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 November 27, 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.


Yesx      No ̈





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
      filerxNon- 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 ̈Nox





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 December 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.
                                                                              
                                                                              Financial
      StatementsCondensed
      Consolidated Financial Statements (Unaudited)
                                                                              
                                                                              3Condensed
      Consolidated Balance Sheets - November
      27, 2010 and May 29,
      2010
                                                                              
                                                                              3Condensed
      Consolidated Statements of Income - Thirteen
      Weeks and Twenty-Six Weeks Ended November
      27, 2010 and  November 28,
      2009
                                                                              
                                                                              4Condensed
      Consolidated Statements of Cash Flows - Twenty-Six
      Weeks Ended November 27, 2010 and November
      28,
      2009
                                                                              
                                                                              5Notes
      to Condensed Consolidated Financial Statements
                                                                              
                                                                              6Item
      2.
                                                                              
                                                                              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                                                              
                                                                              14Item
      3.
                                                                              
                                                                              Quantitative
      and Qualitative Disclosures About Market Risk
                                                                              
                                                                              21Item
      4.
                                                                              
                                                                              Controls
      and Procedures
                                                                              
                                                                              22Part
      II.
                                                                              
                                                                              
                                                                              
                                                                              Other
      InformationItem
      1.
                                                                              
                                                                              Legal
      Proceedings
                                                                              
                                                                              22Item 1A.
                                                                              
                                                                              Risk
      Factors
                                                                              
                                                                              24Item
      6.
                                                                              
                                                                              Exhibits
                                                                              
                                                                              25Signatures
                                                                              
                                                                              26


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)





November27,2010
                              
                              
                              May29,2010(unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                              
                              $
                              66,388
                              
                              
                              $
                              99,453Investment
      securities available-for-sale
                              
                              
                              101,454
                              
                              
                              
                              76,702Investment
      securities trading
                              
                              
                              -
                              
                              
                              
                              22,900Trade
      and other receivables
                              
                              
                              84,438
                              
                              
                              
                              43,587Inventories
                              
                              
                              97,172
                              
                              
                              
                              93,968Prepaid
      expenses and other current assets
                              
                              
                              1,878
                              
                              
                              
                              1,550Total
      current assets
                              
                              
                              351,330
                              
                              
                              
                              338,160Property,
      plant and equipment, net
                              
                              
                              227,756
                              
                              
                              
                              234,111Goodwill
                              
                              
                              22,117
                              
                              
                              
                              22,117Other
      investments
                              
                              
                              17,518
                              
                              
                              
                              17,708Other
      intangible assets
                              
                              
                              11,961
                              
                              
                              
                              12,523Other
      long-lived assets
                              
                              
                              5,994
                              
                              
                              
                              6,665TOTAL
      ASSETS
                              
                              $
                              636,676
                              
                              
                              $
                              631,284LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                              
                              $
                              76,736
                              
                              
                              $
                              61,011Accrued
      dividends payable
                              
                              
                              5,062
                              
                              
                              
                              7,009Current
      maturities of long-term debt
                              
                              
                              14,231
                              
                              
                              
                              29,974Deferred
      income taxes
                              
                              
                              20,281
                              
                              
                              
                              19,980Total
      current liabilities
                              
                              
                              116,310
                              
                              
                              
                              117,974Long-term
      debt, less current maturities
                              
                              
                              98,343
                              
                              
                              
                              104,699Other
      non-current liabilities
                              
                              
                              3,752
                              
                              
                              
                              3,299Deferred
      income taxes
                              
                              
                              28,607
                              
                              
                              
                              28,356Total
      liabilities
                              
                              
                              247,012
                              
                              
                              
                              254,328Stockholders’
      equity:Common
      stock $0.01 par value per share:Authorized
      shares – 60,000Issued
      35,130 shares and 21,453 shares outstanding atNovember
      27, 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 November 27, 2010 and May 29, 2010
                              
                              
                              24
                              
                              
                              
                              24Paid-in
      capital
                              
                              
                              33,148
                              
                              
                              
                              32,699Retained
      earnings
                              
                              
                              379,109
                              
                              
                              
                              365,821Accumulated
      other comprehensive income, net of tax
                              
                              
                              160
                              
                              
                              
                              -Common
      stock in treasury at cost – 13,677 shares at November 27,
    2010and
      13,689 shares at May 29, 2010
                              
                              
                              (20,947
                              )
                              
                              
                              (20,966
                              )Total
      Cal-Maine Foods, Inc. stockholders’ equity
                              
                              
                              391,845
                              
                              
                              
                              377,929Noncontrolling
      interests in consolidated entities
                              
                              
                              (2,181
                              )
                              
                              
                              (973
                              )Total
      stockholders’ equity
                              
                              
                              389,664
                              
                              
                              
                              376,956TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                              
                              $
                              636,676
                              
                              
                              $
                              631,284





See notes
to condensed consolidated financial statements.


