UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        DC 20549
 
 **FORM
        10-Q**
 (mark
        one)
 
 xQuarterly
        report
        pursuant to Section 13 or 15(d) of the Securities Exchange Act of
        1934
 
 For
        the
        quarterly period ended March 3, 2007
  OR
 
 oTransition 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
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 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, 2007.


Common
                  Stock, $0.01 par value
              
              21,158,491
                  sharesClass
                  A Common Stock, $0.01 par value
              
              2,400,000
                  shares









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





**INDEX**


**Page****Number****Part
                  I.**
              
              **Financial
                  Information**Item
                  1.
              
              Condensed
                  Consolidated Financial Statements (unaudited)Condensed
                  Consolidated Balance Sheets - March 3, 2007 and June 3,
                  2006
              
              3Condensed
                  Consolidated Statements of Operations - Thirteen
                  Weeks and Thirty-Nine Weeks Ended March 3, 2007 and February 25,
                  2006
              
              4Condensed
                  Consolidated Statements of Cash Flows - Thirty-Nine Weeks Ended
                  March 3,
                  2007 and February 25, 2006
              
              5Notes
                  to Condensed Consolidated Financial Statements
              
              6Item
                  2.
              
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              
              9Item
                  3.
              
              Quantitative
                  and Qualitative Disclosures About Market Risk
              
              15Item
                  4.
              
              Controls
                  and Procedures
              
              15**Part
                  II.**
              
              **Other
                  Information**Item
                  1.
              
              Legal
                  Proceedings
              
              16Item
                  1A.
              
              Risk
                  Factors
              
              16Item
                  5.
              
              Other
                  Information
              
              16Item
                  6.
              
              Exhibits
              
              17Signatures
              
              
              
              18
  2


**PART
      I. FINANCIAL INFORMATION**




**ITEM
      1. FINANCIAL STATEMENTS**




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


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(in
      thousands)**





March
                3, 2007
            
            June
                3, 2006(unaudited)
            
            (note1)ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            15,134
            
            $
            13,295Investments
            
            
            28,600
            
            
            25,000Trade
                and other receivables
            
            
            40,525
            
            
            24,955Recoverable
                federal income taxes
            
            
            836
            
            
            1,177Inventories
            
            
            62,855
            
            
            57,843Prepaid
                expenses and other current assets
            
            
            1,266
            
            
            3,408Total
                current assets
            
            
            149,216
            
            
            125,678Notes
                receivable and investments
            
            
            8,241
            
            
            8,316Goodwill
            
            
            4,195
            
            
            4,016Other
                assets
            
            
            2,550
            
            
            2,833Property,
                plant and equipment
            
            
            363,209
            
            
            339,831Less
                accumulated depreciation
            
            
            (178,278
            )
            
            (163,556
            )184,931
            
            
            176,275TOTAL
                ASSETS
            
            $
            349,133
            
            $
            317,118LIABILITIES
                AND STOCKHOLDERS’ EQUITYCurrent
                liabilities:Accounts
                payable and accrued expenses
            
            $
            53,482
            
            $
            34,642Current
                maturities of purchase obligation
            
            
            5,435
            
            
            6,884Current
                maturities of long-term debt
            
            
            13,610
            
            
            11,902Deferred
                income taxes
            
            
            11,610
            
            
            11,450Total
                current liabilities
            
            
            84,137
            
            
            64,878Long-term
                debt, less current maturities
            
            
            94,383
            
            
            92,010Minority
                interest
            
            
            923
            
            
            919Purchase
                obligation, less current maturities
            
            
            9,673
            
            
            16,751Other
                non-current liabilities
            
            
            3,701
            
            
            3,860Deferred
                income taxes
            
            
            18,705
            
            
            18,925Total
                liabilities
            
            
            127,385
            
            
            197,343Stockholders’
                equity:Common
                stock $0.01 par value per share:Authorized
                shares - 60,000Issued
                35,130 shares and 21,158 shares outstanding at March 3, 2007 and
                21,103
                shares at June 3, 2006
            
            
            351
            
            
            351Class
                A common stock $0.01 par value per share, authorizedissued
                and outstanding 2,400 shares at March 3, 2007and
                June 3, 2006
            
            
            24
            
            
            24Paid-in
                capital
            
            
            28,955
            
            
            28,700Retained
                earnings
            
            
            129,679
            
            
            112,183Common
                stock in treasury-13,972 shares at March 3, 2007and
                14,027 at June 3, 2006
            
            
            (21,398
            )
            
            (21,483
            )Total
                stockholders’ equity
            
            
            137,611
            
            
            119,775TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            349,133
            
            $
            317,118





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 EndedMarch
                3, 2007
            
            February
                25, 2006
            
            March
                3, 2007
            
            February
                25, 2006Net
                sales
            
            $
            175,211
            
            $
            130,107
            
            $
            428,256
            
            $
            348,150Cost
                of sales
            
            
            131,029
            
            
            104,134
            
            
            350,712
            
            
            303,408Gross
                profit
            
            
            44,182
            
            
            25,973
            
            
            77,544
            
            
            44,742Selling,
                general andadministrative
            
            
            16,902
            
            
            15,493
            
            
            45,830
            
            
            43,140Operating
                income
            
            
            27,280
            
            
            10,480
            
            
            31,714
            
            
            1,602Other
                income (expense):Interest
                expense, net
            
