UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
DC  20549





FORM
10-K





x
            ANNUAL  REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


FOR
FISCAL YEAR ENDED May 30, 2009





o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





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)





Securities
registered pursuant to Section 12 (b) of the Act:





Title
      of each Class:
                  
                  Name
      of exchange on
                    which
      registered:Common
      Stock,  $0.01 par
                    value
      per share
                  
                  The
      NASDAQ Global
Market





Securities
registered pursuant to Section 12 (g) of the Act:  NONE





Indicate
by check mark if the registrant is a well-known seasoned issuer as defined in
Rule 405 of the Securities Act.


Yes  ̈         No
x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes  ̈       
 No x





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  ̈





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


Yes   ̈       No  ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x


Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





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





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


Yes  ̈No x





The
aggregate market value, as reported by the NASDAQ Global Market, of the
registrant’s Common Stock, $0.01 par value, held by non-affiliates
at  November 29, 2008, which was the date of the last business day of
the registrant’s most recently completed second fiscal quarter, was
$344,765,800





As of
August 1, 2009 21,389,091 shares of the registrant’s Common Stock, $0.01 par
value, and 2,400,000 shares of the registrant’s Class A Common Stock, $0.01 par
value, were outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE


The
information called for by Part III of the Form 10-K is incorporated herein by
reference from the registrant’s Definitive Proxy Statement which will be filed
pursuant to Regulation 14A not later than 120 days after the end of the fiscal
year covered by this report.





TABLE
OF CONTENTS





Item
                        
                        Page
                          NumberPart
      I1.
                        Business
                        31A.
                        Risk
      Factors
                        91B.
                        Unresolved
      Staff Comments
                        132.
                        Properties
                        133.
                        Legal
      Proceedings
                        134.
                        Submission
      of Matters to a Vote of Security Holders
                        15Part
      II5.
                        Market
      for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                        166.
                        Selected
      Financial Data
                        177.
                        Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                        187A.
                        Quantitative
      and Qualitative Disclosures About Market Risk
                        328.
                        Financial
      Statements and Supplementary Data
                        339.
                        Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                        759A.
                        Controls
      and Procedures
                        759B.
                        Other
      Information
                        75Part
      III10.
                        Directors
      and Executive Officers of the Registrant
                        7611.
                        Executive
      Compensation
                        7612.
                        Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.
                        7613.
                        Certain
      Relationships and Related Transactions
                        7614.
                        Principal
      Accountant Fees and Services
                        76Part
      IV15.
                        Exhibits
      and Financial Statement Schedules
                        77Signatures
                        82


2


PART
I





FORWARD-LOOKING
STATEMENTS





This
report contains numerous forward-looking statements relating to the Company's
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 in Item 1A, (ii) the risks and hazards inherent in
the shell egg business (including disease, pests, and weather conditions), (iii)
changes in the market prices of shell eggs, and (iv) changes that could result
from the Company's future acquisition of new flocks or
businesses.  Readers are cautioned not to put undue reliance on
forward-looking statements.  The Company disclaims any intent or
obligation to update publicly these forward-looking statements, whether as a
result of new information, future events or otherwise.





ITEM
1.  BUSINESS





Our Business





Cal-Maine
Foods, Inc. (“we”, “us”, “our”, or the “Company”) is the largest producer and
marketer of shell eggs in the United States. In fiscal 2009, we sold
approximately 778 million dozen shell eggs, which represented approximately 18%
of domestic shell egg consumption in the United States. Our total flock of
approximately 27 million layers and 6 million pullets and breeders is the
largest in the United States. Layers are mature female chickens, pullets are
young female chickens usually under 20 weeks of age, and breeders are male or
female chickens used to produce fertile eggs to be hatched for egg production
flocks.





We operate in a single segment. Our
primary business is the production, grading, packaging, marketing and
distribution of shell eggs. We sell most 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. The strength of our position is evidenced by the fact
that we have the largest market share in the grocery segment for shell eggs, and
we sell shell eggs to a majority of the largest food retailers in the United
States.





We are also one of the largest
producers and marketers of value-added specialty shell eggs in the United
States. Specialty shell eggs include nutritionally enhanced, cage free and
organic eggs and are a rapidly growing segment of the market. In fiscal 2009,
specialty shell eggs represented approximately 19% of our shell egg dollar
sales, as compared to 14% for fiscal 2008. Retail prices for specialty eggs are
less cyclical than standard shell egg prices and are generally higher due to
consumer willingness to pay for the increased benefits from those products. We
market our specialty shell eggs under the following brands: Egg-Land's Best(TM), Farmhouse(TM), and 4-Grain (TM). We own a 29.1% equity
interest in Egg-Land's Best, Inc., which markets the leading brand in the
specialty shell egg segment.  Egg-Land’s Best, Inc. operates as a
cooperative. We have exclusive license agreements to market and distribute Egg-Land's Best(TM) specialty
shell eggs in major metropolitan areas, including New York City, and a number of
states in the southeast and southwest. We market cage free eggs under our
trademarked Farmhousebrand and distribute those shell eggs across the southeast and southwest
regions of the United States.   We market organic, all natural,
cage-free, vegetarian, and omega-3 eggs under our 4-Grain trademark. We also
produce market and distribute private label specialty shell eggs to several
customers. Sales of specialty shell eggs accounted for approximately 13.8% of
our total shell egg dozen volumes in fiscal 2009, as compared to 12.0% in fiscal
2008.





We are also a leader in industry
consolidation. Since 1989, we have completed sixteen acquisitions ranging in
size from 600,000 layers to 7.5 million layers. Despite a market that has been
characterized by increasing consolidation, the shell egg production industry
remains highly fragmented. There currently are 57 producers who each own more
than one million layers and the ten largest producers own approximately 44% of
total industry layers. We believe industry consolidation will continue and we
plan to capitalize on opportunities as they arise.





Acquisitions





During
fiscal 2009, we completed two acquisitions of egg production facilities located
in Florida, which added approximately six million laying hens and expanded our
pullet growing facilities for replacements. Eggs produced at these facilities
are being marketed to retail food businesses and distributors in the south
central states. See Note 2 of Notes to Consolidated Financial Statements in Part
II of this Annual Report on Form 10-K.


3




During
fiscal 2009 we made an additional payment related to the Hillandale Acquisition
to increase our ownership interest.  See Note 2 of Notes to
Consolidated Financial Statements in Part II of this Annual Report on Form
10-K.





During
fiscal 2007, we completed two acquisitions of egg production facilities located
in Arkansas, which added approximately two million laying hens and expanded our
pullet growing facilities for replacements. Eggs produced at these facilities
are being marketed to retail food businesses and distributors in the south
central states. See Note 2 of Notes to Consolidated Financial Statements in Part
II of this Annual Report on Form 10-K.





Industry Background





Based on historical consumption trends,
demand for shell eggs increases in line with overall population growth,
averaging an increase of about 1% per year. According to U.S. Department of
Agriculture (“USDA”) reports, since 2000, annual per capita consumption in the
United States has varied between 249 and 258 eggs. In calendar year 2008, per
capita consumption in the United States was 249 eggs, or approximately five eggs
per person per week.





Prices for Shell
Eggs





Shell egg prices are a critical
component of profitability in the industry. Approximately, over 90% of all shell
eggs sold in the United States in the retail and foodservice channels are sold
at prices related to the Urner Barry wholesale quotation for shell eggs. For
fiscal 2009, wholesale large shell egg prices in the southeast region averaged
120.9 cents per dozen compared to an average of 102.0 cents per dozen for fiscal
years 2006 to 2008.  According to USDA reports, domestic table egg
production was higher for five of the first six months of calendar year
2009.  This is a reversal of the trend from 2007 to
2008.   For 23 of the 24 consecutive months from 2007 to 2008
domestic shell egg production was lower.   This has translated
into falling egg prices.  Based on these USDA reports, the Company
expects that the table egg laying flock will expand in the upcoming months of
calendar year 2009.   Due to the anticipated expansion in the
laying flock, shell egg production for the remainder of calendar year 2009 is
expected to be slightly above production during the comparable period of
calendar year 2008.





Feed Costs for Shell Egg
Production





Feed is a primary cost component in the
production of shell eggs and represents over one-half of industry farm level
production costs. Most shell egg producers are vertically integrated,
manufacturing the majority of the feed they require themselves. Although feed
ingredients, primarily corn and soybean meal, are available from a number of
sources, prices for ingredients can fluctuate and can be affected by weather and
by various supply and demand factors. Feed prices for fiscal 2009 were higher
than the previous year. Forecasts vary widely for prices over the next year, due
to irregular weather patterns in the Midwest and a much stronger demand for corn
from ethanol plants.





Growth Strategy and
Acquisitions





For
many years, we have pursued a growth strategy focused on the acquisition of
existing shell egg production and processing facilities, as well as the
construction of new and more efficient facilities.  Since the
beginning of fiscal 1989, we have completed sixteen acquisitions. In addition,
we have built seven new “in-line” shell egg production and processing facilities
and one pullet growing facility which added 8 million layers and 1.5 million
growing pullets to our capacity.  Each of the new shell egg production
facilities generally provide for the processing of approximately 400 cases of
shell eggs or 12,000 dozen eggs, per hour. These increases in capacity have been
accompanied by the retirement of older and less efficient facilities and a
reduction in eggs produced by contract producers.  The “in-line”
facilities result in the gathering, grading and packaging of shell eggs by less
labor-intensive, more efficient, mechanical means.





As a
result of our strategy, our total flock, including pullets, layers and breeders,
has increased from approximately 22.3 million at May 28, 2005 to approximately
33.5 million as of May 30, 2009.  Also, the number of dozens of shell
eggs sold has increased from approximately 575.4 million in the fiscal year
ended May 28, 2005 to 777.9 million for the fiscal year ending May 30,
2009.  Net sales amounted to $928.8 million in fiscal 2009 compared to
net sales of $375.3 million in fiscal 2005.


4


We
plan to continue to pursue opportunities for the acquisition of other companies
engaged in the production and sale of shell eggs. We will continue to evaluate
and selectively pursue acquisitions that will expand our shell egg production
capabilities in existing markets and broaden our geographic reach. We have
extensive experience identifying, valuing, executing and integrating
acquisitions and we intend to leverage that experience in the evaluation and
execution of future acquisitions. We will seek to acquire regional shell egg
businesses that have significant market share and long-standing customer
relationships. We believe that enhancing our national presence will help us
further strengthen our relationships with existing customers which have
operations across the United States.





Through
exclusive license agreements with Egg-Land's Best, Inc. in several key
territories and our trademarked Farmhousebrand, we are one
of the leading producers and marketers of value-added specialty shell eggs. We
also produce, market and distribute private label specialty shell eggs to
several customers. Since selling prices of specialty shell eggs are not as
volatile as those of generic shell eggs, we believe that growing our specialty
eggs business will enhance the stability of our margins. We expect that the
price of specialty eggs will remain at a premium to regular shell eggs. We
intend to pursue acquisitions that may expand our specialty shell egg
production.   As part of our Tampa Farms acquisition in December
2008, we acquired the 4-Grain brand of specialty
eggs. We market organic, all natural, cage-free, vegetarian, and omega-3 eggs
under our 4-Grain
trademark.





Federal
anti-trust laws require regulatory approval of acquisitions that exceed certain
threshold levels of significance.  Also, we are subject to federal and
state laws generally prohibiting anti-competitive conduct.  Because
the shell egg production and distribution industry is so fragmented, we believe
that our sales of shell eggs during last fiscal year represented approximately
18% of domestic shell egg sales notwithstanding that we are the largest producer
and distributor of shell eggs in the United States based on independently
prepared industry statistics. We believe that regulatory approval of any future
acquisitions either will not be required, or, if required, that such approvals
will be obtained.





The
construction of new, more efficient production and processing facilities is an
integral part of our growth strategy.  Any such construction will
require compliance with applicable environmental laws and regulations, including
the receipt of permits that could cause schedule delays, although we have not
experienced any significant delays in the past.





Shell
Eggs





Production.Our operations
are fully integrated. At our facilities, we hatch chicks, grow pullets,
manufacture feed and produce and distribute shell eggs.  Company-owned
facilities accounted for approximately 93% of our total fiscal 2009 egg
production, with the balance attributable to contract producers used by us.
Under arrangements with our contract producers, we own the entire flock, furnish
all feed and supplies, own the shell eggs produced and assume all market
risks.  The contract producers own and operate their facilities and
are paid a fee based on production with incentives for performance.





The
commercial production of shell eggs requires a source of baby chicks for laying
flock replacement. We produce approximately 95% of our chicks in our own
hatcheries and obtain the balance from commercial sources. We own breeder
facilities producing 15.5 million pullet chicks per year in a
computer-controlled environment. These pullets are distributed to 37
state-of-the-art laying operations around the southwestern, southeastern,
mid-western and mid-Atlantic regions of the United States. The facilities
produce an average of 1.7 million dozen shell eggs per day and process the shell
eggs through grading and packaging without handling by human hands. We have
spent a cumulative total of $102.6 million over the past five years upgrading
our facilities with the most advanced equipment and technology available in our
industry. We believe our focus on automation throughout the supply chain enables
us to be a low cost supplier in all the markets in which we
compete.





Feed for
the laying flocks is produced by Company-owned and operated mills located in the
southwestern, southeastern, mid-western and mid-Atlantic regions of the United
States. All ingredients necessary for feed production are readily available in
the open market and most are purchased centrally from Jackson,
Mississippi.  Approximately 95% of the feed for our flocks is
manufactured at feed mills owned and operated by us.  Poultry feed is
formulated using a computer model to determine the least-cost ration to meet the
nutritional needs of the flocks.  Although most feed ingredients are
purchased on an as-needed basis, from time-to-time, when deemed advantageous, we
purchase ingredients in advance with a delayed delivery of several weeks or a
few months.





Feed cost
represents the largest element of our farm egg production cost, ranging from 52%
to 64% of total farm production cost in the last five years. Although feed
ingredients are available from a number of sources, we have little, if any,
control over the prices of the ingredients we purchase, which are affected by
weather and by various supply and demand factors.  Increases in feed
costs not accompanied by increases in the selling price of eggs can have a
material adverse effect on the results of our operations.  However,
higher feed costs may encourage producers to reduce production, possibly
resulting in higher egg prices.  Alternatively, low feed costs can
encourage industry overproduction, possibly resulting in lower egg
prices.  Historically, we have tended to have higher profit margins
when feed costs are higher.  However, this may not be the case in the
future.


5




After
the eggs are produced, they are graded and packaged.  Substantially
all of our farms have modern “in-line” facilities that mechanically gather,
grade and package the eggs produced.  The increased use of in-line
facilities has generated significant cost savings as compared to the cost of
eggs produced from non-in-line facilities.  In addition to greater
efficiency, the in-line facilities produce a higher percentage of grade A eggs,
which sell at higher prices.  Eggs produced on farms owned by
contractors are brought to our processing plants where they are graded and
packaged. Since shell eggs are perishable, we maintain very low shell egg
inventories, usually consisting of approximately four days of
production.





Our egg
production activities are subject to risks inherent in the agriculture industry,
such as weather conditions and disease factors.  These risks are not
within our control and could have a material adverse effect on our
operations.  Also, the marketability of our shell eggs is subject to
risks such as possible changes in food consumption opinions and practices
reflecting perceived health concerns.





We
operate in a cyclical industry with total demand that is generally steady and a
product that is price-inelastic.  Thus, small increases in production
or decreases in demand can have a large adverse effect on prices and
vice-versa.  However, economic conditions in the egg industry are
expected to exhibit less cyclicality in the future.  The industry is
concentrating into fewer but stronger hands, which should help lessen the
extreme cyclicality of the past.





Marketing.Of the 778
million dozen shell eggs sold by us in the fiscal year ended May 30, 2009, 598
million were produced by our flocks.





We
sell our shell eggs to a diverse group of customers, including national and
local grocery store chains, club stores, foodservice distributors and egg
product manufacturers. We utilize electronic ordering and invoicing systems that
enable us to manage inventory for certain of our customers. Our top 10 customers
accounted for an aggregate of 65.5% of net sales dollars in fiscal 2009 and
66.5%% of net sales dollars for fiscal 2008. Two affiliated customers, Wal-Mart
Stores and Sam’s Club, on a combined basis, accounted for 32.9% of net sales
dollars during fiscal 2009 and 36.5% of net sales dollars for fiscal
2008.





The
majority of eggs sold are merchandised on a daily or short-term
basis.  Most sales to established accounts are on open account with
terms ranging from seven to 30 days.  Although we have established
long-term relationships with many of our customers, they are free to acquire
shell eggs from other sources.





The shell
eggs we sell are either delivered by us to our customers' warehouses and
facilities with our own fleet of owned or contracted refrigerated delivery
trucks or are picked up by our customers at our processing
facilities.





We sell
our shell eggs at prices generally related to independently quoted wholesale
market prices. Wholesale prices are subject to wide fluctuations.  The
prices of our shell eggs reflect fluctuations in the quoted market, and the
results of our shell egg operations are materially affected by changes in market
quotations.  Egg prices reflect a number of economic conditions, such
as the supply of eggs and the level of demand, which, in turn, are influenced by
a number of factors that we cannot control.  No representation can be
made as to the future level of prices.





According
to U.S. Department of Agriculture reports, for the past five years, annual per
capita consumption in the United States has varied between 249 and 258 eggs.
While we believe that fast food restaurant consumption, high protein diet
trends, reduced egg cholesterol levels and industry advertising campaigns may
result in a continuance of the recent increases in current per capita egg
consumption levels, no assurance can be given that per capita consumption will
not decline in the future.





We sell
the majority of our shell eggs in approximately 29 states across the
southwestern, southeastern, mid-western and mid-Atlantic regions of the United
States. We are a major factor in egg marketing in a majority of these states.
Many states in our market area are egg deficit regions; that is, production of
fresh shell eggs is less than total consumption. Competition from other
producers in specific market areas is generally based on price, service, and
quality of product. Strong competition exists in each of our
markets.


6


Seasonality.Shell eggs are perishable. Consequently, we maintain very low shell egg
inventories, usually consisting of approximately four days of production. Retail
sales of shell eggs are greatest during the fall and winter months and lowest
during the summer months. Prices for shell eggs fluctuate in response to
seasonal demand factors and a natural increase in egg production during the
spring and early summer. We generally experience lower sales and net income in
our fourth and first fiscal quarters ending in May and August, respectively.
During the past ten years, seven of our first quarters and three of our fourth
quarters have resulted in net operating losses.





Specialty Eggs.We also produce specialty eggs such as Egg-Land’s Bestä and
Farmhouse eggs. For
fiscal 2009, specialty eggs accounted for 19.0% of shell egg dollar sales and
13.8% of shell egg dozens sold.  Egg-Land’s Bestäeggs are patented eggs
that are believed by its developers, based on scientific studies, to cause no
increase in serum cholesterol when eaten as part of a low fat diet. We produce
and process Egg-Land’s
Bestäeggs, under license from
Egg-Land’s Best, Inc. (“EB”), at our existing facilities, under EB
guidelines.  The product is marketed to our established base of
customers at prices that reflect a premium over ordinary shell eggs. Egg-Land’s Bestä eggs
accounted for approximately 12.7% of our shell egg dollar sales in fiscal 2009,
as compared to 9.7% in fiscal 2008. Farmhouse brand eggs are
produced at our facilities by hens that are not caged, and are provided with a
diet of natural grains. As in our other flocks, these hens are provided with
drinking water that is free of hormones or other chemical additives. Farmhouse and other non EB
specialty eggs accounted for 6.3% of our shell egg dollar sales in fiscal 2009,
as compared to 4.5% in fiscal 2008. They are intended to meet the demands of
consumers who are sensitive to environmental and animal welfare
issues.  Based on dozens sold Egg-Land’s Bestä eggs
accounted for 9.0% of dozens sold for fiscal 2009, as compared to 8.0% in fiscal
2008.  Farmhouse and other non EB
specialty eggs accounted for 4.8% of dozens sold for fiscal 2009, as compared to
4.0% for fiscal 2008.  The statistical data concerning specialty egg
sales reflects the upward trend of specialty eggs.  In fiscal 2009, we
acquired the 4-Grain brand of specialty eggs which includes organic, all
natural, cage-free, vegetarian, and omega-3 eggs.




Competition.The production,
processing, and distribution of shell eggs is an intensely competitive business,
which, traditionally, has attracted large numbers of producers.  Shell
egg competition is generally based on price, service, and quality of
production.





