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 February 28, 2009


OR





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





For the
transition period from ____________ to ____________





Commission
file number:  000-04892





CAL-MAINE
FOODS, INC.


(Exact
name of registrant as specified in its charter)





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





3320
Woodrow Wilson Avenue, Jackson, Mississippi  39209


(Address
of principal executive offices) (Zip Code)





(601)
948-6813


(Registrant’s
telephone number, including area code)





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


Yes xNo ̈





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





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





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


Yes  ̈No
x





APPLICABLE
ONLY TO CORPORATE ISSUERS:


Indicate
number of shares outstanding of each of the issuer’s classes of common stock
(exclusive of treasury shares), as of March 29, 2009.





Common
      Stock, $0.01 par value
              21,389,091
      sharesClass
      A Common Stock, $0.01 par value
              2,400,000
      shares





CAL-MAINE
FOODS, INC. AND SUBSIDIARIES





INDEX





Page
                                                          NumberPart
      I. Financial
      InformationItem
      1.
                                                        Financial
      StatementsCondensed
      Consolidated Financial Statements (unaudited)Condensed
      Consolidated Balance Sheets - February 28, 2009 and May 31,
      2008
                                                        3Condensed
      Consolidated Statements of Income - Thirteen Weeks and Thirty-Nine Weeks
      Ended February 28, 2009 and March 1, 2008
                                                        4Condensed
      Consolidated Statements of Cash Flows - Thirty-Nine Weeks Ended February
      28, 2009 and March 1, 2008
                                                        5Notes
      to Condensed Consolidated Financial Statements
                                                        6Item
      2.
                                                        Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                                        13Item
      3.
                                                        Quantitative
      and Qualitative Disclosures About Market Risk
                                                        22Item
      4.
                                                        Controls
      and Procedures
                                                        22Part
      II. Other
      InformationItem
      1.
                                                        Legal
      Proceedings
                                                        22Item
      1A.
                                                        Risk
      Factors
                                                        24Item
      6.
                                                        Exhibits
                                                        24Signatures
                                                        25


2


PART
I.  FINANCIAL INFORMATION


ITEM
1.   FINANCIAL STATEMENTS


CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(in
thousands)





February 28, 2009
                
                
                May 31, 2008(unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                74,350
                
                
                $
                94,858Investment
      securities available-for-sale
                
                
                7,965
                
                
                
                -Trade
      and other receivables
                
                
                63,696
                
                
                
                47,930Inventories
                
                
                98,736
                
                
                
                76,766Prepaid
      expenses and other current assets
                
                
                1,156
                
                
                
                4,711Total
      current assets
                
                
                245,903
                
                
                
                224,265Investment
      securities available-for-sale
                
                
                -
                
                
                
                40,754Investment
      securities trading
                
                
                33,150
                
                
                
                -Other
      investments
                
                
                16,781
                
                
                
                13,421Goodwill
                
                
                32,787
                
                
                
                13,452Other
      assets
                
                
                8,253
                
                
                
                2,851Property,
      plant and equipment
                
                
                473,455
                
                
                
                410,326Less
      accumulated depreciation
                
                
                (222,581
                )
                
                
                (203,833
                )250,874
                
                
                
                206,493TOTAL
      ASSETS
                
                $
                587,748
                
                
                $
                501,236LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                
                $
                60,647
                
                
                $
                55,766Accrued
      dividends payable
                
                
                10,281
                
                
                
                12,186Current
      maturities of purchase obligation
                
                
                9,100
                
                
                
                10,358Current
      maturities of long-term debt
                
                
                13,745
                
                
                
                11,470Deferred
      income taxes
                
                
                20,700
                
                
                
                12,935Total
      current liabilities
                
                
                114,473
                
                
                
                102,715Long-term
      debt, less current maturities
                
                
                119,213
                
                
                
                85,680Non-controlling
      interests in consolidated entities
                
                
                1,114
                
                
                
                1,687Purchase
      obligation, less current maturities
                
                
                -
                
                
                
                9,598Other
      non-current liabilities
                
                
                4,437
                
                
                
                4,120Deferred
      income taxes
                
                
                23,262
                
                
                
                21,756Total
      liabilities
                
                
                262,499
                
                
                
                225,556Stockholders’
      equity:Common
      stock $0.01 par value per share:Authorized
      shares – 60,000 Issued 35,130 shares and 21,389 shares outstanding at
       February 28, 2009 and 21,317 shares outstanding at May 31,
      2008
                
                
                351
                
                
                
                351Class
      A common stock $0.01 par value per share, authorized, issued
      and outstanding 2,400 shares at February 28, 2009 and May 31,
      2008
                
                
                24
                
                
                
                24Paid-in
      capital
                
                
                32,082
                
                
                
                29,697Retained
      earnings
                
                
                313,837
                
                
                
                267,616Common
      stock in treasury – 13,741 shares at February 28,
      2009    and 13,813 shares at May 31,
    2008
                
                
                (21,045
                )
                
                
                (21,156
                )Accumulated
      other comprehensive loss
                
                
                -
                
                
                
                (852
                )Total
      stockholders’ equity
                
                
                325,249
                
                
                
                275,680TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                
                $
                587,748
                
                
                $
                501,236





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
                            
                            
                            39
      Weeks EndedFebruary 28, 2009
                            
                            
                            March 1, 2008
                            
                            
                            February 28, 2009
                            
                            
                            March 1, 2008Net
      sales
                            
                            $
                            270,009
                            
                            
                            $
                            278,017
                            
                            
                            $
                            715,211
                            
                            
                            $
                            680,311Cost
      of sales
                            
                            
                            201,852
                            
                            
                            
                            173,115
                            
                            
                            
                            548,391
                            
                            
                            
                            453,797Gross
      profit
                            
                            
                            68,157
                            
                            
                            
                            104,902
                            
                            
                            
                            166,820
                            
                            
                            
                            226,514Selling,
      general and administrative
                            
                            
                            22,957
                            
                            
                            
                            19,244
                            
                            
                            
                            60,515
                            
                            
                            
                            54,921Operating
      income
                            
                            
                            45,200
                            
                            
                            
                            85,658
                            
                            
                            
                            106,305
                            
                            
                            
                            171,593Other
      income (expense):Interest
      expense, net
                            
                            
                            (1,736
                            )
                            
                            
                            (676
                            )
                            
                            
                            (4,165
                            )
                            
                            
                            (3,700
                            )Other
                            
                            
                            2,499
                            
                            
                            
                            2,905
                            
                            
                            
                            3,344
                            
                            
                            
                            8,587763
                            
                            
                            
                            2,229
                            
                            
                            
                            (821
                            )
                            
                            
                            4,887Income
      before income taxes
                            
                            
                            45,963
                            
                            
                            
                            87,887
                            
                            
                            
                            105,484
                            
                            
                            
                            176,480Income
      tax expense
                            
                            
                            15,120
                            
                            
                            
                            30,704
                            
                            
                            
                            36,250
                            
                            
                            
                            61,177Net
      income
                            
                            $
                            30,843
                            
                            
                            $
                            57,183
                            
                            
                            $
                            69,234
                            
                            
                            $
                            115,303Net
      income per common  share:Basic
                            
                            $
                            1.30
                            
                            
                            $
                            2.41
                            
                            
                            $
                            2.91
                            
                            
                            $
                            4.87Diluted
                            
                            $
                            1.29
                            
                            
                            $
                            2.41
                            
                            
                            $
                            2.91
                            
                            
                            $
                            4.86Dividends
      declared per common share
                            
                            $
                            0.4322
                            
                            
                            $
                            0.8038
                            
                            
                            $
                            0.9709
                            
                            
                            $
                            0.8288Weighted
      average shares    outstanding:Basic
                            
                            
                            23,789
                            
                            
                            
                            23,712
                            
                            
                            
                            23,763
                            
                            
                            
                            23,664Diluted
                            
                            
                            23,825
                            
                            
                            
                            23,744
                            
                            
                            
                            23,807
                            
                            
                            
                            23,727





See notes
to condensed consolidated financial statements.


