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 25, 2006
 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 Incorporation or Organization)
              
              (I.R.S.
                  Employer Identification No.)
  
 **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
x   No 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 x  Non-
        Accelerated filer o
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in
        Rule 12b-2 of the Exchange Act).
 Yes o   No x
 
 
 APPLICABLE
        ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
 DURING
        THE PRECEDING FIVE YEARS:
  Indicate
        by check mark whether the registrant has filed all documents and reports
        required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange
        Act of 1934 subsequent to the distribution of securities under a plan confirmed
        by a court.
 Yes o   No o
 
  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, 2006.
 
 Common
                  Stock, $0.01 par value
              
              21,098,891
                  sharesClass
                  A Common Stock, $0.01 par value
              
              2,400,000
                  shares


**CAL-MAINE
      FOODS, INC. AND SUBSIDIARIES**





**INDEX**





**Part
                I.**
            **Financial
                Information**
            **Page****Number**Item
                1.
            Condensed
                Consolidated Financial Statements (unaudited)Condensed
                Consolidated Balance Sheets - February 25, 2006 and May 28,
                2005
            3Condensed
                Consolidated Statements of Operations - Three Months and Nine Months
                Ended
                February 25, 2006 and February 26, 2005
            4Condensed
                Consolidated Statements of Cash Flows - Nine Months Ended February
                25,
                2006 and February 26, 2005
            5Notes
                to Condensed Consolidated Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            10Item
                3.
            Quantitative
                and Qualitative Disclosures of Market Risk
            16Item
                4.
            Controls
                and Procedures
            16**Part
                II.**
            **Other
                Information**Item
                1.
            Legal
                Proceedings
            17Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            18Item
                6.
            Exhibits
            18Signatures
            19





2


**PART
      I. FINANCIAL INFORMATION**


**ITEM
      1. FINANCIAL STATEMENTS**


**CAL-MAINE
      FOODS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(in
      thousands)**





February25,
                2006
            
            May
                28, 2005(unaudited)
            
            (note1)ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            14,139
            
            $
            20,221Investments
            
            
            24,600
            
            
            35,384Trade
                and other receivables
            
            
            27,842
            
            
            16,739Recoverable
                federal income taxes
            
            
            1,152
            
            
            6,676Inventories
            
            
            57,794
            
            
            45,628Prepaid
                expenses and other current assets
            
            
            1,995
            
            
            1,308Total
                current assets
            
            
            127,522
            
            
            125,956Notes
                receivable and investments
            
            
            8,900
            
            
            11,681Goodwill
            
            
            4,402
            
            
            3,147Other
                assets
            
            
            2,929
            
            
            1,362Property,
                plant and equipment
            
            
            341,194
            
            
            281,326Less
                accumulated depreciation
            
            
            (164,628
            )
            
            (153,938
            )176,566
            
            
            127,388TOTAL
                ASSETS
            
            $
            320,319
            
            $
            269,534LIABILITIES
                AND STOCKHOLDERS’ EQUITYCurrent
                liabilities:Accounts
                payable and accrued expenses
            
            $
            46,210
            
            $
            33,120Current
                maturities of long-term debt
            
            
            10,956
            
            
            10,149Deferred
                income taxes
            
            
            8,800
            
            
            9,100Total
                current liabilities
            
            
            65,966
            
            
            52,369Long-term
                debt, less current maturities
            
            
            95,047
            
            
            72,845Other
                non-current liabilities
            
            
            19,468
            
            
            2,175Deferred
                income taxes
            
            
            19,590
            
            
            20,290Total
                liabilities
            
            
            200,071
            
            
            147,679Stockholders’
                equity:Common
                stock $0.01 par value per share:Authorized
                shares - 60,000Issued
                and outstanding shares - 35,130 at February 25, 2006 and May 28,
                2005
            
            
            351
            
            
            351Class
                A common stock $0.01 par value per share, authorizedissued
                and outstanding 2,400 shares at February 25, 2006and
                May 28, 2005
            
            
            24
            
            
            24Paid-in
                capital
            
            
            28,676
            
            
            28,621Retained
                earnings
            
            
            112,686
            
            
            114,366Common
                stock in treasury-14,031 shares at February 25,2006
                and 14,043 at May 28, 2005
            
            
            (21,489
            )
            
            (21,507
            )Total
                stockholders’ equity
            
            
            120,248
            
            
            121,855TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            320,319
            
            $
            269,534





See
      notes
      to condensed consolidated financial statements.


3




**CAL-MAINE
      FOODS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(in
      thousands, except per share amounts)**


**UNAUDITED**




13
                  Weeks Ended
              
              39
                  Weeks EndedFebruary
                  25, 2006
              
              February
                  26, 2005
              
              February
                  25, 2006
              
              February
                  26, 2005Net
                  sales
              
              $
              130,107
              
              $
              101,042
              
              $
              348,150
              
              $
              293,789Cost
                  of sales
              
              
              104,134
              
              
              83,927
              
              
              303,408
              
              
              261,007Gross
                  profit
              
              
              25,973
              
              
              17,115
              
              
              44,742
              
              
              32,782Selling,
                  general andadministrative
              
              
              15,493
              
              
              12,440
              
              
              43,140
              
              
              36,531Operating
                  income (loss)
              
              
              10,480
              
              
              4,675
              
              
              1,602
              
              
              (3,749
              )Other
                  income (expense):Interest
                  expense, net
              
              
              (1,906
              )
              
              (791
              )
              
              (5,895
              )
              
              (3,097
              )Other
              
              
              1,346
              
              
              247
              
              
              1,090
              
              
              1,168(560
              )
              
              (544
              )
              
              (4,805
              )
              
              (1,929
              )Income
                  (loss) before incometaxes
              
              
              9,920
              
              
              4,131
              
              
              (3,203
              )
              