3





CAL-MAINE FOODS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


(in
thousands, except per share amounts)


(unaudited)





13 Weeks Ended
                      
                      
                      26 Weeks EndedNovember 27,
                        2010
                      
                      
                      November 28,
                        2009
                      
                      
                      November 27,
                        2010
                      
                      
                      November 28,
                        2009Net
      sales
                      
                      $
                      234,523
                      
                      
                      $
                      229,233
                      
                      
                      $
                      424,926
                      
                      
                      $
                      416,899Cost
      of sales
                      
                      
                      189,308
                      
                      
                      
                      182,406
                      
                      
                      
                      346,975
                      
                      
                      
                      351,855Gross
      profit
                      
                      
                      45,215
                      
                      
                      
                      46,827
                      
                      
                      
                      77,951
                      
                      
                      
                      65,044Selling,
      general, andAdministrative
                      
                      
                      22,432
                      
                      
                      
                      21,392
                      
                      
                      
                      47,127
                      
                      
                      
                      44,910Operating
      income
                      
                      
                      22,783
                      
                      
                      
                      25,435
                      
                      
                      
                      30,824
                      
                      
                      
                      20,134Other
      income (expense):Interest
      expense, net
                      
                      
                      (1,547
                      )
                      
                      
                      (1,675
                      )
                      
                      
                      (3,139
                      )
                      
                      
                      (3,391
                      )Other
                      
                      
                      1,162
                      
                      
                      
                      876
                      
                      
                      
                      1,798
                      
                      
                      
                      1,033(385
                      )
                      
                      
                      (799
                      )
                      
                      
                      (1,341
                      )
                      
                      
                      (2,358
                      )Income
      before income tax
                      
                      
                      22,398
                      
                      
                      
                      24,636
                      
                      
                      
                      29,483
                      
                      
                      
                      17,776Income
      tax expense
                      
                      
                      8,212
                      
                      
                      
                      9,045
                      
                      
                      
                      10,743
                      
                      
                      
                      7,019Net
      income
                      
                      
                      14,186
                      
                      
                      
                      15,591
                      
                      
                      
                      18,740
                      
                      
                      
                      10,757Less:
      Net loss attributable to noncontrolling interest
                      
                      
                      (1,000
                      )
                      
                      
                      (503
                      )
                      
                      
                      (1,209
                      )
                      
                      
                      (1,505
                      )Net
      income attributable to Cal-Maine Foods, Inc.
                      
                      $
                      15,186
                      
                      
                      $
                      16,094
                      
                      
                      $
                      19,949
                      
                      
                      $
                      12,262Net
      income per common share:Basic
                      
                      $
                      0.64
                      
                      
                      $
                      0.68
                      
                      
                      $
                      0.84
                      
                      
                      $
                      0.52Diluted
                      
                      $
                      0.63
                      
                      
                      $
                      0.67
                      
                      
                      $
                      0.83
                      
                      
                      $
                      0.51Dividends  per
      common share
                      
                      $
                      0.212
                      
                      
                      $
                      0.172
                      
                      
                      $
                      0.279
                      
                      
                      $
                      0.172Weighted average
      shares outstanding:Basic
                      
                      
                      23,853
                      
                      
                      
                      23,807
                      
                      
                      
                      23,848
                      
                      
                      
                      23,799Diluted
                      
                      
                      23,944
                      
                      
                      
                      23,881
                      
                      
                      
                      23,940
                      
                      
                      
                      23,873





See notes
to condensed consolidated financial statements.


4


CAL-MAINE FOODS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(in
thousands)


(unaudited)





26 Weeks EndedNovember 27, 2010
                
                
                November 28, 2009Operating
      ActivitiesNet
      income including noncontrolling interests
                
                $
                18,740
                
                
                $
                10,757Depreciation
      and amortization
                
                
                15,510
                
                
                
                15,019Other
      adjustments/net
                
                
                (26,688
                )
                
                
                10,889Net
      cash provided by operating activities
                
                
                7,562
                
                
                
                36,665Investing
      ActivitiesPurchases
      of investments
                
                
                (75,241
                )
                
                
                (8,167
                )Sales
      of investments
                
                
                73,651
                
                
                
                15,265Acquisition
      of businesses, net of cash acquired
                
                
                —
                
                
                
                (508
                )Purchases
      of property, plant and equipment
                
                
                (9,596
                )
                
                
                (10,763
                )Payments
      received on notes receivable and from investments in
      affiliates
                
                
                1,653
                
                
                
                651Increase
      in notes receivable and investments in affiliates
                
                
                (516
                )
                
                
                (705
                )Net
      proceeds from disposal of property, plant and equipment
                
                
                57
                
                
                
                1,179Net
      cash used in investing activities
                
                
                (9,992
                )
                
                
                (3,048
                )Financing
      ActivitiesProceeds
      from issuance of common stock from treasury
                
                
                71
                
                
                
                317Payment
      of purchase obligation
                
                
                —
                
                
                
                (8,150
                )Proceeds
      from long-term borrowings
                
                
                —
                
                
                
                30,000Principal
      payments on long-term debt
                
                
                (22,099
                )
                
                
                (8,031
                )Payments
      of dividends
                
                
                (8,607
                )
                
                
                (3,425
                )Net
      cash provided by (used in) financing activities
                
                
                (30,635
                )
                
                
                10,711Net
      change in cash and cash equivalents
                
                
                (33,065
                )
                
                
                44,328Cash
      and cash equivalents at beginning of period
                
                
                99,453
                
                
                
                66,883Cash
      and cash equivalents at end of period
                
                $
                66,388
                
                
                $
                111,211





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)


November
27, 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 and twenty-six weeks ended
November 27, 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 expense (benefit) for the twenty-six weeks ended
November 27, 2010 and November 28, 2009 was ($114) and $1,086,
respectively.  Our liabilities associated with Stock Appreciation
Rights as of November 27, 2010 and November 28, 2009 were $2,795 and $4,376,
respectively.




During
the twenty-six weeks ended November 27, 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 twenty-six
weeks ended November 27, 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:





November27,2010
                      
                      
                      May29,2010Flocks
                      
                      $
                      61,286
                      
                      
                      $
                      60,387Eggs
                      
                      
                      7,403
                      
                      
                      
                      7,481Feed
      and supplies
                      
                      
                      28,483
                      
                      
                      
                      26,100$
                      97,172
                      
                      
                      $
                      93,968


6


4.
            Contingencies





The
Company is the defendant in certain legal actions.  The Company intends to
vigorously defend its position regarding this litigation. The ultimate outcome
of this litigation cannot presently be determined. Consequently, no estimate of
any possible loss related to this litigation can reasonably be determined.
However, in management’s opinion, the likelihood of a material adverse outcome
is remote in regards to all matters except the egg antitrust
litigation.