The shell
egg industry remains highly fragmented but is characterized by a growing
concentration of producers.In 2008, 57 producers with one million or more layers owned 85% of the
285 million total U.S. layers, compared to 56 producers with one million or more
layers owning 64% of the 232 million total U.S. layers in 1990, and 61 producers
with one million or more layers owning 56% of the 248.0 million total U.S.
layers in 1985. We believe that a continuation of that concentration trend may
result in the reduced cyclicality of shell egg prices, but no assurance can be
given in that regard. A continuation of this trend could also create greater
competition among fewer producers.





Patents
and Trade names.We own the trade
names Farmhouse, Rio
Grande,Sunups, Sunny
Meadowsand 4-Grains. We do not own any
patents or proprietary technologies. We produce and market Egg-Land's BestTMeggs under license agreements
with EB. We own a 29.1% equity interest in EB.





Government
Regulation.Our facilities
and operations are subject to regulation by various federal, state and local
agencies, including, but not limited to, the United States Food and Drug
Administration (“FDA”), the USDA, Environmental Protection Agency, Occupational
Safety and Health Administration and corresponding state agencies. The
applicable regulations relate to grading, quality control, labeling, sanitary
control and waste disposal. Our shell egg facilities are subject to periodic
USDA inspections. Our feed production facilities are subject to FDA regulation
and inspections. In addition, we maintain our own inspection program to assure
compliance with our own standards and customer specifications. We do not know of
any major capital expenditures necessary to comply with such statutes and
regulations; however, there can be no assurance that we will not be required to
incur significant costs for compliance with such statutes and regulations in the
future.





Environmental
Regulation.Our operations and facilities are subject to
various federal, state and local environmental laws and regulations governing,
among other things, the generation, storage, handling, use, transportation,
disposal and remediation of hazardous materials. Under these laws and
regulations, we are also required to obtain permits from governmental
authorities, including, but not limited to, wastewater discharge permits. We
have made and will continue to make capital and other expenditures relating to
compliance with existing environmental, health and safety laws and regulations
and permits. We do not currently know of any major capital expenditures
necessary to comply with such laws and regulations; however, because
environmental, health and safety laws and regulations are becoming increasingly
more stringent, including those relating to animal wastes and wastewater
discharges, there can be no assurance that we will not be required to incur
significant costs for compliance with such laws and regulations in the future.
In addition, under certain circumstances, we may incur costs associated with our
contract producers' failure to comply with laws and regulations, including
environmental laws and regulations.


7




Employees.As of May 30, 2009, we had
a total of approximately 2,100 employees of whom 1,870 worked in egg production,
processing and marketing, 110 were engaged in feed mill operations and 120 were
administrative employees, including officers, at our executive
offices.  Approximately 5% of our personnel are
part-time.  None of our employees are covered by a collective
bargaining agreement.  We consider our relations with employees to be
good.





Our Corporate Information





We were incorporated in Delaware in
1969. Our principal executive office is located at 3320 Woodrow Wilson Drive,
Jackson, Mississippi 39209. The telephone number of our principal executive
office is (601) 948-6813. We maintain a website at www.calmainefoods.com where general
information about our business is available. The information contained in our
website is not a part of this document. Our annual reports on Form 10-K, our
quarterly reports on Form 10-Q, our current reports on Form 8-K, Forms 3 and 4
ownership reports, and all amendments to those reports are available, free of
charge, through our web site as soon as reasonably practicable after they are
filed with the SEC. Information concerning corporate governance matters is also
available on the website.





Our
Common Stock is listed on the NASDAQ Global Market (“NASDAQ”) under the symbol
“CALM”.On May 29,
2009, the last sale price of our Common Stock on NASDAQ was $24.37 per
share.Our fiscal year
2009 ended May 30, 2009, and the first three fiscal quarters of fiscal 2009
ended August 30, 2008, November 29, 2008 and February 28, 2009. All references
herein to a fiscal year means our fiscal year and all references to a year mean
a calendar year.





We
have adopted a Code of Conduct and Ethics for Directors, Officers and Employees,
including the chief executive and principal financial and accounting officers of
the Company. We will provide a copy of the code free of charge to any person
that requests a copy by writing to:





Cal-Maine
Foods, Inc.


P.O. Box
2960


Jackson,
Mississippi 39207


Attn.:  Investor
Relations





Requests
can be made by phone at (601) 948-6813





A
copy is also available at our website www.calmainefoods.com.  Information
contained on our website is not a part of this report.


8


ITEM 1A. RISK
FACTORS





We
are subject to numerous risks and uncertainties, including the
following:





Market
prices of wholesale shell eggs are volatile and changes in these prices and
costs can adversely impact our results of operations.





Our operating results are significantly
affected by wholesale shell egg market prices, which fluctuate widely and are
outside of our control. Small increases in production or small decreases in
demand can have a large adverse effect on shell egg prices. Shell egg prices
trended upward from 2002 until late 2003 and early 2004 when they rose to
historical highs.  In the early fall of 2004, the demand trend related to
the popular diets faded dramatically and prices fell.  During the time of
increased demand, the egg industry had geared up to produce more eggs, resulting
in an oversupply of eggs.  Since 2006, supplies appear to be more closely
balanced with demand and egg prices again reached record levels during 2007 and
2008.  Egg prices have since retreated from those record price levels.
There can be no assurance that shell egg prices will remain at or near current
levels and that the supply of and demand for shell eggs will remain level in the
future.





Retail sales of shell eggs are 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 shell egg production during the
spring and early summer. Shell egg prices tend to increase with the start of the
school year and are highest prior to holiday periods, particularly Thanksgiving,
Christmas and Easter. Consequently, we generally experience lower sales and net
income in our first and fourth fiscal quarters ending in August and May,
respectively. As a result of these seasonal and quarterly fluctuations,
comparisons of our sales and operating results between different quarters within
a single fiscal year are not necessarily meaningful comparisons.





Changes
in consumer demand for shell eggs can negatively impact our
business.





As
discussed above, demand for shell eggs has increased in recent years as a result
of a number of factors. We believe that increased fast food restaurant
consumption, favorable reports from the medical community regarding the health
benefits of shell eggs, reduced shell egg cholesterol levels, high protein diet
trends and industry advertising campaigns have all contributed to the increase
in shell egg demand. However, there can be no assurance that the demand for
shell eggs will not decline in the future. Adverse publicity relating to health
concerns and changes in the perception of the nutritional value of shell eggs,
as well as movement away from high protein diets, could adversely affect demand
for shell eggs, which would have a material adverse effect on our future results
of operations and financial condition.





Feed
costs are volatile and changes in these costs can adversely impact our results
of operations.





Feed
costs represent the largest element of our shell egg production (farm) cost,
ranging from 52% to 64% of total farm annual cost in each of the last five
fiscal years. Although feed ingredients are available from a number of sources,
we have little, if any, control over the prices of the ingredients that we
purchase, which are affected by various demand and supply factors and have
experienced significant fluctuations in the past. Prices for corn and soybean
meal, essential feed ingredients, were higher this year as compared to last
year. However, there are wide swings in corn and soybean meal prices because of
irregular weather patterns in the Midwest and widely varying forecast
projections for the upcoming fall harvest season in September and
October.  Increasing demands for the use of corn and soybean in the
production of renewable energy such as ethanol are also putting upward pressure
on the price of these feed ingredients.Increases
in feed costs which are not accompanied by increases in the selling price of
shell eggs will have a material adverse effect on the results of our
operations.





Due
to the cyclical nature of our business, our financial results from year to year
may fluctuate.





The
shell egg industry has traditionally been subject to periods of high
profitability followed by periods of significant loss. In the past, during
periods of high profitability, shell egg producers have tended to increase the
number of layers in production with a resulting increase in the supply of shell
eggs, which generally has caused a drop in shell egg prices until supply and
demand return to balance. As a result, our financial results from year to year
may vary significantly.





9




We
purchase approximately 23% of the shell eggs we sell from outside producers and
our ability to obtain such eggs at prices and in quantities acceptable to us
could fluctuate.


We
produce approximately 77% of the total number of shell eggs sold by us and
purchase the remaining amount from outside producers. As the wholesale price for
shell eggs increases, our cost to acquire shell eggs from outside producers also
increases. There can be no assurance that we will be able to continue to acquire
shell eggs from outside producers in quantities and prices that are satisfactory
and our inability to do so may have a material adverse affect on our business
and profitability.





Our
acquisition growth strategy subjects us to various risks.





We
plan to continue to pursue a growth strategy which includes acquisitions of
other companies engaged in the production and sale of shell eggs. Acquisitions
can require capital resources and divert management's attention from our
existing business. Acquisitions also entail an inherent risk that we could
become subject to contingent or other liabilities, including liabilities arising
from events or conduct prior to our acquisition of a business that were not
known to us at the time of acquisition. We may also incur significantly greater
expenditures in integrating an acquired business than we had anticipated at the
time of its purchase. We cannot assure you that we:





-
            will
      identify suitable acquisition
candidates;





-
            can
      consummate acquisitions on acceptable terms;
or





-
            can
      successfully integrate any acquired business into our operations or
      successfully manage the operations of any acquired
    business.




No
assurance can be given that companies acquired by us in the future will
contribute positively to our results of operations or financial condition. In
addition, federal anti-trust laws require regulatory approval of acquisitions
that exceed certain threshold levels of significance.





The
consideration we pay in connection with any acquisition also affects our
financial results. If we pay cash, we could be required to use a portion of our
available cash to consummate the acquisition. To the extent we issue shares of
our Common Stock, existing stockholders may be diluted. In addition,
acquisitions may result in the incurrence of debt.





Our
largest customers have historically accounted for a significant portion of our
net sales volume. Accordingly, our business may be adversely affected by the
loss of, or reduced purchases by, one or more of our large
customers.





For
the fiscal years 2009, 2008, and 2007, two affiliated customers, Wal-Mart Stores
and Sam’s Clubs, on a combined basis, accounted for 32.9%, 36.5%, and 36.9% of
our net sales, respectively. Our top 10 customers accounted for 65.5%, 66.5%,
and 67.4% of net sales during those periods. Although we have established
long-term relationships with many of our customers, we do not have contractual
relationships with any of our major customers for the sale of our shell eggs.
If, for any reason, one or more of our larger customers were to purchase
significantly less of our shell eggs in the future or were to terminate their
purchases from us, and we are not able to sell our shell eggs to new customers
at comparable levels, it would have a material adverse effect on our business,
financial condition and results of operations.





Failure
to comply with applicable governmental regulations, including environmental
regulations, could harm our operating results, financial condition and
reputation.





We
are subject to federal and state regulations relating to grading, quality
control, labeling, sanitary control and waste disposal. As a fully-integrated
shell egg producer, our shell egg facilities are subject to United States
Department of Agriculture, the USDA, and Food and Drug Administration, the FDA,
regulation and various state and local health and agricultural agencies. Our
shell egg processing facilities are subject to periodic USDA inspections. Our
feed production facilities are subject to FDA regulation and
inspections.





Our
operations and facilities are also subject to various federal, state and local
environmental, health and safety laws and regulations governing, among other
things, the generation, storage, handling, use, transportation, disposal and
remediation of hazardous materials. Under these laws and regulations, we are
also required to obtain permits from governmental authorities, including, but
not limited to wastewater discharge permits.





If
we fail to comply with any applicable law or regulation or permit, or fail to
obtain any necessary permits, we could be subject to significant fines and
penalties or other sanctions, our reputation could be harmed and our operating
results and financial condition could be materially and adversely affected. In
addition, because these laws and regulations are becoming increasingly more
stringent, there can be no assurances that we will not be required to incur
significant costs for compliance with such laws and regulations in the
future.


10




Our
business is highly competitive.





The
production and sale of fresh shell eggs, which have accounted for virtually all
of our net sales in recent years, is intensely competitive. We compete with a
large number of competitors that may prove to be more successful than we are in
marketing and selling shell eggs. We cannot provide assurance that we will be
able to compete successfully with any or all of these companies. In addition,
increased competition could result in price reductions, greater cyclicality,
reduced margins and loss of market share, which would negatively affect our
business, results of operations and financial condition.





Pressure from animal rights groups
regarding the treatment of animals may subject us to additional costs to conform
our practices to comply with developing standards or subject us to marketing
costs to defend challenges to our current practices and protect our image with
our customers.





We
and many of our customers are facing pressure from animal rights groups, such as
People for the Ethical Treatment of Animals, or PETA, and the Humane Society of
the United States, to require that any companies that supply food products
operate their business in a manner that treats animals in conformity with
certain standards developed by these animal rights groups. As a result, we are
reviewing and changing our operating procedures with respect to our flock of
hens to meet some or all of these treatment standards. The treatment standards
require, among other things, that we provide increased cage space for our hens
and modify beak trimming and forced molting practices (the act of putting
chickens into a regeneration cycle). Changing our procedures and infrastructure
to conform to these guidelines has resulted and will continue to result in
additional costs to our internal production of shell eggs, including cost
increases from housing and feeding the increased flock population resulting from
the modification of molting practices, and the cost for us to purchase shell
eggs from our outside suppliers. While some of these increased costs have been
passed on to our customers, we cannot provide assurance that we can continue to
pass on these costs, or any additional costs we will face, in the
future.





We
are dependent on our management team, and the loss of any key member of this
team may adversely affect the implementation of our business plan in a timely
manner.





Our
success depends largely upon the continued services of our senior management
team, including Fred R. Adams, Jr., our Chairman and Chief Executive Officer.
The loss or interruption of Mr. Adams' services or those of one or more of our
other executive officers could adversely affect our ability to manage our
operations effectively and/or pursue our growth strategy. We have not entered
into any employment or non-compete agreements with any of our executive officers
nor do we carry any significant key-man life insurance on any such
persons.





Agricultural
risks could harm our business.





Our
shell egg production activities are subject to a variety of agricultural risks.
Unusual or extreme weather conditions, disease and pests can materially and
adversely affect the quality and quantity of shell eggs we produce and
distribute. If a substantial portion of our production facilities are affected
by any of these factors in any given quarter or year, our business, financial
condition and results of operations could be materially and adversely
affected.





We
have invested in auction rate securities, the market for which is currently
illiquid. Funds associated with certain of our auction rate securities may not
be accessible for an undetermined period of time.





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


11


By
accepting the Rights, we can no longer assert that we have the intent to hold
the auction rate securities until anticipated recovery. Accordingly, we have
classified our investments in auction rate securities as trading securities, as
defined by FAS No. 115, on the date of our acceptance of the Rights. As a
result, we are required to record these securities at fair value each period
until the Rights are exercised and the auction rate securities are redeemed. At
May 30, 2009 the fair value of our auction rate securities was $2,814 below par
value of which the entire amount has been charged to operations in fiscal 2009.
Because we will be permitted to put the auction rate securities back to UBS at
par value, we have accounted for the Rights as a separate asset that is measured
at its fair value, resulting in gains in fiscal 2009 in an amount equal to the
loss recognized on the auction rate securities. Although the Rights represent
the right to sell the securities back to UBS at par, we will periodically assess
the economic ability of UBS to meet that obligation in assessing the fair value
of the Rights. We will continue to classify the auction rate securities and the
related Rights as long-term investments until June 30, 2009, one year prior to
the expected settlement.





We
are controlled by a principal stockholder.





Fred
R. Adams, Jr., our Chairman of the Board and Chief Executive Officer, and his
spouse own 31.0% of the outstanding shares of our Common Stock, which has one
vote per share, and Mr. Adams owns 74.9% and his son-in-law, Adolphus B. Baker,
our president, chief operating officer and director, owns 25.1% of the
outstanding shares of Class A Common Stock, which has ten votes per share. Mr.
Baker and his spouse also own 2.4% of the outstanding shares of our Common
Stock. As a result, currently Mr. Adams and his spouse possess 54.2%, and
Messrs. Adams and Baker and their spouses possess 68.6%, of the total voting
power represented by the outstanding shares of our Common Stock and Class A
Common Stock. These stockholdings include shares of our Common Stock accumulated
under our employee stock ownership plan for the respective accounts of Messrs.
Adams and Baker.





The
Adams family intends to retain ownership of a sufficient amount of Common Stock
and Class A Common Stock to assure its continued ownership of over 50% of the
combined voting power of our outstanding shares of capital stock. Such ownership
will make an unsolicited acquisition of us more difficult and discourage certain
types of transactions involving a change of control of our company, including
transactions in which the holders of Common Stock might otherwise receive a
premium for their shares over then current market prices. In addition, certain
provisions of our Certificate of Incorporation require that our Class A Common
Stock be issued only to Fred R. Adams, Jr. and members of his immediate family,
and that if shares of the Class A Common Stock, by operation of law or
otherwise, are deemed not to be owned by Mr. Adams or a member of his immediate
family, the voting power of any such shares shall be automatically reduced to
one vote per share. The Adams family controlling ownership of our capital stock
may adversely affect the market price of our Common Stock.





Based
on Mr. Adams' beneficial ownership of our outstanding capital stock, we are a
"controlled company," as defined in Rule 4350(c) (5) of the listing standards of
the NASDAQ Global Market on which our shares of Common Stock are quoted.
Accordingly, we are exempt from certain requirements of NASDAQ's corporate
governance listing standards, including the requirement to maintain a majority
of independent directors on our board of directors and the requirements
regarding the determination of compensation of executive officers and the
nomination of directors by independent directors.


12




ITEM
1B.  UNRESOLVED STAFF COMMENTS





None





ITEM
2.  PROPERTIES





We
operate farms, processing plants, hatcheries, feed mills, warehouses, offices
and other properties located in Alabama, Arkansas, Florida, Georgia, Kansas,
Kentucky, Louisiana, Mississippi, New Mexico, North Carolina, Ohio, Oklahoma,
South Carolina, Tennessee, Texas and Utah. The facilities currently include two
breeding facilities, two hatcheries, five wholesale distribution centers, 19
feed mills, 37 shell egg production facilities, 26 pullet growing facilities,
and 35 processing and packing facilities.  We also own interests in
two egg products facilities and one spent hen processing facility, which are
consolidated in our financial statements. Most of our operations are conducted
from properties we own.





Presently,
we own approximately 19,600 acres of land in various locations throughout our
geographic market area. We have the ability to hatch 21.2 million pullet chicks
annually, grow 17 million pullets annually, house 31 million laying hens and
control the production of an aggregate total of 30 million layers, with the
remainder controlled by contract growers. We also own or control mills that can
produce 668 tons per hour of feed, and processing facilities capable of
processing 11,400 cases of shell eggs per hour (with each case containing 30
dozen shell eggs). Our facilities are well-maintained and operate at a high
level of efficiency. Typically, we insure our facilities for replacement
value.





Over
the past five fiscal years, our capital expenditures, excluding acquisitions of
shell egg production and processing facilities from others, have totaled an
aggregate amount of approximately $102.6 million.  The Company’s
facilities currently are maintained in good operable condition and are insured
to an extent the Company deems adequate.





ITEM 3.  LEGAL
PROCEEDINGS





Chicken Litter
Litigation





Cal-Maine Farms, Inc. is presently a
defendant in two personal injury cases in the Circuit Court of Washington
County, Arkansas.  Those cases are styled, McWhorter vs. Alpharma,
Inc.,et
al., and
Carroll,et
al. vs.
Alpharma, Inc.,et
al.  Cal-Maine Farms, Inc. was named as a defendant in the
McWhorter case
on February 3, 2004.  It was named as a defendant in the Carroll case on May
2, 2005.  Co-defendants in both cases include other integrated poultry
companies such as Tyson Foods, Inc., Cargill, Incorporated, George’s Farms,
Inc., Peterson Farms, Inc., Simmons Foods, Inc., and Simmons Poultry Farms,
Inc.  The manufacturers of an additive for broiler feed are also
included as defendants.  Those defendants are Alpharma, Inc. and
Alpharma Animal Health, Co.





Both cases allege that the plaintiffs
have suffered medical problems resulting from living near land upon which
“litter” from the defendants’ flocks was spread as fertilizer.  The
McWhorter case
focuses on mold and fungi allegedly created by the application of
litter.  The Carroll case also
alleges injury from mold and fungi, but focuses primarily on the broiler feed
ingredient as the cause of the alleged medical injuries.  No trial
date for either the Carroll or McWhorter case has
been set.