4





CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(in
thousands)


UNAUDITED





39 Weeks EndedFebruary 28, 2009
                
                
                March 1, 2008Cash
      flows from operating activitiesNet
      income
                
                $
                69,234
                
                
                $
                115,303Depreciation
      and amortization
                
                
                20,477
                
                
                
                19,079Other
      adjustments, net
                
                
                1,627
                
                
                
                (14,613
                )Net
      cash provided by operations
                
                
                91,338
                
                
                
                119,769Cash
      flows from investing activitiesPurchases
      of investments
                
                
                (14,925
                )
                
                
                (122,825
                )Sales
      of investments
                
                
                16,060
                
                
                
                115,175Acquisition
      of businesses, net of cash acquired
                
                
                (91,223
                )
                
                
                —Purchases
      of property, plant and equipment
                
                
                (19,419
                )
                
                
                (23,581
                )Payments
      received on notes receivable and from affiliates
                
                
                964
                
                
                
                885Increase
      in notes receivable and equity investments
                
                
                (896
                )
                
                
                (744
                )Net
      proceeds from disposal of property, plant and equipment
                
                
                128
                
                
                
                2,280Net
      cash used in investing activities
                
                
                (109,311
                )
                
                
                (28,810
                )Cash
      flows from financing activitiesProceeds
      from issuance of common stock from treasury
                
                
                427
                
                
                
                617Payment
      of purchase obligation
                
                
                (13,721
                )
                
                
                (9,306
                )Proceeds
      from issuance of long-term debt
                
                
                55,765
                
                
                
                —Principal
      payments on long-term debt
                
                
                (19,958
                )
                
                
                (10,916
                )Payment
      of dividends
                
                
                (25,048
                )
                
                
                (588
                )Net
      cash used in financing activities
                
                
                (2,535
                )
                
                
                (20,193
                )Net
      change in cash and cash equivalents
                
                
                (20,508
                )
                
                
                70,766Cash
      and cash equivalents at beginning of period
                
                
                94,858
                
                
                
                15,032Cash
      and cash equivalents at end of period
                
                $
                74,350
                
                
                $
                85,798





See notes
to condensed consolidated financial statements.


5





CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


Notes to
Condensed Consolidated Financial Statements


(in
thousands, except share amounts)


February
28, 2009


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. Operating results for the
thirteen-week and thirty-nine week periods ended February 28, 2009 are not
necessarily indicative of the results that may be expected for the year ending
May 30, 2009.





The
balance sheet at May 31, 2008 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 31, 2008.





Reclassifications





Certain
reclassifications have been made to the prior years’ financial statements to
conform to the current year presentation. These reclassifications had no effect
on previously reported results of operations or retained earnings.





2.
            Acquisitions





Zephyr
Egg, LLC Acquisition





On June 27, 2008, we completed the
acquisition of substantially all of the operating assets of Zephyr Egg Company,
Zephyr Feed Company, Inc. and Scarlett Farms (together, “Sellers”), located in
Zephyrhills, FL and transferred those assets to a new Limited Liability Company,
Hillandale Foods, LLC, formed on that date.   Pursuant to
Articles of Amendment to the Articles of Organization for Hillandale Foods, LLC,
we changed the name of the Limited Liability Company to Zephyr Egg,
LLC.   We own 100% of the membership interests in Zephyr Egg,
LLC. The approximate purchase price was reported in note 2 of our May 31, 2008
audited financial statements as $27,427.  The final purchase price was
$29,579 based upon the final valuation of the assets acquired.  The
purchase price was funded from our available cash balances. The assets purchased
included approximately two million laying hens in modern, in-line facilities,
pullet growing facilities, two egg processing plants, a feed mill and a fleet of
delivery trucks for both eggs and feed. As part of the acquisition, the Company
also acquired the Egg-Land’s
BestTM
franchise for southern Florida, certain flocks of contract laying hens, and the
Sellers 12.58% interest in American Egg Products, Inc., in which the Company
already had a majority interest.  Zephyr Egg, LLC’s results of
operations have been included in the consolidated financial statements since the
date of acquisition.


6


The
following table presents the allocation of the purchase price to the assets
acquired and liabilities assumed, based on their fair values:





Accounts
      receivable
                    
                    $
                    2,610Inventories
                    
                    
                    5,886Other
      investments
                    
                    
                    1,532Property,
      plant, and equipment
                    
                    
                    12,375Intangible
      assets
                    
                    
                    5,300Goodwill
                    
                    
                    1,876Total
      assets acquired
                    
                    
                    29,579Total
      liabilities assumed
                    
                    
                    -Net
      assets acquired
                    
                    $
                    29,579





The
purchase price exceeded the fair values of the tangible assets acquired by
$7,176.  Of this amount $5,300 represents the cost of acquired
intangible assets, which is made up of franchise rights of $1,600 (20-year
useful life), customer relationship intangible of $2,200 (8-year useful life)
and a non-compete agreement of $1,500 (3-year useful life). The remainder of the
excess purchase price, amounting to $1,876 was recorded as goodwill, of which
the entire amount is expected to be deductible for tax purposes.  The
goodwill arising from the acquisition consists largely of the synergies and
economies of scale expected from combining the operations of the Company and
Zephyr Egg, LLC.





Tampa
Farms, LLC Acquisition





We
entered into a Membership Interests Purchase Agreement as of November 28, 2008
(the “Agreement”) with Tampa Farm Service, Inc., a Florida corporation
(“Seller”), TFS Holdings, Inc., a Florida corporation (“TFS Holdings”), and
Michael H. Bynum, Blair M. Bynum and Samuel G. Bynum (collectively, the
“Shareholders”). The Seller, based in Dover, Florida, and its affiliates were
for many years engaged directly in the production, grading, packaging and
distribution of shell eggs and related activities, including the production and
milling of feed for laying hens and pullets (the “Seller’s Business”), with
operations in the southeastern United States.





In
general, the assets acquired by the Company include approximately four million
laying hens in modern, in-line facilities, pullet growing facilities, two feed
mills and a fleet of delivery trucks for both eggs and feed.  In
addition, the Company acquired the 4-GrainTM brand
of specialty eggs, certain flocks of contract laying hens, and the Seller’s
12.88% interest in American Egg Products, Inc, which gives us approximately a
97% ownership interest in American Egg Products, Inc.  To facilitate
the sale of the Seller’s Business, the Seller transferred all of its assets, but
none of its liabilities, to Tampa Farms, LLC (“Tampa Farms”), a Florida limited
liability company. Under the Agreement, the Seller sold to the Company all of
the issued and outstanding membership interests (the “Membership Interests”) of
Tampa Farms to the Company in accordance with the terms of the
Agreement.





The final
purchase price for the Membership Interests was $61,644, which was paid from the
Company’s available funds, and additional long-term borrowings.  The
Company completed the acquisition of the Seller’s Business on December 11, 2008.
Tampa Farms’ results of operations have been included in the consolidated
financial statements since the date of acquisition.


7


The
following table presents the preliminary allocation of the purchase price to the
assets acquired and liabilities assumed, based on their fair
values:





Inventories
                    
                    $
                    11,971Prepaid
      expenses
                    
                    
                    350Other
      investments
                    
                    
                    901Property,
      plant, and equipment
                    
                    
                    33,222Goodwill
      and intangible assets
                    
                    
                    15,200Total
      assets acquired
                    
                    
                    61,644Total
      liabilities assumed
                    
                    
                    -Net
      assets acquired
                    
                    $
                    61,644





The
allocation of the purchase price is based on preliminary data and could change
when final valuation of certain assets is obtained.





Pro forma
information related to the Zephyr Egg, LLC and Tampa Farms, LLC acquisitions is
not included herein, because we are in the process of obtaining the necessary
information in order to disclosure the pro forma effects of these acquisitions
and anticipate including such information in our annual report on Form
10K.





Hillandale
Acquisition





On July
28, 2005, we entered into an Agreement to Form a Limited Liability Company with
Hillandale Farms, Inc. and Hillandale Farms of Florida, Inc. (together,
“Hillandale”), and the Hillandale shareholders (the “Agreement”). Under the
terms of the Agreement, we acquired 51% of the Units of Membership in
Hillandale, LLC for cash of approximately $27,006 on October 12, 2005, with the
remaining 49% of the Units of Membership to be acquired in essentially equal
annual installments over a four-year period. The purchase price of the Units
equals their book value at the time of purchase as calculated under the terms of
the Agreement.





