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 September 2, 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
            
            (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
x 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 September 29, 2006.




Common
                  Stock, $0.01 par
                  value
              
              21,102,891
                  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)
            
            3Condensed
                Consolidated Balance Sheets - September 2, 2006 and June 3,
                2006
            
            3Condensed
                Consolidated Statements of Operations - Thirteen Weeks Ended September
                2,
                2006 and August 27, 2005
            
            4Condensed
                Consolidated Statements of Cash Flow - Thirteen Weeks Ended September
                2,
                2006 and August 27, 2005
            
            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 of Market Risk
            
            14Item
                4.
            
            Controls
                and Procedures
            
            14**Part
                II.**
            
            **Other
                Information**Item
                1.
            
            Legal
                Proceedings
            
            14Item
                1A.
            
            Risk
                Factors
            
            15Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            15Item
                5.
            
            Other
                Information
            
            16Item
                6.
            
            Exhibits
            
            16Signatures
            
            
            
            17


2


**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS**





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


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


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





September
                2,
              2006
            
            June
                3,
              2006(unaudited)
            
            (note
                1)ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            16,717
            
            $
            13,295Investments
            
            
            10,000
            
            
            25,000Trade
                and other receivables
            
            
            30,753
            
            
            24,955Recoverable
                federal and state income taxes
            
            
            3,596
            
            
            1,177Inventories
            
            
            57,310
            
            
            57,843Prepaid
                expenses and other current assets
            
            
            2,403
            
            
            3,408Total
                current assets
            
            
            120,779
            
            
            125,678Notes
                receivable and investments
            
            
            7,975
            
            
            8,316Goodwill
            
            
            4,016
            
            
            4,016Other
                assets
            
            
            2,700
            
            
            2,833Property,
                plant and equipment
            
            
            340,870
            
            
            339,831Less
                accumulated depreciation
            
            
            (167,887
            )
            
            (163,556
            )172,983
            
            
            176,275TOTAL
                ASSETS
            
            $
            308,453
            
            $
            317,118LIABILITIES
                AND STOCKHOLDERS’ EQUITYCurrent
                liabilities:Accounts
                payable and accrued expenses
            
            $
            42,539
            
            $
            34,642Current
                maturities of purchase obligation
            
            
            5,435
            
            
            6,884Current
                maturities of long-term debt
            
            
            12,248
            
            
            11,902Deferred
                income taxes
            
            
            11,895
            
            
            11,450Total
                current liabilities
            
            
            72,117
            
            
            64,878Long-term
                debt, less current maturities
            
            
            90,004
            
            
            92,010Minority
                interest
            
            
            782
            
            
            919Purchase
                obligation, less current maturities
            
            
            9,284
            
            
            16,751Other
                non-current liabilities
            
            
            3,890
            
            
            3,860Deferred
                income taxes
            
            
            18,280
            
            
            18,925Total
                liabilities
            
            
            194,357
            
            
            197,343Stockholders’
                equity:Common
                stock $0.01 par value per share:Authorized
                shares - 60,000Issued
                and outstanding shares - 35,130 at September 2, 2006 and June 3,
                2006
            
            
            351
            
            
            351Class
                A common stock $0.01 par value, authorized, issued andoutstanding
                2,400 shares at September 2, 2006 and June 3, 2006
            
            
            24
            
            
            24Paid-in
                capital
            
            
            28,755
            
            
            28,700Retained
                earnings
            
            
            106,449
            
            
            112,183Common
                stock in treasury-14,027 shares at September 2, 2006and
                at June 3, 2006
            
            
            (21,483
            )
            
            (21,483
            )Total
                stockholders’ equity
            
            
            114,096
            
            
            119,775TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            308,453
            
            $
            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 EndedSeptember
                2,
              2006
            
            August
                27,
              2005Net
                sales
            
            $
            115,308
            
            $
            79,756Cost
                of sales
            
            
            106,901
            
            
            78,796Gross
                profit
            
            
            8,407
            
            
            960Selling,
                general and administrative
            
            
            14,470
            
            
            10,917Operating
                loss
            
            
            (6,063
            )
            
            (9,957
            )Other
                income (expense):Interest
                expense, net
            
            
            (1,795
            )
            
            (1,695
            )Other
            
            
            (143
            )
            
            (449
            )(1,938
            )
            
            (2,144
            )Loss
                before income taxes
            
            
            (8,001
            )
            
            (12,101
            )Income
                tax benefit
            
            
            (2,570
            )
            
            (3,993
            )Net
                loss
            
            $
            (5,431
            )
            $
            (8,108
            )Net
                loss per common share:Basic
            
            $
            (.23
            )
            $
            (.35
            )Diluted
            
            $
            (.23
            )
            $
            (.35
            )Dividends
                per common share
            
            $
            .0125
            
            $
            .0125Weighted
                average shares outstanding:Basic
            
            
            23,503
            
            
            23,490Diluted
            
            
            23,503
            
            
            23,490





See
      notes
      to condensed  consolidated
      financial  statements.