Management
determined that recent developments in the egg antitrust litigation have changed
the likelihood of a material adverse outcome to reasonably possible. Two of the
defendants in the case have reached a settlement agreement with the plaintiffs,
subject to court approval.  Neither settlement agreement admits any
liability on the part of the defendants. Since the inception of this litigation,
the Company has denied the allegations of the plaintiffs and has been vigorously
defending the case.  The Company’s decision to defend has not been
altered by settlement by two of our co-defendants.  The Company will
continue to defend the case based on defenses which we believe are meritorious
and provable.  At the present time it is not possible to estimate the
amount of monetary exposure, if any, to the Company as a result of this
case.





Accordingly, adjustments, if any, which
might result from the resolution of these legal matters, have not been reflected
in the financial statements. These legal actions are discussed in detail atPart II, Item 1, of this report.





5.
            Net
      Income 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.  The computations of basic and diluted net
income per share attributable to the Company are as follows:





13
      weeks ended
                    
                    
                    26
      weeks endedNovember
      27, 2010
                    
                    
                    November
      28, 2009
                    
                    
                    November
      27, 2010
                    
                    
                    November
      29, 2008Net
      income attributable toCal-Maine
      Foods, Inc.
                    
                    $
                    15,186
                    
                    
                    $
                    16,094
                    
                    
                    $
                    19,949
                    
                    
                    $
                    12,262Basic
      weighted-average common sharesoutstanding
                    
                    
                    23,853
                    
                    
                    
                    23,807
                    
                    
                    
                    23,848
                    
                    
                    
                    23,799Effect
      of dilutive securities:Common
      stock options
                    
                    
                    91
                    
                    
                    
                    74
                    
                    
                    
                    92
                    
                    
                    
                    74Dilutive
      common shares outstanding
                    
                    
                    23,944
                    
                    
                    
                    23,881
                    
                    
                    
                    23,940
                    
                    
                    
                    23,873Net
      income per common share attributable to Cal-Maine Foods
    Inc:Basic
                    
                    $
                    0.64
                    
                    
                    $
                    0.68
                    
                    
                    $
                    0.84
                    
                    
                    $
                    0.52Diluted
                    
                    $
                    0.63
                    
                    
                    $
                    0.67
                    
                    
                    $
                    0.83
                    
                    
                    $
                    0.51





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, dividends are paid 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 will 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 in accord with the
above.  The amount of the accrual appears on the condensed
consolidated balance sheet as “Accrued dividends payable.”


7


7.
            Comprehensive
      Income





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





13WeeksEnded
                    
                    
                    26WeeksEndedNovember27,2010
                    
                    
                    November28,2009
                    
                    
                    November27,2010
                    
                    
                    November28,2009Net
      income (loss) attributable to Cal-Maine Foods, Inc.  and
      noncontrolling interest
                    
                    $
                    14,186
                    
                    
                    $
                    15,591
                    
                    
                    $
                    18,740
                    
                    
                    $
                    10,757Other
      comprehensive income —Unrealized
      gains on investment securities available-for-sale, net of
    tax
                    
                    
                    1
                    
                    
                    
                    -
                    
                    
                    
                    160
                    
                    
                    
                    -Total
      comprehensive income
                    
                    $
                    14,187
                    
                    
                    $
                    15,591
                    
                    
                    $
                    18,900
                    
                    
                    $
                    10,757





8.
            Investment
      securities (available-for-sale and
trading)





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, time deposits, United States treasury bills, United
States government obligations, government agency bonds, taxable municipal
bonds,  tax-exempt municipal bonds,  zero coupon municipal
bonds and corporate 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 for which there are 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 twenty six-week period ended
November 27, 2010, we recognized an unrealized gain of $262 ($160 net of tax) in
the line item “Accumulated other comprehensive income, net of tax” on our
Condensed Consolidated Balance Sheet as of November 27, 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.





At
November 27, 2010 and May 29, 2010, we had $101,454 and $76,702,
respectively,  of current investment securities available-for-sale
consisting of commercial paper, certificates of deposit, time deposits, United
States treasury bills, United States government obligations, government agency
bonds, taxable municipal bonds,  tax-exempt municipal bonds, zero
coupon municipal bonds and corporate 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




8


·
            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:





November 27, 2010
                  
                  
                  May 29, 2010Fair Value
                  
                  
                  Carrying Value
                  
                  
                  Fair Value
                  
                  
                  Carrying ValueTotal
      Debt
                  
                  $
                  116,079
                  
                  
                  $
                  112,574
                  
                  
                  $
                  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 November  27, 2010:





Fair Value Measurements at Reporting Date UsingQuoted Pricesin Active
                    
                    SignificantMarkets for
                    
                    Other
                    
                    SignificantIdentical
                    
                    Observable
                    
                    UnobservableInstruments
                    
                    Inputs
                    
                    Inputs
                    
                    Total(Level1)
                    
                    (Level2)
                    
                    (Level3)
                    
                    BalanceInvestment
      securitiesavailable-for-sale
      (Current)
                    
                    $
                    —
                    
                    
                    $
                    101,454
                    
                    
                    $
                    —
                    
                    
                    $
                    101,454Total
      assets measured at fair value
                    
                    $
                    —
                    
                    
                    $
                    101,454
                    
                    
                    $
                    —
                    
                    
                    $
                    101,454





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
      securitiesavailable-for-sale
      (Current)
                        
                        $
                        —
                        
                        
                        $
                        76,702
                        
                        
                        $
                        —
                        
                        
                        $
                        76,702Investment
      securitiestrading
      (Current)*
                        
                        
                        —
                        
                        
                        
                        —
                        
                        
                        
                        22,900
                        
                        
                        
                        22,900Total
      assets measured at fair value
                        
                        $
                        —
                        
                        
                        $
                        76,702
                        
                        
                        $
                        22,900
                        
                        
                        $
                        99,602


*
                    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.