In August
2006, in accordance with the Agreement, we purchased, for $6,102, an additional
13% of the Units of Hillandale, LLC based on their book value as of July 29,
2006. In August 2007, we purchased, for $6,769, an additional 12% of the Units
of Hillandale, LLC based on their book value as of July 28, 2007.  In
August 2008, we purchased, for $11,585, an additional 12% of the Units of
Hillandale, LLC based on their book value as of July 28, 2007.  Our
ownership of Hillandale, LLC currently is 88%. Our obligation to acquire the
remaining 12% of Hillandale, LLC is recorded at its present value of $9,100
as of February 28, 2009, which is included in current liabilities in the
accompanying consolidated balance sheet.  During fiscal 2008,
additional payments totaling $5,700 were paid on the purchase obligation. We
will purchase the remaining 12% of Hillandale LLC based on the book value of the
Membership Units as of July 25, 2009.  The Company will adjust the
original Hillandale purchase price allocation based on the ultimate amount paid
for the acquisition in accordance with SFAS 141.





3.
            Stock
      Compensation Plans




Total
stock based compensation expense/(benefit) for the thirty-nine weeks ended
February 28, 2009 and March 1, 2008 was ($161) and $7,356,
respectively.  Our liabilities associated with Stock Appreciation
Rights as of February 28, 2009 and March 1, 2008 was $3,997 and $7,758,
respectively.




During
the thirty-nine weeks ended February 28, 2009, options were exercised for 72
shares of common stock. Proceeds from the exercise of these options amounted to
$427.  The Company made no stock-based grants during the thirty-nine
weeks ended February 28, 2009.  Refer to Note 9 of our May 31, 2008
audited financial statements for further information on our stock compensation
plans.


8


4.
            Inventories





Inventories consisted of the
following:





February28,2009
                  
                  
                  May31,2008Flocks
                  
                  $
                  63,605
                  
                  
                  $
                  49,176Eggs
                  
                  
                  7,033
                  
                  
                  
                  5,095Feed
      and supplies
                  
                  
                  28,098
                  
                  
                  
                  22,495$
                  98,736
                  
                  
                  $
                  76,766





5.
            Legal
      Proceedings





We are
defendants in certain legal actions.  It is our opinion, based on
advice of legal counsel, that the outcome of these actions is not able to be
reasonably estimated nor can we determine the probable outcome of these legal
actions. Please refer to Part II, Item 1, of this report for a description of
certain pending legal proceedings.





6.
            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 stock options.  The computations of basic net income per share and
diluted net income per share are as follows:





13 weeks
                      
                      
                      39 weeksFebruary 28, 2009
                      
                      
                      March 1, 2008
                      
                      
                      February 28, 2009
                      
                      
                      March 1, 2008Net
      income
                      
                      $
                      30,843
                      
                      
                      $
                      57,183
                      
                      
                      $
                      69,234
                      
                      
                      $
                      115,303Basic
      weighted-average shares
                      
                      
                      23,789
                      
                      
                      
                      23,712
                      
                      
                      
                      23,763
                      
                      
                      
                      23,664Effect
      of dilutive securities:Common
      stock options
                      
                      
                      36
                      
                      
                      
                      32
                      
                      
                      
                      44
                      
                      
                      
                      63Dilutive
      potential common shares
                      
                      
                      23,825
                      
                      
                      
                      23,744
                      
                      
                      
                      23,807
                      
                      
                      
                      23,727Net
      income per common share:Basic
                      
                      $
                      1.30
                      
                      
                      $
                      2.41
                      
                      
                      $
                      2.91
                      
                      
                      $
                      4.87Diluted
                      
                      $
                      1.29
                      
                      
                      $
                      2.41
                      
                      
                      $
                      2.91
                      
                      
                      $
                      4.86





7.
            Dividends
      declared per common share





Dividends
declared per Common Share is the average dividend declared on all classes of
common stock, calculated by dividing the dividends declared for the period by
the average number of common stock outstanding for the period. Effective October
2, 2008, our Class A Common Stock is paid at a rate equal to the rate on our
Common Stock.


9


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





Investment
securities available-for-sale consist of auction rate securities accounted for
in accordance with Statement of Financial Accounting Standards No. 115 (“FAS
115”) , “Accounting for Certain Investments in Debt and Equity Securities.”
Available-for-sale securities are reported at fair value with unrealized gains
and losses excluded from earnings and reported in shareholders’
equity.  Under FAS 115, securities purchased to be held for
indeterminate periods of time and not intended at the time of purchase to be
held until maturity are classified as available-for-sale securities with any
unrealized gains and losses reported as a separate component of accumulated
other comprehensive loss. We continually evaluate whether any marketable
investments have been impaired and, if so, whether such impairment is temporary
or other than temporary.





Trading
securities are bought and held principally for the purpose of selling them.
Unrealized holding gains and losses for trading securities are included in
earnings.





Our
auction rate securities were purchased from UBS Financial Services, Inc. (“UBS”)
and are long-term debt obligations, which were rated AAA at the date of
purchase. Although some of the obligations have maintained their AAA rating some
of the securities have declined to a rating of AA. The ratings on the auction
rate securities take into account credit support through insurance policies
guaranteeing each of the bonds’ payment of principal and accrued interest. In
the past, the auction process allowed investors to obtain immediate liquidity if
so desired by selling the securities at their face amounts. Liquidity for these
securities has historically been provided by an auction process that resets
interest rates on these investments on average every 7-35 days. However, as has
been reported in the financial press, the disruptions in the credit markets
adversely affected the auction market for these types of securities. The Company
believes that the appropriate presentation of these securities is long-term
investments as reflected in our condensed consolidated balance sheets at May 31,
2008 and February 28, 2009. Net unrealized holding losses on available-for-sale
securities of $852, net of income taxes, are included in accumulated other
comprehensive loss as of May 31, 2008.





On August
8, 2008, UBS agreed to a settlement in principle with the Securities and
Exchange Commission, the New York Attorney General, the Massachusetts Securities
Division, the Texas State Securities Board and other state regulatory agencies
represented by the North American Securities Administrators Association to
restore liquidity to all remaining UBS clients who hold auction rate
securities.   On November 3, 2008, we agreed to accept Auction
Rate Security Rights (the “Rights”) from UBS offered through a prospectus filed
on October 7, 2008.   The Rights permit us to sell, or put, our
auction rate securities back to UBS at par value at any time during the period
from June 30, 2010 through July 2, 2012.  We expect to exercise our
Rights and put our auction rate securities back to UBS on June 30, 2010, the
earliest date allowable under the Rights.





By
accepting the Rights, we can no longer assert that we have the intent to hold
the auction rate securities until anticipated recovery. Accordingly, we have
classified our investments in auction rate securities and the Rights as trading
securities, as defined by FAS No. 115, on the date of our acceptance of the
Rights. As a result, we are required to record these two individual securities
at fair value each period until the Rights are exercised and the auction rate
securities are redeemed. At February 28, 2009 the fair value of our auction rate
securities were $6,482 below par value of which $4,713 and $1,769 was charged to
operations in the second and third quarters of fiscal 2009,
respectively.  Because we will be permitted to put the auction rate
securities back to UBS at par value, we have accounted for the Rights as a
separate asset that is measured at its fair value, resulting in gains in the
second and third quarter of 2009 in amounts equal to the losses recognized on
the auction rate securities. Although the Rights represent the right to sell the
securities back to UBS at par, we will periodically assess the economic ability
of UBS to meet that obligation in assessing the fair value of the Rights. We
will continue to classify the auction rate securities and the related Rights as
long-term investments until June 30, 2009, one year prior to the expected
settlement.





Since our
last fiscal year, ended May 31, 2008, we have liquidated two of our auction rate
securities at par. On July 10, 2008, we liquidated one auction rate security at
par value for $4,500 with accrued interest after this security was called by the
original issuer. On January 30, 2009, UBS redeemed a $4,500 auction rate
security at par with accrued interest after this security was called by the
issuer.


10


At
February 28, 2009, we have $7,965 of current investment securities
available-for-sale consisting primarily of pre-funded municipal bonds and
certificates of deposit with maturities of three to six months when purchased.
Due to the nature of the investments, the cost at February 28, 2009 approximates
fair value; therefore, other comprehensive income (loss) has not been recognized
as a separate component of stockholders' equity in regards to the current
investment securities available-for-sale.





9.
            Fair
      value of financial instruments





Effective
June 1, 2008, we adopted Financial Accounting Standards Board (“FASB”) Statement
No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 establishes a single
authoritative definition of fair value, sets out a framework for measuring fair
value, and expands on required disclosures about fair value
measurement.  In February 2008, FASB issued FASB Staff Position No.
157-2, “Effective Date of FASB Statement No. 157” which provides a one-year
deferral of the effective date of FAS 157 for non-financial assets and
non-financial liabilities except those that are recognized or disclosed in the
financial statements at fair value at least annually.