4





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


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(in
      thousands)**


**(unaudited)**





13
                Weeks EndedSeptember
                2,
              2006
            
            August
                27,
              2005Cash
                provided by (used in) operations
            
            $
            2,138
            
            $
            (8,227
            )Investing
                activities:Net
                decrease in investments
            
            
            15,000
            
            
            14,389Purchases
                of property, plant and equipment
            
            
            (5,238
            )
            
            (1,649
            )Payments
                received on notes receivable and from investments
            
            
            328
            
            
            1,418Increase
                in notes receivable and investments
            
            
            (1,030
            )
            
            (552
            )Net
                proceeds from disposal of property, plant and equipment
            
            
            277
            
            
            1,540Net
                cash provided by investing activities
            
            
            9,337
            
            
            15,146Financing
                activities:Proceeds
                from issuance of common stock from treasury
            
            
            -
            
            
            46Payment
                of purchase obligation
            
            
            (6,101
            )
            
            -Principal
                payments on long-term debt
            
            
            (1,660
            )
            
            (1,708
            )Payments
                of dividends
            
            
            (292
            )
            
            (292
            )Net
                cash used in financing activities
            
            
            (8,053
            )
            
            (1,954
            )Net
                change in cash and cash equivalents
            
            
            3,422
            
            
            4,965Cash
                and cash equivalents at beginning of period
            
            
            13,295
            
            
            20,221Cash
                and cash equivalents at end of period
            
            $
            16,717
            
            $
            25,186





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)


September
      2, 2006


(unaudited)





1.  Presentation
      of Interim Information





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles for interim
      financial information and with the instructions to Form 10-Q and Article 10
      of
      Regulation S-X. Accordingly, they do not include all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements. In the opinion of management, all adjustments, consisting
      of normal recurring adjustments, considered necessary for a fair presentation
      have been included. Operating results for the thirteen weeks ended September
      2,
      2006 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.





**Hillandale
      Acquisition**





On
      July 28,
      2005, we entered into an Agreement to Form a Limited Liability Company with
      Hillandale Farms, Inc. and Hillandale Farms of Florida, Inc. (together,
“Hillandale”), and the Hillandale shareholders (the “Agreement”). Under the
      terms of the Agreement, we acquired 51% of the Units of Membership in
      Hillandale, LLC for cash of approximately $27 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 $14.7 million as of September 2, 2006,
      of
      which $5.4 million is included in current liabilities and $9.3 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.





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. Because all of the information to close
      the
      accounting records of Hillandale, LLC was not available at August 27, 2005,
      we
      did not include the financial statements of Hillandale, LLC in our consolidated
      financial statements until the second fiscal quarter of 2006.


6





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 EndedSept.
                2, 2006
            
            Aug.
                25, 2005Net
                sales
            
            $
            115,308
            
            $
            92,730Net
                loss
            
            $
            (5,431
            )
            $
            (12,264
            )Basic
                net loss per share
            
            $
            (0.23
            )
            $
            (0.52
            )Diluted
                net loss per share
            
            $
            (0.23
            )
            $
            (0.52
            )





**Stock
      Based Compensation**





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. We recognized stock
      based compensation expense of $160 for the thirteen week period ended September
      2, 2006.





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 the
      thirteen week period ended September 2, 2006.


7





Our
      stock-based compensation plans are described in note 1 of the consolidated
      financial statements included in our Annual Report of Form 10-K for the fiscal
      year ended June 3, 2006. These plans have not been modified in the 2007 fiscal
      year.