Several other separate, but related,
cases were prosecuted in the same venue by the same attorneys.  The
same theories of liability were prosecuted in all of the cases.  No
Cal-Maine company was named as a defendant in any of those other
cases.  The plaintiffs selected one of those cases, Green,et
al. vs.
Alpharma, Inc., et
al., as a bellwether case to go to trial first.  All of the
poultry defendants were granted summary judgment in the Green case on August
2, 2006.  On May 8, 2008, however, the Arkansas Supreme Court reversed
the summary judgment in favor of the poultry defendants and remanded the case
for trial.  Green was re-tried on
remand in April, 2009.  The jury found for the defense and awarded the
plaintiffs in that case nothing.  It is not presently known whether
the plaintiffs in the McWhorter and Carroll cases will
continue to prosecute those cases.





State of Oklahoma Watershed
Pollution Litigation





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


13




Some
dispositive motions have been filed jointly by all defendants.  Some
of those motions were rejected by the Court, and others were left unresolved
after oral arguments.  In February, 2008, a hearing was had on the
plaintiff’s motion for preliminary injunctive relief.  The principal
relief sought was a moratorium on litter application in the
watershed.  The district court denied the plaintiff’s
motion.





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





On July
22, 2009, the Court entered its Order dismissing all claims for damages by the
plaintiff in this action because much of the land and water which the plaintiff
claims to have been polluted is actually owned by the Cherokee Nation, a
separate sovereignty not represented by the State of Oklahoma.  The
dismissal was without prejudice to re-file a claim for damages, but the Court
ruled that no such re-filing can occur unless the Cherokee Nation joins the
litigation.  It is not known whether the Cherokee Nation will join the
litigation.  While this ruling may be reconsidered or appealed, it
removes, at least temporarily, the threat of a judgment for monetary damages
against us.  Unless outstanding motions for summary judgment are
granted, the action will proceed to trial for a determination of whether the
plaintiff is entitled to injunctive relief.





The case
is set for trial in Tulsa, Oklahoma beginning September 21, 2009.





Egg Antitrust
Litigation





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




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




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




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


14


The
Pennsylvania court has entered a series of orders related to case management and
scheduling.  On April 30, 2009, the Company filed motions to dismiss both
the direct purchaser consolidated case and the indirect purchaser consolidated
case.  The plaintiffs have not yet responded to those
motions.  There is no definite schedule in either consolidated case
for discovery, class certification proceedings, or filing motions for summary
judgment.  No trial date has been set in either consolidated
case.




Florida civil investigative
demand.




On November 4, 2008, the Company received an antitrust civil investigative
demand from the Attorney General of the State of Florida.  The demand seeks
production of documents and responses to interrogatories relating to the
production and sale of eggs and egg products.  The Company is cooperating
with this investigation and expects to provide responsive information.  No
allegations of wrongdoing have been made against the Company in this
matter.





ITEM
4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS





No
matters were submitted to a vote of our security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year.





15




PART
II.





ITEM
      5.
            MARKET FOR
      REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS
      ANDISSUER
      PURCHASES OF EQUITY SECURITIES





Our
Common Stock is traded on the NASDAQ Global Market under the symbol
“CALM”.  The last reported sale price for our Common Stock on July 30,
2009 was $29.73 per share. The following table sets forth the high and low daily
sale prices and dividends per share for four quarters of fiscal 2008 and fiscal
2009.





Sales Price
                        
                        
                        DividendsFiscal Year Ended
                        
                        
                        Fiscal Quarter
                        
                        High
                        
                        
                        LowMay
      31, 2008
                        
                        
                        First
      Quarter
                        
                        $
                        22.73
                        
                        
                        $
                        13.04
                        
                        
                        $
                        0.0125Second
      Quarter
                        
                        
                        28.75
                        
                        
                        
                        19.59
                        
                        
                        
                        0.0125Third
      Quarter
                        
                        
                        35.90
                        
                        
                        
                        20.75
                        
                        
                        
                        0.8038Fourth
      Quarter
                        
                        
                        40.75
                        
                        
                        
                        26.60
                        
                        
                        
                        0.5138May
      30, 2009
                        
                        
                        First
      Quarter
                        
                        $
                        48.80
                        
                        
                        $
                        27.72
                        
                        
                        $
                        0.1570Second
      Quarter
                        
                        
                        42.21
                        
                        
                        
                        21.08
                        
                        
                        
                        0.3817Third
      Quarter
                        
                        
                        30.99
                        
                        
                        
                        22.00
                        
                        
                        
                        0.4322Fourth
      Quarter
                        
                        
                        27.96
                        
                        
                        
                        17.01
                        
                        
                        
                        0.1438





There
is no public trading market for the Class A Common Stock all the outstanding
shares of which are owned by Fred R. Adams, Jr., Chairman of the Board of
Directors and Chief Executive Officer of the Company (74.9%) and his son-in-law
Adolphus Baker, President, Chief Operating Officer and Director of the Company
(25.1%).





STOCKHOLDERS





At
July 24, 2009, there were approximately 260record holders of our
Common Stock and approximately 18,400 beneficial owners whose shares were held
by nominees or broker dealers.





DIVIDENDS





We
have paid cash dividends on our Common Stock since 1998. The annual dividend
rate of $0.05 per share of Common Stock, or $0.0125 per quarter, was paid in
each of the fiscal quarters shown in the table above, through the second quarter
of fiscal 2008. We have also paid cash dividends on our Class A Common Stock at
a rate equal to 95% of the annual rate on our Common Stock, prior to October 2,
2008.  Effective November 30, 2007, the Company’s Board of Directors
approved the adoption of a variable dividend policy to replace the Company’s
fixed dividend policy. Commencing with the third quarter of fiscal 2008
Cal-Maine began to pay a dividend to shareholders of its Common Stock and Class
A Common Stock on a quarterly basis for each quarter for which the Company
reports net income computed in accordance with generally accepted accounting
principles in an amount equal to one-third (1/3) of such quarterly income. The
amount of the dividend payable on each share of Class A Common
Stock  prior to October 2, 2008 was payable in an amount equal to 95%
of the amount paid on each share of Common Stock.   Effective
October 2, 2008, our Class A Common Stock is paid at a rate equal to the rate on
our Common Stock. Dividends are paid to shareholders of record as of the 60th day
following the last day of such quarter, except that effective July 23, 2009 the
Board of Directors approved a change in the dividend policy whereby for the
fourth fiscal quarter only, the Company will pay dividends to shareholders of
record on the 70th day
after the quarter end. Dividends are payable on the 15th day
following the record date. Following a quarter for which the Company does not
report net income, the Company shall not pay a dividend for a subsequent
profitable quarter until the Company is profitable on a cumulative basis
computed from the date of the last quarter for which a dividend was
paid.





RECENT
SALES OF UNREGISTERED SECURITIES





No
sales of securities without registration under the Securities Act of 1933
occurred during our fiscal year ended May 30, 2009.


16


ITEM 6.  SELECTED
FINANCIAL DATA


Fiscal
      Years EndedMay
      30
                            
                            
                            May
      31
                            
                            
                            June
      2
                            
                            
                            June
      3
                            
                            
                            May
      282009**
                            
                            
                            2008
                            
                            
                            2007**
                            
                            
                            2006**
                            
                            
                            200552
      wks
                            
                            
                            52
      wks
                            
                            
                            52
      wks
                            
                            
                            53
      wks
                            
                            
                            52
      wks(Amounts
      in thousands, except per share and operating data)Statement
      of Operations Data:Net
      sales
                            
                            $
                            928,812
                            
                            
                            $
                            915,939
                            
                            
                            $
                            598,128
                            
                            
                            $
                            477,555
                            
                            
                            $
                            375,266Cost
      of sales
                            
                            
                            724,085
                            
                            
                            
                            617,383
                            
                            
                            
                            479,504
                            
                            
                            
                            415,338
                            
                            
                            
                            339,833Gross
      profit
                            
                            
                            204,727
                            
                            
                            
                            298,556
                            
                            
                            
                            118,624
                            
                            
                            
                            62,217
                            
                            
                            
                            35,433Selling,
      general and administrative
                            
                            
                            83,253
                            
                            
                            
                            74,919
                            
                            
                            
                            60,394
                            
                            
                            
                            57,702
                            
                            
                            
                            47,758Operating
      income (loss)
                            
                            
                            121,474
                            
                            
                            
                            223,637
                            
                            
                            
                            58,230
                            
                            
                            
                            4,515
                            
                            
                            
                            (12,325
                            )Other
      income (expense):Interest
      expense (net of non cash interest expense & interest
      income)
                            
                            
                            (4,565
                            )
                            
                            
                            (3,152
                            )
                            
                            
                            (4,993
                            )
                            
                            
                            (5,582
                            )
                            
                            
                            (4,222
                            )Interest
      expense - non cash
                            
                            
                            (477
                            )
                            
                            
                            (942
                            )
                            
                            
                            (882
                            )
                            
                            
                            (1,284
                            )
                            
                            
                            -Equity
      in income (loss) of affiliates
                            
                            
                            2,612
                            
                            
                            
                            6,324
                            
                            
                            
                            1,699
                            
                            
                            
                            (757
                            )
                            
                            
                            (88
                            )Non-controlling
      interest
                            
                            
                            (324
                            )
                            
                            
                            (175
                            )
                            
                            
                            286
                            
                            
                            
                            165
                            
                            
                            
                            -Other
      (net)
                            
                            
                            2,290
                            
                            
                            
                            5,699
                            
                            
                            
                            1,921
                            
                            
                            
                            1,465
                            
                            
                            
                            1,227(464
                            )
                            
                            
                            7,754
                            
                            
                            
                            (1,969
                            )
                            
                            
                            (5,993
                            )
                            
                            
                            (3,083
                            )Income
      (loss) before income tax
                            
                            
                            121,010
                            
                            
                            
                            231,391
                            
                            
                            
                            56,261
                            
                            
                            
                            (1,478
                            )
                            
                            
                            (15,408
                            )Income
      tax expense (benefit)
                            
                            
                            41,510
                            
                            
                            
                            79,530
                            
                            
                            
                            19,605
                            
                            
                            
                            (465
                            )
                            
                            
                            (5,050
                            )Net
      income (loss)
                            
                            $
                            79,500
                            
                            
                            $
                            151,861
                            
                            
                            $
                            36,656
                            
                            
                            $
                            (1,013
                            )
                            
                            $
                            (10,358
                            )Net
      income (loss) per common share:Basic
                            
                            $
                            3.34
                            
                            
                            $
                            6.41
                            
                            
                            $
                            1.56
                            
                            
                            $
                            (0.04
                            )
                            
                            $
                            (0.43
                            )Diluted
                            
                            $
                            3.34
                            
                            
                            $
                            6.40
                            
                            
                            $
                            1.55
                            
                            
                            $
                            (0.04
                            )
                            
                            $
                            (0.43
                            )Cash
      dividends declared per common share *
                            
                            $
                            1.11
                            
                            
                            $
                            1.34
                            
                            
                            $
                            0.05
                            
                            
                            $
                            0.05
                            
                            
                            $
                            0.05Weighted
      average shares outstanding:Basic
                            
                            
                            23,769
                            
                            
                            
                            23,677
                            
                            
                            
                            23,526
                            
                            
                            
                            23,496
                            
                            
                            
                            23,834Diluted
                            
                            
                            23,811
                            
                            
                            
                            23,733
                            
                            
                            
                            23,599
                            
                            
                            
                            23,496
                            
                            
                            
                            23,834Balance
      Sheet Data:Working
      capital
                            
                            $
                            137,999
                            
                            
                            $
                            121,550
                            
                            
                            $
                            80,552
                            
                            
                            $
                            60,800
                            
                            
                            $
                            73,587Total
      assets
                            
                            
                            582,845
                            
                            
                            
                            501,236
                            
                            
                            
                            364,568
                            
                            
                            
                            317,118
                            
                            
                            
                            269,534Total
      debt (including current maturities)
                            
                            
                            129,789
                            
                            
                            
                            97,150
                            
                            
                            
                            112,852
                            
                            
                            
                            103,912
                            
                            
                            
                            82,994Total
      stockholders’ equity
                            
                            
                            332,051
                            
                            
                            
                            275,680
                            
                            
                            
                            155,739
                            
                            
                            
                            119,775
                            
                            
                            
                            121,855Operating
      Data:Total
      number of layers at period ended (thousands)
                            
                            
                            27,022
                            
                            
                            
                            21,853
                            
                            
                            
                            23,181
                            
                            
                            
                            23,276
                            
                            
                            
                            18,164Total
      shell eggs sold (millions of dozens)
                            
                            
                            777.9
                            
                            
                            
                            678.5
                            
                            
                            
                            685.5
                            
                            
                            
                            683.1
                            
                            
                            
                            575.4







*
              Effective
      October 2, 2008, our Class A Common Stock is paid a dividend rate equal to
      the rate on our Common Stock.  Prior to that date, Class A
      shares were paid at 95% of the common stock dividend
  rate.




**
              Results
      for fiscal 2006 include the results of operations of Hillandale, LLC,
      which was consolidated with our operations as of July 29,
      2005.  Results for fiscal 2007 include the results of operations
      of Green Forest Foods, LLC which was consolidated with our operations as
      of January 24, 2007, and Benton County Foods, LLC, which was consolidated
      with our operations as of April 20, 2007.  Results for fiscal
      2009 include the results of operations of Zephyr Egg, LLC, which was
      consolidated with our operations as of June 27, 2008, and Tampa Farms,
      LLC, which was consolidated with our operations as of December 11,
      2008.  See Note 2 to the Consolidated Financial Statements
      included in this Annual Report for a description of these acquisitions in
      fiscal 2006, 2007, and 2009.




17




ITEM
      7.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF
      OPERATIONS





Risk
Factors; Forward-Looking Statements





For
information relating to important risks and uncertainties that could materially
adversely affect our business, securities, financial condition or operating
results, reference is made to the disclosure set forth under Item 1A above under
the caption "Risk Factors." In addition, because the following discussion
includes numerous forward-looking statements relating to us, our results of
operations and financial condition and business, reference is made to the
information set forth above in Item 1 under the caption "Important Factors
Relating to Forward-Looking Statements."





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





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





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





OVERVIEW





We
are primarily engaged in the production, grading, packing, and sale of fresh
shell eggs. Our fiscal year end is the Saturday nearest to May 31 which was May
30, 2009 (52 weeks), May 31, 2008 (52 weeks), and June 2, 2007 (52 weeks) for
the most recent three fiscal years.





Our
operations are fully integrated.  At our facilities we hatch chicks,
grow pullets, manufacture feed, and produce, process, and distribute shell
eggs.  We currently are the largest producer and distributor of fresh
shell eggs in the United States.  Shell eggs accounted for
approximately 95% of our net sales in fiscal 2009 and 94% in fiscal 2008. Egg
products accounted for approximately 4% of our net sales in fiscal 2009 and 5%
in fiscal 2008. We primarily market our shell eggs in the southwestern,
southeastern, mid-western and mid-Atlantic regions of the United
States.  Shell eggs are sold directly by us primarily to national and
regional supermarket chains.





We
currently use contract producers for approximately 7% of our total egg
production.  Contract producers operate under agreements with us for
the use of their facilities in the production of shell eggs by layers owned by
us. We own the shell eggs produced under these arrangements. Approximately 23%
of the total number of shell eggs sold by us is purchased from outside producers
for resale, as needed.





Our
operating income or loss is significantly affected by wholesale shell egg market
prices, which can fluctuate widely and are outside of our
control.  Retail sales of shell eggs historically have been greatest
during the fall and winter months and lowest during the summer
months.  Our need for working capital generally is highest in the last
and first fiscal quarters ending in May and August, respectively, when egg
prices are normally at seasonal lows.   Prices for shell eggs
fluctuate in response to seasonal factors and a natural increase in shell egg
production during the spring and early summer.  Shell egg prices tend
to increase with the start of the school year and are highest prior to holiday
periods, particularly Thanksgiving, Christmas and
Easter.  Consequently, we generally experience lower sales and net
income in our first and fourth fiscal quarters ending in August and May,
respectively. As a result of these seasonal and quarterly fluctuations,
comparisons of our sales and operating results between different quarters within
a single fiscal year are not necessarily meaningful comparisons.





Our cost of production is materially
affected by feed costs, which currently averages about 64% of our total farm egg
production cost.  Changes in market prices for corn and soybean meal,
the primary ingredients of the feed we use, result in changes in our cost of
goods sold.   The cost of our feed ingredients, which are
commodities, are subject to factors in which we have little or no control such
as volatile price changes caused by weather, size of harvest, transportation and
storage costs, demand and the agricultural and energy policies of the United
States and foreign governments.  Market prices for corn remain higher
in part because of increasing demand from ethanol producers. Market prices for
soybean meal remain higher as a result of competition for acres from other grain
producers.  However, our feed costs were lower than the previous
quarter with both corn and soybean meal prices moving sharply lower after
reaching record levels during the summer of calendar year 2008.  Feed
costs, while much improved, will likely remain relatively high and could be
volatile in the year ahead.


18




The
purchase of Zephyr Egg, LLC and Tampa Farms, LLC described in Note 2 of the
notes to the consolidated financial statements are collectively referred to
below as the “Acquisitions".





RESULTS
OF OPERATIONS





The
following table sets forth, for the years indicated, certain items from our
consolidated statements of operations expressed as a percentage of net
sales.


Percentage of Net Sales
                  Fiscal Years EndedMay 30, 2009
                
                
                May 31, 2008
                
                
                June 2, 2007Net
      sales
                
                
                100.00
                %
                
                
                100.00
                %
                
                
                100.00
                %Cost
      of sales
                
                
                78.0
                
                
                
                67.4
                
                
                
                80.2Gross
      profit
                
                
                22.0
                
                
                
                32.6
                
                
                
                19.8Selling,
      general & administrative expenses
                
                
                8.9
                
                
                
                8.2
                
                
                
                10.1Operating
      income
                
                
                13.1
                
                
                
                24.4
                
                
                
                9.7Other
      income (expense)
                
                
                (0.1
                )
                
                
                0.9
                
                
                
                (0.3
                )Income
      before taxes
                
                
                13.0
                
                
                
                25.3
                
                
                
                9.4Income
      tax expense
                
                
                4.5
                
                
                
                8.7
                
                
                
                3.3Net
      income
                
                
                8.5
                %
                
                
                16.6
                %
                
                
                6.1
                %




EXECUTIVE OVERVIEW OF RESULTS – May 30,
2009, May 31, 2008, and June 2, 2007





Our operating results are significantly
affected by wholesale shell egg market prices, which can fluctuate widely and
are outside of our control.  Primarily, our shell eggs are sold at
prices related to the Urner Barry Spot Egg Market Quotations for the
southeastern region of the country.  The following table shows our net
income (loss), net average shell egg selling price, and the average Urner Barry
wholesale large shell egg prices in the southeast region, for each of our three
most recent fiscal years.





Fiscal
      Year ended
                  
                  May 30, 2009
                  
                  
                  May 31, 2008
                  
                  
                  June 2, 2007Net
      income (loss) - (in thousands)
                  
                  $
                  79,500
                  
                  
                  $
                  151,861
                  
                  
                  $
                  36,656Net
      average shell egg selling price
                  
                  $
                  1.14
                  
                  
                  $
                  1.26
                  
                  
                  $
                  0.83Urner
      Barry Spot Egg Market Quotations1
                  
                  $
                  1.21
                  
                  
                  $
                  1.38
                  
                  
                  $
                  0.93







The shell
egg industry has traditionally been subject to periods of high profitability
followed by periods of significant loss. The periods of high profitability
reflect increased consumer demand relative to supply while the periods of
significant loss reflect excess supply for the then prevailing consumer
demand.   Historically, demand for shell eggs increases in line
with overall population growth. As reflected above, our operating results
correspond with changes in the spot egg market quote.   The net
average shell egg selling price is the blended price for all sizes and grades of
shell eggs, including non-graded shell egg sales, breaking stock and
undergrades.  In fiscal 2003 and 2004, shell egg demand increased at
higher than normal trend rates due to the increased popularity of high protein
diets.  This demand imbalance caused shell egg prices to
increase.  In late fiscal 2004, the popularity of these high protein
diets began to diminish, but our egg production had been increased to meet the
earlier higher demand levels.  Lower egg prices followed, and we
experienced net losses in fiscal 2005 and 2006.  Beginning in the
latter part of fiscal 2006, egg supplies appeared to become more aligned with
demand. Since that time, the supply-demand balance has
tightened.  Tighter supplies resulted in increased prices in fiscal
2007, and prices reached record levels in fiscal 2008.  These
increased prices resulted in significantly improved profitability.  In
fiscal 2009, egg prices declined as compared to fiscal 2008.  Due to
the state of the overall economy, we saw demand decrease at the food service
level.   Egg sales at the retail level remain
strong.  As a consequence of the current economic situation and the
drop in demand at the food service level, there was a drop in egg
prices.  Future levels of profitability will be highly dependent on
the relationship between demand levels and the supply of eggs available.
According to USDA reports, domestic table egg production was higher for five of
the first six months of calendar year 2009.  This is a reversal of the
trend from 2007 to 2008.   For 23 of the 24 consecutive months
from 2007 to 2008 domestic shell egg production was lower.   This
has translated into falling egg prices.  Based upon USDA reports, the
Company expects that the table egg laying flock will expand in the upcoming
months of calendar year 2009.   Due to the anticipated expansion
in the laying flock, shell egg production for the remainder of calendar year
2009 is expected to be slightly above production during the comparable period of
calendar year 2008.