              (5,678
              )Income
                  tax expense (benefit)
              
              
              1,930
              
              
              1,710
              
              
              (2,400
              )
              
              (1,870
              )Net
                  income (loss)
              
              $
              7,990
              
              $
              2,421
              
              $
              (803
              )
              $
              (3,808
              )Net
                  income (loss) per common share:Basic
              
              $
              0.34
              
              $
              0.10
              
              $
              (0.03
              )
              $
              (0.16
              )Diluted
              
              $
              0.34
              
              $
              0.10
              
              $
              (0.03
              )
              $
              (0.16
              )Dividends
                  per common share
              
              $
              0.0125
              
              $
              0.0125
              
              $
              0.0375
              
              $
              0.0375Weighted
                  average sharesoutstanding:Basic
              
              
              23,497
              
              
              23,797
              
              
              23,494
              
              
              23,900Diluted
              
              
              23,680
              
              
              23,905
              
              
              23,494
              
              
              23,900


See
      notes
      to condensed consolidated financial statements.




4





**CAL-MAINE
      FOODS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(in
      thousands)**


**UNAUDITED**







39
                Weeks EndedFebruary
                25, 2006
            
            February
                26, 2005Cash
                flows provided by operating activities
            
            $
            13,622
            
            $
            4,971Cash
                flows from investing activities:Net
                decrease in investments
            
            
            10,784
            
            
            34,259Acquisitions
                of businesses, net of cash acquired
            
            
            (23,804
            )
            
            -0-Purchases
                of property, plant and equipment
            
            
            (6,939
            )
            
            (8,199
            )Payments
                received on notes receivable and from investments
            
            
            1,755
            
            
            989Increase
                in notes receivable and investments
            
            
            (519
            )
            
            (565
            )Net
                proceeds from sale of property, plant and equipment
            
            
            1,637
            
            
            505Net
                cash provided by (used in) investing activities
            
            
            (17,086
            )
            
            26,989Cash
                flows from financing activities:Purchases
                of common stock for treasury
            
            
            -0-
            
            
            (7,614
            )Long-term
                borrowings
            
            
            28,000
            
            
            -0-Principal
                payments on long-term debt
            
            
            (29,814
            )
            
            (8,371
            )Proceeds
                from issuance of common stock from treasury
            
            
            73
            
            
            2,577Payment
                of dividends
            
            
            (877
            )
            
            (892
            )Net
                cash used in financing activities
            
            
            (
                2,618
            )
            
            (
                14,300
            )Net
                change in cash and cash equivalents
            
            
            (6,082
            )
            
            17,660Cash
                and cash equivalents at beginning of period
            
            
            20,221
            
            
            36,629Cash
                and cash equivalents at end of period
            
            $
            14,139
            
            $
            54,289





See
      notes
      to condensed consolidated financial statements.





5




**CAL-MAINE
      FOODS, INC. AND SUBSIDIARIES**


Notes
      to
      Condensed Consolidated Financial Statements


(in
      thousands, except share amounts)


February
      25, 2006


1.  Presentation
      of Interim Information





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles for interim
      financial information and with the instructions to Form 10-Q and Article 10
      of
      Regulation S-X. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. In the opinion of management, all adjustments, consisting
      of normal recurring adjustments, considered necessary for a fair presentation
      have been included. Operating results for the three-month and nine-month periods
      ended February 25, 2006 are not necessarily indicative of the results that
      may
      be expected for the year ending June 3, 2006.





The
      balance sheet at May 28, 2005 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 28, 2005.





ACQUISITIONS





We
      entered into an Agreement to Form a Limited Liability Company, Transfer Assets
      Thereto, and Purchase Units of Membership Therein, dated July 28, 2005, with
      Hillandale Farms, Inc. and Hillandale Farms of Florida, Inc. (together,
“Hillandale”), and the Hillandale shareholders (the “Agreement”). Under the
      terms of the Agreement, we acquired 51% of the units of membership in
      Hillandale, LLC for cash of approximately $27 million on October 12, 2005.
      The
      remaining 49% of the units of membership in Hillandale, LLC will be acquired
      in
      essentially equal annual installments over a four-year period, with the purchase
      price of the units equal to their book value at the time of purchases as
      calculated in accordance with the terms of the Agreement. The total preliminary
      purchase price is estimated to be as follows (in thousands):





Cash
                  consideration paid to seller for 51% of Hillandale, LLC's membership
                  units
              
              $
              27,006Obligation
                  to acquire 49% of Hillandale, LLC's membership units
              
              
              25,94752,953Less
                  discount of preliminary purchase price to the present value as
                  of July 28,
                  2005
              
              
              (3,556
              )Total
                  preliminary purchase price
              
              $
              49,397





The
      preliminary purchase price was allocated based upon the fair value of the assets
      acquired and liabilities assumed as follows (in thousands):




Assets
                acquired:Cash
                and cash equivalents
            
            $
            3,918Receivables
            
            
            7,181Inventories
            
            
            11,330Prepaid
                and other assets
            
            
            2,798Property,
                plant and equipment
            
            
            49,531Total
                assets acquired
            
            
            74,758




6


Liabilities
                assumed:Accounts
                payable and accrued expenses
            
            
            3,567Notes
                payable and long-term debt
            
            
            21,794Total
                liabilities assumed
            
            
            25,361Net
                assets acquired
            
            $
            49,397




In
      October 2005, we paid substantially all of Hillandale, LLC notes payable and
      long-term debt and obtained a new $28 million term loan from an insurance
      company secured by substantially all of the property, plant and equipment of
      Hillandale, LLC. The new term loan requires monthly principal payments of
      $150,000 plus interest beginning in January 2007 through November 2020. The
      obligation to acquire 49% of Hillandale, LLC is recorded at its present value
      of
      $23.3 million as of February 25, 2006, of which $6.9 million is included in
      current liabilities and $16.4 million is included in other non-current
      liabilities in the accompanying condensed consolidated balance sheet.