A
      summary
      of our equity award activity and related information for the thirteen weeks
      ended September 2, 2006 is as follows:





Number
                of Options
            
            Weighted
                Exercise Price Per Share
            
            Weighted
                Average Remaining Contractual Life (in Years)
            
            Aggregate
                Intrinsic ValueOutstanding,
                June 3, 2006
            
            
            473,400
            
            $
            4.97Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Outstanding,
                September 2, 2006
            
            
            473,400
            
            $
            4.97
            
            
            8.09
            
            $
            1,003Exercisable,
                September 2, 2006
            
            
            159,840
            
            $
            3.71
            
            
            6.96
            
            $
            541




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





Number
                of Shares
            
            Weighted
                Average Grant-Date Fair Value Per ShareNonvested,
                June 3, 2006
            
            
            395,760
            
            $
            2.56Granted
                during quarter
            
            
            -
            
            
            -Vested
                during quarter
            
            
            (82,200
            )
            
            2.52Forfeited
                during quarter
            
            
            -
            
            
            -Nonvested,
                September 2, 2006
            
            
            313,560
            
            $
            2.58





A
      summary
      of our liability award activity and related information for the thirteen weeks
      ended September 2, 2006 is as follows:





Number
                Of Rights
            
            Weighted
                Average Strike Price Per Right
            
            Weighted
                Average Remaining Contractual Life (in Years)
            
            Aggregate
                Intrinsic ValueOutstanding,
                June 3, 2006
            
            
            586,000
            
            $
            5.69Granted
            
            
            15,000
            
            
            6.93Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Outstanding,
                September 2, 2006
            
            
            601,000
            
            $
            5.72
            
            
            8.69
            
            $
            822Exercisable,
                September 2, 2006
            
            
            144,200
            
            $
            4.93
            
            
            7.79
            
            $
            311




8





The
      fair
      value of liability awards was estimated as of September 2, 2006 using a
      Black-Scholes option pricing model using the following weighted-average
      assumptions: risk-free interest rate of 4.7%; dividend yield of 1%; volatility
      factor of the expected market price of our stock of 51.4%; and a
      weighted-average expected life of the rights of 5 years.





2.
      Inventories





Inventories
      consisted of the following:


September
                2,
              2006
            
            June
                3,
              2006Flocks
            
            $
            38,626
            
            $
            39,092Eggs
            
            
            3,895
            
            
            3,820Feed
                and supplies
            
            
            14,789
            
            
            14,931$
            57,310
            
            $
            57,843




3.
      Legal
      Proceeding




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 description of certain pending legal
      proceedings.





4.
      Net
      Loss per Common Share





Basic
      loss per share is based on the weighted average common shares outstanding.
      Diluted loss per share includes any dilutive effects of options and warrants.
      Options and warrants representing 473 **,** 400
      shares were excluded from the calculation of diluted earnings per share for
      the
      thirteen week period ended September 2, 2006 because they would be anti-dilutive
      since we had a net loss for the period.





**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL** **CONDITION
      AND RESULTS OF OPERATIONS**




This
      report contains numerous forward-looking statements relating to our shell egg
      business, including estimated production data, expected operating schedules,
      expected capital costs and other operating data. Such forward-looking statements
      are identified by the use of words such as "believes," "intends," "expects,"
      "hopes," "may," "should," "plan," "projected," "contemplates," "anticipates"
      or
      similar words. Actual production, operating schedules, results of operations
      and
      other projections and estimates could differ materially from those projected
      in
      the forward-looking statements. The factors that could cause actual results
      to
      differ materially from those projected in the forward-looking statements include
      (i) the risk factors set forth under Item 1A of our Annual Report on Form 10-K
      for the fiscal year ended June 2, 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.


9





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 30 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.




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.




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, certain items from our
      Condensed Consolidated Statements of Operations expressed as a percentage of
      net
      sales.




Percentage
                of Net Sales13
                Weeks EndedSeptember
                2,
              2006
            
            August
                27,
              2005Net
                sales
            
            
            100.0
            %
            
            100.0
            %Cost
                of sales
            
            
            92.7
            
            
            98.8Gross
                profit
            
            
            7.3
            
            
            1.2Selling,
                general & administrative
            
            
            12.5
            
            
            13.7Operating
                loss
            
            
            (5.2
            )
            
            (12.5
            )Other
                expense
            
            
            (1.7
            )
            
            (2.7
            )Loss
                before taxes
            
            
            (6.9
            )
            
            (15.2
            )Income
                tax benefit
            
            
            (
                2.2
            )
            
