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 27, 2010




OR


o
              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 o




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


Yes oNo o




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




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


Yes oNo 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, 2010.






Common Stock, $0.01
      par value
            21,425,091
      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
      27, 2010 and May 30, 2009
            
            
            3Condensed
      Consolidated Statements of Income -Thirteen
      Weeks and Thirty-Nine Weeks EndedFebruary
      27, 2010 and February 28, 2009
            
            
            4Condensed
      Consolidated Statements of Cash Flows -Thirty-Nine
      Weeks Ended February 27, 2010 andFebruary
      28, 2009
            
            
            5Notes
      to Condensed Consolidated Financial Statements
            
            
            6Item
      2. Management’s Discussion and Analysis ofFinancial
      Condition and Results of Operations
            
            
            13Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk
            
            
            21Item
      4. Controls and Procedures
            
            
            22Part
      II. Other InformationItem
      1. Legal Proceedings
            
            
            22Item
      1A. Risk Factors
            
            
            24Item
      6. Exhibits
            
            
            24Signatures
            
            
            25









PART
I.  FINANCIAL INFORMATION




ITEM
1.   FINANCIAL STATEMENTS




CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS


(in
thousands, except per share amounts)





February
      27, 2010
            
            
            May
      30, 2009(unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            141,223
            
            
            $
            66,883Investment
      securities available-for-sale
            
            
            33,202
            
            
            
            15,165Investment
      securities trading
            
            
            32,800
            
            
            
            —Trade
      and other receivables
            
            
            61,488
            
            
            
            44,628Inventories
            
            
            94,947
            
            
            
            97,535Prepaid
      expenses and other current assets
            
            
            1,427
            
            
            
            17,474Total
      current assets
            
            
            365,087
            
            
            
            241,685Investment
      securities trading
            
            
            —
            
            
            
            33,150Investment
      securities available-for-sale
            
            
            711
            
            
            
            —Other
      investments
            
            
            19,653
            
            
            
            18,069Goodwill
            
            
            22,116
            
            
            
            22,455Amortizable
      intangible assets
            
            
            13,971
            
            
            
            15,056Other
      assets
            
            
            1,013
            
            
            
            2,472Property,
      plant and equipment
            
            
            486,444
            
            
            
            479,327Less
      accumulated depreciation
            
            
            (250,208
            )
            
            
            (229,369
            )Net
      property, plant and equipment
            
            
            236,236
            
            
            
            249,958TOTAL
      ASSETS
            
            $
            658,787
            
            
            $
            582,845LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
            
            $
            83,715
            
            
            $
            58,423Accrued
      dividends payable
            
            
            11,511
            
            
            
            3,422Current
      maturities of purchase obligation
            
            
            —
            
            
            
            8,400Current
      maturities of long-term debt
            
            
            39,581
            
            
            
            13,806Deferred
      income taxes
            
            
            19,640
            
            
            
            19,635Total
      current liabilities
            
            
            154,447
            
            
            
            103,686Long-term
      debt, less current maturities
            
            
            108,348
            
            
            
            115,983Other
      non-current liabilities
            
            
            3,133
            
            
            
            3,532Deferred
      income taxes
            
            
            30,950
            
            
            
            26,635Total
      liabilities
            
            
            296,878
            
            
            
            249,836Stockholders’
      equity:Common
      stock $0.01 par value per share:Authorized
      shares – 60,000Issued
      35,130 shares and 21,425 shares outstanding atFebruary
      27, 2010 and 21,389 shares outstanding at May 30, 2009
            
            
            351
            
            
            
            351Class
      A common stock $0.01 par value per share, authorized, issued
      andoutstanding
      2,400 shares at February 27, 2010 and May 30, 2009
            
            
            24
            
            
            
            24Paid-in
      capital
            
            
            32,495
            
            
            
            32,098Retained
      earnings
            
            
            351,816
            
            
            
            320,623Common
      stock in treasury – 13,705 shares at February 27, 2010and
      13,741 shares at May 30, 2009
            
            
            (20,911
            )
            
            
            (21,045
            )Total
      Cal-Maine Foods, Inc. stockholders’ equity
            
            
            363,775
            
            
            
            332,051Noncontrolling
      interests in consolidated entities
            
            
            (1,866
            )
            
            
            958Total
      stockholders’ equity
            
            
            361,909
            
            
            
            333,009TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            658,787
            
            
            $
            582,845





See
notes to condensed consolidated financial statements.










CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


(in
thousands, except per share amounts)


UNAUDITED




13
      Weeks
      Ended
            
            
            39
      Weeks EndedFebruary
      27, 2010
            
            
            February
      28, 2009
            
            
            February
      27, 2010
            
            
            February
      28, 2009Net
      sales
            
            $
            271,156
            
            
            $
            270,009
            
            
            $
            688,055
            
            
            $
            715,211Cost
      of sales
            
            
            196,232
            
            
            
            201,852
            
            
            
            548,087
            
            
            
            548,391Gross
      profit
            
            
            74,924
            
            
            
            68,157
            
            
            
            139,968
            
            
            
            166,820Selling,
      general andadministrative
            
            
            24,987
            
            
            
            22,957
            
            
            
            69,897
            
            
            
            60,515Operating
      income
            
            
            49,937
            
            
            
            45,200
            
            
            
            70,071
            
            
            
            106,305Other
      income (expense):Interest
      expense, net
            
            
            (1,653
            )
            
            
            (1,736
            )
            
            
            (5,044
            )
            
            
            (4,165
            )Other
            
            
            5,080
            
            
            
            2,381
            
            
            
            6,113
            
            
            
            3,9143,427
            
            
            
            645
            
            
            
            1,069
            
            
            
            (251
            )Income
      before income taxes
            
            
            53,364
            
            
            
            45,845
            
            
            
            71,140
            
            
            
            106,054Income
      tax expense
            
            
            19,413
            
            
            
            15,120
            
            
            
            26,432
            
            
            
            36,250Net
      income
            
            
            33,951
            
            
            
            30,725
            
            
            
            44,708
            
            
            
            69,804Net
      (income) loss attributable to noncontrolling interest
            
            
            583
            
            
            
            118
            
            
            
            2,088
            
            
            
            (570
            )Net
      income attributable to Cal-Maine Foods, Inc.
            
            $
            34,534
            
            
            $
            30,843
            
            
            $
            46,796
            
            
            $
            69,234Net
      income per commonshare:Basic
            
            $
            1.45
            
            
            $
            1.30
            
            
            $
            1.97
            
            
            $
            2.91Diluted
            
            $
            1.45
            
            
            $
            1.29
            
            
            $
            1.96
            
            
            $
            2.91Dividends
      declared per common share
            
            $
            0.483
            
            
            $
            0.432
            
            
            $
            .655
            
            
            $
            0.971Weighted
      average shares outstanding:Basic
            
            
            23,818
            
            
            
            23,789
            
            
            
            23,806
            
            
            
            23,763Diluted
            
            
            23,880
            
            
            
            23,825
            
            
            
            23,875
            
            
            
            23,807





See notes
to condensed consolidated financial statements.









CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS


(in
thousands)


UNAUDITED




39
      Weeks EndedFebruary
      27, 2010
            
            
            February
      28, 2009Cash
      flows from operating activitiesNet
      income
            
            $
            44,708
            
            
            $
            69,804Net
      (income) loss attributable to noncontrolling interest
            
            
            2,088
            
            
            
            (570
            )Depreciation
      and amortization
            
            
            22,403
            
            
            
            20,477Other
      adjustments, net
            
            
            35,062
            
            
            
            1,627Net
      cash provided by operations
            
            
            104,261
            
            
            
            91,338Cash
      flows from investing activitiesPurchases
      of investments
            
            
            (35,220
            )
            
            
            (14,925
            )Sales
      of investments
            
            
            16,822
            
            
            
            16,060Acquisition
      of businesses, net of cash acquired
            
            
            (508
            )
            
            
            (91,223
            )Purchases
      of property, plant and equipment
            
            
            (15,603
            )
            
            
            (19,419
            )Payments
      received on notes receivable and from investments in
      affiliates
            
            
            1,343
            
            
            
            964Increase
      in notes receivable and equity investments in affiliates
            
            
            (705
            )
            
            
            (896
            )Net
      proceeds from disposal of property, plant and equipment
            
            
            1,270
            
            
            
            128Net
      cash used in investing activities
            
            
            (32,601
            )
            
            
            (109,311
            )Cash
      flows from financing activitiesProceeds
      from issuance of common stock from treasury
            
            
            213
            
            
            
            427Payment
      of purchase obligation
            
            
            (8,149
            )
            
            
            (13,721
            )Proceeds
      from long-term borrowings
            
            
            30,000
            
            
            
            55,765Principal
      payments on long-term debt
            
            
            (11,860
            )
            
            
            (19,958
            )Payment
      of dividends
            
            
            (7,524
            )
            
            
            (25,048
            )Net
      cash provided by (used in) financing activities
            
            
            2,680
            
            
            
            (2,535
            )Net
      change in cash and cash equivalents
            
            
            74,340
            
            
            
            (20,508
            )Cash
      and cash equivalents at beginning of period
            
            
            66,883
            
            
            
            94,858Cash
      and cash equivalents at end of period
            
            $
            141,223
            
            
            $
            74,350





See notes
to condensed consolidated financial statements.









CAL-MAINE
FOODS, INC. AND SUBSIDIARIES


Notes to Condensed Consolidated Financial
Statements


(in
thousands, except share amounts)


February
27, 2010




1.            
Presentation of Interim Information





The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.  In the opinion of management, all
adjustments, consisting of normal recurring adjustments, considered necessary
for a fair presentation have been included. Preparation of condensed
consolidated financial statements requires us to make estimates and
assumptions.  These estimates and assumptions affected reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the condensed consolidated financial statements and
the reported amounts of revenues and expenses during the reporting
period.  Operating results for the thirteen and thirty-nine weeks
ended February 27, 2010 are not necessarily indicative of the results that may
be expected for the year ending May 29, 2010.





The
condensed consolidated balance sheet at May 30, 2009 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 30, 2009. References to “we,”  “us,
“our,” or the “Company” refer to Cal-Maine Foods, Inc.





Hillandale,
LLC Acquisition





During
the first quarter of fiscal 2010, we made the final payment of $8,150 on the
Hillandale, LLC purchase obligation.  Effective July 30, 2009,
Hillandale, LLC was merged into Cal-Maine Foods, Inc. Refer to Note 2 of our May
30, 2009 audited financial statements for further information on the Hillandale
Acquisition.





Benton
County Foods, LLC Acquisition





We now
own 100% of Benton County Foods, LLC.  We purchased the remaining 10%
ownership interest in Benton County Foods, LLC for $508 in the first quarter of
fiscal 2010.  Refer to Note 2 of our May 30, 2009 audited financial
statements for further information on the Benton County Foods, LLC
Acquisition.





2.          
  Stock Compensation Plans





Total
stock based compensation expense (benefit) for the thirty-nine weeks ended
February 27, 2010 and February 28, 2009 was $2,016 and $(161),
respectively.  Our liabilities associated with Stock Appreciation
Rights as of February 27, 2010 and February 28, 2009 was $4,304 and $3,997,
respectively.





During
the thirty-nine weeks ended February 27, 2010, options were exercised for 36,000
shares of common stock. Proceeds from the exercise of these options amounted to
$213.  The Company made no stock-based grants during the thirty-nine
weeks ended February 27, 2010.  Refer to Note 11 of our May 30, 2009
audited financial statements for further information on our stock compensation
plans.










3.            
Inventories





Inventories consisted of the
following:





February
      27, 2010
            
            
            May
      30, 2009Flocks
            
            $
            60,024
            
            
            $
            64,040Eggs
            
            
            7,719
            
            
            
            6,880Feed
      and supplies
            
            
            27,204
            
            
            
            26,615$
            94,947
            
            
            $
            97,535





4.
            Debt





In
November 2009, the Company entered into a loan agreement with Metropolitan Life
Insurance Company for borrowings of $30,000 (the “Note”).  The Note
has a 6.2% fixed interest rate, monthly installments of $250 per month (plus
interest), with a final maturity on November 30, 2019.   Proceeds
from the Note were used to increase the Company’s working
capital.   This Note is secured by mortgages, security
agreements, assignments of lease and rents with respect to certain of the
Company’s egg production, feed mill, grain storage, and related facilities
located in Florida.





The
Company had a $40,000 revolving line of credit with three banks which expired on
December 31, 2009. On the maturity date, there were no borrowings outstanding
and the Company elected not to renew this line of credit.   Prior
to the expiration, $3,900 of the revolving line of credit was utilized for
standby letters of credit.  The standby letters of credit, which
remain outstanding, are now collateralized by cash and cash
equivalents.





The
Company has a revolving line of credit with UBS Financial Services Inc.
(“UBS”).   Borrowings under this revolving line of credit are
collateralized by auction rate securities in our account with UBS.  As
of February 27, 2010, the balance owed under this revolving line of credit was
$24,731.  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 in
the current liability portion of our condensed consolidated balance sheet in the
line item, “Current maturities of long-term debt,” because the auction rate
securities that collateralize this debt are correspondingly classified as
current assets.





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 cannot 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 options.  The computations of basic and diluted net income per
share attributable to the Company are as follows:





13
      weeks
            
            
            39
      weeksFebruary
      27, 2010
            
            
            February
      28, 2009
            
            
            February
      27, 2010
            
            
            February
      28, 2009Net
      income attributable to Cal-Maine Foods, Inc.
            
            $
            34,534
            
            
            $
            30,843
            
            
            $
            46,796
            
            
            $
            69,234Basic
      weighted-average shares
            
            
            23,818
            
            
            
            23,789
            
            
            
            23,806
            
            
            
            23,763Effect
      of dilutive securities:Common
      stock options
            
            
            62
            
            
            
            36
            
            
            
            69
            
            
            
            44Dilutive
      potential common shares
            
            
            23,880
            
            
            
            23,825
            
            
            
            23,875
            
            
            
            23,807Net
      income per common share attributable to Cal-Maine Foods
    Inc:Basic
            
            $
            1.45
            
            
            $
            1.30
            
            
            $
            1.97
            
            
            $
            2.91Diluted
            
            $
            1.45
            
            
            $
            1.29
            
            
            $
            1.96
            
            
            $
            2.91









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 shares outstanding for the period.





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





Our
investment securities are accounted for in accordance with Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320
(Investments-Debt and Equity Securities) (“ASC 320”). Our investment securities
are stated at fair value.  They consist of auction rate securities,
which we classify as trading, and high quality short-term municipal bonds, which
we classify as available-for-sale. Under ASC 320, securities purchased to be
held for an indeterminate period 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.  Trading securities are
bought and held principally for trading purposes. Unrealized holding gains and
losses for trading securities are included in earnings.





Our
auction rate securities were purchased from UBS.  They are long-term
debt obligations, which were rated AAA at the date of purchase. Although some of
the obligations have maintained their AAA rating, certain 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. 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 was reported in the
financial press, the disruptions in the credit markets adversely affected the
auction market for these types of securities.





On August
8, 2008, UBS agreed to a settlement in principle with the Securities and
Exchange Commission (the “SEC”), 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 UBS prospectus
dated October 7, 2008. The Rights permit us to sell, or put, our auction rate
securities back to UBS at par value anytime 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 as trading securities. As
of the date of our acceptance of the Rights, the change in fair value of the
auction rate securities and Rights are included in earnings. 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 an amount equal to the loss recognized on the auction rate
securities. Although the Rights represent the right to sell the securities back
to UBS at par, we periodically assess the economic ability of UBS to meet that
obligation in assessing the fair value of the Rights. We have classified the
auction rate securities and the related Rights as current investments as of
February 27, 2010 because we have the ability to put the auction rate securities
back to UBS on June 30, 2010.  The fair value of the auction rate
securities and Rights totaled $32,800 at February 27, 2010 and $33,150 at May
30, 2009.





At
February 27, 2010, we have $33,202 of current investment securities
available-for-sale and $711 of non-current investment securities
available-for-sale consisting primarily of high quality short-term municipal
bonds with maturities of three to fifteen months when purchased. Due to the
nature of the investments, the cost of available-for-sale securities
approximated fair value at February 27, 2010.