The
adoption of FAS 157 for our financial assets and financial liabilities did not
have a material impact on our financial statements.  We are currently
evaluating the effect that the implementation of this standard for nonfinancial
assets and nonfinancial liabilities will have on our financial statements upon
full adoption in fiscal 2010. FAS 157 defines fair value as the price that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit price).
Valuation techniques used to measure fair value under FAS 157 must maximize the
use of observable inputs and minimize the use of unobservable inputs. FAS 157
classifies the inputs used to measure fair value into the following
hierarchy:




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




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




•
            Level
      3 - Unobservable inputs for the asset or
  liability.




Our
financial assets consisted of current investment securities available-for-sale
at February 28, 2009 which we consider to be classified as Level 1 and our
long-term investment securities classified as trading which we consider to be
classified as Level 2.




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 February 28, 2009:





Fair Value Measurements at Reporting Date UsingQuoted Pricesin Active
                
                
                SignificantMarkets for
                
                
                Other
                
                
                SignificantIdentical
                
                
                Observable
                
                
                UnobservableInstruments
                
                
                Inputs
                
                
                Inputs
                
                
                Total(In thousands)
                
                (Level 1)
                
                
                (Level 2)
                
                
                (Level 3)
                
                
                BalanceInvestment
      securities available-for-sale (Current)
                
                $
                7,965
                
                
                $
                -
                
                
                $
                -
                
                
                
                7,965Investment
      securities trading (Non -Current)
                
                
                -
                
                
                
                33,150
                
                
                
                -
                
                
                
                33,150Total
      assets measured at fair value
                
                $
                7,965
                
                
                $
                33,150
                
                
                $
                -
                
                
                $
                41,115


11




In
February 2007, the FASB issued FASB Statement No. 159, "Establishing the Fair
Value Option for Financial Assets and Liabilities" (“FAS 159”), to permit all
entities to choose to elect to measure eligible financial instruments at fair
value. We adopted FAS 159 effective June 1, 2008.  Upon adoption, we did not
elect the fair value option for any items within the scope of FAS 159 and,
therefore, the adoption of FAS 159 did not have an impact on our financial
statements.





10.
            Guarantee
      of Third-Party Indebtedness—No Liability Is
  Recorded




As of
February 28, 2009, the Company is contingently liable as guarantor with respect
to $7,063 of indebtedness of Delta Egg Farm, LLC (“Delta Egg”), which is an
entity that is fifty-percent owned by the Company. The term of the guarantee is
through July 2018. At any time through that date, should Delta Egg default in
its obligation to make debt payments, the Company will be obligated to perform
under the guarantee by primarily making the required payments, including late
fees and penalties. The maximum potential amount of future payments that the
Company is required to make under the guarantee is fifty-percent of the
outstanding principal amount. The total principal amount owed by Delta Egg at
February 28, 2009 was $14,126, and we are a guarantor of $7,063.  This
guarantee arose in connection with Delta Egg’s construction of an organic egg
production and distribution facility near our Chase, Kansas location, and the
additional debt undertaken to fund construction of this facility, which serves
as collateral for this debt.




11.
            Long-Term
      Debt





On July
23, 2008, the Company entered into a term loan agreement for $20,000 with First
South Farm Credit, ACA, which was for construction of our Farwell, Texas
complex.   The loan is collateralized by the Farwell
assets.  This loan has a 5.45% fixed interest rate, monthly
installments of $175,500 per month (plus interest), with a final payment of
$168,500 plus interest due on June 1, 2018.  Borrowings under the line
are subject to certain financial covenants and restrictions on indebtedness,
dividend payments, financial guarantees, and other related items.





The
Company entered into and borrowed proceeds under a revolving line of credit with
UBS.   This revolving line of credit is collateralized by auction
rate securities in our account with UBS.  During the quarter we
borrowed $29,765.   On January 30, 2009, UBS redeemed a $4,500
auction rate security we held.  Proceeds from this redemption were
used to reduce amounts owed under our revolving line of credit with
UBS.  As of February 28, 2009, the balance owed under this revolving
line of credit was $25,265.  This revolving line of credit is a net no
cost loan.   Thus, the interest expense on this revolving line of
credit is equal to the interest income we receive on the auction rate securities
held in our account.   This loan becomes due and payable as the
auction rate securities are liquidated.    Attributable to
this payback feature, we have classified the entire amount owed under this
revolving line of credit as long-term debt, since the auction rate securities
that collateralize this debt are correspondingly classified as long-term
assets.


12


12.
            Concentration
      of Credit Risk for Cash Deposits at
Banks





We
maintain bank accounts that are insured by the Federal Deposit Insurance
Corporation (FDIC) up to $250.  At times, cash balances may be in
excess of the FDIC insurance limit. The Company manages this risk through
maintaining cash deposits and other highly liquid investments in high quality
financial institutions.





13.
            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
31, 2008 for a discussion of the impact of recently issued accounting standards.
There were no accounting standards issuedduring the quarter ended
February 28, 2009 that we expect will have a material impact on our consolidated
financial statements.





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 31, 2008, (ii) the risks and hazards inherent in
the shell egg business (including disease, pests, and weather conditions), (iii)
changes in the market prices of shell eggs, and (iv) changes or obligations that
could result from our future acquisition of new flocks or businesses. Readers
are cautioned not to put undue reliance on forward-looking statements. We
disclaim any intent or obligation to update publicly these forward-looking
statements, whether as a result of new information, future events or
otherwise.


As widely
reported, financial markets have been experiencing extreme disruption in recent
months, including, among other things, extreme volatility in securities prices,
severely diminished liquidity and credit availability, rating downgrades of
certain investments and declining valuations of others. Among other risks we
face, the current tightening of credit in financial markets may adversely affect
our ability to obtain financing in the future, including, if necessary, to fund
strategic acquisitions, and our ability to refinance any of our long-term
debt.





In
addition, current economic conditions could harm the liquidity or financial
position of our customers or suppliers, which could in turn cause such parties
to fail to meet their contractual or other obligations to us.





In
addition, we maintain significant amounts of cash and cash equivalents at one or
more financial institutions that are in excess of federally insured limits.
Given the current instability of financial institutions, we cannot be assured
that we will not experience losses on these deposits.





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.


13


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. As a result 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.





We
currently produce approximately 76% of the total number of shell eggs sold by
us, with approximately 6% of such total shell egg production being through the
use of 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 24% of the total number of shell eggs
sold by us is purchased from outside producers for resale, as
needed.





Our
operating income or loss is significantly affected by wholesale shell egg market
prices, which can fluctuate widely and are outside of our
control.  Retail sales of shell eggs are generally greatest during the
fall and winter months and lowest during the summer months.  Prices
for shell eggs fluctuate in response to seasonal factors and a natural increase
in egg production during the spring and early summer.





Our cost
of production is materially affected by feed costs, which currently average
about 65% 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 in 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.  Market
prices for corn remain higher in part because of increasing demand from ethanol
producers. Market prices for soybean meal remain higher as a result of
competition for acres from other grain producers.  However, our feed
costs were lower than the previous quarter with both corn and soybean meal
prices moving sharply lower after reaching record levels during the summer of
calendar year 2008.  Feed costs, while much improved, will likely
remain relatively high and could be volatile in the year ahead.





The
purchase of Zephyr Egg, LLC and Tampa Farms, LLC described above in Part1,
Item1, Note 2 are collectively referred to below as the
“Acquisitions".