9




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 November 27, 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 – November 27, 2010
                  
                  $
                  —




Level 2:We classified our
current investment securities – available-for-sale as level
2.   These securities consist of commercial paper, certificates
of deposit, time deposits, United States treasury bills, United States
government obligations, government agency bonds, taxable municipal
bonds,  tax exempt municipal bonds, zero coupon municipal bonds, and
corporate 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.





11.
            Casualty
      Loss





Farwell,
TX





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.


10


The
Company has not settled its final claim with its insurance carriers related to
the Farwell, TX fire.  As of November 27, 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 be finalized in 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 twenty-six week period ending
November 27, 2010, there were no gains recognized related to the property damage
claim. The Company believes the property damage claim will be finalized in the
third quarter of fiscal 2011.





Shady Dale,
GA





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.





12.
            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 $11,500 at November 27, 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.





13.
            Egg
      Recall





In August
2010, there was a nationwide recall for eggs produced by two egg producers in
Iowa.  We also issued a voluntary egg recall in November
2010.  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 has had minimal effect on
Cal-Maine’s results for the thirteen and twenty-six week periods ending November
27, 2010.  It is still too soon to predict the long-term effect, if
any, of the recall on demand trends. While demand for eggs suffered in early
September 2010 because of the nationwide egg recall, American Egg Board research
indicates egg demand has now rebounded to pre-recall levels.


11


14.
            Noncontrolling
      Interest





The
following reflects the equity activity, including our noncontrolling interest,
for the twenty-six week period ended November 27, 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 *
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (6,661
            )
            
            
            
            
            
            
            (6,661
            )Issuance
      of common stockfrom
      treasury
            
            
            
            
            
            
            
            
            
            
            19
            
            
            
            52
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            71Vesting
      of stock basedcompensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            109
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            109Tax
      benefit on non-qualifying disposition of incentive stock
      options
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            288
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            288Other
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1
            
            
            
            1Unrealized
      gain on available-for-sale securities (net of tax $102)
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            160
            
            
            
            
            
            
            
            
            
            
            
            160Net
      income (loss)
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            19,949
            
            
            
            (1,209
            )
            
            
            18,740Total
      comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            18,900Balance
      at November 27, 2010
            
            $
            351
            
            
            $
            24
            
            
            $
            (20,947
            )
            
            $
            33,148
            
            
            $
            160
            
            
            $
            379,109
            
            
            $
            (2,181
            )
            
            $
            389,664







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




15.
            Impairment
      of Assets Held and Used





In the current twenty-six week period
ended November 27, 2010, during the course of the Company’s strategic review of
South Texas Protein, the Company assessed the recoverability of the carrying
value of certain fixed assets, which resulted in impairment losses of
$1,523.    These losses reflect the amounts by which the
carrying values of these assets exceed their estimated fair values. The
impairment loss is recorded as a component of ‘‘Cost of sales’’ in the Condensed
Consolidated Statements of Income for the thirteen and twenty-six weeks ended
November 27, 2010. South Texas Protein, a spent hen processing operation, is a
variable interest entity in which we are the primary
beneficiary.


13


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.





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 November 27, 2010, we produced approximately 79% of the total
number of shell eggs sold by us, with approximately 8% of such total shell egg
production being with 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 21% 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 average
about 62% 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 have risen, in part, due to 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.


14


In August
2010, there was a nationwide recall for eggs produced by two egg producers in
Iowa.  We also issued a voluntary egg recall in November
2010.  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 has had minimal effect on
Cal-Maine’s results for the thirteen and twenty-six week periods ending November
27, 2010.  It is still too soon to predict the long-term effect, if
any, of the recall on demand trends. While demand for eggs suffered in early
September 2010 because of the nationwide egg recall, American Egg Board research
indicates egg demand has now rebounded to pre-recall levels.





RESULTS
OF OPERATIONS





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





Percentage
      of Net Sales13
      weeks ended
                              
                              
                              26
      weeks endedNovember
      27, 2010
                              
                              
                              November
      28, 2009
                              
                              
                              November
      27, 2010
                              
                              
                              November
      28, 2009Net
      sales
                              
                              
                              100.0
                              %
                              
                              
                              100.0
                              %
                              
                              
                              100.0
                              %
                              
                              
                              100.0
                              %Cost
      of Sales
                              
                              
                              80.7
                              
                              
                              
                              79.6
                              
                              
                              
                              81.7
                              
                              
                              
                              84.4Gross
      profit
                              
                              
                              19.3
                              
                              
                              
                              20.4
                              
                              
                              
                              18.3
                              
                              
                              
                              15.6Selling,
      general, andadministrative
                              
                              
                              9.6
                              
                              
                              
                              9.3
                              
                              
                              
                              11.1
                              
                              
                              
                              10.8Operating
      income
                              
                              
                              9.7
                              
                              
                              
                              11.1
                              
                              
                              
                              7.2
                              
                              
                              
                              4.8Other
      expense
                              
                              
                              (0.2
                              )
                              