We
      gained
      effective control of the Hillandale operations upon signing of the Agreement.
      Accordingly, the acquisition date for accounting purposes is July 28, 2005.
      The
      operations of Hillandale, LLC have been consolidated with our operations
      beginning July 29, 2005.





We
      have a
      44% membership interest in American Egg Products, LLC (“AEP”) and Hillandale,
      LLC has a 27.5% membership interest in AEP. Prior to the acquisition of
      Hillandale, LLC, our membership was accounted for by the equity method.
      Effective with our acquisition of Hillandale, LLC, we own a majority of the
      membership interest in AEP and, accordingly, the financial statements of AEP
      have been consolidated with our financial statements beginning July 29, 2005.
      AEP, located in Georgia, processes shell eggs into liquid and frozen egg
      products that are sold primarily to food manufacturers and to the food service
      industry. AEP has contract shell egg production for approximately 50% of shell
      egg requirements and purchases the balance from regional egg
      markets.





Hillandale,
      LLC’s production facilities are principally located in Florida. Like
      us,
      Hillandale, LLC is a fully integrated shell egg producer with its own feed
      mills, hatchery, production, processing and distribution facilities. The
      Hillandale acquisition increased our current egg production capacity by
      approximately 30%.





As
      of
      July 28, 2005, Hillandale, LLC owned a 50% ownership interest in Hillandale
      Farms, LLC that was accounted for by the equity method. On October 5, 2005,
      Hillandale, LLC acquired the other 50% interest in Hillandale Farms, LLC for
      $1.0 million. The purchase price was allocated to the assets acquired and
      liabilities assumed and resulted in approximately $1.3 million of goodwill.
      Hillandale Farms, LLC is engaged in the production, processing and distribution
      of shell eggs.





The
      unaudited financial information in the table below summarizes the combined
      results of our operations and Hillandale, LLC, on a pro forma basis, as though
      we had been combined as of the beginning of the earliest period presented.
      The
      pro forma financial information is presented for informational purposes only
      and
      is not indicative of the results of operations that would have been achieved
      if
      the acquisition had taken place at the beginning of the earliest period
      presented.


13
                  Weeks Ended
              
              39
                  Weeks EndedFeb.
                  25, 2006
              
              Feb
                  26, 2005
              
              Feb.
                  25, 2006
              
              Feb.
                  26, 2005Net
                  sales
              
              $
              130,107
              
              $
              121,971
              
              $
              361,124
              
              $
              358,701Net
                  income (loss)
              
              $
              7,990
              
              $
              (1,095
              )
              $
              (4,959
              )
              $
              (15,9200
              )Basic
                  net income (loss) per share
              
              $
              0.34
              
              $
              (0.05
              )
              $
              (0.21
              )
              $
              (0.660
              )Diluted
                  net income (loss) per share
              
              $
              0.34
              
              $
              (0.05
              )
              $
              (0.21
              )
              $
              (0.660
              )


7


**Stock
      Based Compensation**




We
      account for stock option grants in accordance with APB Opinion No. 25,
“Accounting for Stock Issued to Employees.”





The
      following table illustrates the effect on net income (loss) and earnings (loss)
      per share if the Company had applied the fair value recognition provisions
      of
      Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for
      Stock- Based Compensation,” which require compensation cost for all stock-based
      employee compensation plans to be recognized based on the use of a fair value
      method (in thousands except per share amounts):




13
                        Weeks Ended
                    
                    39
                        Weeks EndedFeb.
                        25, 2006
                    
                    Feb.
                        26, 2005
                    
                    Feb.
                        25, 2006
                    
                    Feb.26,
                        2005Net
                        income (loss)
                    
                    $
                    7,990
                    
                    $
                    2,421
                    
                    $
                    (803
                    )
                    $
                    (3,808
                    )Add:
                        Stock-based employee compensation expense included in reported
                        net income
                        (loss)
                    
                    
                    26
                    
                    
                    (242
                    )
                    
                    26
                    
                    
                    (467
                    )Deduct:
                        Total stock-based employee compensation expense determined
                        under fair
                        value-based method for all awards
                    
                    
                    (331
                    )
                    
                    113
                    
                    
                    (242
                    )
                    
                    212Pro
                        forma net income (loss)
                    
                    $
                    7,685
                    
                    $
                    2,292
                    
                    $
                    (1,019
                    )
                    $
                    (4,063
                    )Earnings
                        (loss) per share:Basic-as
                        reported
                    
                    $
                    0.34
                    
                    $
                    0.10
                    
                    $
                    (0.03
                    )
                    $
                    (0.16
                    )Basic-pro
                        forma
                    
                    $
                    0.33
                    
                    $
                    0.10
                    
                    $
                    (0.04
                    )
                    $
                    (0.17
                    )Diluted-as
                        reported
                    
                    $
                    0.34
                    
                    $
                    0.10
                    
                    $
                    (0.03
                    )
                    $
                    (0.16
                    )Diluted-pro
                        forma
                    
                    $
                    0.32
                    
                    $
                    0.10
                    
                    $
                    (0.04
                    )
                    $
                    (0.17
                    )Weighted
                        average shares outstanding:Basic
                    
                    
                    23,497
                    
                    
                    23,797
                    
                    
                    23,494
                    
                    
                    23,900Diluted
                    
                    
                    23,680
                    
                    
                    23,905
                    
                    
                    23,494
                    
                    
                    23,900


NEW
      STOCK
      OPTION PLAN AND STOCK APPRECIATION RIGHTS PLAN





On
      July
      28, 2005, our Board of Directors approved the Cal-Maine Foods, Inc. 2005
      Incentive Stock Option Plan (the “Plan”) and reserved 500,000 shares for
      issuance upon exercise of options granted under the Plan. Options issued
      pursuant to the Plan may be granted to any of our employees. The options may
      have a term of up to ten years and generally will vest ratably over five years.
      On August 17, 2005, we issued 360,000 options with an exercise price of $5.93.
      The options have ten-year terms and vest over five years beginning from the
      date
      of grant. The Plan was ratified by our shareholders at our annual meeting of
      shareholders on October 13, 2005.