19


Fiscal
Year Ended May 30, 2009 Compared to Fiscal Year Ended May 31, 2008





Net
Sales.In fiscal 2009, approximately 95% of our net sales
consisted of shell egg sales and approximately 4% was for sales of egg products,
with the 1% balance consisting of sales of incidental feed and feed
ingredients.Net
sales for the fiscal year ended May 30, 2009 were $928.8 million, an increase of
$12.9 million, or 1.4%, from net sales of $915.9 million for fiscal
2008.  In fiscal 2009 total dozens of eggs sold increased and egg
selling prices decreased as compared to fiscal 2008. In fiscal 2009 total dozens
of shell eggs sold were 777.9 million, an increase of 99.4 million dozen, or
14.6%, compared to 678.5 million sold in fiscal 2008. Our average selling price
of shell eggs decreased from $1.260 per dozen for fiscal 2008 to $1.136 per
dozen for fiscal 2009, a decrease of $.124 per dozen, or 9.8%.  Our
net average shell egg selling price is the blended price for all sizes and
grades of shell eggs, including non-graded shell egg sales, breaking stock and
undergrades.  Our operating results are significantly affected by
wholesale shell egg market prices, which are outside of our control. Small
changes in production or demand levels can have a large effect on shell egg
prices.  In fiscal 2009, egg prices declined as compared to fiscal
2008.  Due to the state of the overall economy, we saw demand decrease
at the food service level.   Egg sales at the retail level remain
strong.  As a consequence of the current economic situation and the
drop in demand at the food service level, there was a drop in egg
prices.





On a comparable basis, excluding the
Acquisitions, net sales for fiscal 2009 were $838.6 million, a decrease of $77.3
million, or 8.4%, as compared to net sales of $915.9 million for fiscal
2008.   Dozens sold for fiscal 2009, excluding the Acquisitions,
were 703.1 million, an increase of 24.6 million, or 3.6% as compared to 678.5
million for fiscal 2008.





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





Fiscal
      Years Ended
                                (52
      weeks)
                              
                              
                              Quarter Ended
                                (13
      weeks)May
      30, 2009
                              
                              
                              May
      31, 2008
                              
                              
                              May
      30, 2009
                              
                              
                              May
      31, 2008(Amounts
      in thousands)
                              
                              
                              (Amounts
      in thousands)Total
      net sales
                              
                              $
                              928,812
                              
                              
                              $
                              915,939
                              
                              
                              $
                              213,601
                              
                              
                              $
                              235,628Non-specialty
      shell egg sales
                              
                              $
                              718,677
                              
                              
                              $
                              736,968
                              
                              
                              $
                              162,614
                              
                              
                              $
                              186,254Specialty
      shell egg sales
                              
                              
                              168,785
                              
                              
                              
                              121,229
                              
                              
                              
                              43,124
                              
                              
                              
                              34,706Net
      shell egg sales
                              
                              $
                              887,462
                              
                              
                              $
                              858,197
                              
                              
                              $
                              205,738
                              
                              
                              $
                              220,960Net
      shell egg sales as apercent
      of total net sales
                              
                              
                              95
                              %
                              
                              
                              94
                              %
                              
                              
                              96
                              %
                              
                              
                              94
                              %Non-
      specialty shell egg dozens sold
                              
                              
                              670,860
                              
                              
                              
                              597,496
                              
                              
                              
                              178,260
                              
                              
                              
                              145,660Specialty
      shell egg dozens sold
                              
                              
                              107,025
                              
                              
                              
                              80,997
                              
                              
                              
                              26,997
                              
                              
                              
                              22,584Total
      dozens sold
                              
                              
                              777,885
                              
                              
                              
                              678,493
                              
                              
                              
                              205,257
                              
                              
                              
                              168,244





Our
non-specialty shell eggs include all shell egg sales not specifically identified
as specialty shell egg sales.   The non-specialty shell egg
market is characterized by an inelasticity of demand, and small increases in
production or decreases in demand can have a large adverse effect on prices and
vice-versa.  In fiscal 2009, non-specialty shell eggs represented
approximately 81.0% of our shell egg dollar sales, as compared to 85.8% for
fiscal 2008.   Sales of non-specialty shell eggs accounted for
approximately 86.2% of our total shell egg dozen volumes in fiscal 2009, as
compared to 88.0% in fiscal 2008.





For the
thirteen-week period ended May 30, 2009, non-specialty shell eggs represented
approximately 79.0% of our shell egg dollar sales, as compared to 84.3% for the
thirteen-week period ended May 31, 2008.   For the thirteen-week
period ended May 30, 2009, non-specialty shell eggs accounted for approximately
86.8% of the total shell egg dozen volume, as compared to 86.6% for the
thirteen-week period ended May 31, 2008.


20





We
continue to increase our sales volume of specialty eggs, which include
nutritionally enhanced, cage free and organic eggs. Specialty egg retail prices
are less cyclical than standard shell egg prices and are generally higher due to
consumer willingness to pay for the increased benefits from these products. For
fiscal 2009, specialty eggs accounted for 19.0% of shell egg dollar sales, as
compared to 14.2% in fiscal 2008 and 13.8% of shell egg dozens sold in fiscal
2008, as compared to 12.0% in fiscal 2008. They are a rapidly growing part of
the shell egg market. Due to healthier eating trends, the volume of specialty
eggs continues to increase. From fiscal 2008 to fiscal 2009, the volume of
specialty eggs sold increased by 32.1%.





For the
thirteen-week period ended May 30, 2009, specialty shell eggs represented
approximately 21.0% of our shell egg dollar sales, as compared to 15.7% for the
thirteen-week period ended May 31, 2008. For the thirteen-week period ended May
30, 2009, specialty shell eggs accounted for approximately 13.2% of the total
shell egg dozen volume, as compared to 13.4% for the thirteen-week period ended
May 31, 2008.





For fiscal 2009 our egg product sales
were $33.9 million, a decrease of $8.9 million or 20.8%, as compared to $42.8
million for fiscal 2008. Our volume of egg products sold was unchanged at 57.4
million pounds, for fiscal 2009 and fiscal 2008. Egg products are primarily sold
into the institutional and food service sectors, and the sizeable decrease in
egg products sales is attributable to the declines in these sectors. This led to
a decline in the wholesale price of egg products. Our consolidated net sales
include the sales of egg products by American Egg Products, LLC (“AEP”) and
Texas Egg Products, LLC (“TEP”). For fiscal 2009, egg product sales for AEP were
$19.6 million, as compared to $25.5 million for fiscal 2008, a decrease of $5.9
million, or 23.1%. For AEP the volume of egg products sold for fiscal 2009 was
34.0 million pounds, a decrease of 2.6 million pounds, or 7.1%, as compared to
36.6 million pounds for fiscal 2008. The egg product sales for TEP in fiscal
2009 were $14.3 million, as compared to $17.3 million for fiscal 2008, a
decrease of $3.0 million. For TEP the volume of egg products sold for fiscal
2009 was 23.4 million pounds, an increase of 2.6 million pounds, or 12.5%, as
compared to 20.8 million pounds for fiscal 2008. As described in note 1 to the
consolidated financial statements, TEP is a variable interest entity of which
the Company is the primary beneficiary.





Cost of Sales.





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


Fiscal
      Years Ended
                    (52
      weeks)
                  
                  
                  Quarter
      Ended
                    (13
      weeks)May
      30, 2009
                  
                  
                  May
      31, 2008
                  
                  
                  May
      30, 2009
                  
                  
                  May
      31, 2008(Amounts
      in thousands)
                  
                  
                  (Amounts
      in thousands)Cost
      of sales
                  
                  $
                  724,085
                  
                  
                  $
                  617,383
                  
                  
                  $
                  175,694
                  
                  
                  $
                  163,586Dozens
      produced
                  
                  
                  598,042
                  
                  
                  
                  535,216
                  
                  
                  
                  161,082
                  
                  
                  
                  128,950Dozens
      purchased outside
                  
                  
                  179,843
                  
                  
                  
                  143,277
                  
                  
                  
                  44,175
                  
                  
                  
                  39,294Dozens
      sold
                  
                  
                  777,885
                  
                  
                  
                  678,493
                  
                  
                  
                  205,257
                  
                  
                  
                  168,244Feed
      cost (price per dozen produced )
                  
                  $
                  .391
                  
                  
                  $
                  .334
                  
                  
                  $
                  .376
                  
                  
                  $
                  .424Farm
      production cost (price per dozen produced)
                  
                  $
                  .609
                  
                  
                  $
                  .524
                  
                  
                  $
                  .593
                  
                  
                  $
                  .596Outside
      egg purchases (average price paid per dozen)
                  
                  $
                  1.114
                  
                  
                  $
                  1.273
                  
                  
                  $
                  .990
                  
                  
                  $
                  1.323





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 fiscal year ended May 30, 2009 was $724.1
million, an increase of $106.7 million, or 17.3%, as compared to cost of sales
of  $617.4 million for fiscal 2008. On a comparable basis, dozens
produced increased, dozens purchased from outside shell egg producers increased
and cost of feed ingredients increased in fiscal 2009. The cost of the shell
eggs purchased from outside producers increased due to the volume of shell eggs
purchased from outside shell egg producers.   This fiscal year we
produced 77% of the eggs sold by us, as compared to 79% for the previous year.
Feed cost for fiscal 2009 was $.391 per dozen, compared to $.334 per dozen for
the prior fiscal year, an increase of 17.1%.  Our average egg selling
prices did not offset the increase in feed ingredient costs and higher costs
incurred for egg purchases from outside egg producers, resulting in a decrease
in gross profit from 32.6% of net sales for fiscal 2008 to 22.0% of net sales
for fiscal 2009.





On a comparable basis, excluding the
Acquisitions, cost of sales for fiscal 2009 was $656.7 million, an increase of
$39.3 million, or 6.4%, as compared to cost of sales of $617.4 million for
fiscal 2008.





Cost of sales for the thirteen-week
period ended May 30, 2009 was $175.7 million, an increase of $12.1 million, or
7.4%, as compared to cost of sales of $163.6 million for the thirteen-week
period ended May 31, 2008.  On a comparable basis, excluding the
Acquisitions, cost of sales for the thirteen-week period ended May 30, 2009 was
$150.6 million, a decrease of $13.0 million, or 7.9%, as compared to cost of
sales of $163.6 million for the thirteen-week period ended May 31,
2008.


21





Selling,
General and Administrative Expenses.





Fiscal
      Years Ended
                                  (52
      weeks)Actual
                                
                                
                                Less:
      Acquisitions
                                
                                
                                NetMay
      30, 2009
                                
                                
                                May
      30, 2009
                                
                                
                                May
      30, 2009
                                
                                
                                May
      31, 2008
                                
                                
                                ChangeCategory
                                
                                (Amounts
      in thousands)Stock
      compensation expense
                                
                                $
                                495
                                
                                
                                $
                                -
                                
                                
                                $
                                495
                                
                                
                                $
                                7,071
                                
                                
                                $
                                (6,576
                                )Specialty
      egg expenses
                                
                                
                                18,879
                                
                                
                                
                                2,663
                                
                                
                                
                                16,216
                                
                                
                                
                                12,639
                                
                                
                                
                                3,577Payroll
      and overhead
                                
                                
                                19,220
                                
                                
                                
                                2,132
                                
                                
                                
                                17,088
                                
                                
                                
                                16,758
                                
                                
                                
                                330Other
      expenses
                                
                                
                                17,951
                                
                                
                                
                                3,845
                                
                                
                                
                                14,106
                                
                                
                                
                                16,748
                                
                                
                                
                                (2,642
                                )Delivery
      expense
                                
                                
                                26,708
                                
                                
                                
                                4,608
                                
                                
                                
                                22,100
                                
                                
                                
                                21,703
                                
                                
                                
                                397Total
                                
                                $
                                83,253
                                
                                
                                $
                                13,248
                                
                                
                                $
                                70,005
                                
                                
                                $
                                74,919
                                
                                
                                $
                                (4,914
                                )





Selling, general and administrative
expenses include costs of marketing, distribution, accounting and corporate
overhead.  Selling, general and administrative expense was $83.3
million in fiscal 2009, an increase of $8.4 million or 11.2%, as compared to
$74.9 million for fiscal 2008. Excluding the Acquisitions, selling, general, and
administrative expense for fiscal 2009 was $70.0 million, a decrease of $4.9
million, or 6.5%, as compared to $74.9 million for fiscal
2008.   Stock based compensation plans expense decreased $6.6
million for the current fiscal year due mainly to a decrease in the closing
price of the Company’s common stock.  The calculation of the stock
based compensation plans expense is dependent on the closing stock price of the
Company’s common stock, which decreased from $31.20 at May 31, 2008 to 24.37 at
May 30, 2009, which is a 21.9% decline in the Company’s stock
price.   Specialty egg expenses represent advertising,
commissions, and franchise fees as they are incurred with sales of our specialty
eggs.   The expense increase is attributable to the increase in
the dozens of specialty eggs sold this year as compared to last fiscal
year.    Payroll and overhead expenses increased primarily
due to an increase in the cost of employee benefits which includes health
insurance.   There was also a slight increase in salaries and
wages.  Other selling, general, and administrative expenses decreased
primarily due to a decrease in our insurance costs.  Our delivery
expenses for the current thirteen-week period remained relatively
unchanged.   As a percent of net sales, selling, general and
administrative expense increased from 8.2% for fiscal 2008 to 8.9% for fiscal
2009.





Fiscal
      Years Ended
                                (13
      weeks)Actual
                              
                              
                              Less:
      Acquisitions
                              
                              
                              NetMay
      30, 2009
                              
                              
                              May
      30, 2009
                              
                              
                              May
      30, 2009
                              
                              
                              May
      31, 2008
                              
                              
                              ChangeCategory
                              
                              (Amounts
      in thousands)Stock
      compensation expense
                              
                              $
                              537
                              
                              
                              $
                              -
                              
                              
                              $
                              537
                              
                              
                              $
                              (368
                              )
                              
                              $
                              905Specialty
      egg expenses
                              
                              
                              5,179
                              
                              
                              
                              692
                              
                              
                              
                              4,487
                              
                              
                              
                              3,541
                              
                              
                              
                              946Payroll
      and overhead
                              
                              
                              5,501
                              
                              
                              
                              967
                              
                              
                              
                              4,534
                              
                              
                              
                              5,178
                              
                              
                              
                              (644
                              )Other
      expenses
                              
                              
                              4,658
                              
                              
                              
                              2,231
                              
                              
                              
                              2,427
                              
                              
                              
                              5,939
                              
                              
                              
                              (3,512
                              )Delivery
      expense
                              
                              
                              6,863
                              
                              
                              
                              1,754
                              
                              
                              
                              5,109
                              
                              
                              
                              5,709
                              
                              
                              
                              (600
                              )Total
                              
                              $
                              22,738
                              
                              
                              $
                              5,644
                              
                              
                              $
                              17,094
                              
                              
                              $
                              19,999
                              
                              
                              $
                              (2,905
                              )





Selling, general and administrative
expense was $22.7 million for the thirteen-week period ended May 30, 2009, an
increase of $2.7 million or 13.5%, as compared to $20.0 million for the
thirteen-week period ending May 31, 2008. Excluding the Acquisitions, selling,
general, and administrative expense for the thirteen-week period ending May 30,
2009 was $17.1 million, a decrease of $2.9 million, or 14.5%, as compared to
$20.0 million for the thirteen-week period ending May 31, 2008.  The
decrease is primarily attributable to a decrease in our insurance
costs.





Operating
Income (Loss).As a result of the above, our operating
income was $121.5 million for fiscal 2009, as compared to operating income of
$223.6 million for fiscal 2008.  The operating income as a percent of
sales for fiscal 2009 was 13.1%, as compared to operating income of 24.4% for
fiscal 2008.





Other
Income (Expense).Other income or expense consists of income or costs not
directly charged or related to operations such as equity in income of affiliates
and interest expense.Other expense for fiscal
2009 was $464,000 as compared to other income of $7.8 million for fiscal 2008, a
decrease of $8.2 million. We had higher average long-term borrowing balances and
our average invested cash balances were lower.  The effect of higher
average long-term borrowing balances and lower average invested cash balances
this fiscal year was an increase in net interest expense.Other income decreased due
to decreased equity in income of affiliates, which are also in the shell egg
business.   Last year we recorded a gain on the sale of the fixed
assets at our Albuquerque feed mill.  We did not have a similar fixed
asset sale this fiscal year.  Our net interest expense includes the
computation of non-cash interest expense, which is imputed on our non-interest
bearing obligation to acquire the remaining membership units of Hillandale, LLC
over the remaining acquisition period culminating with us having a 100%
ownership interest in Hillandale, LLC. As a percent of net sales, other expense
was .1% for fiscal 2009, as compared to other income of .9% for fiscal
2008.





22




Income
Taxes.  For the fiscal year ended, May 30, 2009, our pre-tax
income was $121.0 million, as compared to $231.4 million for fiscal
2008.  Income tax expense of $41.5 million was recorded for fiscal
2009 with an effective income tax rate of 34.3%, as compared to $79.5 million
for fiscal 2008 with an effective income tax rate of 34.4%. Our effective tax
rate differs from the federal statutory income tax rate of 35% due to state
income taxes and certain items included in income for financial reporting
purposes that are not included in taxable income or loss for income tax
purposes, including tax exempt interest income, certain employee stock option
expense and the minority ownership in the profits and losses held in
consolidated entities.





Net
Income.As a result of the above, net income for fiscal 2009
was $79.5 million, or $3.34 per basic and diluted share, as compared to $151.9
million, or $6.41 per basic share and $6.40 per diluted share for fiscal
2008.





Fiscal
Year Ended May 31, 2008 Compared to Fiscal Year Ended June 2, 2007





Net
Sales.In fiscal 2008, approximately 94% of our net sales
consisted of shell egg sales and approximately 5% was for sales of egg products,
with the 1% balance consisting of sales of incidental feed sales to outside egg
producers.Net sales
for the fiscal year ended May 31, 2008 were $915.9 million, an increase of
$317.8 million, or 53.1%, from net sales of $598.1 million for fiscal
2007.  In fiscal 2008 total dozens of eggs sold decreased and egg
selling prices increased as compared to fiscal 2007. In fiscal 2008 total dozens
of shell eggs sold were 678.5 million, a decrease of 6.9 million dozen, or 1.0%,
compared to 685.4 million sold in fiscal 2007. Our average selling price of
shell eggs increased from $.832 per dozen for fiscal 2007 to $1.260 per dozen
for fiscal 2008, an increase of $.428 per dozen, or 51.4%.  Our
operating results are significantly affected by wholesale shell egg market
prices, which are outside of our control. Small changes in production or demand
levels can have a large effect on shell egg prices.  Egg supply has
been better balanced with demand resulting in favorable egg market conditions.
According to statistics from the USDA, the number of table-egg laying hens was
down from the previous year, which added continued support in balancing supply
and demand in the shell egg market. An improved balance of supply and demand,
led to higher average shell egg selling prices throughout the fiscal year ended
May 31, 2008, as compared to the previous year.