14


RESULTS
OF OPERATIONS





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





13 Weeks Ended
                      
                      
                      39 Weeks EndedFebruary 28,
                        2009
                      
                      
                      March 1,
                        2008
                      
                      
                      February 28,
                        2009
                      
                      
                      March 1,
                        2008Net
      sales
                      
                      
                      100.0
                      %
                      
                      
                      100.0
                      %
                      
                      
                      100.0
                      %
                      
                      
                      100.0
                      %Cost
      of sales
                      
                      
                      74.8
                      
                      
                      
                      62.3
                      
                      
                      
                      76.7
                      
                      
                      
                      66.7Gross
      profit
                      
                      
                      25.2
                      
                      
                      
                      37.7
                      
                      
                      
                      23.3
                      
                      
                      
                      33.3Selling,
      general & administrative
                      
                      
                      8.5
                      
                      
                      
                      6.9
                      
                      
                      
                      8.4
                      
                      
                      
                      8.1Operating
      income
                      
                      
                      16.7
                      
                      
                      
                      30.8
                      
                      
                      
                      14.9
                      
                      
                      
                      25.2Other
      income (expense)
                      
                      
                      0.3
                      
                      
                      
                      0.8
                      
                      
                      
                      (0.1
                      )
                      
                      
                      0.7Income
      (loss) before taxes
                      
                      
                      17.0
                      
                      
                      
                      31.6
                      
                      
                      
                      14.8
                      
                      
                      
                      25.9Income
      tax expense
                      
                      
                      5.6
                      
                      
                      
                      11.0
                      
                      
                      
                      5.1
                      
                      
                      
                      9.0Net
      income
                      
                      
                      11.4
                      %
                      
                      
                      20.6
                      %
                      
                      
                      9.7
                      %
                      
                      
                      16.9
                      %





NET
SALES





Year- to-date, approximately 95% of our
net sales consist of shell egg sales and approximately 4% 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 February
28, 2009 were $270.0 million, a decrease of $8.0 million, or 2.9%, as compared
to net sales of $278.0 million for the thirteen-week period ended March 1,
2008.  Total dozens of eggs sold increased and egg selling prices
decreased for the current thirteen-week period as compared with the same period
in fiscal 2008.  Dozens sold for the current thirteen-week period of
fiscal 2009 were 216.8 million, an increase of 42.7 million, or 24.5% as
compared to 174.1 million for the same period of fiscal 2008.  During
this quarter there was good demand for eggs at the retail level, but a declining
demand for eggs from the institutional and food service sectors.  Our
net average selling price per dozen of shell eggs for the thirteen-week period
ended February 28, 2009 was $1.206, compared to $1.480 for the thirteen-week
period ended March 1, 2008, a decrease of 18.5%. Our net average selling price
is the blended price for all sizes and grades of shell eggs, including
non-graded shell egg sales, breaking stock and undergrades.





On a comparable basis, excluding the
Acquisitions, net sales for the thirteen-week period ended February 28, 2009
were $229.0 million, a decrease of $49.0 million, or 17.6%, as compared to net
sales of $278.0 million for the thirteen-week period ended March 1,
2008.   Dozens sold for the current thirteen-week period of
fiscal 2009, excluding the Acquisitions, were 185.5 million, an increase of 11.4
million, or 6.6% as compared to 174.1 million for the same period of fiscal
2008.





Our shell
egg sales which represent approximately 95% of our net sales, includes the sale
of specialty shell eggs. Specialty shell eggs include nutritionally enhanced,
cage free and organic eggs.  In the thirteen weeks ended February 28,
2009, specialty shell eggs represented approximately 19.8% of our shell egg
dollar sales, as compared to 12.6% for the same thirteen-week period last
year.  For the thirteen weeks ended February 28, 2009, specialty shell
eggs represented 14.8% of the total dozen eggs sold, as compared to 12.3% for
the same thirteen-week period last year.





Our egg
product sales represent approximately 4% of our net sales. For the thirteen
weeks ended February 28, 2009, egg product sales were $6.2 million, a decrease
of $6.7 million, or 51.9 %, as compared to $12.9 million for the same thirteen-
week period last year.   Egg products are primarily sold into the
institutional and food service sectors mentioned above, and the sizeable
decrease in egg products sales is attributable to the declines in these
sectors.





Net sales for the thirty-nine week
period ended February 28, 2009 were $715.2 million, an increase of $34.9
million, or 5.1 % as compared to net sales of $680.3 million for the thirty-nine
week period ended March 1, 2008. Dozens sold for the current thirty-nine week
period were 572.6 million, as compared to 510.2 million for the same time period
in fiscal 2008, an increase of 62.4 million, or 12.2%.  For the
current fiscal 2009 thirty-nine week period, our net average selling price per
dozen of shell eggs was $1.186, as compared to $1.220 per dozen for the same
period in fiscal 2008, a decrease of 2.8 %.


15


On a
comparable basis, excluding the Acquisitions, net sales for the thirty-nine week
period ended February 28, 2009 were $656.5 million, a decrease of $23.8 million,
or 3.5%, as compared to net sales of $680.3 million for the thirty-nine week
period ended March 1, 2008.   Dozens sold for the current
thirty-nine week period of fiscal 2009, excluding the Acquisitions, were 527.0
million, an increase of 16.8 million, or 3.3% as compared to 510.2 million for
the same period of fiscal 2008.





For the
thirty-nine weeks ended February 28, 2009, specialty shell eggs represented
approximately 18.5 % of our shell egg dollar sales, as compared to 13.5 % for
the same thirty-nine week period last year.  For the thirty-nine weeks
ended February 28, 2009, specialty shell eggs represented 14.0 % of the total
dozen eggs sold, as compared to 11.3% for the same thirty-nine week period last
year.  For the thirty-nine weeks ended February 28, 2009, egg product
sales were $28.1 million, a decrease of $2.3 million, or 7.6%, as compared to
$30.4 million for the same thirty-nine week period last year.





COST
OF SALES





Cost
of sales consists of costs directly related to production and processing of
shell eggs, including feed costs, and purchases of shell eggs from outside egg
producers. Cost of sales for the thirteen-weeks ended February 28, 2009 was
$201.9 million, an increase of $28.8 million, or 16.6%, as compared to cost of
sales of $173.1 million for the thirteen-week period ended March 1, 2008. In the
subsequent discussion related to cost of sales for this period excluding the
Acquisition, we show that this increase is directly related to the inclusion of
the Acquisition in our consolidated results for this thirteen-week period. The
primary factors affecting our cost of sales are costs of feed ingredients and
costs of shell eggs purchased from outside producers. Despite a decrease in the
market price for eggs this fiscal quarter as compared to the same period last
fiscal year, the increased cost for shell eggs purchased is attributable to an
increase in the volume of eggs purchased from outside nonaffiliated egg
producers. The volume of eggs purchased from outside shell egg producers
represented 26.0% of the dozens sold for the current thirteen-week period of
fiscal 2009, as compared to 22.7% of the dozens sold for the same period last
year.  Feed cost per dozen of shell eggs produced for the
thirteen-weeks ended February 28, 2009 was $.370 per dozen, as compared to the
thirteen-week period ended March 1, 2008 feed cost per dozen of $.347, an
increase of 6.6%; this was due to higher costs paid for corn and soybean meal
our primary feed ingredients.  Most industry projections indicate that
costs for corn and soybean meal will continue to be at elevated levels due to
demands for usage in ethanol and biodiesel production, and continued competition
for acreage from other grain producers.  The combination of higher
feed costs and lower shell egg selling prices are the fundamental causes that
led to a decline in gross profit from 37.7% of net sales for the thirteen-weeks
ended March 1, 2008 to 25.2% of net sales for the thirteen-weeks ended February
28, 2009.





On a comparable basis, excluding the
Acquisitions, cost of sales for the thirteen-week period ended February 28, 2009
was $172.9 million, a decrease of $200,000, or 0.1%, as compared to cost of
sales of $173.1 million for the thirteen-week period ended March 1,
2008.





Cost of sales for the thirty-nine week
period ended February 28, 2009 was $548.4 million, an increase of $94.6 million,
or 20.8%, as compared to cost of sales of $453.8 million for the thirty-nine
week period ended March 1, 2008. Cost of sales increased for reasons equivalent
to those discussed in the aforementioned section concerning cost of sales for
the comparable thirteen week periods of fiscal 2008 and fiscal 2009. The volume
of eggs purchased from outside shell egg producers represented 23.7% of the
dozens sold for the current thirty-nine week period of fiscal 2009, as compared
to 20.4% of the dozens sold for the same period last year.  Feed cost
per dozen of shell eggs produced for the current thirty-nine week period was
$.396 per dozen, as compared to $.313 per dozen for the same period in the prior
fiscal year, an increase of 26.5%.  The combination of higher feed
costs and lower shell egg selling prices are the fundamental causes that led to
a decline in gross profit from 33.3% of net sales for last year’s thirty-nine
week period to a gross profit of 23.3% of net sales for the current thirty-nine
week period.





On a
comparable basis, excluding the Acquisitions, cost of sales for the thirty-nine
week period ended February 28, 2009 was $506.1 million, an increase of $52.3
million, or 11.5%, as compared to cost of sales of $453.8 million for the
thirty-nine week period ended March 1, 2008.