                              
                              (0.3
                              )
                              
                              
                              (0.3
                              )
                              
                              
                              (0.6
                              )Income
      before income tax
                              
                              
                              9.5
                              
                              
                              
                              10.8
                              
                              
                              
                              6.9
                              
                              
                              
                              4.2Income
      tax expense
                              
                              
                              3.5
                              
                              
                              
                              3.9
                              
                              
                              
                              2.5
                              
                              
                              
                              1.7Net
      income
                              
                              
                              6.0
                              
                              
                              
                              6.9
                              
                              
                              
                              4.4
                              
                              
                              
                              2.5Less:
      Net  loss attributable tononcontrolling
      interest
                              
                              
                              (0.4
                              )
                              
                              
                              (0.1
                              )
                              
                              
                              (0.3
                              )
                              
                              
                              0.4Net
      income attributable toCal-Maine
      Foods, Inc.
                              
                              
                              6.4
                              %
                              
                              
                              7.0
                              %
                              
                              
                              4.7
                              %
                              
                              
                              2.9
                              %




NET
SALES





Year- to-date, approximately 96% of our
net sales consist of shell egg sales and approximately 3% was for sales of egg
products, with the 1% balance consisting of sales of incidental feed and feed
ingredients.  Net sales for the thirteen-week period ended November
27, 2010 were $234.5 million, an increase of $5.3 million or 2.3%, as compared
to net sales of $229.2 million for the thirteen-week period ended November 28,
2009.  Total dozens of eggs sold decreased and egg-selling prices
increased in the current thirteen-week period as compared to the same comparable
thirteen-week period in fiscal 2010. Dozens sold for the current thirteen-week
period were 206.0 million dozen, a decrease of 300,000 dozen, or 0.1% as
compared to 206.3 million dozen sold during same thirteen-week period of fiscal
2010.  Our net average selling price per dozen for the thirteen-week
period ended November 27, 2010 was $1.090, compared to $1.057 for the
thirteen-week period ended November 28, 2009, an increase of $.033 per dozen, or
3.1%. The net average selling price per dozen is the blended price for all sizes
and grades of shell eggs, including non-graded egg sales, breaking stock and
undergrades.





For the
thirteen weeks, ended November 27, 2010, egg product sales were $6.9 million, a
decrease of $800,000, or 10.4%, as compared to $7.7 million for the same
thirteen- week period last year. This decrease is due to reduced production at
our American Egg Products facility.  Egg products are primarily sold
into the institutional and food service sectors.





Net sales
for the twenty-six week period ended November 27, 2010 were $424.9 million, an
increase of $8.0 million, or 1.9% compared to net sales of $416.9 million for
the fiscal 2010 twenty-six week period.  Dozens sold for the current
twenty-six week period were 400.0 million compared to 399.3 million for the same
twenty-six week period in fiscal 2010, an increase of 700,000 dozen, or
0.2%.  For the current fiscal 2011 twenty-six week period, our net
average selling price per dozen was $1.012, compared to $0.992 per dozen for the
same period last year, an increase of $0.020 per dozen, or
2.0%.


15


For the
twenty-six week period ended November 27, 2010, egg product sales were $13.5
million, a decrease of $200,000, or 1.5%, as compared to $13.7 million for the
same twenty-six week period last year. This decrease is due to reduced
production at our American Egg Products facility.





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
                
                
                26 weeks ended(Amounts in thousands)
                
                November 27, 2010
                
                
                November 28, 2009
                
                
                November 27, 2010
                
                
                November 28, 2009Total net sales
                
                $
                234,523
                
                
                $
                229,233
                
                
                $
                424,926
                
                
                $
                416,899Non-specialty shell egg sales
                
                $
                172,680
                
                
                $
                173,087
                
                
                $
                306,796
                
                
                $
                310,937Specialty
      shell egg sales
                
                
                51,942
                
                
                
                44,873
                
                
                
                98,164
                
                
                
                85,070Other
                
                
                735
                
                
                
                698
                
                
                
                1,599
                
                
                
                1,520Net
      shell egg sales
                
                $
                225,357
                
                
                $
                218,658
                
                
                $
                406,559
                
                
                $
                397,527Net
      shell egg sales as a percent of total net sales
                
                
                96
                %
                
                
                95
                %
                
                
                96
                %
                
                
                95
                %Non-specialty
      shell egg dozens sold
                
                
                174,133
                
                
                
                178,065
                
                
                
                339,288
                
                
                
                345,674Specialty
      shell egg dozens sold
                
                
                31,905
                
                
                
                28,186
                
                
                
                60,736
                
                
                
                53,624Total
      dozens sold
                
                
                206,038
                
                
                
                206,251
                
                
                
                400,024
                
                
                
                399,298





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 November 27, 2010,
non-specialty shell eggs represented approximately 76.6% of our shell egg dollar
sales, as compared to 79.2%, for the thirteen-week period ended November 28,
2009.   For the thirteen-week period ended November 27, 2010,
non-specialty shell eggs accounted for approximately 84.5% of the total shell
egg dozen volume, as compared to 86.3% for the thirteen-week period ended
November 28, 2009.





For the
twenty-six week period ended November 27, 2010, non-specialty shell eggs
represented approximately 75.5% of our shell egg dollar sales, as compared to
78.2% for the twenty-six week period ended November 28,
2009.   For the twenty-six week period ended November 27, 2010,
non-specialty shell eggs accounted for approximately 84.8% of the total shell
egg dozen volumes, as compared to 86.6% for the twenty-six week period ended
November 28, 2009.