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





Fiscal
      Years Ended
                    (52
      weeks)May
      31, 2008
                  
                  
                  June
      2, 2007(Amounts
      in thousands)Total
      net sales
                  
                  $
                  915,939
                  
                  
                  $
                  598,128Non-specialty
      shell egg sales
                  
                  $
                  736,968
                  
                  
                  $
                  485,058Specialty
      shell egg sales
                  
                  
                  121,229
                  
                  
                  
                  86,619Net
      shell egg sales
                  
                  $
                  858,197
                  
                  
                  $
                  571,677Net
      shell egg sales as a percent of total net
sales
                  
                  
                  94
                  %
                  
                  
                  96
                  %Non-
      specialty shell egg dozens sold
                  
                  
                  597,496
                  
                  
                  
                  626,052Specialty
      shell egg dozens sold
                  
                  
                  80,997
                  
                  
                  
                  59,486Total
      dozens sold
                  
                  
                  678,493
                  
                  
                  
                  685,538




Our
non-specialty shell eggs include all shell egg sales not specifically identified
as specialty shell egg sales.   The non-specialty shell egg
market is characterized by an inelasticity of demand, and small increases in
production or decreases in demand can have a large adverse effect on prices and
vice-versa.  In fiscal 2008, non-specialty shell eggs represented
approximately 86% of our shell egg dollar sales, as compared to 85% for fiscal
2007.   Sales of non-specialty shell eggs accounted for
approximately 88.0% of our total shell egg dozen volumes in fiscal 2008, as
compared to 91.3% in fiscal 2007.





23




Specialty
shell eggs include nutritionally enhanced, cage free and organic
eggs.  They are a rapidly growing part of the shell egg market. In
fiscal 2008, specialty shell eggs represented approximately 14% of our shell egg
dollar sales, as compared to 15% for fiscal 2007. Retail prices for specialty
eggs are less cyclical than non-specialty shell egg prices and are generally
higher due to consumer willingness to pay for the increased benefits from those
products. Sales of specialty shell eggs accounted for approximately 12.0% of our
total shell egg dozen volumes in fiscal 2008, as compared to 8.7% in fiscal
2007. Due to healthier eating trends, the volume of specialty eggs continues to
increase.   From fiscal 2007 to fiscal 2008, the volume of
specialty eggs sold increased by 36.2%.





For fiscal 2008 our egg product sales
were $42.8 million, an increase of $28.9 million or 207.9%, as compared to $13.9
million for fiscal 2007.  Our consolidated net sales include the sales
of egg products by AEP and Texas Egg Products, LLC.  For fiscal 2008,
egg product sales for AEP were $25.5 million, as compared to $13.5 million for
fiscal 2007, an increase of $12.0 million, or 88.9%.  The egg product
sales for Texas Egg Products, LLC in fiscal 2008 were $17.3 million, as compared
to $424,000 for fiscal 2007, an increase of $16.9 million.  As
described in note 1 to the consolidated financial statements, Texas Egg
Products, LLC is a variable interest entity of which the Company is the primary
beneficiary.  Texas Egg Products, LLC began operations in fiscal 2007,
and we consolidated 5 weeks of activity for fiscal 2007, as compared to 52 weeks
in fiscal 2008. Our net average shell egg selling price is the blended price for
all sizes and grades of shell eggs, including non-graded shell egg sales,
breaking stock and undergrades.





Cost of Sales.





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





Fiscal
      Years Ended
                      (52
      Weeks)May
      31, 2008
                    
                    
                    June
      2, 2007(Amounts
      in thousands)Cost
      of sales
                    
                    $
                    617,383
                    
                    
                    $
                    479,504Dozens
      produced
                    
                    
                    535,216
                    
                    
                    
                    535,502Dozens
      purchased outside
                    
                    
                    143,277
                    
                    
                    
                    150,036Dozens
      sold
                    
                    
                    678,493
                    
                    
                    
                    685,538Feed
      cost (price per dozen produced )
                    
                    $
                    .334
                    
                    
                    $
                    .252Farm
      production cost (price per dozen produced)
                    
                    $
                    .524
                    
                    
                    $
                    .435Outside
      egg purchases (average price paid per dozen)
                    
                    $
                    1.273
                    
                    
                    $
                    .842





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 fiscal year ended May 31, 2008 was $617.4 million, an increase of
$137.9 million, or 28.8%, as compared to cost of sales of  $479.5
million for fiscal 2007. On a comparable basis, dozens produced decreased,
dozens purchased from outside shell egg producers decreased and cost of feed
ingredients increased in fiscal 2008. The cost of the shell eggs purchased from
outside producers increased due to improved egg market selling
prices.   For fiscal 2008 we produced 79% of the eggs sold by us,
as compared to 78% for the previous year. Feed cost for fiscal 2008 was $.334
per dozen, compared to $.252 per dozen for the prior fiscal year, an increase of
32.5%.  Higher than average egg selling prices, more than offset the
increase in feed ingredient costs and higher costs of purchases from outside egg
producers, resulting in an increase in gross profit from 19.8% of net sales for
fiscal 2007 to 32.6% of net sales for fiscal 2008.





Selling,
General and Administrative Expenses.





Fiscal
      Years Ended
                              (52
      weeks)May
      31, 2008
                            
                            
                            June
      2, 2007
                            
                            
                            ChangeCategory
                            
                            (Amounts
      in thousands)Stock
      compensation expense
                            
                            $
                            7,071
                            
                            
                            $
                            2,309
                            
                            
                            $
                            4,762Specialty
      egg expenses
                            
                            
                            12,639
                            
                            
                            
                            10,129
                            
                            
                            
                            2,510Payroll
      and overhead
                            
                            
                            16,758
                            
                            
                            
                            14,519
                            
                            
                            
                            2,239Other
      sga expenses
                            
                            
                            16,748
                            
                            
                            
                            12,332
                            
                            
                            
                            4,416Delivery
      expense
                            
                            
                            21,703
                            
                            
                            
                            21,105
                            
                            
                            
                            598Total
                            
                            $
                            74,919
                            
                            
                            $
                            60,394
                            
                            
                            $
                            14,525




24


Selling,
general and administrative expenses include costs of marketing, distribution,
accounting and corporate overhead.Selling, general and
administrative expense was $74.9 million in fiscal 2008, an increase of $14.5
million as compared to $60.4 million for fiscal 2007. The increase in selling,
general, and administrative expenses is primarily attributable to increases of
$2.3 million in franchise fees for specialty egg sales, $4.8 million in our
equity compensation plan expense, $2.2 million in administrative payroll
expenses, $2.1 million in employee insurance costs, $645,000 for commissions
paid to egg brokers, with delivery costs slightly up with an increase of
$598,000. The expense recognized in connection with our stock based compensation
plans is dependent on the price of the Company's common stock, which increased
from $13.46 at June 2, 2007 to $31.20 at May 31, 2008. Overall, delivery costs
increased slightly, due to continued reduction in the number of Company long
haul trucks and the increased use of contract trucking. As a percent of net
sales, selling, general and administrative expense decreased from 10.1% for
fiscal 2007 to 8.2% for fiscal 2008.





Operating Income (Loss).As a
result of the above, our operating income was $223.6 million for fiscal 2008, as
compared to operating income of $58.2 million for fiscal 2007. The operating
income as a percent of sales for fiscal 2008 was 24.4%, as compared to operating
income of 9.7% for fiscal 2007.





Other Income (Expense).Other
income or expense consists of income or costs not directly charged or related to
operations such as equity in income of affiliates and interest expense.Other income for fiscal 2008
was $7.8 million as compared to other expense of $2.0 million for fiscal 2007,
an increase of $9.8 million. We had lower average long-term borrowing balances
and higher invested cash balances, which decreased net interest expense.Other income increased due to
increased equity in income of affiliates, which are also in the shell egg
business. Gains recorded on the sale of property, plant, & equipment, which
includes the sale of our feed mill in Albuquerque, NM, also increased other
income. Our net interest expense includes the computation of non-cash interest
expense, which is imputed on our non-interest bearing obligation to acquire the
remaining membership units of Hillandale, LLC over the remaining acquisition
period culminating with us having a 100% ownership interest in Hillandale, LLC.
As a percent of net sales, other income was .9% for fiscal 2008, as compared to
other expense of .3% for fiscal 2007.





Income Taxes.For the fiscal
year ended, May 31, 2008, our pre-tax income was $231.4 million, as compared to
$56.3 million for fiscal 2007. Income tax expense of $79.5 million was recorded
for fiscal 2008 with an effective income tax rate of 34.4%, as compared to $19.6
million for fiscal 2007 with an effective income tax rate of 34.8%. Our
effective tax rate differs from the federal statutory income tax rate of 35% due
to state income taxes and certain items included in income for financial
reporting purposes that are not included in taxable income or loss for income
tax purposes, including tax exempt interest income, certain employee stock
option expense and the minority ownership in the profits and losses held in
consolidated entities.





Net Income.As a result of
the above, net income for fiscal 2008 was $151.9 million, or $6.41 per basic
share and $6.40 per diluted share, as compared to $36.7 million, or $1.56 per
basic share and $1.55 per diluted share for fiscal 2007.





Capital Resources
and Liquidity.Our working capital at May 30, 2009 was $138.0 million compared to $121.6
million at May 31, 2008. Our current ratio was 2.33 at May 30, 2009 as compared
with 2.18 at May 31, 2008. Our need for working capital generally is highest in
the last and first fiscal quarters ending in May and August, respectively, when
egg prices are normally at seasonal lows. Seasonal borrowing needs frequently
are higher during these quarters than during other fiscal quarters. We have a
$40 million line of credit with three banks, $3.9 million of which was utilized
for standby letters of credit at May 30, 2009. Our long-term debt at May 30,
2009, including current maturities, amounted to $129.8 million, as compared to
$97.2 million at May 31, 2008.





For the
fiscal year ended May 30, 2009, $111.3 million in net cash was provided by
operating activities. This compares to $158.4 million of net cash provided for
the fiscal year ended May 31, 2008. For fiscal 2009, $21.5 million was used for
the purchase of short-term investments, $15.4 million was provided from the sale
of short-term investments, and net $778,000 was provided from notes receivable
and other investments. Approximately $128,000 was provided from disposal of
property, plant and equipment, $26.1 million was used for purchases of property,
plant and equipment and $14.6 million was used for an additional acquisition of
the Hillandale business. We used $29.6 million for the acquisition of Zephyr
Egg, LLC, and $61.6 million for the acquisition of Tampa Farm, LLC.
Approximately $35.3 million was used for payments of dividends on the common
stock, and $23.0 million was used for principal payments on long-term debt. We
received $427,000 from the issuance of common stock from the treasury through
the exercise of stock options. Approximately $55.7 million was received from
additional long-term borrowings. The net result of these activities was a
decrease in cash and cash equivalents of approximately $28.0
million.




25





For the fiscal year ended May 31, 2008,
$158.4 million in net cash was provided by operating activities. This compares
to $59.7 million of net cash provided for the fiscal year ended June 2, 2007. In
fiscal 2008, $31.7 million was used for purchases of property, plant and
equipment, which includes $14.6 million in expenditures in connection with
construction of our facilities in Farwell, TX. Net cash of $2.7 million was used
for investments and $531,000 received on notes receivable. In fiscal 2008, we
received $2.5 million from the disposal of property, plant and equipment. As
part of our stock option plan, approximately $626,000 was received for sales of
common stock from the treasury, and $19.7 million was used for payments of
dividends on our common stock. Payments of $15.7 million were made on long-term
debt. In accord with the Hillandale, LLC purchase agreement, we made payments of
$12.5 million on our long-term purchase obligation. The net result was an
increase in cash and cash equivalents of approximately $79.8
million.





Substantially
all trade receivables, auction rate securities and inventories collateralize our
lines of credit and property, plant and equipment collateralize our notes
payable and senior secured notes. Unless otherwise approved by our lenders, we
are required by provisions of our loan agreements to (1) maintain minimum levels
of working capital (ratio of not less than 1.25 to 1) and net worth (minimum of
$90.0 million tangible net worth, plus 45% of cumulative net income); (2) limit
dividends paid in any given quarter to not exceed an amount equal to one third
of the previous quarter’s consolidated net income (allowed if no events of
default), capital expenditures not to exceed $60,000,000 in any twelve month
period, lease obligations and additional long-term borrowings (total funded debt
to total capitalization not to exceed 55%); and (3) maintain various current and
cash-flow coverage ratios (1.25 to 1), among other restrictions. At May 30,
2009, we were in compliance with the financial covenant requirements of all loan
agreements. Under certain of the loan agreements, the lenders have the option to
require the prepayment of any outstanding borrowings in the event we undergo a
change in control, as defined. Our debt agreements also require the Chief
Executive Officer of the Company, or his family, to maintain ownership of not
less than 50% of the outstanding voting stock of the Company.




Under the
terms of our Agreement with Hillandale and the Hillandale shareholders, a new
Florida limited liability company named Hillandale, LLC was formed. In fiscal
2006, we purchased 51% of the Units of Membership in Hillandale, LLC for cash of
approximately $27.0 million, with the remaining Units to be acquired in
essentially equal annual installments over a four-year period. The purchase
price of the Units is equal to their book value as calculated in accordance with
the terms of the Agreement. In fiscal 2007, we purchased, pursuant to the
Agreement, an additional 13% of the Units of Membership for $6.1 million from
our cash balances. In fiscal 2008, we purchased an additional 12% of the Units
of Membership for $6.8 million from our cash balances. During fiscal 2008, an
additional payment of $5.7 million was paid on the purchase obligation. During
fiscal 2009, we purchased an additional 12% of the Units of Membership for $9.2
million from our cash balances. During fiscal 2009, we made additional payments
totaling $5.4 million on the purchase obligation. We have recorded the
obligation to acquire the remaining 12% at its estimated present value of $8.4
million at May 30, 2009. The actual remaining purchase price may be higher or
lower when the acquisitions are completed. Future funding is expected to be
provided by our cash balances and borrowings under our existing credit
facilities.





Capital
expenditure requirements are expected to be for the normal repair and
replacement of our facilities. We are constructing a new integrated layer
production complex in Farwell, TX to replace our Albuquerque, New Mexico
complex, which ceased egg production in fiscal 2007. The expected cost is
approximately $30.0 million. Completion of this facility was estimated to be in
January 2010. As of May 30, 2009 capital expenditures related to construction of
this complex totaled $27.2 million. The remaining future capital expenditures
will be funded by cash flows from operations, existing lines of credit and
additional long-term borrowings.





On July
9, 2009 the Company’s egg complex in Farwell, Texas, was damaged by a fire. The
700 acre facility includes a processing plant, feed mill, two pullet houses, and
nine layer houses. The fire completely destroyed four of the nine layer houses,
with additional loss of laying hens at a fifth house due to smoke inhalation.
There were no personal injuries and minimal physical damage was sustained to the
rest of the complex.





Prior to
the fire, the Farwell complex could house up to 1.5 million laying hens and
accounted for approximately three to four percent of the Company’s weekly
production. This facility, as well as all of the Company’s other facilities, are
fully insured for their replacement value, including the estimated loss of
production. It is too early to estimate the total amount of gain or loss that
will ultimately be recognized due to this fire. Based on preliminary estimates,
the Company has determined that the net book value of plant, and equipment lost
due to this casualty is approximately $6.8 million. The
Company believes that this will have minimal financial impact on our operations
and do not expect any long-term disruption to our customers. Due to this
casualty, estimated completion time for this facility will probably be delayed
by an additional year to January 2011.





Delta Egg
Farm, LLC, an unconsolidated affiliate, is constructing an organic egg
production and distribution facility near our Chase, Kansas location. The cost
of construction is estimated to be approximately $13.0 million. In connection
with this project, we are a pro rata guarantor, with the other Delta Egg Farm,
LLC owners, of additional debt undertaken to fund construction of this facility.
We are currently a guarantor of approximately $6.9 million of long-term debt of
Delta Egg Farm, LLC.




26





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





By
accepting the Rights, we can no longer assert that we have the intent to hold
the auction rate securities until anticipated recovery. Accordingly, we have
classified our investments in auction rate securities as trading securities, as
defined by FAS No. 115, on the date of our acceptance of the Rights. As a
result, we are required to record these securities at fair value each period
until the Rights are exercised and the auction rate securities are redeemed. At
May 30, 2009 the fair value of our auction rate securities was $2.8 million
below par value of which the entire amount has been charged to operations in
fiscal 2009. Because we will be permitted to put the auction rate securities
back to UBS at par value, we have accounted for the Rights as a separate asset
that is measured at its fair value, resulting in gains in fiscal 2009 in an
amount equal to the loss recognized on the auction rate securities. Although the
Rights represent the right to sell the securities back to UBS at par, we will
periodically assess the economic ability of UBS to meet that obligation in
assessing the fair value of the Rights. We will continue to classify the auction
rate securities and the related Rights as long-term investments until June 30,
2009, one year prior to the expected settlement.





Since our
last fiscal year, ended May 31, 2008, we have liquidated two of our auction rate
securities at par. On July 10, 2008, we liquidated one auction rate security at
par value for $4.5 million with accrued interest after this security was called
by the original issuer. On January 30, 2009, UBS redeemed a $4.5 million auction
rate security at par with accrued interest after this security was called by the
issuer.





The
Company entered into and borrowed proceeds under a revolving line of credit with
UBS. This revolving line of credit is collateralized by auction rate securities
in our account with UBS. As of May 30, 2009, the balance owed under this
revolving line of credit was $25.2 million. This revolving line of credit is a
net no cost loan. Thus, the interest expense on this revolving line of credit is
equal to the interest income we receive on the auction rate securities held in
our account. This loan becomes due and payable as the auction rate securities
are liquidated. Attributable to this payback feature, we have classified the
entire amount owed under this revolving line of credit as long-term debt, since
the auction rate securities that collateralize this debt are correspondingly
classified as long-term assets.





Assets measured at fair
value





Effective
June 1, 2008, we adopted Financial Accounting Standards Board (“FASB”) Statement
No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 establishes a single
authoritative definition of fair value, sets out a framework for measuring fair
value, and expands on required disclosures about fair value measurement.




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




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





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





• Level 3
- Unobservable inputs for the asset or liabilitythat are supported by little or no
market activity and that are significant to the fair value of the assets or
liabilities.




27





Level 2





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





Level 3





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





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





In
February 2007, the FASB issued FASB Statement No. 159, "Establishing the Fair
Value Option for Financial Assets and Liabilities" (“FAS 159”), to permit all
entities to choose to elect to measure eligible financial instruments at fair
value. We adopted FAS 159 effective June 1, 2008. We have elected the fair value
option for our Auction Rate Security Rights. We agreed to accept these Auction
Rate Security Rights from UBS on November 3, 2008.





We
currently have a $1.6 million deferred tax liability due to a subsidiary's
change from a cash basis to an accrual basis taxpayer on May 29, 1988. The
Taxpayer Relief Act of 1997 provides that this liability is payable ratably over
the 20 years beginning in fiscal 1999. However, such taxes will be due in their
entirety in the first fiscal year in which there is a change in ownership
control so that we no longer qualify as a family farming corporation. We are
currently making annual payments of approximately $150 related to this
liability. However, while these current payments reduce cash balances, payment
of the $1.6 million deferred tax liability would not impact our consolidated
statement of income or stockholders' equity, as these taxes have been accrued
and are reflected on our consolidated balance sheet.





Looking
forward, we believe that our current cash balances, borrowing capacity,
utilization of our revolving line of credit, and cash flows from operations are
sufficient to fund our current and projected capital needs in light of the
disruptions in the financial markets. These disruptions in the financial markets
include among other things, extreme volatility in securities prices, severely
diminished liquidity and credit availability, rating downgrades of certain
investments and declining valuations of others. In light of the current
tightening of credit in the financial markets, we might suffer adverse affects
in so far as our ability to secure financing in the future, including, if
necessary, to fund a strategic acquisition, and our ability to refinance any of
our long-term debt.





Off-Balance
Sheet Arrangements





The
Company owns 50% of the membership interest in Delta Egg Farm, LLC (“Delta
Egg”). The Company is a guarantor of 50% of Delta Egg's long-term debt, which
totaled approximately $13.8 million at May 30, 2009. Delta Egg's long-term debt
is secured by substantially all fixed assets of Delta Egg and is due in monthly
installments through fiscal 2018. Delta Egg is engaged in the production,
processing and distribution of shell eggs. The other 50% owner also guarantees
50% of the debt. The guarantee arose when Delta Egg borrowed funds to construct
its production and processing facility in 1999. The guarantee would be required
if Delta Egg is not able to pay the debt. Management of the Company believes
this possibility is unlikely because Delta Egg is now well capitalized. On July
11, 2008, this debt was refinanced for a term of ten years. There were
additional borrowings under this refinancing due to the construction of an
organic egg production and distribution facility near, Chase, Kansas costing
approximately $13.0 million.