On
      July
      28, 2005, our Board of Directors also approved the Cal-Maine Foods, Inc. Stock
      Appreciation Rights Plan (the “Rights Plan”). The Rights Plan covers 1,000,000
      shares of common stock of the Company. Stock Appreciation Rights (“SAR”) may be
      granted to any employee or non-employee member of the Board of Directors. Upon
      exercise of a SAR, the holder will receive shares of our common stock equal
      to
      the difference between the fair market value of a single share of common stock
      at the time of exercise and the strike price which is equal to the fair market
      value of a single share of common stock on the date of the grant. The SARs
      have
      a ten-year term and vest over five years. On August 17, 2005, we issued 592,500
      SARs with a strike price of $5.93 and, on August 26, 2005, we issued 22,500
      SARs
      with a strike price of $6.71. The Rights Plan was ratified by our shareholders
      at our annual meeting of shareholders on October 13, 2005.




8


2.
        Inventories
 
 Inventories
        consisted of the following:
  February
                  25, 2006
              
              May
                  28, 2005Flocks
              
              $
              39,211
              
              $
              31,088Eggs
              
              
              3,321
              
              
              2,477Feed
                  and supplies
              
              
              15,262
              
              
              12,063$
              57,794
              
              $
              45,628
 
 3. Stockholders’
        Equity
  Stock
        Repurchase Program
  On
        August
        3, 2004, our Board of Directors approved a repurchase program whereby we
        were
        allowed to purchase up to 2,000,000 shares of our common stock by July 31,
        2005.
        The repurchase program, in which approximately 942,000 shares were repurchased,
        expired on July 31, 2005. We do not have any other stock repurchase
        programs.




4.
      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 will not have a material adverse
      effect on our consolidated financial position or operations. Please refer to
      Part II, Item 1, of this report for a description of certain pending legal
      proceedings.





5.
      Net
      Income (Loss) per Common Share





Basic
      earnings (loss) per share are based on the weighted average common shares
      outstanding. Diluted earnings per share include any dilutive effects of options
      and warrants. Options and warrants representing 182,793 shares were excluded
      from the calculation of diluted earnings per share for the nine month period
      ended February 25, 2006 because of the net loss for the period.


9


**ITEM
      2. MANAGEMENTS’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 1 of our Annual Report on Form 10-K
      for the fiscal year ended May 28, 2005, (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 that could result
      from our future acquisition of new flocks or businesses. Readers are cautioned
      not to put undue reliance on forward-looking statements. We disclaim any intent
      or obligation to update publicly these forward-looking statements, whether
      as a
      result of new information, future events or otherwise.





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.





We
      currently produce approximately 75% of the total number of shell eggs sold
      by
      us, with approximately 10% of such total shell egg production being through
      the
      use of contract producers. Contract producers operate under agreements with
      us
      for the use of their facilities in the production of shell eggs by layers owned
      by us. We own the shell eggs produced under these arrangements. Approximately
      25% of the total number of shell eggs sold by us is purchased from outside
      producers for resale, as needed, by us.





Although
      several of our production facilities are located in areas affected by hurricanes
      Katrina and Rita, there has been no material adverse effect to our operations
      or
      properties at these facilities.





Like
      other shell egg and poultry producers, our operations are subject to the effects
      of adverse weather conditions, disease and pests common to agricultural
      industries.  We do not believe the country's poultry and egg industries are
      likely to experience a major outbreak of bird flu in the near future.  We
      are taking extra precautions to assure that we have effective bio-security
      at
      our egg complexes.  We have eliminated or reduced visits to our poultry
      facilities by non-employees.  We also are taking extra precautions against
      bringing used packaging materials or equipment on to our farms that could cause
      the spread of any poultry disease.  Thus far, we have not seen any
      indication of loss of demand for eggs because of bird flu concerns.




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





Our
      cost
      of production is materially affected by feed costs, which average about 55%
      of
      our total shell egg production cost. Changes in feed costs result in changes
      in
      cost of goods sold. The cost of feed ingredients is affected by a number of
      supply and demand factors such as crop production and weather, and other
      factors, such as the level of grain exports, over which we have little or no
      control.





10





As
      discussed in Note 1 of the Notes to Condensed Consolidated Financial Statements,
      we acquired 51% of the units of membership in Hillandale, LLC for cash of $27
      million on October 12, 2005. The remaining 49% of the units of membership in
      Hillandale, LLC will be acquired over a four-year period, at their book value
      at
      the time of purchases.





We
      gained
      effective control of the Hillandale operations upon signing of the Agreement.
      Accordingly, the acquisition date for accounting purposes is July 28, 2005.
      The
      operations of Hillandale, LLC have been consolidated with our operations
      beginning July 29, 2005.





We
      have a
      44% membership interest in American Egg Products, LLC (“AEP”) and Hillandale,
      LLC has a 27.5% membership interest in AEP. Prior to the acquisition of
      Hillandale, LLC, our membership was accounted for by the equity method.
      Effective with our acquisition of Hillandale, LLC, we own a majority of the
      membership interest in AEP and, accordingly, the financial statements of AEP
      have been consolidated with our financial statements beginning July 29, 2005.





Hillandale,
      LLC’s production facilities are principally located in Florida. Like
      us,
      Hillandale, LLC is a fully integrated shell egg producer with its own feed
      mills, hatchery, production, processing and distribution facilities. The
      Hillandale acquisition increased our current egg production capacity by
      approximately 30%.