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 November 27, 2010, specialty shell eggs
represented approximately 23.0% of our shell egg dollar sales, as compared to
20.5%, for the thirteen-week period ended November 28, 2009. For the
thirteen-week period ended November 27, 2010, specialty shell eggs accounted for
approximately 15.5% of the total shell egg dozen volume, as compared to 13.7%
for the thirteen-week period ended November 28, 2009.





For the
twenty-six week period ended November 27, 2010, specialty shell eggs represented
approximately 24.1% of our shell egg dollar sales, as compared to 21.4% for the
twenty-six week period ended November 28, 2009. For the twenty-six week period
ended November 27, 2010, specialty shell eggs accounted for approximately 15.2%
of the total shell egg dozen volumes, as compared to 13.4% for the twenty-six
week period ended November 28, 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.


16




COST OF
SALES





The
following table presents the key variables affecting our cost of
sales.





13
      weeks ended
                  
                  
                  26
      weeks ended(Amounts
      in thousands)
                  
                  November
      27,
                    2010
                  
                  
                  November
      28,
                    2009
                  
                  
                  November
      27,
                    2010
                  
                  
                  November
      28,
                    2009Cost
      of sales
                  
                  $
                  189,308
                  
                  
                  $
                  182,406
                  
                  
                  $
                  346,975
                  *
                  
                  $
                  351,855Dozens
      produced
                  
                  
                  159,749
                  
                  
                  
                  164,647
                  
                  
                  
                  315,093
                  
                  
                  
                  320,790Dozens purchased
      outside†
                  
                  
                  46,289
                  
                  
                  
                  41,604
                  
                  
                  
                  84,931
                  
                  
                  
                  78,508Dozens
      sold
                  
                  
                  206,038
                  
                  
                  
                  206,251
                  
                  
                  
                  400,024
                  
                  
                  
                  399,298Feed
      cost (price per dozen produced)
                  
                  $
                  0.387
                  
                  
                  $
                  0.347
                  
                  
                  $
                  0.361
                  
                  
                  $
                  0.352Farm
      production cost (price per dozen produced)
                  
                  $
                  0.605
                  
                  
                  $
                  0.556
                  
                  
                  $
                  0.582
                  
                  
                  $
                  0.573Outside
      egg purchases (average price paid per dozen)
                  
                  $
                  1.155
                  
                  
                  $
                  1.126
                  
                  
                  $
                  1.070
                  
                  
                  $
                  1.084




*
                Cost of sales has been reduced 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)
 †
                Net of processing loss and
      inventory
adjustments




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. Total cost of sales for the thirteen-week period ended November 27,
2010 was $189.3 million, an increase of $6.9 million, or 3.8%, as compared to
the cost of sales of $182.4 million for the thirteen-week period ended November
28, 2009.   This increase is due primarily to higher costs of feed
ingredients and costs of shell eggs purchased from outside producers. This
increase is also due to the recognition of a $1.5 million impairment charge for
the fixed assets of South Texas Protein (“STP”), a variable interest entity, in
which we are the primary beneficiary.  Feed cost for the thirteen-week
period ended November 27, 2010 was $.387 per dozen, an increase of 11.5%, as
compared to cost per dozen of $.347 for the same thirteen-week period in fiscal
2010.   Increases in feed cost are the result of higher market prices
for corn and soybean meal, primary ingredients for the feed we use. Our gross
profit decreased from 20.4% of net sales for the thirteen-week period ended
November 28, 2009 to 19.3% of net sales for the thirteen-week period ended
November 27, 2010.





For the twenty-six week period ended
November 27, 2010, total cost of sales was $347.0 million, a decrease of $4.9
million, or 1.4%, as compared to cost of sales of $351.9 million for the
twenty-six week period ended November 28, 2009. The decrease is due to the
recognition of business interruption proceeds received from our insurance
carriers, and decreases in the cost of egg purchases from outside egg
producers.   Our feed costs increased.  Feed cost for the current
twenty-six week period was $.361 per dozen, compared to $.352 per dozen for the
twenty-six week period ended November 28, 2009, an increase of 2.6%. Gross
profit increased to 18.3% of net sales for the twenty-six week period ended
November 27, 2010 from 15.6% for the comparable twenty-six week period ended
November 28, 2009.





SELLING,
GENERAL, AND ADMINISTRATIVE EXPENSES





13 Weeks Ended(Amounts in thousands)
                  
                  November 27, 2010
                  
                  
                  November 28, 2009
                  
                  
                  ChangeStock
      compensation expense
                  
                  $
                  44
                  
                  
                  $
                  (215
                  )
                  
                  $
                  259Specialty
      egg expense
                  
                  
                  5,900
                  
                  
                  
                  4,109
                  
                  
                  
                  1,791Payroll
      and overhead
                  
                  
                  4,364
                  
                  
                  
                  4,386
                  
                  
                  
                  (22
                  )Other
      expenses
                  
                  
                  4,768
                  
                  
                  
                  5,935
                  
                  
                  
                  (1,167
                  )Delivery
      expense
                  
                  
                  7,356
                  
                  
                  
                  7,177
                  
                  
                  
                  179Total
                  
                  $
                  22,432
                  
                  
                  $
                  21,392
                  
                  
                  $
                  1,040


17


Selling,
general, and administrative expenses include costs of marketing, distribution,
accounting and corporate overhead. Selling, general, and administrative expense
for the thirteen-week period ended November 27, 2010 was $22.4 million, an
increase of $1.0 million, or 4.7%, as compared to $21.4 million for the
thirteen-week period ended November 28, 2009.   Stock based
compensation plans expense increased.  The calculation of the stock based
compensation plans expense is dependent on the closing stock price of the
Company’s stock.  From the fiscal period ended August 28, 2010 to November
27, 2010, the stock price decreased from $31.50 at August 28, 2010 to $31.08 at
November 27, 2010, which is a 1.3% decrease.   From the fiscal period
ended August 29, 2009 to November 28, 2009, the stock price decreased from
$28.95 at August 29, 2009 to $27.42 at November 28, 2009, which is a 5.3%
decrease.  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
decreased slightly as compared to the same period the prior year.  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 9.3% for the
thirteen-week period ended November 28, 2009 to 9.6% for the thirteen-week
period ended November 27, 2010.