9.            
Fair value





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




·
              Level
      1 - Quoted prices in active markets for identical assets or
      liabilities
 
 ·
              Level
      2 - Quoted prices in active markets for similar assets or liabilities,
      quoted prices in markets that are not active, or inputs other than quoted
      prices that are observable for the asset or
  liability
 
 ·
              Level
      3 - Unobservable inputs for the asset or liability that are supported by
      little or no market activity and that are significant to the fair value of
      the assets or liabilities






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




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




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








February
      27, 2010
            
            
            May
      30, 2009Fair
      Value
            
            
            Carrying
      Value
            
            
            Fair
      Value
            
            
            Carrying
      ValueTotal
      Debt
            
            $
            147,728
            
            
            $
            147,929
            
            
            $
            130,868
            
            
            $
            129,789





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 27, 2010:





Fair Value Measurements at Reporting Date UsingQuoted Pricesin Active
            
            SignificantMarkets for
            
            Other
            
            SignificantIdentical
            
            Observable
            
            UnobservableInstruments
            
            Inputs
            
            Inputs
            
            Total(Level
      1)
            
            (Level
      2)
            
            (Level
      3)
            
            BalanceInvestment
      securitiesavailable-for-sale
      (Current)
            $
            
            —
            
            $
            
            33,202
            
            $
            
            —
            
            $
            
            33,202Investment
      securitiesavailable-for-sale
      (Non-current)
            
            
            —
            
            
            
            711
            
            
            
            —
            
            
            
            711Investment
      securitiestrading
      (Current) 1
            
            
            —
            
            
            
            —
            
            
            
            32,800
            
            
            
            32,800Total
      assets measured at fair value
            $
            
            —
            
            $
            
            33,913
            
            $
            
            32,800
            
            $
            
            66,713







1
              Investment
      securities trading (Current) is the aggregate fair value of the auction
      rate securities and the Rights. The fair value of the auction rate
      securities is $30,462. The fair value of the Rights is $2,338, determined
      as the difference between the par value and the fair value of the auction
      rate securities. The aggregate fair value of the auction rate securities
      and the Rights is $32,800.




Assets
measured at fair value on a recurring basis consisted of the following types of
instruments as of May 30, 2009:





Fair Value Measurements at Reporting Date UsingQuoted Pricesin Active
            
            SignificantMarkets for
            
            Other
            
            SignificantIdentical
            
            Observable
            
            UnobservableInstruments
            
            Inputs
            
            Inputs
            
            Total(Level
      1)
            
            (Level
      2)
            
            (Level
      3)
            
            BalanceInvestment
      securitiesavailable-for-sale
      (Current)
            $
            
            —
            
            $
            
            15,165
            
            $
            
            —
            
            $
            
            15,165Investment
      securitiestrading
      (Non -Current)1
            
            
            —
            
            
            
            —
            
            
            
            33,150
            
            
            
            33,150Total
      assets measured at fair value
            $
            
            —
            
            $
            
            15,165
            
            $
            
            33,150
            
            $
            
            48,315




1
                Investment securities trading (Non-Current) is the aggregate
      fair value of the auction rate securities and the
      Rights.   The fair value of the auction rate securities is
      $30,336.   The fair value of the Rights is $2,814,
      determined as the difference between the par value and the fair value of
      the auction rate securities. The aggregate fair value of the auction
      rate securities and the Rights is
$33,150


The
following is a reconciliation of the beginning and ending balances for assets
measured at fair value on a recurring basis using significant unobservable
inputs (Level 3) during the period ended February 27, 2010.





Investment
      securities
              Trading
      (Non-Current)
            
            
            Investment
      securities
              Trading
      (Current)
            
            
            TotalBeginning
      balance – May 30, 2009
            
            $
            33,150
            
            
            $
            —
            
            
            $
            33,150Total
      gains – (realized/unrealized)
            
            
            —
            
            
            
            —
            
            
            
            —Included
      in earnings (or changes in net assets), net
            
            
            —
            
            
            
            —
            
            
            
            —Included
      in other comprehensive income, net
            
            
            —
            
            
            
            —
            
            
            
            —Purchases,
      issuances, and settlements
            
            
            —
            
            
            
            (350
            )
            
            
            (350
            )Transfers
      in and/or out of Level 3
            
            
            (33,150
            )
            
            
            33,150
            
            
            
            —Ending
      balance – February 27, 2010
            
            $
            —
            
            
            $
            32,800
            
            
            $
            32,800





Level 2


We
classified our current and long-term investment securities – available-for-sale
as level 2.   These securities consist of high quality short-term
municipal bonds with maturities of three to fifteen months when
purchased.   Due to the nature of these securities, they are
reported at cost, which approximates fair value based upon quoted prices for
similar assets in active markets.  Observable inputs for these
securities are yields, credit risks, default rates, and volatility.





Level 3


We
classified our current investment securities – trading as level
3.  These securities consist of auction rate securities and the
Rights. Our auction rate securities consist of two types: formulaic muni auction
rate securities and student loan auction rate securities.   The
formulaic (i.e. formula based) muni auction rate securities are municipal
securities whose maximum rates are generally based on an index multiplied by a
percentage (which is based on the rating of the security).   The
student loan auction rate securities are securities issued by student loan
trusts.




For the
formulaic muni auction rate securities, the observable inputs include credit
risk, and yields or spreads of fixed rate municipal bonds issued by the same or
comparable issuers.  The unobservable input for the formulaic muni
auction rate securities is the assessment of the likelihood of
redemption.  For the student loan auction rate securities, the
observable inputs include tax status, credit risk, duration, insurance wraps,
the portfolio composition, future cash flows based on maximum rate formulas, and
estimates of observable market data including yields or spreads of trading
instruments that are similar or comparable.  The unobservable input
for the student loan auction rate securities are the likelihood of
redemption.  Due to the combination of observable and unobservable
inputs, we believe that level 3 is the proper classification.





In
accordance with accounting guidance in ASC Topic 825 (Financial Instruments)
(“ASC 825”), we have elected the fair value option for our
Rights.  The value for the Rights is derived from the difference
between the par value and the fair value of our auction rate
securities.   When a gain or loss is recorded on our auction rate
securities, we record an offsetting gain or loss on the
Rights.   The impact of this treatment is that the auction rate
securities are recorded on our balance sheet at par value.










The
Rights are valued at $2,338 on our condensed consolidated balance sheet at
February 27, 2010.  They are included in the total amountfor “Investment securities trading” in the current asset portion
of our condensed consolidated balance sheet.  The Rights represent a
firm agreement in accordance with ASC Topic 815(Derivatives and Hedging) (“ASC
815”), which defines a firm agreement as an agreement binding on both parties
and usually legally enforceable.  It hasthe following characteristics: (a) the agreement
specifies all significant terms, including the quantity to be exchanged, the
fixed price, and the timing of the transaction, and (b) the agreement includes a
disincentive for nonperformance that is sufficiently large to make performance
probable.  The enforceability of the Rights resulted in a put option
that is recognized as a freestanding asset separate from the auction rate
securities.   We determined that the Rights do not meet the
definition of a derivative security as described in the authoritative guidance
for accounting for derivative instruments and hedging activities because the
Rights are non-transferrable, and we must tender the related auction rate
securities to receive the cash settlement.  Therefore, we have elected to
measure the Rights at fair value under ASC 825, which permits an entity to
measure certain items at fair value, to mitigate volatility in reported earnings
from the changes in the fair value of the auction rate securities.  As
a result, unrealized gains and losses will be included in earnings in future
periods.  We expect that future changes in the fair value of the
Rights will largely mitigate fair value movements in the related auction rate
securities.





10.          
Recent accounting pronouncements





In June
2009, the FASB issued FASB Statement No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles – a
replacement of FASB Statement No. 162” (“FASB ASC 105”).   FASB
ASC 105 modifies the GAAP hierarchy by establishing only two levels of GAAP,
authoritative and nonauthoritative accounting literature.  Effective
July 2009, the ASC, also known collectively as the “Codification,” is considered
the single source of authoritative U.S. accounting and reporting standards,
except for additional authoritative rules and interpretive releases issued by
the SEC.  The Codification was developed to organize GAAP
pronouncements by topic so that users can more easily access authoritative
accounting guidance.   FASB ASC 105 became effective for the
second quarter of fiscal year 2010.  All other accounting standards
references have been updated in this report with ASC references.