16


SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES





13 weeksActual
                      
                      
                      Less: Acquisitions
                      
                      
                      NetCategory
                      
                      February 28, 2009
                      
                      
                      February 28, 2009
                      
                      
                      February 28, 2009
                      
                      
                      March 1, 2008
                      
                      
                      DifferenceStock
      compensation expense
                      
                      $
                      (368
                      )
                      
                      $
                      -
                      
                      
                      $
                      (368
                      )
                      
                      $
                      3,151
                      
                      
                      $
                      (3,519
                      )Specialty
      egg expenses
                      
                      
                      5,741
                      
                      
                      
                      916
                      
                      
                      
                      4,825
                      
                      
                      
                      3,415
                      
                      
                      
                      1,410Payroll
      and overhead
                      
                      
                      4,814
                      
                      
                      
                      743
                      
                      
                      
                      4,071
                      
                      
                      
                      3,631
                      
                      
                      
                      440Other
      sga expenses
                      
                      
                      5,661
                      
                      
                      
                      1,185
                      
                      
                      
                      4,476
                      
                      
                      
                      3,632
                      
                      
                      
                      844Delivery expense
                      
                      
                      7,109
                      
                      
                      
                      1,620
                      
                      
                      
                      5,489
                      
                      
                      
                      5,415
                      
                      
                      
                      74Total
                      
                      $
                      22,957
                      
                      
                      $
                      4,464
                      
                      
                      $
                      18,493
                      
                      
                      $
                      19,244
                      
                      
                      $
                      (751
                      )





Selling,
general and administrative expenses include costs of marketing, distribution,
accounting and corporate overhead.  Selling, general and
administrative expenses for the thirteen-week period ended February 28, 2009
were $23.0 million, an increase of $3.7 million or 19.3%, as compared to $19.2
million for the thirteen-week period ended March 1, 2008. Excluding the
Acquisitions, selling, general, and administrative expenses for the
thirteen-week period ended February 28, 2009 was $18.5 million, a decrease of
$751,000, or 3.6%, as compared to selling, general, and administrative expenses
of $19.2 million for the thirteen-week period ended March 1,
2008.   Stock based compensation plans expense decreased $3.5
million for the current quarter due primarily to a decrease in the closing price
of the Company’s common stock.  The calculation of the stock based
compensation plans expense is dependent on the closing stock price of the
Company’s common stock, which decreased from $34.50 at March 1, 2008 to 22.28 at
February 28, 2009, which is a 35.4% decline in the Company’s stock
price.   Specialty egg expenses represent advertising,
commissions, and franchise fees as they are incurred with sales of our specialty
eggs.   The expense increase is attributable to a 48.6% increase
in the dozens of specialty eggs sold this thirteen-week period as compared to
the same period last fiscal year.    Payroll and overhead
expenses increased primarily due to an increase in the cost of employee benefits
which includes health insurance.   There was also a slight
increase in salaries and wages.  Other selling, general, and
administrative expenses increased due to general and liability insurance cost
increases.  Due to recent litigation and the Acquisitions,
professional fees including legal and audit have increased.   Our
delivery expenses for the current thirteen-week period remained relatively
unchanged.   As a percent of net sales, selling, general and
administrative expense increased from 6.9% for the thirteen-week period ended
March 1, 2008 to 8.5% for the thirteen-week period ended February 28,
2009.





39 weeksActual
                        
                        
                        Less: Acquisitions
                        
                        
                        NetCategory
                        
                        February 28, 2009
                        
                        
                        February 28, 2009
                        
                        
                        February 28, 2009
                        
                        
                        March 1, 2008
                        
                        
                        DifferenceStock
      compensation expense
                        
                        $
                        (42
                        )
                        
                        $
                        -
                        
                        
                        $
                        (42
                        )
                        
                        $
                        7,439
                        
                        
                        $
                        (7,481
                        )Specialty
      egg expenses
                        
                        
                        13,699
                        
                        
                        
                        1,972
                        
                        
                        
                        11,727
                        
                        
                        
                        9,098
                        
                        
                        
                        2,629Payroll
      and overhead
                        
                        
                        13,719
                        
                        
                        
                        1,244
                        
                        
                        
                        12,475
                        
                        
                        
                        11,580
                        
                        
                        
                        895Other
      sga expenses
                        
                        
                        13,294
                        
                        
                        
                        1,533
                        
                        
                        
                        11,761
                        
                        
                        
                        10,810
                        
                        
                        
                        951Delivery expense
                        
                        
                        19,845
                        
                        
                        
                        2,855
                        
                        
                        
                        16,990
                        
                        
                        
                        15,994
                        
                        
                        
                        996Total
                        
                        $
                        60,515
                        
                        
                        $
                        7,604
                        
                        
                        $
                        52,911
                        
                        
                        $
                        54,921
                        
                        
                        $
                        (2,010
                        )





Selling,
general and administrative expenses for the thirty-nine week period ended
February 28, 2009 was $60.5 million, an increase of $5.6 million or 10.2%, as
compared to $54.9 million for the thirty-nine week period ended March 1,
2008.  Excluding the Acquisitions, selling, general, and
administrative expenses for the thirty-nine week period ended February 28, 2009
was $52.9 million, a decrease of $2.0 million, or 3.6%, as compared to selling,
general, and administrative expenses of $54.9 million for the thirty-nine week
period ended March 1, 2008. In the thirty-nine week period ended February 28,
2009, stock compensation plans expense decreased $7.5 million for the reasons
indicated above. Specialty egg expenses increased due to a 37.0% increase in the
dozens of specialty eggs sold this thirty-nine week period as compared to the
same period last fiscal year.    Payroll and other selling,
general, and administrative expenses increased for the same reasons as discussed
above.    Delivery expenses increased for the thirty-nine
week period ended due to an increase in dozens sold, generally higher operating
costs and higher costs for the use of outside trucking companies. As a percent
of net sales, selling, general and administrative expense increased from 8.1%
for the thirty-nine week period of fiscal 2008 to 8.4% for the thirty-nine week
period of fiscal 2009.


17


OPERATING
INCOME





As a result of the above, operating
income was $45.2 million for the thirteen-week period ended February 28, 2009,
as compared to operating income of $85.7 million for the thirteen-week period
March 1, 2008. Operating income was 16.7% of net sales for the current
thirteen-week period, as compared to operating income of 30.8% of net sales for
the thirteen-week period ended March 1, 2008.





For the thirty-nine week period ended
February 28, 2009, operating income was $106.3 million, as compared to operating
income of $171.6 million for the thirty-nine week period ended March 1, 2008.
Operating income was 14.9% of net sales for the current thirty-nine week period
as compared to operating income of 25.2% of net sales in the same thirty-nine
week period in fiscal 2008.





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 the income of
affiliates.





Other income for the
thirteen-week period ended February 28, 2009 was $763,000, a decrease of $1.4
million, as compared to other income of $2.2 million for the thirteen-week
period ended March 1, 2008.  This net decrease for the current
thirteen-week period was primarily the result of a $1.0 million increase in net
interest expense and a $406,000 decrease in other income.  We had
higher average long-term borrowing balances and lower invested cash balances,
which increased net interest expense.  Other income decreased due to
decreased equity in income of affiliates, which are also in the shell egg
business. This quarter, the overall activity in other income was relatively flat
as compared to last year, but we did receive a patronage dividend this quarter
from Eggland’s
BestTM
for $1.9 million.  As a percent of net sales, other income was 0.8%
for the third quarter of fiscal 2008 and other income was 0.3% of net sales for
the third quarter of fiscal 2009.





For the thirty-nine week period ended
February 28, 2009 other expense was $821,000.  This is in comparison
to other income of $4.9 million for the same thirty-nine week period in fiscal
2008. For the current thirty-nine weeks, net interest expense increased
$465,000, for the same aforementioned reasons as discussed for the thirteen-week
period of this fiscal period.  Other income decreased $5.3 million,
due primarily from decreases in the equity in income of
affiliates.  There were also significant gains recorded on the sales
of fixed assets last year, in which similar sales did not transpire during the
thirty-nine week period this fiscal year.  As a percent of net sales,
other expense was 0.1% for the current thirty-nine week period, as compared to
other income of 0.7% for the same thirty-nine week period in fiscal
2008.





INCOME TAXES





As a result of the above, our pre-tax
income was $46.0 million for the third quarter ended February 28, 2009, as
compared to pre-tax income of $87.9 million for the thirteen-week period ended
March 1, 2008. For the current thirteen-week period, income tax expense of $15.1
million was recorded with an effective tax rate of 32.9%, as compared to income
tax expense of $30.7 million with an effective tax rate of 34.9% for the same
thirteen-week period in fiscal 2008.