            
            (1,639
            )
            
            (1,906
            )
            
            (5,198
            )
            
            (5,895
            )Other
            
            
            1,956
            
            
            1,346
            
            
            2,637
            
            
            1,090317
            
            
            (560
            )
            
            (2,561
            )
            
            (4,805
            )Income
                (loss) before incometaxes
            
            
            27,597
            
            
            9,920
            
            
            29,153
            
            
            (3,203
            )Income
                tax expense (benefit)
            
            
            10,194
            
            
            1,930
            
            
            10,780
            
            
            (2,400
            )Net
                income (loss)
            
            $
            17,403
            
            $
            7,990
            
            $
            18,373
            
            $
            (803
            )Net
                income (loss) per common share:Basic
            
            $
            0.74
            
            $
            0.34
            
            $
            0.78
            
            $
            (0.03
            )Diluted
            
            $
            0.74
            
            $
            0.34
            
            $
            0.78
            
            $
            (0.03
            )Dividends
                per common share
            
            $
            0.0125
            
            $
            0.0125
            
            $
            0.0375
            
            $
            0.0375Weighted
                average sharesoutstanding:Basic
            
            
            23,519
            
            
            23,497
            
            
            23,508
            
            
            23,494Diluted
            
            
            23,578
            
            
            23,680
            
            
            23,583
            
            
            23,494




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 EndedMarch
                3, 2007
            
            February
                25, 2006Cash
                flows provided by operating activities
            
            $
            36,959
            
            $
            13,622Cash
                flows from investing activities:Net
                (increase) / decrease in investments
            
            
            (3,600
            )
            
            10,784Acquisitions
                of businesses, net of cash acquired
            
            
            (1,152
            )
            
            (23,804
            )Purchases
                of property, plant and equipment
            
            
            (17,071
            )
            
            (6,939
            )Payments
                received on notes receivable and from investments
            
            
            846
            
            
            1,755Increase
                in notes receivable and investments
            
            
            (1,180
            )
            
            (519
            )Net
                proceeds from sale of property, plant and equipment
            
            
            402
            
            
            1,637Net
                cash used in investing activities
            
            
            (21,755
            )
            
            (17,086
            )Cash
                flows from financing activities:Proceeds
                from issuance of common stock from treasury
            
            
            177
            
            
            73Payment
                of purchase obligation
            
            
            (6,102
            )
            
            -Proceeds
                from long-term borrowings
            
            
            3,000
            
            
            28,000Principal
                payments on long-term debt
            
            
            (9,563
            )
            
            (29,814
            )Payment
                of dividends
            
            
            (877
            )
            
            (877
            )Net
                cash used in financing activities
            
            
            (13,365
            )
            
            (
                2,618
            )Net
                change in cash and cash equivalents
            
            
            1,839
            
            
            (6,082
            )Cash
                and cash equivalents at beginning of period
            
            
            13,295
            
            
            20,221Cash
                and cash equivalents at end of period
            
            $
            15,134
            
            $
            14,139





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)


March
      3,
      2007




1.  Presentation
      of Interim Information





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles for interim
      financial information and with the instructions to Form 10-Q and Article 10
      of
      Regulation S-X. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. In the opinion of management, all adjustments, consisting
      of normal recurring adjustments, considered necessary for a fair presentation
      have been included. Operating results for the thirteen-week and thirty-nine
      week
      periods ended March 3, 2007 are not necessarily indicative of the results that
      may be expected for the year ending June 2, 2007.





The
      balance sheet at June 3, 2006 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 June 3, 2006.





**Green
      Forest Foods, LLC Acquisition**





On
      January 24, 2007, we entered into an agreement to buy the remaining 50 percent
      interest in Green Forest Foods, LLC, owned by Pier 44 Properties, LLC. Green
      Forest Foods, LLC located in Green Forest, Arkansas, had been jointly owned
      and
      operated by Pier 44 Properties, LLC and Cal-Maine Foods, Inc. since January
      2006. Effective January 27, 2007, we became the sole owner and operator of
      Green
      Forest Foods, and it became a fully consolidated entity. Prior to this purchase,
      we accounted for our investment in Green Forest Foods, LLC under the equity
      method. The acquisition cost was $2 million in cash. We also assumed $11.0
      million in liabilities, primarily obligations for fixed assets subject to
      capital leases. Pro forma information with respect to the acquisition is
      insignificant to the Company’s consolidated financial statements and accordingly
      has not been presented.




Green
      Forest Foods produces, processes, and markets eggs from approximately one
      million laying hens, along with pullet growing for replacements.