In August
2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05,
“Measuring Liabilities at Fair Value”(“ASU 2009-05”). ASU
2009-05 provides clarification that in circumstances in which a quoted price in
an active market for the identical liability is not available, a reporting
entity is required to measure fair value of such liability using one or more of
the techniques prescribed by the update. ASU 2009-05 is effective for the first
reporting period beginning after issuance. We adopted ASU 2009-05 for our second
fiscal quarter ended November 28, 2009. There was no change to our consolidated
financial statements due to the implementation of this guidance.




In
January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurements and
Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements”
(“ASU 2010-06”). Reporting entities will have to provide information about
movements of assets among Levels 1 and 2, and a reconciliation of purchases,
sales, issuance, and settlements of activity valued with a Level 3 method, of
the three-tier fair value hierarchy established by FASB Statement No. 157,
“Fair Value Measurements” (ASC 820). The ASU 2010-06 also clarifies the existing
guidance to require fair value measurement disclosures for each class of assets
and liabilities. ASU 2010-06 is effective for interim and annual reporting
periods beginning after December 15, 2009 for Level 1 and 2 disclosure
requirements and after December 15, 2010 for Level 3 disclosure
requirements. We will adopt the guidance in our fourth quarter of fiscal 2010.
We do not anticipate this adoption will have a material impact on our
consolidated financial statements.




In
February 2010, the FASB issued ASU No. 2010-09, “Subsequent Events
(Topic 855)—Amendments to Certain Recognition and Disclosure
Requirements”(“ASU 2010-09”).
ASU 2010-09 removes the requirement that SEC filers disclose the date
through which subsequent events have been evaluated. This amendment alleviates
potential conflicts between Subtopic 855-10 and the SEC’s requirements. The
guidance was effective upon issuance and was adopted by the Company in the third
quarter of fiscal 2010.










11.          
Noncontrolling Interest and Pro Forma Information





The
following reflects the stockholders’ equity activity for the thirty-nine week
period ended February 27, 2010:





Cal-Maine
      Foods, Inc.Common
      Stock(in
      thousands)
            
            Amount
            
            
            Class
      A
              Amount
            
            
            Treasury
              Amount
            
            
            Paid
      in Capital
            
            
            Retained
      Earnings
            
            
            Noncontrolling
              Interest
            
            
            Total
      EquityBalance
      at May 30, 2009
            
            $
            351
            
            
            $
            24
            
            
            $
            (21,045
            )
            
            $
            32,098
            
            
            $
            320,623
            
            
            $
            958
            
            
            $
            333,009Dividends
      declared
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (15,603
            )
            
            
            
            
            
            
            (15,603
            )Issuance
      of common stock
              from
      treasury
            
            
            
            
            
            
            
            
            
            
            134
            
            
            
            233
            
            
            
            
            
            
            
            
            
            
            
            367Vesting
      of stock based
              compensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            164
            
            
            
            
            
            
            
            
            
            
            
            164Capital
      distributions
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (736
            )
            
            
            (736
            )Net
      income (loss)
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            46,796
            
            
            
            (2,088
            )
            
            
            44,708Balance
      February 27, 2010
            
            $
            351
            
            
            $
            24
            
            
            $
            (20,911
            )
            
            $
            32,495
            
            
            $
            351,816
            
            
            $
            (1,866
            )
            
            $
            361,909





Noncontrolling
interests represents the earnings of the Company’s variable interest entities
(“VIEs”) under the consolidation provisions of ASC Topic 810 (Consolidation)
(“ASC 810”).    We include in noncontrolling interests, the
portion of earnings attributable to non-affiliated equity owners in consolidated
subsidiaries where we do not own 100% of the equity
interest.     Net loss attributable to noncontrolling
interest for the thirteen-week period ended February 27, 2010 was $583 as
compared to net loss attributable to noncontrolling interest of $118 for the
thirteen-week period ended February 28, 2009.





Net loss
attributable to noncontrolling interest for the thirty-nine week period ended
February 27, 2010 was $2,088 as compared to net income attributable to
noncontrolling interest of $570 for the thirty-nine week period ended February
28, 2009.





Upon
adoption of ASC 810, the Company no longer absorbs 100% of the losses
attributable to noncontrolling interests.  Under previous guidance,
the Company absorbed those losses when the attribution of the losses to the
noncontrolling interests would create a deficit balance in the noncontrolling
interest account on the balance sheet.   ASC 810 allows for the
attribution of losses to the noncontrolling interests even when doing so will
create a deficit balance on the balance sheet. The following table reconciles
the reported net income (loss) attributable to Cal-Maine Foods, Inc. to the pro
forma consolidated net income (loss) and net income (loss) per share that would
have been attributable to Cal-Maine Foods, Inc. had the Company not adopted the
provisions of ASC 810 on May 31, 2009:







13
      weeks ended
            
            
            39
      weeks ended(in
      thousands, except per share amount)
            
            February
      27, 2010
            
            
            February
      28, 2009
            
            
            February
      27, 2010
            
            
            February
      28, 2009Net
      income attributed to Cal-Maine Foods, Inc., as reported
            
            $
            34,534
            
            
            $
            30,843
            
            
            $
            46,796
            
            
            $
            69,234Pro
      forma loss attributable to noncontrolling interest had the Company not
      adopted the provisions of ASC Topic 810
            
            
            (583
            )
            
            
            —
            
            
            
            (1,681
            )
            
            
            —Net
      income attributed to Cal-Maine Foods, Inc., pro forma
            
            $
            33,951
            
            
            $
            30,843
            
            
            $
            45,115
            
            
            $
            69,234Basic
      net income per share attributable to Cal-Maine Foods, Inc’s common
      shareholders, as reported
            
            $
            1.45
            
            
            $
            1.30
            
            
            $
            1.97
            
            
            $
            2.91Basic
      net income per share attributable to Cal-Maine Foods, Inc’s common
      shareholders, pro forma
            
            $
            1.43
            
            
            $
            1.30
            
            
            $
            1.90
            
            
            $
            2.91Diluted
      net income per share attributable to Cal-Maine Foods, Inc’s common
      shareholders, as reported
            
            $
            1.45
            
            
            $
            1.29
            
            
            $
            1.96
            
            
            $
            2.91Diluted
      net income per share attributable to Cal-Maine Foods, Inc’s common
      shareholders, pro forma
            
            $
            1.42
            
            
            $
            1.29
            
            
            $
            1.89
            
            
            $
            2.91





12.          
Insurance Receivable





On July
9, 2009, the Farwell, Texas egg production complex was damaged by a fire. The
700-acre facility includes a processing plant, feed mill, two pullet houses, and
nine layer houses. The fire completely destroyed four of the nine layer houses,
with additional loss of laying hens at a fifth house due to smoke inhalation.
The Company believes the effects of lost production and additional expenses
related to the fire will be substantially reimbursed by the Company’s insurance
carriers.  The Company has received $10,000 in proceeds from its
insurance carriers through February 27, 2010 and anticipates additional
insurance proceeds to cover its losses due to the fire. The Company intends to
seek reimbursement for all of its insured losses, including lost profits and
expenses. The book value of assets written off and expenses incurred because of
the fire were reported as $9,527 through November 28, 2009. During the
subsequent quarter we incurred additional out of pocket expenses and wrote off
additional assets.  A portion of our out of pocket expense is directly
related to the ongoing reconstruction activities.   We have
reclassed this amount to construction in progress (“CIP”). The book value of
assets written off and expenses incurred net of reclassification to CIP totaled
$9,036 through February 27, 2010. Insurance proceeds have been recognized in the
consolidated income statement for the thirty-nine week period ended February 27,
2010 to offset the assets written off and expenses incurred.  No gain,
if any, will be recognized until all contingencies surrounding the resolution of
the insurance claim are resolved, which is expected to occur in calendar
2010.










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 30, 2009, (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 because of new information, future events or
otherwise.