26 Weeks Ended(Amounts in thousands)
                  
                  November 27, 2010
                  
                  
                  November 28, 2009
                  
                  
                  ChangeStock
      compensation expense
                  
                  $
                  (114
                  )
                  
                  $
                  1,086
                  
                  
                  $
                  (1,200
                  )Specialty
      egg expense
                  
                  
                  11,848
                  
                  
                  
                  8,375
                  
                  
                  
                  3,473Payroll
      and overhead
                  
                  
                  10,847
                  
                  
                  
                  9,643
                  
                  
                  
                  1,204Other
      expenses
                  
                  
                  9,761
                  
                  
                  
                  11,680
                  
                  
                  
                  (1,919
                  )Delivery
      expense
                  
                  
                  14,785
                  
                  
                  
                  14,126
                  
                  
                  
                  659Total
                  
                  $
                  47,127
                  
                  
                  $
                  44,910
                  
                  
                  $
                  2,217





For
the twenty-six weeks ended November 27, 2010, selling, general, and
administrative expense was $47.1 million, an increase of $2.2 million, or 4.9%,
as compared to $44.9 million for the same period in 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 November 27,
2010, the stock price decreased from $32.37 at May 29, 2010 to $31.08 at
November 27, 2010, which is a 4.0% decrease.   From the fiscal year
ended May 30, 2009 to November 28, 2009, the stock price increased from $24.37
at May 30, 2009 to $27.42 at November 28, 2009, which is a 12.5% 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 10.8% for the twenty-six week period of
fiscal 2010 to 11.1% for the current comparable period in fiscal
2011.





OPERATING INCOME





As a result of the above, operating
income was $22.8 million for the thirteen-weeks ended November 27, 2010, as
compared to operating income of $25.4 million for the thirteen-week period ended
November 28, 2009.  As a percent of net sales, operating income for the
thirteen-week period ended November 27, 2010 was 9.7%, as compared to 11.1% for
the thirteen-week period ended November 28, 2009.





For the twenty-six weeks ended November
27, 2010, operating income was $30.8 million, compared to operating income of
$20.1 million for the comparable period in fiscal 2010.  As a percent of
net sales, operating income for the current fiscal 2011 period was 7.2%, as
compared to 4.8% for the same period in fiscal 2010.





OTHER INCOME (EXPENSE)





Other income or expense consists of
costs or income not directly charged to, or related to, operations such as
interest expense and equity in income from affiliates. Other expense for the
thirteen-week period ended November 27, 2010 was $385,000, which is a decrease
of $414,000 from other expense of $799,000 for same thirteen-week period of
fiscal 2010. There was a decrease in net interest expense. We had lower average
long-term borrowing balances, which decreased net interest expense. We also had
increased equity in the income of affiliates. As a percent of net sales, other
expense was 0.2% for the thirteen-weeks ended November 27, 2010, compared to
other expense of 0.3% for the comparable period last year.





For the twenty-six weeks ended November
27, 2010, other expense was $1.3 million, which is a decrease of $1.1 million
from other expense of $2.4 million for the comparable period in fiscal
2010.  Similar to the current thirteen-week period, our net interest
expense decreased, and we had increased equity in the income of
affiliates.  As a percent of net sales, other expense was 0.3% for the
twenty-six weeks ended November 27, 2010, compared to other expense of 0.6% for
the comparable period last year.


18





INCOME
TAXES





As a result of the above, our pre-tax
income was $22.4 million for the thirteen-week period ended November 27, 2010,
compared to pre-tax income of $24.6 million for last year’s comparable
period.  For the current thirteen-week period, income tax expense of $8.2
million was recorded with an effective tax rate of 36.7% as compared to an
income tax expense of $9.0 million with an effective rate of 36.7% for last
year’s comparable thirteen-week period.





For the twenty-six week period ended
November 27, 2010, pre-tax income was $29.5 million, compared to pre-tax income
of $17.8 million for the comparable period in fiscal 2010.  For the current
fiscal 2011 twenty-six week period, income tax expense of $10.7 million was
recorded with an effective tax rate of 36.4%, as compared to an income tax
expense of $7.0 million with an effective rate of 39.5% for last year’s
comparable period.





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.





NET LOSS ATTRIBUTABLE TO NONCONTROLLING
INTEREST





Net loss
attributable to noncontrolling interest for the thirteen-week period ended
November 27, 2010 was $1.0 million as compared to $503,000 for the same
thirteen-week period of fiscal 2010.





Net loss
attributable to noncontrolling interest for the twenty-six week period ended
November 27, 2010 was $1.2 million as compared to $1.5 million for the same
twenty-six week period of fiscal 2010.





NET
INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC.





Net income for the thirteen-week period
ended November 27, 2010 was $15.2 million, or $.64 per basic and $.63 per
diluted share, compared to net income of $16.1 million, or $0.68 per basic and
$0.67 per diluted share for the same period last year.





For the twenty-six week period ended
November 27, 2010, net income was $19.9 million or $0.84 per basic and $0.83 per
diluted share, compared to net income of $12.3 million, or $0.52 per basic and
$0.51 per diluted share for the same period last year.