**Hillandale
      Acquisition**





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





In
      August
      2006, in
      accordance with the Agreement, we
      purchased, for $6.1 million, an additional 13% of the Units of Hillandale,
      LLC
      based on their book value as of July 29, 2006. Our ownership of Hillandale,
      LLC
      currently is 64%. Our obligation to acquire the remaining 36% of Hillandale,
      LLC
      is recorded at its present value of $15.1 million as of March 3, 2007 of which
      $5.4 million is included in current liabilities and $9.7 million is included
      in
      other non-current liabilities in the accompanying consolidated balance sheet.
      We
      will purchase an additional 12% of Hillandale LLC based on the book value of
      the
      Membership Units as of July 29, 2007.





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




6





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




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.




39
                Weeks EndedMarch
                3, 2007
            
            February
                25, 2006Net
                sales
            
            $
            428,256
            
            $
            361,124Net
                income (loss)
            
            $
            18,373
            
            $
            (4,959
            )Basic
                net income (loss) per share
            
            $
            0.78
            
            $
            (0.21
            )Diluted
                net income (loss) per share
            
            $
            0.78
            
            $
            (0.21
            )




**Stock
      Based Compensation**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) Statement No. 123
      (revised 2004)(“SFAS No.123(R)”), "Share-Based Payment," which is a revision of
      SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS
      No. 123(R) supersedes Accounting Principles Board (“APB”) Opinion
      No. 25, "Accounting for Stock Issued to Employees", and amends SFAS
      No. 95, "Statement of Cash Flows". SFAS No. 123(R) requires all
      share-based payments to employees, including grants of employee stock options,
      restricted stock and performance-based shares to be recognized in the income
      statement based on their fair values. SFAS No. 123(R) also requires the
      benefits of tax deductions in excess of recognized compensation cost to be
      reported as a financing cash flow, rather than as an operating cash flow as
      required under current literature. This requirement will reduce net operating
      cash flows and increase net financing cash flows in periods after adoption.
      In
      the first quarter of fiscal 2007, we adopted SFAS No. 123(R) using the
      modified prospective method. Under the modified prospective method, compensation
      cost will be recognized for all share-based payments granted after the adoption
      of SFAS No. 123(R) and for all awards granted to employees prior to the
      adoption date of SFAS No. 123(R) that remain unvested on the adoption date.
      Accordingly, no restatements were made to prior periods. We recognized stock
      based compensation expense of $1,269 and $1,522 for the thirteen week and
      thirty-nine week periods ended March 3, 2007.





Prior
      to
      adoption of SFAS No. 123(R), we applied Accounting Principles Board(“APB”) No.
      25 in accounting for our employee stock compensation plans and generally
      recognized no compensation expense for employee stock options. Under the
      provisions of APB No. 25, we recognized a liability for Stock Appreciation
      Rights (“SARS”) and Tandem Stock Appreciation Rights (“TSARS”) (collectively,
“Rights”) based upon the intrinsic value of vested SARS and TSARS at each period
      end. Under SFAS No. 123(R), we are required to recognize a liability for vested
      SARS and TSARS based upon their fair value at each period end using a
      Black-Scholes option pricing model and to record a cumulative effect adjustment
      for the change in method of accounting for such liability awards. The cumulative
      effect resulting from the adoption of SFAS No. 123(R) was insignificant and
      is
      included in stock based compensation expense for the current fiscal year.





Our
      stock-based compensation plans are 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 June 3, 2006. On August 24, 2006, in accordance with
      provisions of our 2005 Stock Appreciation Rights Plan (the “SARs Plan”), our
      Board of Directors approved an amendment to the SARs Plan providing that
      exercises under the SARs Plan be settled in cash and not with shares of our
      common stock.





A
      summary
      of our equity award activity and related information for the thirty-nine weeks
      ended March 3, 2007 is as follows:





WeightedWeighted
            
            AverageNumber
            
            Exercise
            
            Remaining
            
            Aggregateof
            
            Price
            
            Contractual
            
            IntrinsicOptions
            
            Per
                Share
            
            Life
                (in Years)
            
            ValueOutstanding,
                June 3, 2006
            
            
            473,400
            
            $
            4.97Granted
            
            
            -
            
            
            -Exercised
            
            
            55,600
            
            
            3.18Forfeited
            
            
            -
            
            
            -Outstanding,
                March 3, 2007
            
            
            417,800
            
            $
            5.21
            
            
            7.59
            
            $
            3,351Exercisable,
                March 3, 2007
            
            
            104,240
            
            $
            3.99
            
            
            6.73
            
            $
            840





7




The
      number and weighted average grant-date fair value of non-vested equity awards
      was as follows:





WeightedAverageGrant-DateNumber
            
            Fairof
            
            ValueShares
            
            Per
                ShareNonvested,
                June 3, 2006
            
            
            395,760
            
            $
            2.56Granted
            
            
            -
            
            
            -Vested
            
            
            (82,200
            )
            
            2.52Forfeited
            
            
            -
            
            
            -Nonvested,
                March 3, 2007
            
            
            313,560
            
            $
            2.58





A
      summary
      of our liability award activity and related information for the thirty-nine
      weeks ended March 3, 2007 is as follows :