OVERVIEW





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





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





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





For the
quarter ended February 27, 2010, we produced approximately 77% of the total
number of shell eggs sold by us, with approximately 9% of such total shell egg
production being with contract producers.  Contract producers operate
under agreements with us for the use of their facilities in the production of
shell eggs by layers owned by us. We own the shell eggs produced under these
arrangements.  Approximately 23% of the total number of shell eggs
sold by us was purchased from outside producers.










Our cost
of production is materially affected by feed costs, which currently average
between 61% - 64% of our total farm egg production cost.  Changes in
market prices for corn and soybean meal, the primary ingredients of the feed we
use, result in changes in our cost of goods sold.   The cost of
our feed ingredients, which are commodities, are subject to factors over which
we have little or no control such as volatile price changes caused by weather,
size of harvest, transportation and storage costs, demand and the agricultural
and energy policies of the United States and foreign governments.  The
corn and soybean crops were large for the 2009 crop
year.   Prices have moved down recently from levels seen during
the summer months of calendar 2009, but remain high on a historical
basis.  Market prices for corn remain higher in part because of
increasing demand from ethanol producers. Planted acreage for corn is expected
to increase for the 2010 – 2011 crop year.  Market prices for soybean
meal remain high because of competition for planted acres for other grain
production.  Feed costs, while much improved, will likely remain
relatively high, and could be volatile in the year ahead.





The
purchase of Tampa Farms, LLC on November 28, 2008 described in note 2 of our May
30, 2009 audited financial statements is referred to below as the
“Acquisition.”





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
      27, 2010
            
            
            February
      28, 2009
            
            
            February
      27, 2010
            
            
            February
      28, 2009Net
      sales
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %Cost
      of sales
            
            
            72.4
            
            
            
            74.8
            
            
            
            79.7
            
            
            
            76.7Gross
      profit
            
            
            27.6
            
            
            
            25.2
            
            
            
            20.3
            
            
            
            23.3Selling,
      general & administrative
            
            
            9.2
            
            
            
            8.5
            
            
            
            10.2
            
            
            
            8.4Operating
      income
            
            
            18.4
            
            
            
            16.7
            
            
            
            10.1
            
            
            
            14.9Other
      income (expense)
            
            
            1.3
            
            
            
            0.2
            
            
            
            0.2
            
            
            
            (0.0
            )Income
      before taxes
            
            
            19.7
            
            
            
            16.9
            
            
            
            10.3
            
            
            
            14.9Income
      tax expense
            
            
            7.2
            
            
            
            5.6
            
            
            
            3.8
            
            
            
            5.1Net
      income
            
            
            12.5
            
            
            
            11.3
            
            
            
            6.5
            
            
            
            9.8Net
      (income) lossattributable to noncontrolling interest
            
            
            0.2
            
            
            
            0.1
            
            
            
            0.3
            
            
            
            (0.1
            )Net
      income attributable to Cal-Maine Foods, Inc.
            
            
            12.7
            %
            
            
            11.4
            %
            
            
            6.8
            %
            
            
            9.7
            %





NET
SALES





Year-to-date, approximately 96% of our
net sales consist of shell egg sales and approximately 3% was for sales of egg
products, with the 1% balance consisting of sales of incidental feed and feed
ingredients.  Net sales for the thirteen-week period ended February
27, 2010 were $271.2 million, an increase of $1.2 million, or .4%, as compared
to net sales of $270.0 million for the thirteen-week period ended February 28,
2009.  Total dozens of eggs sold decreased and egg selling prices
increased for the current thirteen-week period as compared with the same period
in fiscal 2009.  Dozens sold for the current thirteen-week period of
fiscal 2010 were 210.9 million, a decrease of 5.9 million, or 2.7% as compared
to 216.8 million for the same period of fiscal 2009.  Our net average
selling price per dozen of shell eggs for the thirteen-week period ended
February 27, 2010 was $1.238, compared to $1.206 for the thirteen-week period
ended February 28, 2009, an increase of 2.7%. 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.





For the
thirteen weeks ended February 27, 2010, egg product sales were $6.7 million, an
increase of $500,000, or 8.1%, as compared to $6.2 million for the same
thirteen- week period last year.   Egg products are primarily
sold into the institutional and food service sectors mentioned above, and
although there was a small increase in sales, there is continued weakness in the
food service sector.










Net sales for the thirty-nine week
period ended February 27, 2010 were $688.1 million, a decrease of $27.1 million,
or 3.8% as compared to net sales of $715.2 million for the thirty-nine week
period ended February 28, 2009. Dozens sold for the current thirty-nine week
period were 610.2 million, as compared to 572.6 million for the same time period
in fiscal 2009, an increase of 37.6 million, or 6.6%.  For the current
fiscal 2010 thirty-nine week period, our net average selling price per dozen of
shell eggs was $1.077, as compared to $1.186 per dozen for the same period in
fiscal 2009, a decrease of 9.2%.





On a
comparable basis, excluding the Acquisition, net sales for the thirty-nine week
period ended February 27, 2010 were $643.6 million, a decrease of $71.6 million,
or 10.0%, as compared to net sales of $715.2 million for the thirty-nine week
period ended February 28, 2009.   Dozens sold for the current
thirty-nine week period of fiscal 2010, excluding the Acquisition, were 569.1
million, a decrease of 3.5 million, or .6% as compared to 572.6 million for the
same period of fiscal 2009.





For the
thirty-nine weeks ended February 27, 2010, egg product sales were $20.4 million,
a decrease of $7.7 million, or 27.4%, as compared to $28.1 million for the same
thirty-nine week period last year.  This decrease is due primarily to
weakness in the foodservice sector and increased competition in the egg products
industry.





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










13
      weeks ended
            
            
            39
      weeks ended(Amounts
      in thousands)
            
            February
      27, 2010
            
            
            February
      28, 2009
            
            
            February
      27, 2010
            
            
            February
      28, 2009Total
      net sales
            
            $
            271,156
            
            
            $
            270,009
            
            
            $
            688,055
            
            
            $
            715,211Non-specialty
      shell egg sales
            
            $
            207,723
            
            
            $
            209,765
            
            
            $
            518,660
            
            
            $
            553,241Specialty
      shell egg sales
            
            
            53,327
            
            
            
            51,655
            
            
            
            138,397
            
            
            
            125,661Other
            
            
            484
            
            
            
            1,138
            
            
            
            2,004
            
            
            
            2,822Net
      shell egg sales
            
            $
            261,534
            
            
            $
            262,558
            
            
            $
            659,061
            
            
            $
            681,724Net
      shell egg sales as a percent of total net sales
            
            
            96
            %
            
            
            97
            %
            
            
            96
            %
            
            
            95
            %Non-specialty
      shell egg dozens sold
            
            
            178,426
            
            
            
            184,654
            
            
            
            524,100
            
            
            
            492,599Specialty
      shell egg dozens sold
            
            
            32,495
            
            
            
            32,130
            
            
            
            86,119
            
            
            
            80,028Total
      dozens sold
            
            
            210,921
            
            
            
            216,784
            
            
            
            610,219
            
            
            
            572,627





Our
non-specialty shell eggs include all shell egg sales not specifically identified
as specialty shell egg sales.   The non-specialty shell egg
market is characterized by an inelasticity of demand, and small increases in
production or decreases in demand can have a large adverse effect on prices and
vice-versa.  For the thirteen-week period ended February 27, 2010,
non-specialty shell eggs represented approximately 79.4% of our shell egg dollar
sales, as compared to 79.9%, for the thirteen-week period ended February 28,
2009.   For the thirteen-week period ended February 27, 2010,
non-specialty shell eggs accounted for approximately 84.6% of the total shell
egg dozen volume, as compared to 85.2% for the thirteen-week period ended
February 28, 2009.





For the
thirty-nine week period ended February 27, 2010, non-specialty shell eggs
represented approximately 78.7% of our shell egg dollar sales, as compared to
81.2% for the thirty-nine week period ended February 28,
2009.   For the thirty-nine week period ended February 27, 2010,
non-specialty shell eggs accounted for approximately 85.9% of the total shell
egg dozen volumes, as compared to 86.0% for the thirty-nine week period ended
February 28, 2009.