28





Contractual
Obligations





The following table summarizes future estimated cash payments, in thousands, to
be made under existing contractual obligations. Further information on debt
obligations is contained in Note 7, and on lease obligations in Note 6, of Notes
to Consolidated Financial Statements. The table includes the obligation incurred
by us for the Hillandale acquisition, which is subject to change, because the
exact amounts of which are to be determined under the terms of the Agreement. At
the closing of the Hillandale transaction on October 12, 2005, we purchased 51%
of the Units of Membership in Hillandale, LLC. 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. In
August 2007, we purchased, for $6.8 million, an additional 12% of the Units of
Hillandale, LLC based on their book value as of July 28, 2007. During fiscal
2008, an additional payment of $5.7 million was paid on the purchase obligation.
In August 2008, we purchased, for $9.2 million, an additional 12% of the Units
of Hillandale, LLC based on their book value as of July 26, 2008. During fiscal
2009, additional payments totaling $5.4 million were paid on the purchase
obligation. Our ownership of Hillandale, LLC currently is 88%. Our obligation to
acquire the remaining 12% of Hillandale, LLC is recorded at its present value of
$8.4 million as of May 30, 2009, which is included in current liabilities in the
accompanying consolidated balance sheet. We will purchase the remaining 12% of
Hillandale LLC based on the book value of the Membership Units as of July 25,
2009.





Total
                
                
                2010
                
                
                2011
                
                
                2012
                
                
                2013
                
                
                2014
                
                
                Over 5 yearsLong-term
      debt
                
                $
                129,789
                
                
                $
                13,806
                
                
                $
                36,784
                
                
                $
                9,960
                
                
                $
                10,066
                
                
                $
                9,430
                
                
                $
                49,743Purchase
      obligation
                
                
                8,400
                
                
                
                8,400
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Operating
      leases
                
                
                7,990
                
                
                
                2,659
                
                
                
                1,718
                
                
                
                1,165
                
                
                
                977
                
                
                
                449
                
                
                
                1,022Total
                
                $
                146,179
                
                
                $
                24,865
                
                
                $
                38,502
                
                
                $
                11,125
                
                
                $
                11,043
                
                
                $
                9,879
                
                
                $
                50,765





Impact of Recently Issued
Accounting Standards.





Adopted




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




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




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




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




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




Our
financial assets consisted of current investment securities available-for-sale
at May 30, 2009 which we consider to be classified as Level 2 and our long-term
investment securities classified as trading which we consider to be classified
as Level 3.




In
February 2007, the FASB issued FASB Statement No. 159, "Establishing the Fair
Value Option for Financial Assets and Liabilities" (“FAS 159”), to permit all
entities to choose to elect to measure eligible financial instruments at fair
value. We adopted FAS 159 effective June 1, 2008. We have elected the fair value
option for our Auction Rate Security Rights. We agreed to accept these Auction
Rate Security Rights from UBS on November 3, 2008.




29





Not Yet
Adopted





In
December 2007, the FASB issued FASB Statement No. 141 (Revised 2007), or (R),
“Business Combinations” (“FAS 141(R)”). FAS 141(R) retained the fundamental
requirements in FAS 141 that the acquisition method of accounting (which FAS 141
called the purchase method) be used for all business combinations and for an
acquirer to be identified or each business combination. FAS 141(R), which is
broader in scope than that of FAS 141, which applied only to business
combinations in which control was obtained by transferring consideration,
applies the same method of accounting (the acquisition method) to all
transactions and other events in which one entity obtains control over one or
more other businesses. FAS 141(R) also makes certain other modifications to FAS
141. This statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008, which will begin with our 2010
fiscal year. Earlier adoption is prohibited. The Company is currently assessing
the effect FAS 141(R) may have on its consolidated results of operations and
financial position.




In
December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling Interests
in Consolidated Financial Statements- An amendment of Accounting Research
Bulletin (“ARB”) (“FAS 160”).” FAS 160 amends ARB No. 51 to establish accounting
and reporting standards for the noncontrolling interest in a subsidiary and for
the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest
in a subsidiary, which is sometimes referred to as minority interest, is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Among other requirements, this
statement requires consolidated net income to be reported at amounts that
include the amounts attributable to both the parent and the noncontrolling
interest. It also requires disclosure, on the face of the consolidated income
statement, of the amounts of consolidated net income attributable to the parent
and to the noncontrolling interest. FAS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008, which will begin with our 2010 fiscal year. Earlier adoption is
prohibited. The Company is currently assessing the effect FAS 160 may have on
its consolidated results of operations and financial position.




In April
2008, the FASB posted FASB Staff Position No. FAS 142-3, Determination of the
Useful Life of Intangible Assets (“FSP FAS 142-3”), which applies to recognized
intangible assets that are accounted for pursuant to SFAS No. 142, Goodwill and
Other Intangible Assets. FSP FAS 142-3 amends the factors an entity must
consider when developing renewal or extension assumptions used in determining
the useful life of a recognized intangible asset. It also requires entities to
provide certain disclosures about its assumptions. FSP FAS 142-3 is effective
for financial statements issued for fiscal years beginning after December 15,
2008 and interim periods within those fiscal years. This statement is effective
for the Company in fiscal 2010. The Company is currently evaluating the impact
of the adoption of these requirements on its financial statements.




In June
2008, the FASB issued FASB Staff Position EITF 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities” (“FSP EITF 03-6-1”). Under the FSP, unvested share-based payment
awards that contain rights to receive nonforfeitable dividends (whether paid or
unpaid) are participating securities, and should be included in the two-class
method of computing EPS. The FSP is effective for fiscal years beginning after
December 15, 2008, and interim periods within those years. This statement is
effective for the Company in fiscal 2010. The Company does not expect the
adoption of FSP EITF 03-6-1 to have a material effect on its consolidated
financial statements.




In May
2009, the FASB issued FASB Statement No. 165, “Subsequent Events” (“FAS 165”).
FAS 165 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued. This statement does not apply to subsequent events or transactions that
are within the scope of other applicable generally accepted accounting
principles that provide different guidance on the accounting treatment for
subsequent events or transactions. FAS 165 would apply to both interim financial
statements and annual financial statements and should not result in significant
changes in the subsequent events that are reported. FAS 165 introduces the
concept of financial statements being available to be issued. It requires the
disclosure of the date through which a Company has evaluated subsequent events
and the basis for that date, whether that represents the date the financial
statements were issued or were available to be issued. FAS 165 should alert all
users of financial statements that an entity has not evaluated subsequent events
after that date in the set of financial statements being presented. This
statement is effective for interim or annual reporting periods ending after June
15, 2009, which corresponds to the Company’s first quarter of fiscal
2010.




In June
2009, the FASB issued FASB Statement No. 167 “Amendments to FASB Interpretation
No. 46(R)” (“FAS 167”). FAS 167 is a revision to FASB Interpretation No. 46
(Revised December 2003), Consolidation of Variable Interest Entities, and
changes how a reporting entity determines when an entity that is insufficiently
capitalized or is not controlled through voting (or similar rights) should be
consolidated. The determination of whether a reporting entity is required to
consolidate another entity is based on, among other things, the other entity’s
purpose and design and the reporting entity’s ability to direct the activities
of the other entity that most significantly impact the other entity’s economic
performance. FAS 167 will require a reporting entity to provide additional
disclosures about its involvement with variable interest entities and any
significant changes in risk exposure due to that involvement. A reporting entity
will be required to disclose how its involvement with a variable interest entity
affects the reporting entity’s financial statements. FAS 167 will be effective
at the start of a reporting entity’s first fiscal year beginning after November
15, 2009. This statement is effective for the Company in fiscal 2011. Early
application is not permitted. The Company is currently evaluating the impact, if
any, of adoption of FAS 167 on its financial statements.




30




In June
2009, the FASB issued FASB Statement No. 168 “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles – A
Replacement of FASB Statement No. 162” (“FAS 168”). FAS 168 establishes the
FASB Accounting Standards
CodificationTM(Codification) as the single
source of authoritative U.S. generally accepted accounting principles (U.S.
GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules
and interpretive releases of the SEC under authority of federal securities laws
are also sources of authoritative U.S. GAAP for SEC registrants. FAS 168 and the
Codification are effective for financial statements issued for interim and
annual periods ending after September 15, 2009, which corresponds to the
Company’s second quarter of fiscal 2010. When effective, the Codification will
supersede all existing non-SEC accounting and reporting standards. All other
non-grandfathered non-SEC accounting literature not included in the Codification
will become nonauthoritative. Following FAS 168, the FASB will not issue new
standards in the form of Statements, FASB Staff Positions, or Emerging Issues
Task Force Abstracts. Instead, the FASB will issue Accounting Standards Updates,
which will serve only to: (a) update the Codification;
(b) provide background
information about the guidance; and (c) provide the bases for
conclusions on the change(s) in the Codification. The adoption of FAS 168 will
not have an impact on the Company’s consolidated financial statements.




Critical
Accounting Policies.The preparation of financial statements in
accordance with U.S. generally accepted accounting standards requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from these estimates.





Management
suggests that our Summary of Significant Accounting Policies, as described in
Note 1 of the Notes to Consolidated Financial Statements, be read in conjunction
with this Management’s Discussion and Analysis of Financial Condition and
Results of Operations. We believe the critical accounting policies that most
impact our consolidated financial statements are described below.





Allowance for Doubtful Accounts.In the normal course of business, we extend credit to our customers on a
short-term basis. Although credit risks associated with our customers are
considered minimal, we routinely review our accounts receivable balances and
make provisions for probable doubtful accounts. In circumstances where
management is aware of a specific customer’s inability to meet its financial
obligations to us (e.g. bankruptcy filings), a specific reserve is recorded to
reduce the receivable to the amount expected to be collected. For all other
customers, we recognize reserves for bad debts based on the length of time the
receivables are past due, generally 100% for amounts more than 60 days past
due.





Inventories.Inventories of
eggs, feed, supplies and livestock are valued principally at the lower of cost
(first-in, first-out method) or market. If market prices for eggs and feed
grains move substantially lower, we would record adjustments to write-down the
carrying values of eggs and feed inventories to fair market value. The cost
associated with flock inventories, consisting principally of chick purchases,
feed, labor, contractor payments and overhead costs, are accumulated during the
growing period of approximately 22 weeks. Capitalized flock costs are then
amortized over the productive lives of the flocks, generally one to two years.
Flock mortality is charged to cost of sales as incurred. High mortality from
disease or extreme temperatures would result in abnormal adjustments to
write-down flock inventories. Management continually monitors each flock and
attempts to take appropriate actions to minimize the risk of mortality
loss.





Long-Lived Assets.Depreciable long-lived assets are primarily comprised of buildings and
improvements and machinery and equipment. Depreciation is provided by the
straight-line method over the estimated useful lives, which are 15 to 25 years
for buildings and improvements and 3 to 12 years for machinery and equipment. An
increase or decrease in the estimated useful lives would result in changes to
depreciation expense. When property and equipment are retired, sold, or
otherwise disposed of, the asset's carrying amount and related accumulated
depreciation are removed from the accounts and any gain or loss is included in
operations. We continually reevaluate the carrying value of our long-lived
assets, for events or changes in circumstances, which indicate that the carrying
value may not be recoverable from the estimated future cash flows expected to
result from its use and eventual disposition. If the sum of the expected future
cash flows (undiscounted and without interest charges) are less than the
carrying amount of the asset, an impairment loss is recognized to reduce the
carrying value of the long-lived asset to the estimated fair value of the
asset.





Investment in Affiliates. We
have invested in other companies engaged in the production, processing and
distribution of shell eggs and egg products. Our ownership percentages in these
companies range from less than 20% to 50%. Therefore, these investments are
recorded using the cost or the equity method, and accordingly, not consolidated
in our financial statements. Changes in the ownership percentages of these
investments might alter the accounting methods currently used. Our investment in
these companies amounted to $16.4 million at May 30, 2009. The combined total
assets and total liabilities of these companies were approximately $100.3
million and $55.0 million, respectively, at May 30, 2009. We are a guarantor of
approximately $6.9 million of long-term debt of one of the
affiliates.




31





Goodwill.At May 30, 2009,
our goodwill balance represented 3.9% of total assets and 6.8% of stockholders’
equity. Goodwill relates to the following:





Fiscal Period
                      
                      Description
                      
                      Amount1999
                      
                      Acquisition
      of Hudson Brothers, Inc.
                      
                      $
                      3,1472006
                      
                      Acquisition
      of Hillandale Farms, LLC
                      
                      
                      8692007
                      
                      Acquisition
      of Green Forest Foods, LLC
                      
                      
                      1792008
                      
                      Revision
      to purchase price for incremental purchase of Hillandale
                      
                      
                      9,2572009
                      
                      Revision
      to purchase price for incremental purchase of Hillandale
                      
                      
                      2,5272009
                      
                      Acquisition
      of Zephyr Egg, LLC
                      
                      
                      1,8762009
                      
                      Acquisition
      of Tampa Farms, LLC
                      
                      
                      4,600Total
      Goodwill
                      
                      $
                      22,455





We
adopted, as of June 3, 2001, Statement of Financial Accounting Standards No.
142, “Goodwill and Other Intangible Assets” (SFAS 142). Under SFAS 142, goodwill
and indefinite lived intangible assets are no longer amortized but are reviewed
annually or more frequently if impairment indicators arise, for impairment. An
impairment loss would be recorded if the recorded goodwill exceeds its implied
fair value. We have only one operating segment, which is our sole reporting
unit. Accordingly, goodwill is tested for impairment at the entity level.
Significant adverse industry or economic changes, or other factors not
anticipated could result in an impairment charge to reduce recorded
goodwill.





Income Taxes.We determine
our effective tax rate by estimating our permanent differences resulting from
differing treatment of items for tax and accounting purposes. We are
periodically audited by taxing authorities. Any audit adjustments affecting
permanent differences could have an impact on our effective tax
rate.





Forward Looking
Statements. The foregoing statements contain forward-looking statements
which involve risks and uncertainties and our actual experience may differ
materially from that discussed above. Factors that may cause such a difference
include, but are not limited to, those discussed in “Factors Affecting Future
Performance” below, as well as future events that have the effect of reducing
our available cash balances, such as unanticipated operating losses or capital
expenditures related to possible future acquisitions. Readers are cautioned not
to place undue reliance on forward-looking statements, which reflect
management’s analysis only as the date hereof. We assume no obligation to update
forward-looking statements.





Factors Affecting
Future Performance.Our future operating results may be affected by various trends and
factors which are beyond our control. These include adverse changes in shell egg
prices and in the grain markets. Accordingly, past trends should not be used to
anticipate future results and trends. Further, our prior performance should not
be presumed to be an accurate indication of future performance.





ITEM 7A.
QUANTITATIVEAND QUALITATIVE DISCLOSURES
ABOUT MARKET RISKS





Our
interest expense is sensitive to changes in the general level of U.S. interest
rates. We maintain certain of our debt as fixed rate in nature to mitigate the
impact of fluctuations in interest rates. Under our current policies, we do not
use interest rate derivative instruments to manage our exposure to interest rate
changes. A 1% adverse move (decrease) in interest rates would adversely affect
the net fair value of our debt by $4.3 million at May 30, 2009.





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




32





By
accepting the Rights, we can no longer assert that we have the intent to hold
the auction rate securities until anticipated recovery. Accordingly, we have
classified our investments in auction rate securities as trading securities, as
defined by FAS No. 115, on the date of our acceptance of the Rights. As a
result, we are required to record these securities at fair value each period
until the Rights are exercised and the auction rate securities are redeemed. At
May 30, 2009 the fair value of our auction rate securities was $2,814 below par
value of which the entire amount has been charged to operations in fiscal 2009.
Because we will be permitted to put the auction rate securities back to UBS at
par value, we have accounted for the Rights as a separate asset that is measured
at its fair value, resulting in gains in fiscal 2009 in an amount equal to the
loss recognized on the auction rate securities. Although the Rights represent
the right to sell the securities back to UBS at par, we will periodically assess
the economic ability of UBS to meet that obligation in assessing the fair value
of the Rights. We will continue to classify the auction rate securities and the
related Rights as long-term investments until June 30, 2009, one year prior to
the expected settlement.





Our
operating results are significantly affected by wholesale shell egg market
prices, which fluctuate widely and are outside of our control. Small increases
in production or small decreases in demand can have a large adverse effect on
shell egg prices.





Feed
costs represent the largest element of our shell egg production (farm) cost,
ranging from 52% to 64% of total farm annual cost in each of the last five
fiscal years. Although feed ingredients are available from a number of sources,
we have little, if any, control over the prices of the ingredients that we
purchase, which are affected by various demand and supply factors and have
experienced significant fluctuations in the past.





We are a party to no other market risk
sensitive instruments requiring disclosure.





ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY
DATA





Management’s
Report on Internal Control Over Financial Reporting





The
following sets forth, in accordance with Section 404(a) of the Sarbanes-Oxley
Act of 2002 and Item 308 of the Securities and Exchange Commission’s Regulation
S-K, the report of management on our internal control over financial
reporting.





1.Our management
is responsible for establishing and maintaining adequate internal control over
financial reporting. “Internal control over financial reporting” is a process
designed by, or under the supervision of, our Chief Executive Officer and Chief
Financial Officer, together with other financial officers, and effected by our
Board of Directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles and includes those policies and procedures
that:





·
              Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of our
      assets;




·
              Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of our management and
      directors; and




·
              Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statements.




2.Our
management, in accordance with Rule 13a-15(c) under the Securities Exchange Act
of 1934 and with the participation of our Chief Executive Officer and Chief
Financial Officer, together with other financial officers, evaluated the
effectiveness of our internal control over financial reporting as of May 30,
2009. The framework on which management’s evaluation of our internal control
over financial reporting is based is the “Internal Control – Integrated
Framework”published in
1992 by the Committee of Sponsoring Organizations (“COSO”) of the Treadway
Commission.





3.We maintain documentation providing
reasonable support for management’s assessment of the effectiveness of our
internal control over financial reporting. Management’s documentation
includes:





·
              The
      design of controls over all relevant assertions related to all significant
      accounts and disclosures in the financial
  statements;




·
              Information
      about how significant transactions are initiated, authorized, recorded,
      processed and reported;




33




·
              Sufficient
      information about the flow of transactions to identify the points at which
      material misstatements due to error or fraud could
  occur;




·
              Controls
      designed to prevent or detect fraud, including who performs the controls
      and the related segregation of
duties;




·
              Controls
      over the period-end financial reporting
process;




·
              Controls
      over safeguarding of assets;
and




·
              The
      results of management’s testing and
evaluation.




4.Management has
determined that our internal control over financial reporting as of May 30, 2009
is effective and that there is no material weakness in our internal control over
financial reporting as of that date. In that connection, a “material weakness,”
is a significant deficiency, or a combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the
financial statements will not be prevented or detected. A “significant
deficiency” is a control deficiency or a combination of control deficiencies,
that adversely affects our ability to initiate, authorize, record, process, or
report external financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a
misstatement of our financial statements that is more than inconsequential will
not be prevented or detected. A “control deficiency” exists when the design or
operation of a control does not allow management or employees, in the normal
course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. It is noted that internal control over
financial reporting cannot provide absolute assurance of achieving financial
reporting objectives, but rather reasonable assurance of achieving such
objectives.





5.The
attestation report of FROST, PLLC on management’s assessment of our internal
control over financial reporting, which includes that firm’s opinion on
management’s assessment of the effectiveness of internal control over financial
reporting and opinion on the effectiveness of internal control over financial
reporting, is set forth below.


34


Report of Independent
Registered Public Accounting Firm on Internal Control Over Financial
Reporting





Board of
Directors and Stockholders


Cal-Maine
Foods, Inc. and Subsidiaries


Jackson,
Mississippi





We have
audited Cal-Maine Foods, Inc. and Subsidiaries internal control over financial
reporting as of May 30, 2009, based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). Cal-Maine Foods, Inc. and Subsidiaries management
is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over
financial reporting included in the accompanying Management’s Report on Internal
Control Over Financial Reporting in Item 8. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our
audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting,
assessing that the risks that a material weakness exists, testing and evaluating
the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered
necessary in the circumstances. We believe our audit provides a reasonable basis
for our opinion.





A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of consolidated financial statements for external purposes
in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the Company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of consolidated financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a
material effect on the consolidated financial statements.





Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.