WeightedWeighted
            
            AverageNumber
            
            Average
            
            Remaining
            
            AggregateOf
            
            Strike
                Price
            
            Contractual
            
            IntrinsicRights
            
            Per
                Right
            
            Life
                (in Years)
            
            ValueOutstanding,
                June 3, 2006
            
            
            586,000
            
            $
            5.69Granted
            
            
            15,000
            
            $
            6.93Exercised
            
            
            56,400
            
            $
            5.01Forfeited
            
            
            -
            
            
            -Outstanding,
                March 3, 2007
            
            
            544,600
            
            $
            5.80
            
            
            8.29
            
            $
            3,406
                822Exercisable,
                March 3, 2007
            
            
            123,320
            
            $
            5.19
            
            
            7.65
            
            $
            846





8




The
      fair
      value of liability awards was estimated as of March 3, 2007 using a
      Black-Scholes option pricing model using the following weighted-average
      assumptions: risk-free interest rate of 4.5%; dividend yield of 1%; volatility
      factor of the expected market price of our stock of 36.8%; and a
      weighted-average expected life of the rights of 4.75 years .




2.
      Inventories





Inventories
      consisted of the following:




March
                3, 2007
            
            June
                3, 2006Flocks
            
            $
            38,806
            
            $
            39,092Eggs
            
            
            5,452
            
            
            3,820Feed
                and supplies
            
            
            18,597
            
            
            14,931$
            62,855
            
            $
            57,843





3.
      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.




4 .
      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 thirty-nine week
      period ended February 25, 2006 because of the net loss for the period.





**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 1A of our Annual Report on Form 10-K
      for the fiscal year ended June 3, 2006, (ii) the risks and hazards inherent
      in
      the shell egg business (including disease, pests, and weather conditions),
      (iii)
      changes in the market prices of shell eggs, and (iv) changes or obligations
      that
      could result from our future acquisition of new flocks or businesses. Readers
      are cautioned not to put undue reliance on forward-looking statements. We
      disclaim any intent or obligation to update publicly these forward-looking
      statements, whether as a result of new information, future events or
      otherwise.





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.




9





We
      currently produce approximately 75% of the total number of shell eggs sold
      by
      us, with approximately 7% 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 are purchased from outside
      producers for resale, as needed, by us.





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 56%
      of
      our total shell egg farm 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. Costs for corn and soybean meal, our primary feed ingredients,
      were
      higher for the quarter as a result of strong demand from ethanol plants. Based
      on current forecasts, we believe these higher feed costs will continue for
      the
      foreseeable future.





The
      acquisition of Hillandale, LLC and the financial consolidation of American
      Egg
      Products, LLC described above in Item 1 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 EndedMarch
                  3, 2007
              
              February
                  25, 2006
              
              March
                  3, 2007
              
              February
                  25, 2006Net
                  sales
              
              
              100.0
              %
              
              100.0
              %
              
              100.0
              %
              
              100.0
              %Cost
                  of sales
              
              
              74.8
              
              
              80.0
              
              
              81.9
              
              
              87.1Gross
                  profit
              
              
              25.2
              
              
              20.0
              
              
              18.1
              
              
              12.9Selling,
                  general & administrative
              
              
              9.6
              
              
              11.9
              
              
              10.7
              
              
              12.4Operating
                  income
              
              
              15.6
              
              
              8.1
              
              
              7.4
              
              
              .5Other
                  income (expense)
              
              
              .2
              
              
              (0.5
              )
              
              (.6
              )
              
              (1.4
              )Income
                  (loss) before taxes
              
              
              15.8
              
              
              7.6
              
              
              6.8
              
              
              (.9
              )Income
                  tax expense (benefit)
              
              
              5.8
              
              
              1.5
              
              
              2.5
              
              
              (.7
              )Net
                  income (loss)
              
              
              9.9
              %
              
              6.1
              %
              
              4.3
              %
              
              (.2)
              %


NET
      SALES





Currently,
      approximately 96% of our net sales consist of shell egg sales, 2% consist of
      incidental feed sales to outside producers, with the balance consisting of
      sales
      of egg products. Net sales for the third quarter of fiscal 2007 were $175.2
      million, an increase of $45.1 million, or 34.7%, as compared to net sales of
      $130.1 million for the third quarter of fiscal 2006. Total dozens of eggs sold
      and egg selling prices increased in the current quarter as compared with fiscal
      2006. Dozens sold for the current quarter were 176.9 million dozen, an increase
      of 7.5 million dozen, or 4.4% as compared to the third quarter of fiscal 2006.
      Our production and processing facilities accounted for most of the increase
      in
      dozens of shell eggs sold, with additional increases in dozens purchased from
      outside (non-contract) shell egg producers making up the balance. Purchases
      of
      shell eggs from outside producers average about 25% of our total dozens sold.
      Consumer demand was good and shell egg supply was in better balance due to
      a
      significant export order, both of which market factors resulted in higher shell
      egg selling prices during the current third quarter as compared to the fiscal
      2006 third quarter. Our net average selling price per dozen of shell eggs for
      the third quarter of fiscal 2007 was $0.980, compared to $0.741 for the third
      quarter of fiscal 2006, an increase of 32.3%. 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.