For the thirty-nine week period ended
February 28, 2009, our pre-tax income was $105.5 million, as compared to $176.5
million for the thirty-nine week period ended March 1, 2008. For the current
thirty-nine week period, an income tax expense of $36.3 million was recorded
with an effective tax rate of 34.4%, as compared to an income tax expense of
$61.2 million with an effective tax rate of 34.7% for the same thirty-nine week
period in fiscal 2008.  Our effective tax rate differs from the
federal statutory income tax rate of 35% due to state income taxes and certain
items included in income for financial reporting purposes that are not included
in taxable income or loss for income tax purposes, including tax exempt interest
income, certain stock option expense and the minority ownership interest in the
profits and losses of Hillandale, LLC for income tax purposes.


18


NET INCOME





Net income for the thirteen-week period
ended February 28, 2009 was $30.8 million, or $1.30 per basic and $1.29 per
diluted share, as compared to net income of $57.2 million, or $2.41 per basic
and diluted share, for the thirteen-week period ended March 1,
2008.





For the thirty-nine week period ended
February 28, 2009, net income was $69.2 million, or $2.91 per basic and diluted
share, as compared to $115.3 million, or $4.87 per basic and $4.86 per diluted
share, for the thirty-nine week period ended March 1, 2008.





CAPITAL
RESOURCES AND LIQUIDITY





Our
working capital at February 28, 2009 was $131.4 million compared to $121.6
million at May 31, 2008. Our current ratio was 2.15 at February 28, 2009 as
compared with 2.18 at May 31, 2008. Our need for working capital generally is
highest in the last and first fiscal quarters ending in May and August,
respectively, when egg prices are normally at seasonal lows.  Seasonal
borrowing needs frequently are higher during these quarters than during other
fiscal quarters. We have a $40 million line of credit with three banks, $3.9
million of which was utilized as a standby letter of credit at February 28,
2009.  Our long-term debt at February 28, 2009, including current
maturities, amounted to $133.0 million, as compared to $97.2 million at May 31,
2008.





On July
23, 2008, the Company entered into a term loan agreement for $20,000 with First
South Farm Credit, ACA, which was for construction of our Farwell, Texas
complex.   The loan is collateralized by the Farwell
assets.  This loan has a 5.45% fixed interest rate, monthly
installments of $175,500 per month (plus interest), with a final payment of
$168,500 plus interest due on June 1, 2018.  Borrowings under the line
are subject to certain financial covenants and restrictions on indebtedness,
dividend payments, financial guarantees, and other related items.





We
entered into and borrowed proceeds under a revolving line of credit with
UBS.   This revolving line of credit is collateralized by the
auction rate securities in our account with UBS.  During the quarter
we borrowed $29,765.   On January 30, 2009, UBS redeemed a $4,500
auction rate security we held.  Proceeds from this redemption were
used to reduce amounts owed under our revolving line of credit with
UBS.  As of February 28, 2009, the balance owed under this revolving
line of credit was $25,265.  This revolving line of credit is a net no
cost loan.   Thus, the interest expense on this revolving line of
credit is equal to the interest income we receive on the auction rate securities
held in our account.   This loan becomes due and payable as the
auction rate securities are liquidated.    Attributable to
this payback feature, we have classified the entire amount owed under this
revolving line of credit as long-term debt, since the auction rate securities
that collateralize this debt are correspondingly classified as long-term
assets.




In the
thirty-nine week period ended February 28, 2009, $91.3 million in net cash was
provided by operating activities.  This compares to $119.8 million of
net cash from operating activities for the thirty-nine week period ended March
1, 2008. For the thirty-nine weeks ended February 28, 2009, $14.9 million was
used for the purchase of short-term investments, $16.1 million was provided from
the sale of short-term investments, and net $68,000 was provided from notes
receivable and other investments.  Approximately $128,000 was provided
from disposal of property, plant and equipment, $19.4 million was used for
purchases of property, plant and equipment and $13.7 million was used for an
additional acquisition of the Hillandale business.  We used $29.6
million for the acquisition of Zephyr Egg, LLC, and $61.6 million for the
acquisition of Tampa Farm, LLC.  Approximately $25.0 million was used
for payments of dividends on the common stock, and $20.0 million was used for
principal payments on long-term debt. We received $427,000 from the issuance of
common stock from the treasury through the exercise of stock
options.  Approximately $55.8 million was received from additional
long-term borrowings. The net result of these activities was a decrease in cash
and cash equivalents of $20.5 million since May 31, 2008.




In the
thirty-nine weeks ended March 1, 2008, the Company used $7.7 million for the
purchase of investments, $141,000 was received on notes receivable and
investments in unconsolidated affiliates, and $2.3 million was provided from
disposal of property, plant and equipment. The Company used $23.6 million for
purchases of property, plant and equipment, and $9.3 million for payment on the
purchase obligation for Hillandale, LLC. In addition, $617,000 was provided from
the issuance of common stock from the treasury upon the exercise of stock
options, and $588,000 was used for payments of dividends.  Principal
payments on long term debt were $10.9 million. The net result of these
activities was an increase in cash of $70.8 million since June 2,
2007.


19


Substantially
all trade receivables and inventories collateralize our revolving line of
credit. Most of our property, plant and equipment collateralize our long-term
debt under our loan agreements with our lenders. Unless otherwise approved by
our lenders, we are required by provisions of these 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 adjusted for
earnings); (2) limit capital expenditures less exclusions (not to exceed $60.0
million for any period of four consecutive fiscal quarters), lease obligations
and additional long-term borrowings (total funded debt to total capitalization
not to exceed 55%); and (3) maintain various cash-flow coverage ratios (1.25 to
1), among other restrictions. At February 28, 2009 we were in compliance with
the provisions 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.





Under the terms of our Agreement with
Hillandale and the Hillandale shareholders, a new Florida limited liability
company named Hillandale, LLC was formed. In fiscal 2006, we purchased 51% of
the Units of Membership in Hillandale, LLC for cash of approximately $27.0
million, with the remaining Units to be acquired in essentially equal annual
installments over a four-year period. The purchase price of the Units is equal
to their book value as calculated in accordance with the terms of the Agreement.
In fiscal 2007, we purchased, pursuant to the Agreement, an additional 13% of
the Units of Membership for $6.1 million from our cash balances. In fiscal 2008,
we purchased an additional 12% of the Units of Membership for $6.8 million from
our cash balances. During fiscal 2008, an additional payment of $5.7 million was
paid on the purchase obligation.  In fiscal 2009, we purchased an
additional 12% of the Units of Membership for $11.6 million from our cash
balances. We have recorded the obligation to acquire the remaining 12% at its
estimated present value of $9.1 million at February 28, 2009. The actual
remaining purchase price may be higher or lower when the acquisitions are
completed. Future funding is expected to be provided by our cash balances and
borrowings under our existing credit facilities.





Capital expenditure requirements are
expected to be for the normal repair and replacement of our facilities. In
addition, we are constructing a new integrated layer production complex in the
city of Farwell in west Texas to replace our Albuquerque, New Mexico complex,
which has ceased egg production. The expected cost is approximately $30.0
million. Completion of this facility is estimated to be in January 2010. As of
February 28, 2009 capital expenditures related to construction of this complex
were $25.1 million.  The remaining future capital expenditures will be
funded by cash flows from operations, existing lines of credit and additional
long-term borrowings.





Delta Egg Farm, LLC, an unconsolidated
affiliate, is constructing an organic egg production and distribution facility
near our Chase, Kansas location. The cost of construction is estimated to be
approximately $13.0 million.  In connection with this project, we are
a pro rata guarantor, with the other Delta Egg Farm, LLC owners, of additional
debt undertaken to fund construction of this facility. We are currently a
guarantor of approximately $7.1 million of long-term debt of Delta Egg Farm,
LLC.





On August
8, 2008, UBS agreed to a settlement in principle with the Securities and
Exchange Commission, the New York Attorney General, the Massachusetts Securities
Division, the Texas State Securities Board and other state regulatory agencies
represented by the North American Securities Administrators Association to
restore liquidity to all remaining UBS clients who hold auction rate
securities.   On November 3, 2008, we agreed to accept Auction
Rate Security Rights (the “Rights”) from UBS offered through a prospectus filed
on October 7, 2008.   The Rights permit us to sell, or put, our
auction rate securities back to UBS at par value at any time during the period
from June 30, 2010 through July 2, 2012.  We expect to exercise our
Rights and put our auction rate securities back to UBS on June 30, 2010, the
earliest date allowable under the Rights.