In our
opinion, Cal-Maine Foods, Inc. and Subsidiaries maintained, in all material
respects, effective internal control over financial reporting as of May 30,
2009, based on criteria established in Internal Control-Integrated
Frameworkissued by COSO.





We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets and the related
consolidated statements of operations, stockholders’ equity and cash flows of
Cal-Maine Foods, Inc. and Subsidiaries, and our report dated August 10, 2009
expressed an unqualified opinion.





FROST,
      PLLC /s/Certified Public
Accountants





Little
Rock, Arkansas


August
10, 2009


35


Report of Independent
Registered Public Accounting Firm





Board of
Directors and Shareholders


Cal-Maine
Foods, Inc. and Subsidiaries


Jackson,
Mississippi





We have audited the accompanying
consolidated balance sheets of Cal-Maine Foods, Inc. and Subsidiaries as of May
30, 2009 and May 31, 2008, and the related consolidated statements of
operations, stockholders’ equity and cash flows for the three years then ended.
Our audits also included the consolidated financial statement schedule listed in
the Index at Item 15(c). These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.





We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe our audits provide a
reasonable basis for our opinion.





In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Cal-Maine Foods, Inc. and Subsidiaries as
of May 30, 2009 and May 31, 2008 and the consolidated results of its operations
and its cash flows for the three years then ended in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, the related consolidated financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.





We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), Cal-Maine Foods, Inc. and Subsidiaries internal control over financial
reporting as of May 30, 2009, based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”), and our report dated August 10, 2009, expressed an
unqualified opinion.




FROST,
      PLLC /s/Certified Public
Accountants  Little
Rock, Arkansas


August
10, 2009


36


Cal-Maine
Foods, Inc. and Subsidiaries


Consolidated
Balance Sheets


(in
thousands, except for par value amounts)


May 30
                                            
                                            
                                            May 312009
                                            
                                            
                                            2008AssetsCurrent
      assets:Cash
      and cash equivalents
                                            
                                            $
                                            66,883
                                            
                                            
                                            $
                                            94,858Investments
      securities available-for-sale
                                            
                                            
                                            15,165
                                            
                                            
                                            
                                            -Receivables:Trade
      receivables, less allowance for doubtfulaccounts
      of  $394 in 2009 and  $313 in 2008
                                            
                                            
                                            43,682
                                            
                                            
                                            
                                            44,793Other
                                            
                                            
                                            946
                                            
                                            
                                            
                                            3,13744,628
                                            
                                            
                                            
                                            47,930Inventories
                                            
                                            
                                            97,535
                                            
                                            
                                            
                                            76,766Prepaid
      expenses and other current assets
                                            
                                            
                                            17,474
                                            
                                            
                                            
                                            4,711Total
      current assets
                                            
                                            
                                            241,685
                                            
                                            
                                            
                                            224,265Other
      assets:Investments
      securities trading
                                            
                                            
                                            33,150
                                            
                                            
                                            
                                            -Investments
      securities available-for-sale
                                            
                                            
                                            -
                                            
                                            
                                            
                                            40,754Other
      investments
                                            
                                            
                                            18,069
                                            
                                            
                                            
                                            13,421Goodwill
                                            
                                            
                                            22,455
                                            
                                            
                                            
                                            13,452Other
      intangible assets
                                            
                                            
                                            15,056
                                            
                                            
                                            
                                            302Other
      long-lived assets
                                            
                                            
                                            2,472
                                            
                                            
                                            
                                            2,54991,202
                                            
                                            
                                            
                                            70,478Property,
      plant and equipment, less accumulateddepreciation
                                            
                                            
                                            249,958
                                            
                                            
                                            
                                            206,493Total
      assets
                                            
                                            $
                                            582,845
                                            
                                            
                                            $
                                            501,236Liabilities
      and stockholders' equityCurrent
      liabilities:Trade
      accounts payable
                                            
                                            $
                                            40,327
                                            
                                            
                                            $
                                            35,691Accrued
      dividends payable
                                            
                                            
                                            3,422
                                            
                                            
                                            
                                            12,186Accrued
      wages and benefits
                                            
                                            
                                            9,559
                                            
                                            
                                            
                                            9,111Accrued
      expenses and other liabilities
                                            
                                            
                                            8,537
                                            
                                            
                                            
                                            10,964Current
      maturities of purchase obligation
                                            
                                            
                                            8,400
                                            
                                            
                                            
                                            10,358Current
      maturities of long-term debt
                                            
                                            
                                            13,806
                                            
                                            
                                            
                                            11,470Deferred
      income taxes
                                            
                                            
                                            19,635
                                            
                                            
                                            
                                            12,935Total
      current liabilities
                                            
                                            
                                            103,686
                                            
                                            
                                            
                                            102,715Long-term
      debt, less current maturities
                                            
                                            
                                            115,983
                                            
                                            
                                            
                                            85,680Non-controlling
      interests in consolidated entities
                                            
                                            
                                            958
                                            
                                            
                                            
                                            1,687Purchase
      obligation, less current maturities
                                            
                                            
                                            -
                                            
                                            
                                            
                                            9,598Other
      noncurrent liabilities
                                            
                                            
                                            3,532
                                            
                                            
                                            
                                            4,120Deferred
      income taxes
                                            
                                            
                                            26,635
                                            
                                            
                                            
                                            21,756Total
      liabilities
                                            
                                            
                                            250,794
                                            
                                            
                                            
                                            225,556Commitments
      and contingencies – See Notes 7,8,9, and 11Stockholders'
      equity:Common
      stock, $.01 par valueAuthorized
      shares - 60,000 in 2009 and 2008Issued
      35,130 shares in 2009 and 2008 with21,389
      and 21,317 shares outstanding respectively
                                            
                                            
                                            351
                                            
                                            
                                            
                                            351Class
      A common stock, $.01 par valueAuthorized
      shares - 2,400 in 2009 and 2008Issued
      and outstanding shares - 2,400 in 2009 and 2008
                                            
                                            
                                            24
                                            
                                            
                                            
                                            24Paid-in
      capital
                                            
                                            
                                            32,098
                                            
                                            
                                            
                                            29,697Retained
      earnings
                                            
                                            
                                            320,623
                                            
                                            
                                            
                                            267,616Common
      stock in treasury, at cost, –13,741 shares in 2009and
      13,813 in 2008
                                            
                                            
                                            (21,045
                                            )
                                            
                                            
                                            (21,156
                                            )Accumulated
      other comprehensive loss
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (852
                                            )Total
      stockholders' equity
                                            
                                            
                                            332,051
                                            
                                            
                                            
                                            275,680Total
      liabilities and stockholders' equity
                                            
                                            $
                                            582,845
                                            
                                            
                                            $
                                            501,236


See
accompanying notes.


37


Cal-Maine
Foods, Inc. and Subsidiaries


Consolidated
Statements of Income


(in
thousands, except per share amounts)





Fiscal years endedMay 30
                
                
                May 31
                
                
                June 22009
                
                
                2008
                
                
                2007Net
      sales
                
                $
                928,812
                
                
                $
                915,939
                
                
                $
                598,128Cost
      of sales
                
                
                724,085
                
                
                
                617,383
                
                
                
                479,504Gross
      profit
                
                
                204,727
                
                
                
                298,556
                
                
                
                118,624Selling,
      general and administrative
                
                
                83,253
                
                
                
                74,919
                
                
                
                60,394Operating
      income
                
                
                121,474
                
                
                
                223,637
                
                
                
                58,230Other
      income (expense):Interest
      expense
                
                
                (7,096
                )
                
                
                (7,712
                )
                
                
                (6,987
                )Interest
      income
                
                
                2,054
                
                
                
                3,618
                
                
                
                1,112Equity
      in income of affiliates
                
                
                2,612
                
                
                
                6,324
                
                
                
                1,699Non-controlling
      interest
                
                
                (324
                )
                
                
                (175
                )
                
                
                286Other,
      net
                
                
                2,290
                
                
                
                5,699
                
                
                
                1,921(464
                )
                
                
                7,754
                
                
                
                (1,969
                )Income
      before income taxes
                
                
                121,010
                
                
                
                231,391
                
                
                
                56,261Income
      tax expense
                
                
                41,510
                
                
                
                79,530
                
                
                
                19,605Net
      income
                
                $
                79,500
                
                
                $
                151,861
                
                
                $
                36,656Net
      income per share:Basic
                
                $
                3.34
                
                
                $
                6.41
                
                
                $
                1.56Diluted
                
                $
                3.34
                
                
                $
                6.40
                
                
                $
                1.55Weighted
      average shares outstanding:Basic
                
                
                23,769
                
                
                
                23,677
                
                
                
                23,526Diluted
                
                
                23,811
                
                
                
                23,733
                
                
                
                23,599





See
accompanying notes.


38





Cal-Maine
Foods, Inc. and Subsidiaries


Consolidated
Statements of Stockholders' Equity


(in
thousands)





Common StockClass A
                              
                              
                              Class A
                              
                              
                              Treasury
                              
                              
                              Treasury
                              
                              
                              Paid In
                              
                              
                              Retained
                              
                              
                              Accum. OtherShares
                              
                              
                              Amount
                              
                              
                              Shares
                              
                              
                              Amount
                              
                              
                              Shares
                              
                              
                              Amount
                              
                              
                              Capital
                              
                              
                              Earnings
                              
                              
                              Comp. Loss
                              
                              
                              TotalBalance
      at June 3, 2006
                              
                              
                              35,130
                              
                              
                              $
                              351
                              
                              
                              
                              2,400
                              
                              
                              $
                              24
                              
                              
                              
                              14,039
                              
                              
                              $
                              (21,483
                              )
                              
                              $
                              28,700
                              
                              
                              $
                              112,183
                              
                              
                              $
                              -
                              
                              
                              $
                              119,775Cash
      dividends paid ($.05 per common share) *
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (1,172
                              )
                              
                              
                              -
                              
                              
                              
                              (1,172
                              )Issuance ofcommon stock from treasury
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (102
                              )
                              
                              
                              137
                              
                              
                              
                              125
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              262Vesting
      of stock basedcompensation
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              218
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              218Net
      income for fiscal 2007
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              36,656
                              
                              
                              
                              -
                              
                              
                              
                              36,656Balance
      at June 2, 2007
                              
                              
                              35,130
                              
                              
                              
                              351
                              
                              
                              
                              2,400
                              
                              
                              
                              24
                              
                              
                              
                              13,937
                              
                              
                              
                              (21,346
                              )
                              
                              
                              29,043
                              
                              
                              
                              147,667
                              
                              
                              
                              -
                              
                              
                              
                              155,739Dividends
      *
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (31,912
                              )
                              
                              
                              -
                              
                              
                              
                              (31,912
                              )Issuance
      of common stock from treasury
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (124
                              )
                              
                              
                              190
                              
                              
                              
                              436
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              626Vesting
      of stock basedcompensation
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              218
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              218Net
      income for fiscal 2008
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              151,861
                              
                              
                              
                              -
                              
                              
                              
                              151,861Other
      comprehensive loss (net oftax
      $544)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (852
                              )
                              
                              
                              (852
                              )Total
      comprehensive income
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              151,009Balance
      at May 31, 2008
                              
                              
                              35,130
                              
                              
                              $
                              351
                              
                              
                              
                              2,400
                              
                              
                              $
                              24
                              
                              
                              
                              13,813
                              
                              
                              $
                              (21,156
                              )
                              
                              $
                              29,697
                              
                              
                              $
                              267,616
                              
                              
                              $
                              (852
                              )
                              
                              $
                              275,680Dividends
      *
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (26,493
                              )
                              
                              
                              -
                              
                              
                              
                              (26,493
                              )Issuance
      of common
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              -stock
      from treasury
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (72
                              )
                              
                              
                              111
                              
                              
                              
                              2,183
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              2,294Vesting
      of stock basedcompensation
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              218
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              218Net
      income for fiscal 2009
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              79,500
                              
                              
                              
                              -
                              
                              
                              
                              79,500Other
      comprehensive gain (net oftax
      $544)
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              852
                              
                              
                              
                              852Total
      comprehensive income
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              80,352Balance
      at May 30, 2009
                              
                              
                              35,130
                              
                              
                              $
                              351
                              
                              
                              
                              2,400
                              
                              
                              $
                              24
                              
                              
                              
                              13,741
                              
                              
                              $
                              (21,045
                              )
                              
                              $
                              32,098
                              
                              
                              $
                              320,623
                              
                              
                              $
                              -
                              
                              
                              $
                              332,051





*
              For
      Fiscal 2007, dividends paid at $.05 per common share. For Fiscal 2008,
      dividends paid at $.05 per common share for the 1st
      and 2nd
      quarters, and for the 3rd
      and subsequent quarter the dividend was determined from one third of net
      income. For Fiscal 2009, dividends for the entire fiscal year were
      determined from one third of net income. Class A shares were paid at 95%
      of the common stock dividend rate. Effective October 2, 2008, the Class A
      shares were paid at the same rate as the common
  shares.


See
accompanying notes.


39


Cal-Maine
Foods, Inc. and Subsidiaries


Consolidated
Statements of Cash Flows


(in
thousands)





Fiscal year endedMay 31
                                            
                                            
                                            May 31
                                            
                                            
                                            June 22009
                                            
                                            
                                            2008
                                            
                                            
                                            2007Cash
      flows from operating activitiesNet
      income
                                            
                                            $
                                            79,500
                                            
                                            
                                            $
                                            151,861
                                            
                                            
                                            $
                                            36,656Adjustments
      to reconcile net incometo
      net cash provided by operating activities:Depreciation
      and amortization
                                            
                                            
                                            28,076
                                            
                                            
                                            
                                            25,320
                                            
                                            
                                            
                                            21,476Deferred
      income taxes
                                            
                                            
                                            11,035
                                            
                                            
                                            
                                            3,659
                                            
                                            
                                            
                                            1,205Equity
      in income of affiliates
                                            
                                            
                                            (2,612
                                            )
                                            
                                            
                                            (6,324
                                            )
                                            
                                            
                                            (1,699
                                            )Gain
      (loss) on disposal of property, plant andequipment
                                            
                                            
                                            (10
                                            )
                                            
                                            
                                            (1,657
                                            )
                                            
                                            
                                            38Stock
      compensation expense (benefit), net of amounts paid
                                            
                                            
                                            (2,722
                                            )
                                            
                                            
                                            4,531
                                            
                                            
                                            
                                            1,650Interest
      on purchase obligation
                                            
                                            
                                            477
                                            
                                            
                                            
                                            942
                                            
                                            
                                            
                                            882Net
      change in non-controlling interest in consolidated
entities
                                            
                                            
                                            (728
                                            )
                                            
                                            
                                            (207
                                            )
                                            
                                            
                                            975Change
      in operating assets and liabilities, netof
      effects from acquisitionsReceivables
      and other assets
                                            
                                            
                                            (3,580
                                            )
                                            
                                            
                                            (13,305
                                            )
                                            
                                            
                                            (8,097
                                            )Inventories
                                            
                                            
                                            (2,911
                                            )
                                            
                                            
                                            (14,558
                                            )
                                            
                                            
                                            47Accounts
      payable, accrued expensesand
      other liabilities
                                            
                                            
                                            4,757
                                            
                                            
                                            
                                            8,154
                                            
                                            
                                            
                                            6,591Net
      cash provided by operating activities
                                            
                                            
                                            111,282
                                            
                                            
                                            
                                            158,416
                                            
                                            
                                            
                                            59,724Cash
      flows from investing activitiesPurchases
      of investments
                                            
                                            
                                            (21,453
                                            )
                                            
                                            
                                            (122,825
                                            )
                                            
                                            
                                            (43,250
                                            )Sales
      of investments
                                            
                                            
                                            15,388
                                            
                                            
                                            
                                            120,175
                                            
                                            
                                            
                                            28,750Acquisition
      of businesses, net of cash acquired
                                            
                                            
                                            (91,223
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (12,053
                                            )Payments
      received on notes receivable andfrom
      investments
                                            
                                            
                                            1,674
                                            
                                            
                                            
                                            1,199
                                            
                                            
                                            
                                            1,453Purchases
      of property, plant and equipment
                                            
                                            
                                            (26,112
                                            )
                                            
                                            
                                            (31,686
                                            )
                                            
                                            
                                            (23,472
                                            )Increase
      in notes receivable and investments
                                            
                                            
                                            (896
                                            )
                                            
                                            
                                            (668
                                            )
                                            
                                            
                                            (1,202
                                            )Net
      proceeds from disposal of property,plant
      and equipment
                                            
                                            
                                            128
                                            
                                            
                                            
                                            2,470
                                            
                                            
                                            
                                            503Net
      cash used in investing activities
                                            
                                            
                                            (122,494
                                            )
                                            
                                            
                                            (31,335
                                            )
                                            
                                            
                                            (49,271
                                            )Cash
      flows from financing activitiesLong-term
      borrowings
                                            
                                            
                                            55,661
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            29,500Principal
      payments on long-term debt
                                            
                                            
                                            (23,022
                                            )
                                            
                                            
                                            (15,702
                                            )
                                            
                                            
                                            (31,204
                                            )Payment
      of purchase obligation
                                            
                                            
                                            (14,561
                                            )
                                            
                                            
                                            (12,529
                                            )
                                            
                                            
                                            (6,102
                                            )Proceeds
      from issuance of common stock fromtreasury
                                            
                                            
                                            427
                                            
                                            
                                            
                                            626
                                            
                                            
                                            
                                            262Payments
      of dividends
                                            
                                            
                                            (35,268
                                            )
                                            
                                            
                                            (19,650
                                            )
                                            
                                            
                                            (1,172
                                            )Net
      cash used in financing activities
                                            
                                            
                                            (16,763
                                            )
                                            
                                            
                                            (47,255
                                            )
                                            
                                            
                                            (8,716
                                            )Increase
      (decrease) in cash and cash equivalents
                                            
                                            
                                            (27,975
                                            )
                                            
                                            
                                            79,826
                                            
                                            
                                            
                                            1,737Cash
      and cash equivalents at beginning of year
                                            
                                            
                                            94,858
                                            
                                            
                                            
                                            15,032
                                            
                                            
                                            
                                            13,295Cash
      and cash equivalents at end of year
                                            
                                            $
                                            66,883
                                            
                                            
                                            $
                                            94,858
                                            
                                            
                                            $
                                            15,032Supplemental
      cash flow information:Cash
      paid during the year for:Income
      taxes
                                            
                                            $
                                            44,327
                                            
                                            
                                            $
                                            82,223
                                            
                                            
                                            $
                                            15,679Interest
      (net of amount capitalized)
                                            
                                            
                                            6,164
                                            
                                            
                                            
                                            7,302
                                            
                                            
                                            
                                            6,426





See
accompanying notes.


40


Cal-Maine
Foods, Inc. and Subsidiaries


Notes
to Consolidated Financial Statements


(in
thousands, except share and per share amounts)


May
30, 2009




1.
Significant Accounting Policies





Principles
of Consolidation


The
consolidated financial statements include the accounts of Cal-Maine Foods, Inc.
and its subsidiaries (“we”, “us”, “our”, or the “Company”) and variable interest
entities in which the Company is the primary beneficiary. All significant
intercompany transactions and accounts have been eliminated in
consolidation.





Business


The
Company is engaged in the production, processing and distribution of shell eggs.
The Company's operations are significantly affected by the market price
fluctuation of its principal products sold, shell eggs, and the costs of its
principal feed ingredients, corn and other grains.





Primarily
all of the Company's sales are to wholesale egg buyers in the southeastern,
southwestern, mid-western and mid-Atlantic regions of the United States. Credit
is extended based upon an evaluation of each customer's financial condition and
credit history and generally collateral is not required. Credit losses have
consistently been within management's expectations. Two affiliated customers, on
a combined basis, accounted for 32.9%, 36.5% and 36.9% of the Company's net
sales in fiscal 2009, 2008 and 2007, respectively.





Fiscal Year


The
Company's fiscal year-end is on the Saturday nearest May 31, which was May 30,
2009 (52 weeks), May 31, 2008 (52 weeks), June 2, 2007 (52 weeks), for the most
recent three fiscal years.





Reclassifications


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





Variable
Interest Entities




Financial
Accounting Standards Board Interpretation (“FASB”) No. 46 (revised),
“Consolidation of Variable Interest Entities,” ("FIN 46") requires variable
interest entities ("VIEs”) to be consolidated if a party with ownership,
contractual or other financial interest in the VIE (a variable interest holder)
is obligated to absorb a majority of the risk of loss from the VIE's activities,
is entitled to receive a majority of the VIE's residual returns (if no party
absorbs a majority of the VIE's losses), or both. A variable interest holder
that consolidates the VIE is called the primary beneficiary.