10




Net
      sales
      for the thirty-nine week period ended March 3, 2007 were $428.3 million, an
      increase of $80.1 million, or 23.0%, as compared to net sales of $348.2 million
      for the thirty-nine week period ended February 25, 2006. Dozens sold for the
      current thirty-nine week period were 513.3 million, as compared to 493.6 million
      for the same time period in fiscal 2006, an increase of 19.7 million dozen,
      or
      4.0%. For the current fiscal 2007 thirty-nine week period, our net average
      selling price per dozen of shell eggs was $.800, as compared to $.659 per dozen
      for the same period in fiscal 2006, an increase of 21.4%.




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 March 3, 2007 was $131.0
      million, an increase of $26.9 million, or 25.8%, as compared to cost of sales
      of
      $104.1 million for the third quarter of fiscal 2006. 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 March 3, 2007 was $.278 per dozen of
      shell
      eggs, compared to the third quarter of fiscal 2006 cost per dozen of shell
      eggs
      of $.211, an increase of 31.8%; this was due to higher costs paid for corn
      and
      soybean our primary feed ingredients. The higher shell egg selling price was
      the
      primary reason for the increase in gross profit from 20.0% of net sales for
      the
      quarter ended February 25, 2006 to 25.2% of net sales for the third quarter
      ended March 3, 2007.





Cost
      of
      sales for the thirty-nine week period ended March 3, 2007 was $350.7 million,
      an
      increase of $47.3 million, or 15.6%, as compared to cost of sales of $303.4
      million for the thirty-nine week period ended February 25, 2006. The increase
      in
      cost of sales is the net result of a higher number of dozens produced at
      Company-owned facilities, higher outside shell egg purchases, and an increase
      in
      the cost of feed ingredients. Feed cost for the current thirty-nine week period
      was $.240 per dozen of shell eggs, as compared to $.213 per dozen for the same
      period in the prior fiscal year, an increase of 12.7%. The increase in shell
      egg
      selling prices was more than the increase in the cost of feed ingredients which
      resulted in an increase in gross profit from 12.9% of net sales for last year’s
      thirty-nine week period to a gross profit of 18.1% of net sales for the current
      thirty-nine week period.




SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES





Selling,
      general and administrative expenses include costs of marketing, distribution,
      accounting and corporate overhead. Selling, general and administrative expenses
      for the third quarter ended March 3, 2007 were $16.9 million, an increase of
      $1.4 million or 9.0%, as compared to $15.5 million for the third quarter of
      fiscal 2006. Stock based compensation plans expense increased $1.5 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 $6.32 at February 25, 2006 to $12.75 at March 3, 2007.
      On a
      cost per dozen sold basis, selling, general and administrative expense was
      $.096
      per dozen for the current quarter as compared to $.091 for the third quarter
      of
      fiscal 2006. As a percent of net sales, selling, general and administrative
      expense decreased from 11.9% for the third quarter of fiscal 2006 to 9.6% for
      the third quarter of fiscal 2007.




11





Selling,
      general and administrative expenses for the thirty-nine week period ended March
      3, 2007 was $45.8 million, an increase of $2.7 million or 6.3%, as compared
      to
      $43.1 million for the thirty-nine week period ended February 25, 2006. In the
      thirty-nine week period ended March 3, 2007, stock compensation plans expense
      increased $1.8 million for the reasons indicated above. Franchise fees for
      specialty eggs increased $1.7 million during the current thirty-nine week period
      as compared to the same period in fiscal 2006, due to the fact that specialty
      egg sales increased from 6.5% of dozens sold last year to 8.5% of dozens sold
      for this comparable thirty-nine week period. On a cost per dozen sold basis,
      selling, general and administrative expense was $.089 for the current
      thirty-nine week period as compared to $.087 for the comparable period in fiscal
      2006. As a percent of net sales, selling, general and administrative expense
      decreased slightly from 12.4% for the thirty-nine week period of fiscal 2006
      to
      10.7% for the thirty-nine week period of fiscal 2007.





OPERATING
      INCOME





As
      a
      result of the above, operating income was $27.3 million for the third quarter
      ended March 3, 2007, as compared to operating income of $10.5 million for the
      third quarter of fiscal 2006. Operating income was 15.6% of net sales for the
      current fiscal third quarter, compared to operating income of 8.1% of net sales
      for the third quarter in fiscal 2006.





For
      the
      thirty-nine week period ended March 3, 2007, operating income was $31.7 million,
      as compared to operating income of $1.6 million for the thirty-nine week period
      ended February 25, 2006. Operating income was 7.4% of net sales for the current
      thirty-nine week period as compared to operating income of 0.5% of net sales
      in
      the same thirty-nine week period in fiscal 2006.