            (
                5.0
            )Net
                loss
            
            
            (4.7
            )%
            
            (10.2
            )%




10





NET
      SALES





Approximately
      95% of our net sales consist of shell egg sales and approximately 2% was for
      incidental feed sales to outside egg producers, with the 3% balance consisting
      of sales of egg products. Net sales for the first quarter of fiscal 2007 were
      $115.3 million, an increase of $35.5 million, or 44.5%, as compared to net
      sales
      of $79.8 million for the first quarter of fiscal 2006. As discussed above,
      there
      was no financial data concerning the Acquisitions included in the first quarter
      of fiscal 2006. For the first quarter of fiscal 2007, the Acquisitions accounted
      for $17.8 million of the increase in net sales. Excluding the Acquisitions,
      on a
      comparable basis, net sales increased $17.7 million, or 22.0%. Total eggs sold
      and egg selling prices increased in the current fiscal 2007 quarter as compared
      to the same fiscal 2006 quarter. Dozens sold for the 2007 current quarter were
      171.6 million dozen, including 25.4 million dozen sold by the Acquisitions,
      an
      increase of 36.1 million dozen, or 26.7%, as compared to the first quarter
      of
      fiscal 2006. On a comparable basis, excluding the Acquisitions, dozens sold
      increased 10.7 million dozen, or 7.9%. Our net average selling price per dozen
      for the fiscal 2007 first quarter was $.633, compared to $.555 for the first
      quarter of fiscal 2006, an increase of 14.1%. Our net average selling price
      is
      the blended price for all sizes and grades of shell eggs, including non-graded
      egg sales, breaking stock and undergrades. During the first quarter of fiscal
      2006, consumer demand decreased while egg supply continued at higher levels,
      resulting in a drop in egg selling prices. For the first quarter of fiscal
      2007,
      there is a fully adequate egg supply to meet a fairly good demand, resulting
      in
      improved egg selling prices as compared to fiscal 2006.





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 first quarter of fiscal 2007 was $106.9
      million, an increase of $28.1 million, or 35.7%, as compared to the cost of
      sales of 78.8 million for the first quarter of fiscal 2006. The Acquisitions’
cost of sales for the first quarter accounted for $19.2 million of the increase.
      On a comparable basis, excluding the Acquisitions, cost of sales increased
      $8.9
      million, or 11.3%. The increase is due to increases in dozen sold, provided
      by
      increased outside purchases, and in the cost of purchases from outside egg
      producers. Feed cost remained approximately the same. Following the increase
      in
      egg selling prices, the cost of outside purchases increased. Feed cost per
      dozen
      for the fiscal 2007 first quarter was $.216, compared to $.219 per dozen for
      the
      comparable fiscal 2006 first quarter. The increase in egg selling prices
      exceeded the increase in cost of sales and resulted in an increase in gross
      profit from 1.2% of net sales for the quarter ended August 27, 2005 to 7.3%
      of
      net sales for the current quarter ended September 2, 2006.





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 first quarter of fiscal 2007 was $14.5 million, an increase of $3.6
      million as compared to the expense of $10.9 million for the first quarter of
      fiscal 2006. The Acquisitions’ selling, general and administrative expense
      accounted for $2.7 million of the increase. Excluding the Acquisitions, on
      a
      comparable basis, selling, general and administrative expense increased
      $900,000, or 8.25%. The increase is due to increases in payroll expenses and
      franchise fees on specialty egg sales. Excluding the cost of fuel, delivery
      costs generally decreased. On a cost per dozen sold basis, selling, general
      and
      administrative expense increased slightly from $.081 per dozen for the first
      quarter of fiscal 2006 to $.084 per dozen for the first quarter of fiscal 2007.
      As a percent of net sales, selling, general and administrative expense decreased
      from 13.7% for fiscal 2006 first quarter to 12.5% for fiscal 2007 first
      quarter.





OPERATING
      LOSS





As
      a
      result of the above, the operating loss was $6.1 million for the first quarter
      of fiscal 2007, as compared to operating loss of $9.9 million for the fiscal
      2006 first quarter. As a percent of net sales, the first fiscal 2007 quarter
      had
      an operating loss of 5.2% of net sales, compared to an operating loss of 12.5%
      of net sales for the first quarter of fiscal 2006.


11





OTHER
      INCOME (EXPENSE)




Other income or expense consists of costs or income not directly charged to,
      or
      related to, operations such as interest expense and equity in income (loss)
      of
      affiliates. Other expense for the first quarter ended September 2, 2006 was
      $1.9
      million, a decrease of $200,000, as compared to $2.1 million for the quarter
      ended August 27, 2005. For the first quarter of fiscal 2007, net interest
      expense increased $100,000 and other expense decreased $300,000, as compared
      to
      the first quarter of fiscal 2006. Although debt balances were lower for the
      first fiscal 2007 quarter as compared to the first fiscal 2006 quarter, net
      interest expense increased due to non-cash interest expense imputed on our
      non-interest bearing obligation to acquire the remaining membership units in
      Hillandale, LLC. Other expense decreased due to lower equity in the losses
      of
      affiliates. As a percent of net sales, other expense decreased from 2.7% for
      fiscal 2006 first quarter to 1.7% for fiscal 2007 first quarter.