As
      of
      July 28, 2005, Hillandale, LLC owned a 50% ownership interest in Hillandale
      Farms, LLC that was accounted for by the equity method of accounting. On October
      5, 2005, Hillandale, LLC acquired the other 50% interest in Hillandale Farms,
      LLC for $1.0 million. The purchase price was allocated to the assets acquired
      and liabilities assumed and resulted in approximately $1.3 million of goodwill.
      Hillandale Farms, LLC is engaged in the production, processing and distribution
      of shell eggs.





The
      purchase of Hillandale, LLC, AEP and Hillandale Farms, LLC described above
      are
      collectively referred to below as the “Acquisitions".




RESULTS
      OF OPERATIONS





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







13
                Weeks Ended
            
            39
                Weeks EndedFebruary
                25, 2006
            
            February
                26, 2005
            
            February
                25, 2006
            
            February
                26, 2005Net
                sales
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Cost
                of sales
            
            
            80.0
            
            
            83.1
            
            
            87.1
            
            
            88.9Gross
                profit
            
            
            20.0
            
            
            16.9
            
            
            12.9
            
            
            11.1Selling,
                general & administrative
            
            
            11.9
            
            
            12.3
            
            
            12.4
            
            
            12.4Operating
                income (loss)
            
            
            8.1
            
            
            4.6
            
            
            .5
            
            
            (1.3
            )Other
                income (expense)
            
            
            (0.5
            )
            
            (0.5
            )
            
            (1.4
            )
            
            (.6
            )Income
                (loss) before taxes
            
            
            7.6
            
            
            4.1
            
            
            (.9
            )
            
            (1.9
            )Income
                tax expense (benefit)
            
            
            1.5
            
            
            1.7
            
            
            (.7
            )
            
            (.6
            )Net
                income (loss)
            
            
            6.1
            %
            
            2.4
            %
            
            (.2
            )%
            
            (1.3
            )%




11


NET
      SALES





Approximately
      95% of our net sales consist of shell egg sales, 4% consist of incidental feed
      sales to outside egg producers and 1% consists of sales of liquid and frozen
      egg
      products. Net sales for the third quarter of fiscal 2006 were $130.1 million,
      an
      increase of $29.1 million, or 28.8% as compared to net sales of $101.0 million
      for the third quarter of fiscal 2005. The Acquisitions accounted for $21.1
      million of the increase. Excluding the Acquisitions, on a comparable basis,
      net
      sales increased $8.0 million, or 7.9%, for the third fiscal 2006 quarter. The
      increase was due to increases in total dozens of shell eggs sold and shell
      egg
      selling prices, as compared with the same period in fiscal 2005. Dozens sold
      for
      the current quarter were 169.4 million dozen, including 31.5 million dozen
      sold
      by the Acquisitions, an increase of 25.0 million dozen, or 17.3% as compared
      to
      the third quarter of fiscal 2005. On a comparable basis, excluding the
      Acquisitions, dozens sold decreased 4.5%. Our production and processing
      facilities accounted for most of the decrease in dozens of shell eggs sold,
      with
      additional reductions in dozens purchased from outside (non-contract) shell
      egg
      producers making up the balance. Purchases of shell eggs from outside producers
      averages about 25% of our total dozens sold. Consumer demand was stronger than
      last year and shell egg supply was in better balance, both of which market
      factors resulted in higher shell egg selling prices during the current third
      quarter as compared to the fiscal 2005 third quarter. Our net average selling
      price per dozen of shell eggs for the third quarter of fiscal 2006 was $0.741,
      compared to $0.673 for the third quarter of fiscal 2005, an increase of 10.0%.
      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.




Net
      sales
      for the thirty-nine week period ended February 25, 2006 were $348.2 million,
      an
      increase of $54.4 million, or 18.5%, as compared to net sales of $293.8 million
      for the thirty-nine week period ended February 26, 2005. Excluding the net
      sales
      of the Acquisitions of $57.7 million, on a comparable basis, sales have
      decreased $3.4 million, or 1.2%. Dozens sold for the current thirty-nine week
      period were 493.6 million, including the Acquisitions’ 80.1 million dozen, as
      compared to 438.4 million for the same time period in fiscal 2005, an increase
      of 55.2 million dozen, or 12.6%. On a comparable basis, excluding the
      Acquisitions, dozens sold have decreased 5.7%. For the current fiscal 2006
      thirty-nine week period, our net average selling price per dozen of shell eggs
      was $.659, as compared to $.645 per dozen for the same period in fiscal 2005,
      an
      increase of 2.1%.




COST
      OF
      SALES





Cost
      of
      sales consists of costs directly related to production and processing of shell
      eggs, including feed costs, and purchases of shell eggs from outside egg
      producers. Cost of sales for the third quarter ended February 26, 2005 was
      $104.1 million, an increase of $20.2 million, or 24.1%, as compared to cost
      of
      sales of $83.9 million for the third quarter of fiscal 2005. The Acquisitions’
cost of sales accounted for $17.4 million of the increase. Excluding the
      Acquisitions, on a comparable basis, cost of sales increased $2.8 million,
      or
      3.3%. The increase is due to higher cost of purchases from outside egg producers
      and higher cost of feed ingredients. The increase in the cost of the shell
      eggs
      purchased from outside producers was due to improved shell egg market conditions
      and selling prices. Feed cost for the third quarter ended February 25, 2006
      was
      $.211 per dozen of shell eggs, compared to the third quarter of fiscal 2005
      cost
      per dozen of shell eggs of $.202, an increase of 4.5%. The higher shell egg
      selling price was the primary reason for the increase in gross profit from
      16.9%
      of net sales for the quarter ended February 26, 2005 to 20.0% of net sales
      for
      the third quarter ended February 25, 2006.