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
      income for the thirteen weeks ended March 3, 2007 was $317,000, an increase
      of
      $877,000, as compared to other expense of $560,000 for the third quarter of
      fiscal 2006. In the current third quarter, net interest expense decreased
      $267,000. This net decrease for the third quarter was primarily the result
      of a
      decrease in interest expense due to lower long-term obligations and higher
      balances in cash equivalents and investments. Other income increased $610,000
      for the current third quarter due to increases from equity in income of
      affiliates. As a percent of net sales, other expense was 0.5% for the third
      quarter of fiscal 2006 and other income was .2% of net sales for the third
      quarter of fiscal 2007.





For
      the
      thirty-nine week period ended March 3, 2007 other expense was $2.6 million,
      a
      decrease of $2.2 million as compared to $4.8 million for the same thirty-nine
      week period in fiscal 2006. For the current thirty-nine weeks, net interest
      expense decreased $697,000. In the current thirty-nine week period interest
      expense decreased $487,000, primarily due to lower obligations and interest
      income increased $210,000 due to higher cash equivalents and investments. Other
      income increased by $1.5 million for the thirty-nine week period due to
      increases from equity in income of affiliates. As a percent of net sales, other
      expense was .6% for the current thirty-nine week period, as compared to 1.4%
      for
      the same thirty-nine week period in fiscal 2006.





INCOME
      TAXES





As
      a
      result of the above, our pre-tax income was $27.6 million for the third quarter
      ended March 3, 2007, as compared to pre-tax income of $9.9 million for the
      third
      quarter of fiscal 2006. For the current third quarter, an income tax expense
      of
      $10.2 million was recorded with an effective tax rate of 36.9%, as compared
      to
      an income tax expense of $1.9 million with an effective tax rate of 19.4% for
      last year’s third quarter. For the third quarter ended February 25, 2005, we
      projected our effective tax rate for the year to be approximately 75%. The
      increase in the estimated annual effective tax rate was 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%.




12





For
      the
      thirty-nine week period ended March 3, 2007, our pre-tax income was $29.2
      million, as compared to pre-tax loss of $3.2 million for the thirty-nine week
      period ended February 25, 2006. For the current thirty-nine week period, an
      income tax expense of $10.8 million was recorded with an effective tax rate
      of
      37.0%, as compared to an income tax benefit of $2.4 million with an effective
      tax rate of 74.9% for the same thirty-nine week period in fiscal 2006. As
      discussed above, 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 thirteen week period ended March 3, 2007 was $17.4 million,
      or
      $.74 per basic and diluted share, as compared to net income of $8.0 million,
      or
      $0.34 per basic and diluted share, for the third quarter of fiscal
      2006.





For
      the
      thirty-nine week period ended March 3, 2007, net income was $18.4 million,
      or
      $.78 per basic and diluted share, as compared to net loss of $803,000, or $0.03
      per basic and diluted share, for the thirty-nine week period ended February
      25,
      2006.




CAPITAL
      RESOURCES AND LIQUIDITY





Our
      working capital at March 3, 2007 was $65.1 million, as compared to $60.8 million
      at June 3, 2006. Our current ratio was 1.77 at March 3, 2007, as compared to
      1.94 at June 3, 2006. 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 March 3, 2007. Our long-term debt at March 3, 2007,
      including current maturities, amounted to $108.0 million, as compared to $103.9
      million at June 3, 2006.




Inthe
      thirty-nine week period ended March 3, 2007 $37.0 million in net cash was
      provided by operating activities. This compares to $13.6 million of net cash
      for
      the thirty-nine week period ended February 25, 2006.In
      the
      thirty-nine weeks ended March 3, 2007, the Company used $3.6 million for the
      purchase of short-term investments, $334,000 for the issuance of notes
      receivable and purchase of investments, and $402,000 was provided from disposal
      of property, plant and equipment. The Company used $17.1 million for purchases
      of property, plant and equipment,and
      $6.1
      million for payment on the purchase obligation for the Acquisitions. The Company
      used$1.2
      million for the purchase of Green Forest Foods, LLC, net of cash
      acquired.
      In
      addition, $177,000 was provided from the issuance of common stock from the
      treasury upon the exercise of stock options, and$878,000
      was used for payments of dividends on the common stock.Borrowings of $3 million were received in additional long-term debtand $9.6
      million was used for principal payments on long-term debt. The net result of
      these activities was an increase in cash of $1.8 million since June 3,
      2006.




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. $6.9 million was used for purchases of property,
      plant and equipment, 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.





Substantially
      all trade receivables and inventories collateralize our revolving 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 (ratio of not less than 1.25 to 1) and net worth
      (minimum of $90.0 million tangible net worth adjusted for earnings); (2) limit
      dividends to an aggregate amount not to exceed $500,000 per quarter (allowed
      if
      no default), capital expenditures less exclusions (not to exceed 125% of
      depreciation for the same four fiscal quarters), lease obligations and
      additional long-term borrowings (total funded debt to total capitalization
      not
      to exceed 55%); and (3) maintain various cash-flow coverage ratios (1.25 to
      1),
      among other restrictions. At March 3, 2007, 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.