We
continue to increase our sales volume of specialty eggs, which include
nutritionally enhanced, cage free and organic eggs. Specialty egg retail prices
are less cyclical than standard shell egg prices and are generally higher due to
consumer willingness to pay for the increased benefits from these products. For
the thirteen-week period ended February 27, 2010, specialty shell eggs
represented approximately 20.4% of our shell egg dollar sales, as compared to
19.7%, for the thirteen-week period ended February 28, 2009. For the
thirteen-week period ended February 27, 2010, specialty shell eggs accounted for
approximately 15.4% of the total shell egg dozen volume, as compared to 14.8%
for the thirteen-week period ended February 28, 2009.





For the
thirty-nine week period ended February 27, 2010, specialty shell eggs
represented approximately 21.0% of our shell egg dollar sales, as compared to
18.4% for the thirty-nine week period ended February 28, 2009. For the
thirty-nine week period ended February 27, 2010, specialty shell eggs accounted
for approximately 14.1% of the total shell egg dozen volumes, as compared to
14.0% for the thirty-nine week period ended February 28, 2009.










The shell egg sales classified as
“Other” represent sales of hard cooked eggs, hatching eggs, and baby chicks,
which are included with our shell egg operations.





COST OF
SALES





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










13
      weeks ended
            
            
            39
      weeks ended(Amounts
      in thousands)
            
            February
      27, 2010
            
            
            February
      28, 2009
            
            
            February
      27, 2010
            
            
            February
      28, 2009Cost
      of sales
            
            $
            196,232
            
            
            $
            201,852
            
            
            $
            548,087
            
            
            $
            548,391Dozens
      produced
            
            
            162,177
            
            
            
            160,451
            
            
            
            482,967
            
            
            
            436,961Dozens
      purchased outside*
            
            
            48,744
            
            
            
            56,333
            
            
            
            127,252
            
            
            
            135,666Dozens
      sold
            
            
            210,921
            
            
            
            216,784
            
            
            
            610,219
            
            
            
            572,627Feed
      cost (price per dozen produced)
            
            $
            0.347
            
            
            $
            0.370
            
            
            $
            0.358
            
            
            $
            0.396Farm
      production cost (price per dozen produced)
            
            $
            0.564
            
            
            $
            0.576
            
            
            $
            0.575
            
            
            $
            0.615Outside
      egg purchases (average price paid per dozen)
            
            $
            1.289
            
            
            $
            1.232
            
            
            $
            1.162
            
            
            $
            1.224








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 27, 2010 was
$196.2 million, a decrease of $5.7 million, or 2.8%, as compared to cost of
sales of $201.9 million for the thirteen-week period ended February 28, 2009.
The primary factors affecting our cost of sales are costs of feed ingredients
and costs of shell eggs purchased from outside producers. Feed cost per dozen of
shell eggs produced for the thirteen-weeks ended February 27, 2010 was $.347 per
dozen, as compared to the thirteen-week period ended February 28, 2009 feed cost
per dozen of $.370, a decrease of 6.2%; this was due to lower costs paid for
corn and soybean meal, our primary feed ingredients.  The combination
of lower feed costs and higher shell egg selling prices led to an improvement in
gross profit from 25.2% of net sales for the thirteen-weeks ended February 28,
2009 to 27.6% of net sales for the thirteen-weeks ended February 27,
2010.





Cost of sales for the thirty-nine week
period ended February 27, 2010 was $548.1 million, a decrease of $300,000, or
..1%, as compared to cost of sales of $548.4 million for the thirty-nine week
period ended February 28, 2009. Feed cost per dozen of shell eggs produced for
the current thirty-nine week period of fiscal 2010 was $.358 per dozen, as
compared to $.396 per dozen for the same period in the prior fiscal year, a
decrease of 9.6%.  Although feed costs declined for this current
thirty-nine week period, the decline in egg selling prices was greater, which
led to a decline in gross profit from 23.3% of net sales for last year’s
thirty-nine week period to a gross profit of 20.3% of net sales for the current
thirty-nine week period.





On a
comparable basis, excluding the Acquisition, cost of sales for the thirty-nine
week period ended February 27, 2010 was $509.0 million, a decrease of $39.4
million, or 7.2%, as compared to cost of sales of $548.4 million for the
thirty-nine week period ended February 28, 2009.









SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES





13
      weeksCategory
            
            February
      27, 2010
            
            
            February
      28, 2009
            
            
            DifferenceStock
      compensation expense
            
            $
            931
            
            
            $
            (486
            )
            
            $
            1,417Specialty
      egg expenses
            
            
            7,759
            
            
            
            5,741
            
            
            
            2,018Payroll
      and overhead
            
            
            4,858
            
            
            
            4,814
            
            
            
            44Bad
      debt expense
            
            
            (678
            )
            
            
            288
            
            
            
            (966
            )Other
      SG&A expenses
            
            
            4,799
            
            
            
            5,491
            
            
            
            (692
            )Delivery
      expense
            
            
            7,318
            
            
            
            7,109
            
            
            
            209Total
            
            $
            24,987
            
            
            $
            22,957
            
            
            $
            2,030





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 27, 2010
were $25.0 million, an increase of $2.0 million or 8.7%, as compared to $23.0
million for the thirteen-week period ended February 28, 2009. Stock based
compensation plans expense increased $1.4 million for the current quarter due
primarily to an increase 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
increased from $22.28 at February 28, 2009 to $32.06 at February 27, 2010, which
is a 43.9% improvement 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.  We give many of our
customers who sell specialty eggs a promotion allowance.  Specialty
egg expenses increased due to increased promotions this period as compared to
the same period last year. Payroll and overhead expenses remained
relatively unchanged from the same period last year.   We
recognize reserves for bad debts based on the length of time trade receivables
are past due, generally 100% for amounts more than 60 days past
due.   During the current quarter, we collected certain
receivables that were more than 60 days past due resulting in a credit to bad
debt expense for the quarter. Other selling, general, and administrative
expenses decreased due to decreases in legal, audit,  and general
insurance expenses.  There was a small increase in our delivery
expenses for the current thirteen-week period due to the increased price of fuel
for the current thirteen-week period, as compared to the same thirteen-week
period last year.   As a percent of net sales, selling, general
and administrative expense increased from 8.5% for the thirteen-week period
ended February 28, 2009 to 9.2% for the thirteen-week period ended February 27,
2010.





39
      weeksActual
            
            
            Less:
      Acquisition
            
            
            NetCategory
            
            February
      27, 2010
            
            
            February
      27, 2010
            
            
            February
      27, 2010
            
            
            February
      28, 2009
            
            
            DifferenceStock
      compensation expense
            
            $
            2,016
            
            
            $
            —
            
            
            $
            2,016
            
            
            $
            (161
            )
            
            $
            2,177Specialty
      egg expenses
            
            
            16,134
            
            
            
            502
            
            
            
            15,632
            
            
            
            13,699
            
            
            
            1,933Payroll
      and overhead
            
            
            14,501
            
            
            
            723
            
            
            
            13,778
            
            
            
            13,719
            
            
            
            59Bad
      debt expense
            
            
            532
            
            
            
            26
            
            
            
            506
            
            
            
            317
            
            
            
            189Other
      SG&A expenses
            
            
            15,270
            
            
            
            2,723
            
            
            
            12,547
            
            
            
            13,096
            
            
            
            (549
            )Delivery
      expense
            
            
            21,444
            
            
            
            2,747
            
            
            
            18,697
            
            
            
            19,845
            
            
            
            (1,148
            )Total
            
            $
            69,897
            
            
            $
            6,721
            
            
            $
            63,176
            
            
            $
            60,515
            
            
            $
            2,661








Selling,
general and administrative expenses for the thirty-nine week period ended
February 27, 2010 were $69.9 million, an increase of $9.4 million or 15.5%, as
compared to $60.5 million for the thirty-nine week period ended February 28,
2009.  Excluding the Acquisition, selling, general, and administrative
expenses for the thirty-nine week period ended February 27, 2010 was $63.2
million, an increase of $2.7 million, or 4.5%, as compared to selling, general,
and administrative expenses of $60.5 million for the thirty-nine week period
ended February 28, 2009. In the thirty-nine week period ended February 27, 2010,
stock compensation plans expense increased $2.2 million for the reasons
indicated previously.  Specialty egg expenses increased due to an
increase in the dozens of specialty eggs sold this thirty-nine week period as
compared to the same period last fiscal year and increased promotions as
described above   Payroll and overhead remained relatively
unchanged.   We recognize reserves for bad debts based on the
length of time trade receivables are past due, generally 100% for amounts more
than 60 days past due.   The increase in bad debt expense was
within our expectations.  Other selling, general, and administrative
expenses decreased due to general insurance and overhead
expenses.   Our net delivery expense
decreased.  Delivery expense decreased due to lower fuel costs and
lower costs for the use of outside trucking. As a percent of net sales, selling,
general and administrative expense increased from 8.4% for the thirty-nine week
period of fiscal 2009 to 10.2% for the thirty-nine week period of fiscal
2010.