Cost
      of
      sales for the thirty-nine week period ended February 25, 2006 was $303.4
      million, an increase of $42.4 million, or 16.2%, as compared to cost of sales
      of
      $261.0 million for the thirty-nine week period ended February 26, 2005. On
      a
      comparable basis, excluding the Acquisitions’ cost of sales of $53.1 million,
      cost of sales decreased $10.7 million, or 4.1%.The decrease in cost of sales
      is
      the net result of a lower number of dozens produced at Company-owned facilities,
      lower outside shell egg purchases, and a decrease in the cost of feed
      ingredients. Feed cost for the current thirty-nine week period was $.213 per
      dozen of shell eggs, as compared to $.247 per dozen for the same period in
      the
      prior fiscal year, a decrease of 13.8%. The increase in shell egg selling prices
      and lower cost of feed ingredients resulted in an increase in gross profit
      from
      11.1% of net sales for last year’s thirty-nine week period to a gross profit of
      12.9% of net sales for the current thirty-nine week period.





12


SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES





Selling,
      general and administrative expenses include costs of marketing, distribution,
      accounting and corporate overhead. Selling, general and administrative expense
      for the third quarter ended February 25, 2006 was $15.5 million, an increase
      of
      $3.1 million, as compared to $12.4 million for the third quarter of fiscal
      2005.
      The Acquisitions’ selling, general and administrative expense accounted for $2.9
      million of the increase. Excluding the Acquisitions, the current thirteen week
      period had an increase in selling, general and administrative expense of
      $201,000 or 1.6%. Fuel for vehicles and employee health insurance costs have
      each increased approximately $100,000 for the third quarter ended February
      25,
      2006 compared to the same period in the prior year. On a cost per dozen sold
      basis, including the Acquisitions’ cost, selling, general and administrative
      expense was $.091 per dozen for the current quarter as compared to $.086 for
      the
      third quarter of fiscal 2005. As a percent of net sales, selling, general and
      administrative expense decreased slightly from 12.3% for the third quarter
      of
      fiscal 2005 to 11.9% for the third quarter of fiscal 2006.





Selling,
      general and administrative expenses for the thirty-nine week period ended
      February 25, 2006 was $43.1 million, an increase of $6.6 million, as compared
      to
      $36.5 million for the thirty-nine week period ended February 26, 2005. The
      Acquisitions accounted for $7.2 million in expenses for the period. Excluding
      the Acquisitions, the current thirty-nine week period had a decrease in selling,
      general and administrative expense of $550,000 or 1.6%. In the thirty-nine
      week
      period ended February 25, 2006, insurance costs decreased $850,000, and
      professional and legal fees decreased $400,000 compared to the comparable period
      in 2005. During this period, approximately $400,000 was recovered in bad debts
      previously written off. Franchise fees for specialty eggs increased $1.3 million
      during the current thirty-nine week period as compared to the same period in
      fiscal 2005. Fuel for vehicles was the major distribution cost increase in
      the
      period. On a cost per dozen sold basis, including the Acquisitions, selling,
      general and administrative expense was $.087 for the current thirty-nine week
      period as compared to $.083 for the comparable period in fiscal 2005. As a
      percent of net sales, selling, general and administrative expense remained
      the
      same at 12.4% for both thirty-nine week periods in fiscal 2006 and fiscal
      2005.







OPERATING
      INCOME





As
      the
      result of the above, operating income was $10.5 million for the third quarter
      ended February 25, 2006, as compared to operating income of $4.7 million for
      the
      third quarter of fiscal 2005. Operating income was 8.1% of net sales for the
      current fiscal third quarter, compared to operating income of 4.6% of net sales
      for the third quarter in fiscal 2005.





For
      the
      thirty-nine week period ended February 25, 2006, operating income was $1.6
      million, as compared to operating loss of $3.7 million for the thirty-nine
      week
      period ended February 26, 2005. Operating income was 0.5% of net sales for
      the
      current thirty-nine week period as compared to operating loss of 1.3% of net
      sales in the same thirty-nine week period in fiscal 2005.




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 from
      affiliates.





Other
      expense for the third quarter ended February 25, 2006 was $560,000, an increase
      of $16,000, as compared to other expense of $544,000 for the third quarter
      of
      fiscal 2005 In the current third quarter, net interest expense increased $1.1
      million and other income increased $1.1 million. This net increase for the
      third
      quarter was primarily the result of an $800,000 increase in cash interest
      expense due to additional long-term borrowings and lower balances in cash
      equivalents and investments. Included in interest expense for the thirteen
      weeks
      ended February 25, 2006 is $300,000 non-cash expense imputed on our non-interest
      bearing obligation to acquire 49% of Hillandale, LLC’s membership units over a
      four year period. Other income for the current third quarter increased from
      equity in income of affiliates and from a gain on sale of land and a legal
      claim
      settlement. As a percent of net sales, other expense was the same at 0.5% for
      the current third quarter and fiscal 2005.





13


For
      the
      thirty-nine week period ended February 25, 2006, other expense was $4.8 million,
      an increase of $2.9 million as compared to $1.9 million for the same thirty-nine
      week period in fiscal 2005. For the current thirty-nine weeks, net interest
      expense increased $2.8 million and other income decreased $780,000. Interest
      expense increased $937,000, primarily due to additional borrowings and interest
      income decreased $900,000 due to lower cash equivalents and investments.
      Included in interest expense for the thirty-nine weeks ended February 25, 2006
      is $980,000 non-cash expense imputed on our non-interest bearing obligation
      to
      acquire 49% of Hillandale. Other income decreased from equity in losses of
      affiliates. As a percent of net sales, other expense was 1.4% for the current
      thirty-nine week period, as compared to 0.6% for the same thirty-nine week
      period in fiscal 2005.