13





Capital
      expenditure requirements are expected to be for the normal repair and
      replacement of the company’s facilities. In addition, we are evaluating the
      construction of a new integrated layer production complex in West Texas to
      service markets formerly served by our Albuquerque, New Mexico complex. The
      expected cost is approximately $25.0 million. We are also considering
      purchasing, for approximately $10.0 million, the assets currently under capital
      lease at our recently acquired Green Forest subsidiary.





Looking
      forward, our current cash balances, additional borrowings, utilization of our
      revolving line of credit, and cash flows from operations are sufficient to
      fund
      our current and projected capital needs.




Under
      the
      terms of our Agreement with Hillandale and the Hillandale shareholders, a new
      Florida limited liability company named Hillandale, LLC was formed. In fiscal
      2006, we purchased 51% of the Units of Membership in Hillandale, LLC, with
      the
      remaining Units to be acquired in essentially equal annual installments over
      a
      four-year period. The purchase price of the Units is equal to their book value
      as calculated in accordance with the terms of the Agreement. In fiscal 2007,
      we
      purchased, pursuant to the Agreement, an additional 13% of the Units of
      Membership for $6.1 million from our cash balances. We have recorded the
      obligation to acquire the remaining 36% at its present value of $15.1 million.
      The actual remaining purchase price may be higher or lower when the acquisitions
      are completed. Future funding is expected to be provided by our cash balances
      and borrowings under our revolving credit agreement.




We
      currently have a $1.9 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 $1.9 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*** ***.***





In
      November 2004, the FASB issued Statement of Financial Accounting Standards
      (SFAS) No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.” SFAS
      No. 151 amends Accounting Research Bulletin No. 43, Chapter 4, to clarify that
      abnormal amounts of idle facility expense, freight handling costs and wasted
      materials (spoilage) should be recognized as current-period charges. In
      addition, SFAS No. 151 requires that allocation of fixed production overhead
      to
      inventory be based on the normal capacity of the production facilities during
      fiscal years beginning after June 15, 2005. We adopted SFAS No. 151 in the
      first
      quarter of fiscal 2007 and it did not have a significant impact on our results
      of operations, financial position or cash flows.





In
      December 2004, the FASB issued SFAS Statement No. 123 (revised 2004),
      "Share-Based Payment," which is a revision of SFAS No. 123, "Accounting for
      Stock-Based Compensation." SFAS No. 123(R) supersedes APB Opinion No. 25,
      "Accounting for Stock Issued to Employees", and amends SFAS No. 95, "Statement
      of Cash Flows". SFAS No. 123(R) requires all share-based payments to employees,
      including grants of employee stock options, restricted stock and
      performance-based shares to be recognized in the income statement based on
      their
      fair values. SFAS No. 123(R) also requires the benefits of tax deductions in
      excess of recognized compensation cost to be reported as a financing cash flow,
      rather than as an operating cash flow as required under current literature.
      This
      requirement will reduce net operating cash flows and increase net financing
      cash
      flows in periods after adoption. In the first quarter of fiscal 2007, we adopted
      SFAS No. 123(R) using the modified prospective method. Under the modified
      prospective method, compensation cost will be recognized for all share-based
      payments granted after the adoption of SFAS No. 123(R) and for all awards
      granted to employees prior to the adoption date of SFAS No. 123R that remain
      unvested on the adoption date. Accordingly, no restatements were made to prior
      periods.




14





Prior
      to
      adoption of SFAS No. 123(R), we applied APB No. 25 in accounting for our
      employee stock compensation plans and generally recognized no compensation
      expense for employee stock options. Under the provisions of APB No. 25, we
      recognized a liability for Stock Appreciation Rights (“SARS”) and Tandem Stock
      Appreciation Rights (“TSARS”) based upon the intrinsic value of vested SARS and
      TSARS at each period end. Under SFAS No. 123(R), we are required to recognize
      a
      liability for vested SARS and TSARS based upon their fair value at each period
      end using a Black-Scholes option pricing model and to record a cumulative effect
      adjustment for the change in method of accounting for such liability awards.
      The
      cumulative effect resulting from the adoption of SFAS No. 123(R) was
      insignificant and is included in stock based compensation expense for fiscal
      2007.





On
      July
      13, 2006, the FASB issued Interpretation No. 48, Accounting for "Uncertainty
      in
      Income Taxes—an interpretation of FASB Statement No. 109". Interpretation 48
      clarifies the accounting for uncertainty in income taxes recognized in a
      company's financial statements in accordance with Statement 109 and prescribes
      a
      recognition threshold and measurement attribute for financial statement
      disclosure of tax positions taken or expected to be taken on a tax return.
      Additionally, Interpretation 48 provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition. Interpretation 48 is effective for fiscal years
      beginning after December 15, 2006, with early adoption permitted. We are
      currently evaluating whether the adoption of Interpretation 48 will have a
      material effect on our consolidated financial position, results of operations
      or
      cash flows.