CAPITAL
RESOURCES AND LIQUIDITY





Our
working capital at November 27, 2010 was $235.0 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 3.02 at
November 27, 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.  We have collateralized $5.1 million in outstanding standby letters
of credit with cash. Our long-term debt at November 27, 2010, including current
maturities, amounted to $112.6 million, as compared to $134.7 million at May 29,
2010.


19


For the
twenty-six weeks ended November 27, 2010, $7.6 million in cash was provided by
operating activities.  This compares to cash provided by operating
activities of $36.7 million for the 26 weeks ended November 28, 2010.  For
the twenty-six weeks ended November 27, 2010, approximately $73.7 million was
provided from the sale of short-term investments, $75.2 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
$57,000 was provided from disposal of property, plant and equipment and $9.6
million was used for purchases of property, plant and equipment. 
Approximately $8.6 million was used for payment of dividends on common stock and
$22.1 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 $33.1 million since May 29, 2010.





For the
twenty-six weeks ended November 28, 2009, approximately $15.3 million was
provided from the sale of short-term investments, $8.2 million was used for the
purchase of investments, and net $54,000 was used for notes receivable.
Approximately $1.2 million was provided from disposal of property, plant, and
equipment, $10.8 million was used for purchases of property, plant, and
equipment, $8.2 million was used for acquisition of the remaining equity
interest in the Hillandale business, and $508,000 was used to acquire the
remaining equity interest in Benton County Foods, LLC.  Approximately $3.4
million was used for payment of dividends on common stock and $8.0 million was
used for principal payments on long-term debt.  Approximately $317,000 was
received from the issuance of common stock from treasury.  Approximately
$30.0 million was received from additional long-term borrowings. The net result
of these activities was an increase in cash of approximately $44.3 million since
May 30, 2009.





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 November 27,
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 November 27, 2010, capital expenditures related to construction of
this complex were approximately $39.5 million (including replacement capital
expenditures related to the fire mentioned below).





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 November 27, 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.  Maximum
operations at the Farwell facility, including the expansion should be achieved
during December 2010.  Any future capital expenditures will be funded by
cash flows from operations and insurance recoveries.


20





In the
first quarter of fiscal 2011, a fire damaged the Shady Dale, Georgia complex.
The fire 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
$5.8 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
November 27, 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 Form 10-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.





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.


21





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.





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.


22





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





Since
September 25, 2008, the Company has been named as one of several defendants in
twenty-one antitrust cases involving the United States shell egg industry. 
In sixteen of these cases, the named plaintiffs sued on behalf of themselves and
a putative class of others who claim to be similarly situated.  In fourteen
of those putative class actions, 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 putative class
actions, the named plaintiffs are individuals or companies 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.  In the remaining five cases,
the plaintiffs sued for their own alleged damages and are not seeking to certify
a class.




The
Judicial Panel on Multidistrict Litigation consolidated all of the putative
class actions (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 putative class actions around two groups (direct purchasers and
indirect purchasers) and has named interim lead counsel for the named plaintiffs
in each group.




Four of
the five non-class suits were filed in the same court that is presiding over the
putative class actions.  The final non-class case was filed in the United
States District Court for the Western District of Pennsylvania, but the
defendants will soon ask that it be transferred to the Eastern District and
consolidated for pretrial proceedings with the other cases.




The Direct Purchaser Putative Class
Action.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.  The court heard
oral argument on these motions but has not yet ruled.  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.


23


The Indirect Purchaser Putative
Class Action.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.  The court heard oral argument on these motions but has not yet
ruled.  On June 4, 2010, the Company filed its answer and affirmative
defenses to the indirect purchaser plaintiffs’ amended complaint.




The Five Non-Class
Cases.  The five cases in which plaintiffs do not seek to certify a
class were filed between November 16, 2010 and December 17, 2010.  The
Company has not yet answered or moved to dismiss any of these
cases.




Allegations in Each Case.In all of the cases described above, the 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 each case, 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 in the putative class actions 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 in the putative
class actions allege a class period starting on January 1, 2000 and running
“through the present.”  The direct purchaser putative class action case
alleges two separate sub-classes – one for direct purchasers of shell eggs and
one for direct purchasers of egg products.  The direct purchaser putative
class action case seeks relief under the Sherman Act.  The indirect
purchaser putative class action case seeks relief under the Sherman Act and the
statutes and common-law of various states, the District of Columbia, and Puerto
Rico.




In four
of the non-class cases, the plaintiffs seek damages and injunctive relief under
the Sherman Act.  In the fifth non-class case, the plaintiff seeks damages
and injunctive relief under the Sherman Act and the Ohio antitrust act (known as
the Valentine Act).




The
Pennsylvania court has entered a series of orders in the putative class actions
related to case management and scheduling.  There is no definite schedule
in either putative class action case for discovery, class certification
proceedings, or filing motions for summary judgment.  No trial date has
been set in either putative class action case.  The non-class cases were
filed so recently that the court has not set any schedule for them.




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.


24





ITEM
6.  EXHIBITS





a.
            Exhibits





No.
                  
                  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
                  
                  Amended
      and Restated By-Laws (incorporated by reference to Exhibit 3.1 in the
      Company’s Form 8-K, filed October 20, 2010)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 December 27, 2010 announcing interim period financial
      information







25




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:  December
      30, 2010
                  /s/      Timothy A.
      DawsonTimothy
      A. DawsonVice
      President/Treasurer(Principal
      Financial Officer)Date:
      December 30, 2010
                  /s/   Charles F.
      CollinsCharles
      F. CollinsVice
      President/Controller(Principal
      Accounting Officer)


26