INCOME
      TAXES





As
      a
      result of the above, our pre-tax income was $9.9 million for the third quarter
      ended February 25, 2006, as compared to pre-tax income of $4.1 million for
      the
      third quarter of fiscal 2005. For the current third quarter, an income tax
      expense of $1.9 million was recorded with an effective tax rate of 19.4%, as
      compared to an income tax expense of $1.7 million with an effective rate of
      41.4% for last year’s third quarter. The effective tax rate for each period
      differs from the statutory federal income tax rate due to state income taxes
      and
      due to the relationship of certain non-deducible expenses to our income (loss)
      before income taxes. For the third quarter ended February 25, 2005, we projected
      our effective tax rate for the year to be approximately 75% compared to the
      33%
      projected annual tax rate used in the second quarter ended November 26, 2005.
      The increase in the estimated annual effective tax rate is due to an increase
      in
      certain non-deductible expenses in relation to our estimated income (loss)
      before income taxes for the year. As a result of adjusting the income tax
      benefit for the thirty-nine weeks ended February 25, 2006 to the estimated
      annual rate of 75%, our effective rate for the thirteen weeks ended February
      25,
      2006 was reduced to 19.4%.





For
      the
      thirty-nine week period ended February 25, 2006, our pre-tax loss was $3.2
      million, as compared to pre-tax loss of $5.7 million for the thirty-nine week
      period ended February 26, 2005. For the current thirty-nine week period, an
      income tax benefit of $2.4 million was recorded with an effective tax rate
      of
      74.9%, as compared to an income tax benefit of $1.9 million with an effective
      tax rate of 32.9% for the same thirty-nine week period in fiscal 2005. The
      effective tax rate for each period differs from the statutory federal income
      tax
      rate due to state income taxes and due to the relationship of certain
      non-deducible expenses to our income (loss) before income taxes.




NET
      INCOME





Net
      income for the third quarter ended February 25, 2006 was $8.0 million, or $0.34
      per basic and diluted share, as compared to net income of $2.4 million, or
      $.10
      per basic and diluted share, for the third quarter of fiscal 2005.





For
      the
      thirty-nine week period ended February 25, 2006, net loss was $803,000, or
      $0.03
      per basic and diluted share, as compared to net loss of $3.8 million, or $0.16
      per basic and diluted share, for the thirty-nine week period ended February
      26,
      2005.




CAPITAL
      RESOURCES AND LIQUIDITY





Our
      working capital at February 25, 2006 was $61.6 million, as compared to $73.6
      million at May 28, 2005. Our current ratio was 1.93 at February 25, 2006, as
      compared to 2.41 at May 28, 2005. Our need for working capital generally is
      highest in the last and first fiscal quarters ending in May and August,
      respectively, when egg prices are normally at seasonal lows. Seasonal borrowing
      needs frequently are higher during these quarters than during other fiscal
      quarters. We have a $40.0 million line of credit with three banks, $2.6 million
      of which was utilized as a standby letter of credit at February 25, 2006. Our
      long-term debt at February 25, 2006, including current maturities, amounted
      to
      $106.0 million, as compared to $83.0 million at May 28, 2005.





14


In the
      thirty-nine week period ended February 25, 2006, $13.6 million in net cash
      was
      provided by operating activities. This compares to $5.0 million of net cash
      for
      the thirty-nine week period ended February 26, 2005 . In
      the
      thirty-nine weeks ended February 25, 2006, $10.8 million was provided from
      the
      maturity of short-term investments, $1.2 million was provided from notes
      receivable and from investments, and $1.6 million was provided from disposal
      of
      property, plant and equipment. For purchases of property, plant and equipment,
      $6.9 million was used and $23.8
      million was used for the purchase of the Acquisitions .
      In
      addition, $73,000 was provided from the issuance of common stock from the
      treasury and  $877,000
      was used for payments of dividends on the common stock. Borrowings of $28.0 million were received in additional long-term
      debt and
      $29.8 million was used for principal payments on long-term debt. The net result
      of these activities was a decrease in cash of $6.1 million since May 28,
      2005 .




In
      the
      thirty-nine weeks ended February 26, 2005, $34.2 million was provided from
      the
      maturity of short-term investments, $424,000 was provided from notes receivable
      and from investments, $505,000 was provided from disposal of property, plant
      and
      equipment and $8.2 million was used for purchases of property, plant and
      equipment. In addition, $2.6 million was provided from the issuance of common
      stock from the treasury, net cash of $7.6 million was used in the repurchase
      of
      common stock for the treasury, $892,000 was used for payments of dividends
      on
      the common stock and $8.4 million was used for principal payments on long-term
      debt. The net result of these activities was an increase in cash of $17.7
      million.




Substantially
      all trade receivables and inventories collateralize our line of credit and
      property, plant and equipment collateralize our long-term debt under our loan
      agreements with our lenders. Unless otherwise approved by our lenders, we are
      required by provisions of these loan agreements to (1) maintain minimum levels
      of working capital as defined (ratio of not less than 1.25 to 1) and net worth
      (minimum of $90.0 million, plus 45% of cumulative net income, tangible net
      worth); (2) limit dividends to an aggregate amount not to exceed $500,000 per
      quarter (allowed if no default), capital expenditures (not to exceed
      depreciation for the same four fiscal quarters), 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 25, 2006, we were in compliance with the provisions of all loan
      agreements. Under certain of the loan agreements, the lenders have the option
      to
      require the prepayment of any outstanding borrowings in the event we undergo
      a
      change in control.