OPERATING
INCOME





As a result of the above, operating
income was $49.9 million for the thirteen-week period ended February 27, 2010,
as compared to operating income of $45.2 million for the thirteen-week period
February 28, 2009. Operating income was 18.4% of net sales for the current
thirteen-week period, as compared to operating income of 16.7% of net sales for
the thirteen-week period ended February 28, 2009.





For the thirty-nine week period ended
February 27, 2010, operating income was $70.1 million, as compared to operating
income of $106.3 million for the thirty-nine week period ended February 28,
2009. Operating income was 10.1% of net sales for the current thirty-nine week
period as compared to operating income of 14.9% of net sales in the same
thirty-nine week period in fiscal 2009.





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 27, 2010 was $3.4 million, an
increase of $2.8 million, as compared to other income of $645,000 for the
thirteen-week period ended February 28, 2009.  This net increase for
the current thirteen-week period was the result of increased equity in income of
affiliates, which are also in the shell egg business.  This current
thirteen-week period, we received a patronage dividend from Eggland’s BestTM
for $3.3 million, as compared to $1.9 million in the same period last year.As a percent of net sales,
other income was 0.2% for the third quarter of fiscal 2009 and other income was
1.2% of net sales for the third quarter of fiscal 2010.





For the thirty-nine week period ended
February 27, 2010 other income was $1.1 million.  This is in
comparison to other expense of $251,000 for the same thirty-nine week period in
fiscal 2009. For the current thirty-nine weeks, net interest expense increased
$879,000.  Compared to the same period last year, we had higher
average long-term borrowing balances and higher invested cash balances. Rates
earned on invested cash balances were lower in the current
year.  Other income also increased because of increased equity in
income of affiliates.  As a percent of net sales, other income was
0.2% for the current thirty-nine week period, as compared to other expense of
less than 0.1% for the same thirty-nine week period in fiscal 2009.





INCOME TAXES





As a result of the above, our pre-tax
income was $53.4 million for the thirteen-week period ended February 27, 2010,
as compared to pre-tax income of $45.8 million for the thirteen-week period
ended February 28, 2009. For the current thirteen-week period, income tax
expense of $19.4 million was recorded with an effective tax rate of 36.4%, as
compared to income tax expense of $15.1 million with an effective tax rate of
33.0% for the same thirteen-week period in fiscal 2009.





For the thirty-nine week period ended
February 27, 2010, our pre-tax income was $71.1 million, as compared to $106.1
million for the thirty-nine week period ended February 28, 2009. For the current
thirty-nine week period, an income tax expense of $26.4 million was recorded
with an effective tax rate of 37.2%, as compared to an income tax expense of
$36.3 million with an effective tax rate of 34.2% for the same thirty-nine week
period in fiscal 2009.





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





NET
(INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST





Noncontrolling interest represents the
earnings of the Company’s variable interest entities (“VIEs”) under the
consolidation provisions of ASC Topic 810 (Consolidation) (“ASC
810”).   We also include in noncontrolling interest the portion
of earnings attributable to non-affiliated equity owners in consolidated
subsidiaries where we do not own 100% of the equity interest. Upon adoption of
the consolidation provisions of ASC 810, the Company no longer absorbs 100% of
the losses attributable to noncontrolling interests.  Under previous
guidance, the Company absorbed those losses when the attribution of the losses
to the noncontrolling interests would create a deficit balance in the
noncontrolling interest account on the balance sheet.   The
adoption of these consolidation provisions allows for the attribution of losses
to the noncontrolling interests even when doing so will create a deficit balance
on the balance sheet.










Net loss
attributable to noncontrolling interest for the thirteen-week period ended
February 27, 2010 was $583 as compared to net loss attributable to
noncontrolling interest of $118 for the thirteen-week period ended February 28,
2009.





Net loss
attributable to noncontrolling interest for the thirty-nine week period ended
February 27, 2010 was $2,088 as compared to net income attributable to
noncontrolling interest of $570 for the thirty-nine week period ended February
28, 2009.





NET
INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC





Net income for the thirteen-week period
ended February 27, 2010 was $34.5 million, or $1.45 per basic and diluted share,
as compared to net income of $30.8 million, or $1.30 per basic and $1.29 per
diluted share, for the thirteen-week period ended February 28,
2009.





For the thirty-nine week period ended
February 27, 2009, net income was $46.8 million, or $1.97 per basic and $1.96
per diluted share, as compared to $69.2 million, or $2.91 per basic and diluted
share, for the thirty-nine week period ended February 28, 2009.





CAPITAL
RESOURCES AND LIQUIDITY





Our
working capital at February 27, 2010 was $210.6 million compared to $138.0
million at May 30, 2009. The calculation of working capital is defined as
current assets less current liabilities.  Our current ratio was 2.36
at February 27, 2010 as compared with 2.33 at May 30, 2009. The current ratiois calculated by dividing current
assets by current liabilities. Our need for working capital generally is highest
in the last and first fiscal quarters ending in May and August, respectively,
when egg prices are normally at seasonal lows.  Seasonal borrowing
needs frequently are higher during these quarters than during other fiscal
quarters. We have $3.9 million in standby letters of credit outstanding, which
are collateralized with cash. Our long-term debt at February 27, 2010, including
current maturities, amounted to $147.9 million, as compared to $129.8 million at
May 30, 2009.





In
November 2009, the Company entered into a loan agreement with Metropolitan Life
Insurance Company for borrowings of $30.0 million (the “Note”).  The
Note has a 6.2% fixed interest rate, monthly installments of $250,000 per month
(plus interest), with a final maturity on November 30,
2019.   Proceeds from the Note were used to increase the
Company’s working capital.   This Note is secured by mortgages,
security agreements, assignments of lease and rents with respect to certain of
the Company’s egg production, feed mill, grain storage, and related facilities
located in Florida.





In the
thirty-nine week period ended February 27, 2010, $104.3 million in net cash was
provided by operating activities.  This compares to $91.3 million of
net cash from operating activities for the thirty-nine week period ended
February 28, 2009. For the thirty-nine weeks ended February 27, 2010,
approximately $16.8 million was provided from the sale of short-term
investments, $35.2 million was used for the purchase of investments, and net
$638,000 was provided from notes receivable and equity investments in
affiliates. Approximately $1.3 million was provided from disposal of property,
plant and equipment, $15.6 million was used for purchases of property, plant and
equipment, $8.1 million was used for acquisition of the remaining equity
interest in the Hillandale business, and $508,000 was used to acquire the
remaining equity interest in Benton County Foods, LLC.  Approximately
$7.5 million was used for payment of dividends on common stock and $11.9 million
was used for principal payments on long-term debt.  Approximately
$213,000 was received from the issuance of common stock from
treasury.  Approximately $30.0 million was received from additional
long-term borrowings. The net result of these activities was an increase in cash
of approximately $74.3 million since May 30, 2009.









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 payment of the
purchase obligation for 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 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.