In
      September 2006, the FASB issued FASB Statement No.157, Fair Value Measurements
      (“FAS 157”). FAS 157 establishes a single authoritative definition of fair
      value, sets out a framework for measuring fair value, and expands on required
      disclosures about fair value measurement. FAS 157 is effective for us on June
      1,
      2008 and will be applied prospectively. The provisions of FAS 157 are not
      expected to have a material impact on our consolidated financial
      statements.





***Critical
      Accounting Policies*** *.* ****** We
      suggest that our Summary of Significant Accounting Policies, as described in
      Note 1 of the Notes to Consolidated Financial Statements included in Cal-Maine
      Foods, Inc. and Subsidiaries annual report on Form10-K for the fiscal year
      ended
      June 3, 2006, 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 June 3, 2006.




ITEM
      3.
      QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT 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 June 3,
      2006.





ITEM
      4.
      CONTROLS AND PROCEDURES




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




15





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





**ITEM
      1. LEGAL PROCEEDINGS**




Except
      as
      noted below, there have been no new matters or changes to matters discussed
      in
      our Annual Report on Form 10-K for the year ended June 3, 2006.




**Chicken
      Litter Litigation**





Cal-Maine
      Farms, Inc.(“Cal-Maine Farms”), one of our subsidiaries, 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* .
      (“McWhorter”), and Carroll, *et
      al* .
      vs.
      Alpharma, Inc., *et
      al.* (“Carroll”). Cal-Maine Farms was named as a defendant in the McWhorter case on
      February 3, 2004, and as a defendant in the Carroll case on May 2, 2005.
      Co-defendants in both cases include other integrated poultry companies such
      as
      Tyson Foods, Inc., Cargill, Incorporated, George’s Farms, Inc., Peterson Farms,
      Inc., Simmons Foods, Inc., and Simmons Poultry Farms, Inc. Alpharma, Inc. and
      Alpharma Animal Health, Co., manufacturers of an additive for broiler feed
      also
      are included as defendants.





Both
      cases allege that the plaintiffs have suffered medical problems resulting from
      living near land upon which “litter” from the defendants’ flocks was spread as
      fertilizer. The McWhorter case focuses on mold and fungi allegedly created
      by
      the application of litter. The Carroll case also alleges injury from mold and
      fungi, but focuses primarily on the broiler feed ingredient as the cause of
      the
      alleged medical injuries.





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.
      Neither the Company, nor any of its affiliates, was named as a defendant in
      any
      of those other cases. The plaintiffs selected one of those cases, Green, *et
      al* .
      vs.
      Alpharma, Inc., *et
      al* .,
      as a
      bellwether case to go to trial first. All of the poultry defendants were granted
      summary judgment in the Green case on August 2, 2006. The case against the
      Alpharma defendants resulted in a verdict for the defendants on September 25,
      2006. The result in the Green case is not dispositive of the issues raised
      in
      McWhorter and Carroll, but it colors the plaintiffs’ prospects for success.





The
      plaintiffs’ attorneys have not yet indicated their intentions regarding the
      remaining cases. It is possible that the McWhorter and Carroll plaintiffs can
      present fundamentally different proof than was presented in the Green case,
      but
      that does not appear likely at present. While the potential exposure, if any,
      in
      the McWhorter and Carroll cases appears to be diminished as a result of the
      outcome in the Green case, at this point it is still not possible to evaluate
      any potential exposure with certainty.





**State
      of Oklahoma Watershed Pollution Litigation**





On
      June
      18, 2005, the State of Oklahoma filed suit in the U.S. District Court for the
      Northern District of Oklahoma against a number of companies including us and
      Cal-Maine Farms. An Answer on behalf of us and Cal-Maine Farms was filed 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. We no longer have any operations in the Illinois
      River Watershed. Accordingly, we do not anticipate that we will be materially
      affected by any injunctive relief granted or monetary damages
      awarded.





The
      Court
      has under advisement motions to dismiss filed by all defendants. Merit discovery
      is underway. We presently are not able to provide an opinion regarding the
      ultimate resolution of this action.





**ITEM
      1A.**  **RISK
      FACTORS**




There
      have been no material changes in the risk factors previously disclosed in the
      Company's Annual Report on Form 10-K for the fiscal year ended June 3,
      2006.




**ITEM
      5. OTHER INFORMATION** ****





On
      April
      2, 2007, we issued a press release announcing our financial results for the
      quarter ended March 3, 2007. ****




16




**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
                  Officer99.1
              
              Press
                  release dated April 2, 2007 announcing interim period financial
                  information (Incorporated by reference to Exhibit 99.1 of our Form
                  8-K
                  dated April 3, 2007.)




17




**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
              9,
              2007
            
            /s/
              Timothy A. DawsonTimothy
                A. DawsonVice
                President/Treasurer(Principal
              Financial Officer)  Date:
              April
              9,
              2007
            
            /s/
              Charles F. CollinsCharles
              F. CollinsVice
                President/Controller(Principal
              Accounting Officer)




18