As
      discussed in the Notes to Condensed Consolidated Financial Statements section
      of
      this report under “Acquisitions”, under the terms of the Agreement, the
      remaining 49% of the Units of Membership in Hillandale, LLC, are to be acquired
      in essentially equal annual installments over a four-year period, with the
      purchase price of the units equal to their book value as calculated in
      accordance with the terms of the Agreement. Funding is expected to be provided
      by our cash on hand, our operational earnings during the period and drawing
      on
      our existing line of credit.





We
      currently have a $2.1 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 $2.1 million deferred tax liability would not impact our consolidated
      statement of operations or stockholders' equity, as these taxes have been
      accrued and are reflected on our consolidated balance sheet.




***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 28, 2005 for a discussion of the impact of recently issued accounting
      standards. There were no accounting standards issued **** during
      the quarter ended February 25, 2006 that we expect will have a material impact
      on our consolidated financial statements.





15




***Critical
      Accounting Policies*** .
      We
      suggest that our Summary of Significant Accounting Policies, as described in
      Note 1 of the Notes to Consolidated Financial Statements included in Cal-Maine
      Foods, Inc. and Subsidiaries annual report on Form10-K for the fiscal year
      ended
      May 28, 2005, be read in conjunction with this Management’s Discussion and
      Analysis of Financial Condition and Results of Operations. There have been
      no
      changes made to the critical accounting policies identified in our Annual Report
      on Form 10-K for the year ended May 28, 2005.





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 28, 2005.




ITEM
      4.
      CONTROLS AND PROCEDURES




Our
      disclosure controls and procedures are designed to provide reasonable assurance
      that information required to be disclosed by us in our periodic reports filed
      with the Securities and Exchange Commission is recorded, processed, summarized
      and reported within the time periods required. Our Chief Executive Officer
      and
      Chief Financial Officer have concluded that our disclosure controls and
      procedures are effective based on their evaluation of such controls and
      procedures 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 controls over financial reporting. In connection with the Acquisitions,
      we have been and are currently reviewing the controls and procedures in place
      and are implementing changes where necessary to conform the controls and
      procedures of the Acquisitions to those of our other operations.




16




**PART
      II.**  **OTHER
      INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





Except
      as
      noted below, there have been no new matters or changes to matters identified
      in
      our Annual Report on Form 10-K for the year ended May 28, 2005.




**** **Chicken
      Litter Litigation**





On
      May 2,
      2005, Cal-Maine Farms, Inc. (“Cal-Maine Farms”), one of our subsidiaries, was
      added as a defendant in an ongoing action in a case styled Leslie Carroll et
      al
      vs. Alpharma, Inc in the Circuit Court of Washington County, Arkansas. There
      are
      approximately 80 plaintiffs in the action. The plaintiffs complain of a wide
      variety of medical problems which they attribute to the use of chicken manure
      and litter throughout Washington County, Arkansas. The theory of liability
      is
      the same as in the McWhorter suit previously reported in our filings with the
      Securities and Exchange Commission and summarized below. An Answer has been
      filed, and discovery has begun, but no trial date been set. At this stage it
      is
      impossible to evaluate the potential exposure, if any, of Cal-Maine Farms to
      damages in this suit.





On
      February 3, 2004, Cal-Maine Farms was served with process in a civil complaint
      filed in the Circuit Court of Washington County, Arkansas, on behalf of Keith
      McWhorter and Patsy McWhorter, individually and as next friends and guardians
      of
      Hunter McWhorter. Other defendants include Alpharma Inc., Alpharma Animal Health
      Co., Cargill, Incorporated, George's Farms, Inc., Peterson Farms, Inc., Simmons
      Foods, Inc., Simmons Poultry Farms, Inc., and Tyson Foods, Inc. Each of the
      other poultry defendants is engaged in the broiler business. The Alpharma
      defendants produce additives for broiler feed. One individual was originally
      named as a defendant, but has been dismissed.





Both
      the
      McWhorter and Carroll suits 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 Carroll suit focuses on a
      feed
      ingredient that contains arsenic and is alleged to be in the litter that was
      spread. We do not use this particular feed ingredient in our shell egg
      production feed formulation. The McWhorter suit focuses on mold and fungi
      allegedly created by the application of litter. Both suits address conditions
      alleged to exist in Washington County. Both suits seek unspecified actual
      damages and request unspecified punitive damages. An answer has been filed
      on
      behalf of Cal-Maine Farms and some initial discovery has taken place. At this
      stage, it is impossible to evaluate the potential exposure, if any, of Cal-Maine
      Farms to damages in this suit.




**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
      us and Cal-Maine Farms. 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. We no longer have any
      operations in the watershed. Accordingly, we do not anticipate that we will
      be
      materially affected by the request for injunctive relief. Dispositive motions
      have been filed by the defendants, but no hearings on those motions have been
      set. We are not able at present to provide an opinion regarding the ultimate
      resolution of this action.




17





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




We
      did
      not make any sales of unregistered securities during the third quarter of fiscal
      2006.





Information
      as to repurchases of our common stock required by this Item is contained in
      Note
      3 of “Notes to Condensed Consolidated Financial Statements” in Part 1 of this
      Form 10-Q and is incorporated herein by this reference.





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











**ITEM
      6. EXHIBITS**


a.
                  ExhibitsNo.Description31.1
                  Certification
                    of The Chief Executive Officer31.2
                  Certification
                    of The Chief Financial Officer32.0
                  Written
                    Statement of The Chief Executive Officer and The Chief Financial
                    Officer


18





**SIGNATURES**





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




********
              CAL-MAINE
                  FOODS, INC.
                (Registrant)Date:
                April 4, 2006
              By:
              /s/ Timothy
                A. DawsonTimothy
                  A. Dawson
                Vice
                  President/Treasurer
                (Principal
                  Financial Officer)
 Date:
                April 4, 2006
              By:
              /s/ Charles
                F. CollinsCharles
                  F. Collins
                Vice
                  President/Controller
                (Principal
                  Accounting Officer)


19