By
accepting the Rights, we can no longer assert that we have the intent to hold
the auction rate securities until anticipated recovery. Accordingly, we have
classified our investments in auction rate securities and the Rights as trading
securities, as defined by FAS No. 115, on the date of our acceptance of the
Rights. As a result, we are required to record these two individual securities
at fair value each period until the Rights are exercised and the auction rate
securities are redeemed. At February 28, 2009 the fair value of our auction rate
securities were $6,482 below par value of which $4,713 and $1,769 was charged to
operations in the second and third quarters of fiscal 2009,
respectively.  Because we will be permitted to put the auction rate
securities back to UBS at par value, we have accounted for the Rights as a
separate asset that is measured at its fair value, resulting in gains in the
second and third quarter of 2009 in amounts equal to the losses recognized on
the auction rate securities. Although the Rights represent the right to sell the
securities back to UBS at par, we will periodically assess the economic ability
of UBS to meet that obligation in assessing the fair value of the Rights. We
will continue to classify the auction rate securities and the related Rights as
long-term investments until June 30, 2009, one year prior to the expected
settlement.


20


Since our
last fiscal year, ended May 31, 2008, we have liquidated two of our auction rate
securities at par. On July 10, 2008, we liquidated one auction rate security at
par value for $4,500 with accrued interest after this security was called by the
original issuer. On January 30, 2009, UBS redeemed a $4,500 auction rate
security at par with accrued interest after this security was called by the
issuer.





We
currently have a $1.6 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 so that we no longer qualify as a family farming corporation. 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 $1.6 million deferred tax liability would not impact 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,
utilization of our revolving line of credit, and cash flows from operations are
sufficient to fund our current and projected capital needs in light of the
disruptions in the financial markets.  These disruptions in the
financial markets include among other things, extreme volatility in securities
prices, severely diminished liquidity and credit availability, rating downgrades
of certain investments and declining valuations of others. In light of the
current tightening of credit in the financial markets, we might suffer adverse
affects in so far as our ability to secure financing in the future, including,
if necessary, to fund a strategic acquisition, and our ability to refinance any
of our long-term debt.





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 31,
2008 for a discussion of the impact of recently issued accounting standards.
There were no accounting standards issuedduring the quarter ended
February 28, 2009 that we expect will have a material impact on our consolidated
financial statements.





Effective
June 1, 2008, we adopted FASB Statement No. 157, “Fair Value Measurements” (“FAS
157”). FAS 157 establishes a single authoritative definition of fair value, sets
out a framework for measuring fair value, and expands on required disclosures
about fair value measurement.  In February 2008, FASB issued FASB
Staff Position No. 157-2, “Effective Date of FASB Statement No. 157” which
provides a one-year deferral of the effective date of FAS 157 for non-financial
assets and non-financial liabilities except those that are recognized or
disclosed in the financial statements at fair value at least
annually.




The
adoption of FAS 157 for our financial assets and financial liabilities did not
have a material impact on our financial statements.  We are currently
evaluating the effect that the implementation of this standard for nonfinancial
assets and nonfinancial liabilities will have on our financial statements upon
full adoption in 2009. FAS 157 defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit price).
Valuation techniques used to measure fair value under FAS 157 must maximize the
use of observable inputs and minimize the use of unobservable inputs. FAS 157
classifies the inputs used to measure fair value into the following
hierarchy:




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




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




•
            Level
      3 - Unobservable inputs for the asset or
  liability.




Our financial assets consisted
of current investment securities available-for-sale at February 28, 2009
which we consider to be classified as Level 1 and our long-term investment
securities classified as trading which we consider to be classified as Level
2.


21




In
February 2007, the FASB issued FASB Statement No. 159, "Establishing the Fair
Value Option for Financial Assets and Liabilities" (“FAS 159”), to permit all
entities to choose to elect to measure eligible financial instruments at fair
value. We adopted FAS 159 effective June 1, 2008.  Upon adoption, we did not
elect the fair value option for any items within the scope of FAS 159 and,
therefore, the adoption of FAS 159 did not have an impact on our financial
statements.





Critical
Accounting Policies. We
suggest that our Summary of Significant Accounting Policies, as described in
Note 1 of the Notes to Consolidated Financial Statements included in Cal-Maine
Foods, Inc. and Subsidiaries annual report on Form10-K for the fiscal year ended
May 31, 2008, 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 31, 2008.





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 31, 2008.





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 has significantly
affected or is reasonably likely to materially affect our internal controls over
financial reporting, except the change discussed under “Change in Internal
Control over Financial Reporting,” below.




Changes
in Internal Control over Financial Reporting


During
the second quarter of fiscal 2009, we began implementing a new enterprise
resource planning (“ERP”) system. The implementation of the ERP system
represents a material change in our internal controls over financial
reporting.




Management
is reviewing and evaluating the design of key controls in the new ERP system and
the accuracy of the data conversion that is taking place during the
implementation and thus far has not uncovered a control deficiency or
combination of control deficiencies that management believes meet the definition
of a material weakness in internal control over financial reporting. Although
management believes internal controls are being maintained or enhanced by
the new ERP system, it has not completed its testing of the operating
effectiveness of all key controls in the new system. As such, there is a risk
such control deficiencies may exist that have not yet been identified and that
could constitute, individually or in combination, a material weakness.
Management will continue to evaluate the operating effectiveness of related key
controls during subsequent periods.





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 31, 2008.


22


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.  The new trial
in Green is scheduled to begin in April, 2009.




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 ninety percent of a new
corporation, 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.




Some dispositive motions have been
filed jointly by all defendants.  Some of those motions were rejected
by the Court, and others were left unresolved after oral
arguments.  Other dispositive motions will be filed.  We are
not able at present to give an opinion regarding the ultimate resolution of the
action.




In February, 2008, a hearing was had on
the plaintiff’s motion for preliminary injunctive relief.  The
principal relief sought was a moratorium on litter application in the
watershed.  The district court denied the plaintiff’s
motion.




The presiding judge appointed a fellow
district court judge to act as a settlement judge.  That judge
initiated settlement discussions, and several settlement meetings were
had.  The meetings were not been productive and have been
suspended.




The case is set for trial in Tulsa,
Oklahoma beginning during the September, 2009 trial calendar.  A
precise start date has not been announced.




Egg Antitrust Litigation




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


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The
Judicial Panel on Multidistrict Litigation consolidated all of these cases (as
well as certain other cases in which the Company was not a named defendant) for
pretrial proceedings in the United States District Court for the Eastern
District of Pennsylvania.  The Pennsylvania court has organized the
cases around two groups (direct purchasers and indirect purchasers) and has
named interim lead counsel for the named plaintiffs in each
group.  The named plaintiffs in the direct purchaser case filed a
consolidated complaint on January 30, 2009.  The named plaintiffs in
the indirect purchaser case filed a consolidated complaint on February 27,
2009.




In both
consolidated complaints, the named plaintiffs allege that the Company and
certain other large domestic egg producers conspired to reduce the domestic
supply of eggs in a concerted effort to raise the price of eggs to artificially
high levels.  In both consolidated complaints, plaintiffs allege that
all defendants agreed to reduce the domestic supply of eggs by (a) manipulating
egg exports and (b) implementing industry-wide animal welfare guidelines that
reduced the number of hens and eggs.  The indirect purchaser
plaintiffs also allege that all defendants manipulated pricing information in
the egg industry, exchanged price information improperly, and refused to compete
against each other.




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




The
Pennsylvania court has entered a series of orders related to case management and
scheduling.  The defendants have not yet responded to either of the
consolidated complaints.  There is no definite schedule in either
consolidated case for discovery, class certification proceedings, or filing
motions for summary judgment.  No trial date has been set in either
consolidated case.




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
31, 2008.





ITEM
6.  EXHIBITS





a.
            Exhibits


No.
                
                Description31.1
                
                Certification
      of The Chief Executive Officer31.2
                
                Certification
      of The Chief Financial Officer32.0
                
                Written
      Statement of The Chief Executive Officer and The Chief Financial
      Officer99.1
                
                Press
      release dated March 30, 2009 announcing interim period financial
      information




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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:
      April 1, 2009
              /s/ Timothy A. DawsonTimothy
      A. DawsonVice
      President/Treasurer(Principal
      Financial Officer)Date:
      April 1, 2009
              /s/ Charles F. CollinsCharles
      F. CollinsVice
      President/Controller(Principal
      Accounting Officer)




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