INCOME
      TAXES





As
      a
      result of the above, we had a pre-tax loss of $8.0 million for the quarter
      ended
      September 2, 2006, as compared to a pre-tax loss of $12.1 million for the
      quarter ended August 27, 2005. For the fiscal 2007 first quarter, an income
      tax
      benefit of $2.6 million was recorded with an effective tax rate of 32.1%, as
      compared to an income tax benefit of $4.0 million with an effective tax rate
      of
      33.0% for the fiscal 2006 first quarter.





NET
      LOSS





As
      a
      result of the above, the net loss for the first quarter ended September 2,
      2006
      was $5.4 million, or $.23 per basic and diluted share, compared to a net loss
      of
      $8.1 million, or $.35 per basic and diluted share for the quarter ended August
      27, 2005. As a percent of net sales, the net loss was 4.7% for the quarter
      ended
      September 2, 2006, compared to a net loss of 10.2% for the quarter ended August
      27, 2005.




CAPITAL
      RESOURCES AND LIQUIDITY





Our
      working capital at September 2, 2006 was $48.7 million compared to $60.8 million
      at June 3, 2006. Our current ratio was 1.67 at September 2, 2006 as compared
      with 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 million line of credit with three banks, $2.7 million of which was utilized
      as a standby letter of credit at September 2, 2006. Our long-term debt at
      September 2, 2006, including current maturities, amounted to $102.3 million,
      as
      compared to $103.9 million at June 3, 2006.




For
      the
      thirteen weeks ended September 2, 2006, $2.1 million in net cash was provided
      by
      operating activities. This compares to net cash used of $8.2 million for the
      thirteen weeks ended August 27, 2005. In the first 2007 fiscal quarter,
      approximately $15.0 million was provided from the sale of short-term investments
      and net $702,000 was used for notes receivable and investments. Approximately
      $300,000 was provided from disposal of property, plant and equipment, $5.2
      million was used for purchases of property, plant and equipment and $6.1 million
      was used for additional acquisition of the Hillandale business. Approximately
      $292,000 was used for payments of dividends on common stock and $1.7 million
      was
      used for principal payments on long-term debt. The net result of these
      activities was an increase in cash of approximately $3.4 million since June
      3,
      2006 .




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); (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), 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 September
      2,
      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.


12





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
      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 $14.7 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.





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.*** 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
      June 3, 2006 for a discussion of the impact of recently issued accounting
      standards. There were no accounting standards issued **** during
      the quarter ended September 2, 2006 that we expect will have a material impact
      on our consolidated financial statements.





In
      November 2004, the Financial Accounting Standards Board (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. We recognized stock
      based compensation expense of $160 for the thirteen week period ended September
      2, 2006.


13





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 the
      thirteen week period ended September 2, 2006.




**** ***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 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 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 be disclosed 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.





**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 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.


14





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.
      No Cal-Maine company was named as a defendant in any of those other cases.
      The
      plaintiffs selected one of those cases, Green, *et
      al* .
      vs.
      Alpharma, Inc., *et
      al* .,
      as a
      bellwether case to go to trial first. All of the poultry defendants were granted
      summary judgment in the Green case on August 2, 2006. The case against the
      Alpharma defendants resulted in a defendants’ verdict on September 25, 2006. The
      result in the Green case is not dispositive of the issues raised in McWhorter
      and Carroll, but it clearly 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. 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, but 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
      has
      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
      2** **.**  **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS** ****




We
      did
      not make any sales of unregistered securities during the first quarter of fiscal
      2007.




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.


15





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





**** On
      October 9, 2006, we issued a press release announcing our financial results
      for
      the quarter ended September 2, 2006. A copy of our press release is attached
      as
      Exhibit 99.1 to this Form 10-Q Quarterly Report.





**ITEM
      6. EXHIBITS**





a.
            Exhibits





No.
            
            Description31.1
            
            Certification
                of The Chief Executive Officer31.2
            
            Certification
                of The Chief Financial Officer32.0
            
            Section
                1350 Certification of The Chief Executive Officer and The Chief Financial
                Officer99.1
            
            Press
                Release issued by registrant on October 9,
                2006.




16




**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: October
              9, 2006
            
            /s/ Timothy
              A. DawsonTimothy
                A. Dawson
              Vice
                President/Chief Financial Officer
              (Principal
                Financial Officer)




Date: October
              9, 2006
            
            /s/ Charles
              F. CollinsCharles
                F. Collins
              Vice
                President/Controller
              (Principal
                Accounting Officer)




17