Property, plant, and equipment
collateralize our notes payable and senior secured notes. Unless otherwise
approved by our lenders, we are required by provisions of our loan agreements to
(1) maintain minimum levels of working capital (ratio of not less than 1.25 to
1) and net worth (minimum of $90.0 million tangible net worth, plus 45% of
cumulative net income); (2) limit dividends paid in any given quarter to not
exceed an amount equal to one third of the previous quarter’s consolidated net
income (allowed if no events of default), capital expenditures to an amount not
to exceed $60.0 million in any twelve month period, and lease obligations and
additional long-term borrowings (total funded debt to total capitalization not
to exceed 55%); and (3) maintain various current and cash-flow coverage ratios
(1.25 to 1), among other restrictions. At February 27, 2010, we were in
compliance with the financial covenant requirements of all loan agreements.
Under certain of the loan agreements, the lenders have the option to require the
prepayment of any outstanding borrowings in the event we undergo a change in
control, as defined in the applicable loan agreement. Our debt agreements also
require the Chief Executive Officer of the Company, or his family, to maintain
ownership of not less than 50% of the outstanding voting stock of the
Company.





Capital expenditure requirements are
expected to be for the normal repair and replacement of our facilities. We are
constructing a new integrated layer production complex in Farwell, Texas to
replace our Albuquerque, New Mexico complex, which ceased egg production in
fiscal 2007. The facility was expected to cost approximately $32.0 million, and
was estimated to be complete in January 2010. As of February 27, 2010, capital
expenditures related to construction of this complex were approximately $35.4
million.





On July
9, 2009, the Farwell, Texas egg production complex was damaged by a fire. The
700-acre facility includes a processing plant, feed mill, two pullet houses, and
nine layer houses. The fire completely destroyed four of the nine layer houses,
with additional loss of laying hens at a fifth house due to smoke inhalation.
The Company believes the effects of lost production and additional expenses
related to the fire will be substantially reimbursed by the Company’s insurance
carriers.  The Company has received $10.0 million in proceeds from its
insurance carriers through February 27, 2010 and anticipates additional
insurance proceeds to cover its losses due to the fire. The Company intends to
seek reimbursement for all of its insured losses, including lost profits and
expenses. The book value of assets written off and expenses incurred, net of
amounts reclassified to construction in progress, as the result of the fire
totaled $9.0 million through February 27, 2010. Insurance proceeds have been
recognized in the consolidated income statement for the thirty-nine week period
ended February 27, 2010 to offset the assets written off and expenses incurred.
No gain, if any, will be recognized until all contingencies surrounding the
resolution of the insurance claim are resolved, which is expected to occur in
calendar 2010.





The
Company believes that the fire at the Farwell, Texas facility will have minimal
financial impact on our operations and does not expect any long-term disruption
to our customers. Debris removal has been completed and construction to rebuild
the destroyed houses has begun.  Due to this casualty, estimated
completion time for the Farwell facility will likely be delayed to January
2011.  Future capital expenditures will be funded by cash flows from
operations and insurance recoveries.





Delta Egg Farm, LLC, an unconsolidated
affiliate, has constructed an organic egg production and distribution facility
near our Chase, Kansas location. In connection with this project, we are a pro
rata guarantor, with the other Delta Egg Farm, LLC owners, of the additional
debt that was undertaken to fund construction of this facility. We are currently
a guarantor of approximately $6.3 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 UBS prospectus dated October 7, 2008. The
Rights permit us to sell, or put, our auction rate securities back to UBS at par
value anytime 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 as trading securities. As
of the date of our acceptance of the Rights, the change in fair value of the
auction rate securities and Rights are included in earnings. 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 an amount equal to the loss recognized on the auction rate
securities. Although the Rights represent the right to sell the securities back
to UBS at par, we periodically assess the economic ability of UBS to meet that
obligation in assessing the fair value of the Rights. We have classified the
auction rate securities and the related Rights as current investments as of
February 27, 2010 because we have the ability to put the auction rate securities
back to UBS on June 30, 2010.  The fair value of the auction rate
securities and Rights totaled $32.8 million at February 27, 2010 and $33.2
million at May 30, 2009.





At
February 27, 2010, we have $33.2 million of current investment securities
available-for-sale and $711,000 of non-current investment securities
available-for-sale consisting primarily of high quality short-term municipal
bonds with maturities of three to fifteen months when purchased. Due to the
nature of the investments, the cost of available-for-sale securities
approximated fair value at February 27, 2010. Accordingly, other comprehensive
income (loss) has not been recognized as a separate component of stockholders'
equity in regards to the investment securities available-for-sale.





We
currently have a $1.4 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 $1.4 million deferred tax liability would not affect our consolidated
statement of income or stockholders' equity, as these taxes have been accrued
and are reflected on our consolidated balance sheet.





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





Impact of
Recently Issued Accounting Standards.  Please refer
to Item 7, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report Form 10-K for the year ended May 30,
2009 for a discussion of the impact of recently issued accounting standards.
There were no accounting standards issuedduring the quarter ended
February 27, 2010 that we expect will have a material impact on our consolidated
financial statements. For recently adopted accounting standards, please see note
10 in the notes to the consolidated financial statements in Item 1 of this
10-Q.





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 our Annual
Report on Form 10-K for the fiscal year ended May 30, 2009, 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 30, 2009.





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 30, 2009.













ITEM
4.  CONTROLSAND  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 materially affected or is
reasonably likely to materially affect our internal control over financial
reporting.




PART II.  OTHERINFORMATION




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 30, 2009.





Personal Injury Chicken
Litter Litigation




Cal-Maine Farms, Inc. is presently a
defendant in two personal injury cases in the Circuit Court of Washington
County, Arkansas.  Those cases are styled, McWhorter vs. Alpharma,
Inc.,et al., and
Carroll,et al. vs. Alpharma,
Inc.,et al.  Cal-Maine Farms, Inc. was named as a defendant in the McWhortercase on
February 3, 2004.  It was named as a defendant in the Carrollcase 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 McWhortercase
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 Carrollor McWhortercase 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 Greencase 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.   Greenwas re-tried,
and again resulted in a defense verdict.  The plaintiffs have appealed
this judgment.  The appeal was noticed in July 2009.  The
appeal is pending.





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





State of Oklahoma Watershed
Pollution Litigation




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










The
district court has dismissed all damages claims against all
defendants.  The basis for that ruling was the absence of a necessary
party plaintiff, the Cherokee Nation.  The Cherokee Nation owns part
of the land and water in the watershed.  After the dismissal of the
damages claims, the Cherokee Nation attempted to intervene as a
plaintiff.  This attempt was rejected by the district
court.  The Cherokee Nation has appealed that denial to the 10th
Circuit Court of Appeals.  The appeal was noticed in September 2009,
and is pending.





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





Egg Antitrust
Litigation




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




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




The named
plaintiffs in the direct purchaser case filed a consolidated complaint on
January 30, 2009.  On April 30, 2009, the Company filed motions to
dismiss the direct purchasers’ consolidated complaint.  The direct
purchaser plaintiffs did not respond to those motions.  Instead, after
announcing a potential settlement with one defendant, the direct purchaser
plaintiffs filed an amended complaint on December 11, 2009.  On
February 5, 2010, the Company joined with other defendants in moving to dismiss
the direct purchaser plaintiffs’ claims for damages outside the four-year
statute of limitations period and claims arising from a supposed conspiracy in
the egg products sector.  On February 26, 2010, the Company filed its
answer and affirmative defenses to the direct purchaser plaintiffs’ amended
complaint.




The named
plaintiffs in the indirect purchaser case filed a consolidated complaint on
February 27, 2009.  On April 30, 2009, the Company filed motions to
dismiss the indirect purchasers’ consolidated complaint.  The indirect
purchaser plaintiffs still have not responded to those
motions.  Instead, the indirect purchaser plaintiffs obtained Court
permission to file an amended complaint on April 5, 2010.   The
Court has not yet set a schedule for the defendants to answer or otherwise
respond to this new complaint.




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.  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.  RISKFACTORS





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
30, 2009.




ITEM
6.  EXHIBITS





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









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:
      March 31, 2010
            By:
            /s/ Timothy A. DawsonTimothy
      A. DawsonVice
      President, Chief Financial Officer, Treasurer and
Secretary(Principal
      Financial Officer)Date:
      March 31, 2010
            
            /s/ Charles
      F. CollinsCharles
      F. CollinsVice
      President/Controller(Principal
      Accounting Officer)