a series of orders related to case management and
scheduling.  There is no definite schedule in either consolidated case for
discovery, class certification proceedings, or filing motions for summary
judgment.  No trial date has been set in either consolidated
case.




The
Company intends to continue to defend these cases as vigorously as possible
based on defenses which the Company believes are meritorious and
provable.




Florida Civil Investigative
Demand




On November 4, 2008, the Company
received an antitrust civil investigative demand from the Attorney General of
the State of Florida.  The demand seeks production of documents and
responses to interrogatories relating to the production and sale of eggs and egg
products.  The Company is cooperating with this investigation and
expects to provide responsive information.  No allegations of
wrongdoing have been made against the Company in this matter.




ITEM 1A.  RISK
FACTORS





There
have been no material changes in the risk factors previously disclosed in the
Company's Annual Report on  Form 10-K for the fiscal year ended May
29, 2010.





ITEM 2.    UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS





We made
no sales of unregistered securities during the first quarter of fiscal
2011.





For
information as to working capital utilization see “Capital Resources” under Part
1, Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations of this Form 10-Q.





ITEM 5.   OTHER
INFORMATION





None


21


ITEM
6.   EXHIBITS





a.
                  
                  ExhibitsNo.
                  
                  Description3.1
                  
                  Amended
      and Restated Certificate of Incorporation (incorporated by reference to
      the same exhibit in the Company’s Form S-1 Registration Statement No.
      333-14809)3.2
                  
                  Amendment
      to Article 4 of the Certificate of Incorporation (incorporated by
      reference to the same exhibit in the Company’s Form 10-K for fiscal year
      ended May 29, 2004)3.3
                  
                  By-Laws,
      as amended (incorporated by reference to the same exhibit in the Company’s
      Form 8-K, dated August 13, 2007)31.1
                  
                  Certification
      of The Chief Executive Officer31.2
                  
                  Certification
      of The Chief Financial Officer32.0
                  
                  Section
      1350 Certification of The Chief Executive Officer and The Chief Financial
      Officer99.1
                  
                  Press
      release dated September 27, 2010 announcing interim period financial
      information


22


SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.





CAL-MAINE
      FOODS, INC.(Registrant)Date:  September
      30, 2010
              /s/   Timothy A.
      DawsonTimothy
      A. DawsonVice
      President/Chief Financial Officer(Principal
      Financial Officer)Date:  September
      30, 2010
              /s/   Charles F.
      CollinsCharles
      F. CollinsVice
      President/Controller(Principal
      Accounting Officer)


23