Beginning
in the fourth quarter of fiscal 2007, the Company had variable interests in
three entities in which it is the primary beneficiary and accordingly
consolidates the statements of financial position, results of operations and
cash flows of these entities pursuant to FIN 46. The Company has a 37% ownership
interest in Texas Egg Products, LLC and leases to Texas Egg Products, LLC its
operating facility. Texas Egg Products, LLC processes shell eggs into liquid and
frozen egg products that are sold primarily to food manufacturers and to the
food service industry.




41





The
Company has a 43% ownership interest in Texas Egg, LLC and leases to Texas Egg,
LLC its operating facility. Texas Egg, LLC has 70% ownership interest in South
Texas Protein, LLC and subleases the facility to South Texas Protein, LLC. South
Texas Protein, LLC is a spent hen processing facility in the start-up phase of
its operations.





Total
assets of the three VIEs for which the Company is the primary beneficiary
totaled $2,772 for fiscal 2009 and $2,851 for fiscal 2008, net of elimination of
intercompany balances. The total assets of the three VIEs for which the Company
is the primary beneficiary represent 0.5% and 0.6 % of the total assets shown in
the consolidated balance sheets for fiscal periods 2009 and 2008,
respectively.





We are
the primary beneficiary for all our VIEs. Accordingly, they are consolidated in
our financial statements. The classifications of assets and liabilities in the
Company’s consolidated balance sheet associated with our VIEs are as follows at
May 30, 2009, and May 31, 2008:





May 30, 2009
                    
                    
                    May 31, 2008Current
      assetsCash
                    
                    $
                    763
                    
                    
                    $
                    406ReceivablesTrade
      receivables, less allowance for doubtful accounts of $18 and $24,
      respectively
                    
                    
                    892
                    
                    
                    
                    1,532Inventories
                    
                    
                    347
                    
                    
                    
                    269Prepaid
      expenses and other current assets
                    
                    
                    107
                    
                    
                    
                    154Total
      current assets
                    
                    
                    2,109
                    
                    
                    
                    2,361Other
      long-lived assets
                    
                    
                    489
                    
                    
                    
                    236Property,
      plant and equipment, less accumulated depreciation
                    
                    
                    174
                    
                    
                    
                    254Total
      assets
                    
                    $
                    2,772
                    
                    
                    $
                    2,851Current
      liabilitiesAccounts
      payable
                    
                    $
                    786
                    
                    
                    $
                    1,004Accrued
      expenses
                    
                    
                    34
                    
                    
                    
                    57Total
      current liabilities
                    
                    
                    820
                    
                    
                    
                    1,061Total
      liabilities
                    
                    
                    820
                    
                    
                    
                    1061Net
      assets
                    
                    $
                    1,952
                    
                    
                    $
                    1,791





In July
2009, Texas Egg, LLC was merged into South Texas Protein, LLC. The Company now
has a 43% ownership in South Texas Protein, LLC.





Use
of Estimates


The
preparation of the consolidated financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amount reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.




42





Cash
Equivalents


The
Company considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents. We maintain bank accounts that
are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250. At
times, cash balances may be in excess of the FDIC insurance limits. The Company
manages this risk through maintaining cash deposits and other highly liquid
investments in high quality financial institutions.





Investment
Securities


Our
investment securities consist of auction rate securities that we classify as
trading, and prefunded municipal bonds which we classify as available for sale.
Investment securities available-for-sale are accounted for in accordance with
FASB No. 115 (“FAS 115”), “Accounting for Certain Investments in Debt and Equity
Securities.” Available-for-sale securities are reported at fair value with
unrealized gains and losses excluded from earnings and reported in shareholders’
equity. Under FAS 115, securities purchased to be held for indeterminate periods
of time and not intended at the time of purchase to be held until maturity are
classified as available-for-sale securities with any unrealized gains and losses
reported as a separate component of accumulated other comprehensive loss. We
continually evaluate whether any marketable investments have been impaired and,
if so, whether such impairment is temporary or other than temporary. Trading
securities are bought and held principally for the purpose of selling them.
Unrealized holding gains and losses for trading securities are included in
earnings.





Our
auction rate securities were purchased from UBS Financial Services, Inc. (“UBS”)
and are long-term debt obligations, which were rated AAA at the date of
purchase. Although some of the obligations have maintained their AAA rating some
of the securities have declined to a rating of AA. The ratings on the auction
rate securities take into account credit support through insurance policies
guaranteeing each of the bonds’ payment of principal and accrued interest. In
the past, the auction process allowed investors to obtain immediate liquidity if
so desired by selling the securities at their face amounts. Liquidity for these
securities has historically been provided by an auction process that resets
interest rates on these investments on average every 7-35 days. However, as has
been reported in the financial press, the disruptions in the credit markets
adversely affected the auction market for these types of securities. The Company
believes that the appropriate presentation of these securities is long-term
investments as reflected in our condensed consolidated balance sheets at May 31,
2008 and May 30, 2009. Net unrealized holding losses on available-for-sale
securities of $852, net of income taxes, are included in accumulated other
comprehensive loss as of May 31, 2008.





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




43





By
accepting the Rights, we can no longer assert that we have the intent to hold
the auction rate securities until anticipated recovery. Accordingly, we have
classified our investments in auction rate securities as trading securities, as
defined by FAS No. 115, on the date of our acceptance of the Rights. As a
result, we are required to record these securities at fair value each period
until the Rights are exercised and the auction rate securities are redeemed. At
May 30, 2009 the fair value of our auction rate securities was $2,814 below par
value of which the entire amount has been charged to operations in fiscal 2009.
Because we will be permitted to put the auction rate securities back to UBS at
par value, we have accounted for the Rights as a separate asset that is measured
at its fair value, resulting in gains in fiscal 2009 in an amount equal to the
loss recognized on the auction rate securities. Although the Rights represent
the right to sell the securities back to UBS at par, we will periodically assess
the economic ability of UBS to meet that obligation in assessing the fair value
of the Rights. We will continue to classify the auction rate securities and the
related Rights as long-term investments until June 30, 2009, one year prior to
the expected settlement.





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





At May
30, 2009, we have $15,165 of current investment securities available-for-sale
consisting primarily of pre-funded municipal bonds and certificates of deposit
with maturities of three to six months when purchased. Due to the nature of the
investments, the cost at May 30, 2009 approximates fair value; therefore, other
comprehensive income (loss) has not been recognized as a separate component of
stockholders' equity in regards to the current investment securities
available-for-sale.





Investment
in Affiliates


The
equity method of accounting is used when the Company has a 20% to 50% interest
in other entities or when we exercise significant influence over the entity.
Under the equity method, original investments are recorded at cost and adjusted
by the Company’s share of undistributed earnings or losses of these entities.
Nonmarketable investments in which the Company has less than a 20% interest and
in which it does not have the ability to exercise significant influence over the
investee are initially recorded at cost, and periodically reviewed for
impairment.





Trade
Receivables


Trade
receivables are comprised primarily of amounts owed to the Company from
customers, which amounted to $43,682 at May 30, 2009 and $44,793 at May 31,
2008. Trade receivables are presented net of allowance for doubtful accounts of
$394 at May 30, 2009 and $313 at May 31, 2008. The Company extends credit to
customers based upon an evaluation of each customer’s financial condition and
credit history. Collateral is generally not required. Credit losses have
consistently been within management’s expectations. We have concentrations of
credit risk with two affiliated customers. We determine that a
concentration of credit risk exists when any one customer and its
affiliates represents greater than 10% of trade receivables. At May 30,
2009 and May 31, 2008, the two affiliated customers accounted for 30%
and 34% of the Company’s trade accounts receivable, respectively.





44





Allowance
for Doubtful Accounts


In the
normal course of business, we extend credit to our customers on a short-term
basis based upon an evaluation of each customer’s financial condition and credit
history. Collateral is generally not required. Although credit risks associated
with our customers are considered minimal, we routinely review our accounts
receivable balances and make provisions for probable doubtful accounts. In
circumstances where management is aware of a specific customer's inability to
meet its financial obligations to us (e.g. bankruptcy filings), a specific
reserve is recorded to reduce the receivable to the amount expected to be
collected. For all other customers, we recognize reserves for bad debts based on
the length of time the receivables are past due, generally 100% for amounts more
than 60 days past due.





Inventories


Inventories
of eggs, feed, supplies and livestock are valued principally at the lower of
cost (first-in, first-out method) or market.





The cost
associated with flocks, consisting principally of chick purchases, feed, labor,
contractor payments and overhead costs, are accumulated during a growing period
of approximately 22 weeks. Flock costs are amortized over the productive lives
of the flocks, generally one to two years.





Property,
Plant and Equipment


Property,
plant and equipment are stated at cost. Depreciation is provided by the
straight-line method over the estimated useful lives, which are 15 to 25 years
for buildings and improvements and 3 to 12 years for machinery and equipment.
Repairs and maintenance are expensed as incurred. Expenditures that increase the
value or productive capacity of assets are capitalized. When property, plant,
and equipment are retired, sold, or otherwise disposed of, the asset’s carrying
amount and related accumulated depreciation are removed from the accounts and
any gain or loss is included in operations. The Company capitalizes interest
cost incurred on funds used to construct property, plant, and equipment. The
capitalized interest is recorded as part of the asset to which it relates and is
amortized over the asset’s estimated useful life.





Impairment
of Long-Lived Assets


The
Company reviews the carrying value of long-lived assets, other than goodwill,
for impairment whenever events and circumstances indicate that the carrying
value of an asset may not be recoverable from the estimated future cash flows
expected to result from its use and eventual disposition. In cases where
expected future cash flows (undiscounted and without interest charges) are less
than the carrying value, an impairment loss is recognized equal to an amount by
which the carrying value exceeds the fair value of assets. The factors
considered by management in performing this assessment include current operating
results, trends and prospects, the manner in which the property is used, and the
effects of obsolescence, demand, competition, and other economic
factors.





Intangible
Assets


Included
in other assets are loan acquisition costs, which are amortized over the life of
the related loan. Separable intangible assets, which include franchise fees,
non-compete agreements and customer relationship intangibles, are amortized over
their estimated useful lives of 3 to 25 years.





45





Goodwill


Goodwill
represents the excess of cost of business acquisitions over the fair value of
the net identifiable net assets acquired. Goodwill is reviewed for impairment
annually or more frequently if impairment indicators arise.





Accrued
Self Insurance


We use a
combination of insurance and self-insurance mechanisms to provide for the
potential liabilities for health and welfare, workers’ compensation, auto
liability and general liability risks. Liabilities associated with our risks
retained are estimated, in part, by considering claims experience, demographic
factors, severity factors and other actuarial assumptions.





Dividends


Effective
November 30, 2007, the Company’s Board of Directors approved the adoption of a
variable dividend policy to replace the Company’s fixed dividend policy.
Commencing with the third quarter of fiscal 2008, Cal-Maine pays a dividend to
shareholders of its Common Stock and Class A Common Stock on a quarterly basis
for each quarter for which the Company reports net income computed in accordance
with generally accepted accounting principles in an amount equal to one-third
(1/3) of such quarterly income. Dividends are paid to shareholders of record as
of the 60th day
following the last day of such quarter, except that effective July 23, 2009 the
Board of Directors approved a changed in the dividend policy whereby for the
fourth fiscal quarter only, the Company will pay dividends to shareholders of
record on the 70th day
after the quarter end, and are payable on the 15th day
following the record date. Following a quarter for which the Company does not
report net income, the Company shall not pay a dividend for a subsequent
profitable quarter until the Company is profitable on a cumulative basis
computed from the date of the last quarter for which a dividend was paid. As of
fiscal 2009 & fiscal 2008, we accrued dividends payable of $3,422 and
$12,186 respectively, applicable to the Company’s fourth quarter net income for
each fiscal year.





The
amount of the dividend payable on each share of Class A Common Stock was payable
in an amount equal to 95% of the amount paid on each share of Common Stock.
Effective October 2, 2008, our Class A Common Stock is paid at a rate equal to
the rate on our Common Stock.





Treasury
Stock


Treasury
stock purchases are accounted for under the cost method whereby the entire cost
of the acquired stock is recorded as treasury stock. Gains and losses on the
subsequent reissuance of shares are credited or charged to capital in excess of
par value using the average-cost method.





Revenue
Recognition and Delivery Costs


The
Company recognizes revenue only when all of the following criteria have been
met:


·
            Persuasive
      evidence of an arrangement exists;·
            Delivery
      has occurred;


·
            The
      fee for the arrangement is determinable; and·
            Collectability
      is reasonably assured.





The
Company believes the above criteria are met upon delivery and acceptance of the
product by our customers. Costs to deliver product to customers are included in
selling, general and administrative expenses in the accompanying consolidated
statements of operations and totaled $26,708, $21,703, and $21,105, in fiscal
2009, 2008 and 2007, respectively.




46





Advertising
Costs


The
Company expenses advertising costs as incurred. Total advertising costs were
$1,190 in fiscal 2009, $778 in fiscal 2008, and $745 in fiscal 2007. On a
comparable basis, excluding the acquisition of Tampa Farms, LLC and Zephyr Egg,
LLC, advertising cost for fiscal 2009 was $872.





Income
Taxes


Income
taxes have been provided using the liability method. Deferred income taxes
reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes.





Stock
Based Compensation


The
Company accounts for share based payments under the provisions of FASB Statement
No. 123(R), “Share Based Payments” (“FAS 123(R)”). FAS 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. FAS 123(R) also requires the benefits of
tax deductions in excess of recognized compensation cost to be reported as a
financing cash flow.





Net
Income per Common Share


Basic net
income per share is based on the weighted average common shares outstanding.
Diluted net income per share includes any dilutive effects of options and
warrants outstanding.





Basic net
income per share was calculated by dividing net income by the weighted-average
number of common shares outstanding during the period. Diluted net income per
share was calculated by dividing net income by the weighted-average number of
common shares outstanding during the period plus the dilutive effects of stock
options. The computations of basic net income per share and diluted net income
per share are as follows








May 30, 2009
                    
                    
                    May 31, 2008
                    
                    
                    June 2, 2007Net
      income
                    
                    $
                    79,500
                    
                    
                    $
                    151,861
                    
                    
                    $
                    36,656Basic
      weighted-average common shares
                    
                    
                    23,769
                    
                    
                    
                    23,677
                    
                    
                    
                    23,526Effect
      of dilutive securities:Common
      stock options
                    
                    
                    42
                    
                    
                    
                    56
                    
                    
                    
                    73Dilutive
      potential common shares
                    
                    
                    23,811
                    
                    
                    
                    23,733
                    
                    
                    
                    23,599Net
      income per common share:Basic
                    
                    $
                    3.34
                    
                    
                    $
                    6.41
                    
                    
                    $
                    1.56Diluted
                    
                    $
                    3.34
                    
                    
                    $
                    6.40
                    
                    
                    $
                    1.55





Contingencies


Certain
conditions may exist as of the date the financial statements are issued, which
may result in a loss to the Company but which will only be resolved when one or
more future events occur or fail to occur. The Company’s management and its
legal counsel assess such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies related to
legal proceedings that are pending against the Company or unasserted claims that
may result in such proceedings, the Company’s legal counsel evaluates the
perceived merits of any legal proceedings or unasserted claims as well as the
perceived merits of the amount of relief sought or expected to be sought
therein.




47





If the
assessment of a contingency indicates that it is probable that a material loss
has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial statements. If
the assessment indicates that a potentially material loss contingency is not
probable, but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the
range of possible loss if determinable and material, would be
disclosed.





Loss
contingencies considered remote are generally not disclosed unless they involve
guarantees, in which case the nature of the guarantee would be
disclosed.





Impact
of Recently Issued Accounting Standards





Adopted





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




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




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




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




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




Our
financial assets consisted of current investment securities available-for-sale
at May 30, 2009 which we consider to be classified as Level 2 and our long-term
investment securities classified as trading which we consider to be classified
as Level 3.





In
February 2007, the FASB issued FASB Statement No. 159, "Establishing the Fair
Value Option for Financial Assets and Liabilities" (“FAS 159”), to permit all
entities to choose to elect to measure eligible financial instruments at fair
value. We adopted FAS 159 effective June 1, 2008.   We have elected
the fair value option for our Auction Rate Security Rights.  We agreed
to accept these Auction Rate Security Rights from UBS on November 3,
2008.


48


Not Yet
Adopted





In
December 2007, the FASB issued FASB Statement No. 141 (Revised 2007), or (R),
“Business Combinations” (“FAS 141(R)”). FAS 141(R) retained the fundamental
requirements in FAS 141 that the acquisition method of accounting (which FAS 141
called the purchase method) be used for all business combinations and for an
acquirer to be identified or each business combination.  FAS 141(R),
which is broader in scope than that of FAS 141, which applied only to business
combinations in which control was obtained by transferring consideration,
applies the same method of accounting (the acquisition method) to all
transactions and other events in which one entity obtains control over one or
more other businesses. FAS 141(R) also makes certain other modifications to FAS
141. This statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008, which will begin with our 2010
fiscal year. Earlier adoption is prohibited.  The Company is currently
assessing the effect FAS 141(R) may have on its consolidated results of
operations and financial position.




In
December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling Interests
in Consolidated Financial Statements- An amendment of Accounting Research
Bulletin (“ARB”) (“FAS 160”).” FAS 160 amends ARB No. 51 to establish accounting
and reporting standards for the noncontrolling interest in a subsidiary and for
the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest
in a subsidiary, which is sometimes referred to as minority interest, is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Among other requirements, this
statement requires consolidated net income to be reported at amounts that
include the amounts attributable to both the parent and the noncontrolling
interest. It also requires disclosure, on the face of the consolidated income
statement, of the amounts of consolidated net income attributable to the parent
and to the noncontrolling interest. FAS 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008, which will begin with our 2010 fiscal year. Earlier adoption is
prohibited. The Company is currently assessing the effect FAS 160 may have on
its consolidated results of operations and financial position.




In
April 2008, the FASB posted FASB Staff Position No. FAS 142-3,
Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”), which
applies to recognized intangible assets that are accounted for pursuant to SFAS
No. 142, Goodwill and Other Intangible Assets. FSP FAS 142-3 amends the
factors an entity must consider when developing renewal or extension assumptions
used in determining the useful life of a recognized intangible asset. It also
requires entities to provide certain disclosures about its assumptions. FSP FAS
142-3 is effective for financial statements issued for fiscal years beginning
after December 15, 2008 and interim periods within those fiscal
years.  This statement is effective for the Company in fiscal 2010.
The Company is currently evaluating the impact of the adoption of these
requirements on its financial statements.




In June
2008, the FASB issued FASB Staff Position EITF 03-6-1, “Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities” (“FSP EITF 03-6-1”). Under the FSP, unvested share-based payment
awards that contain rights to receive nonforfeitable dividends (whether paid or
unpaid) are participating securities, and should be included in the two-class
method of computing EPS. The FSP is effective for fiscal years beginning after
December 15, 2008, and interim periods within those years. This statement
is effective for the Company in fiscal 2010. The Company does not expect the
adoption of FSP EITF 03-6-1 to have a material effect on its consolidated
financial statements.


49


In May
2009, the FASB issued FASB Statement No. 165, “Subsequent Events” (“FAS 165”).
FAS 165 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued.  This statement does not apply to subsequent events or
transactions that are within the scope of other applicable generally accepted
accounting principles that provide different guidance on the accounting
treatment for subsequent events or transactions. FAS 165 would apply to both
interim financial statements and annual financial statements and should not
result in significant changes in the subsequent events that are reported. FAS
165 introduces the concept of financial statements being available to be issued.
It requires the disclosure of the date through which a Company has evaluated
subsequent events and the basis for that date, whether that represents the date
the financial statements were issued or were available to be issued. FAS 165
should alert all users of financial statements that an entity has not evaluated
subsequent events after that date in the set of financial statements being
presented. This statement is effective for interim or annual reporting periods
ending after June 15, 2009, which corresponds to the Company’s first quarter of
fiscal 2010.




In June
2009, the FASB issued FASB Statement No. 167 “Amendments to FASB Interpretation
No. 46(R)” (“FAS 167”). FAS 167 is a revision to FASB Interpretation
No. 46 (Revised December 2003), Consolidation of Variable Interest
Entities, and changes how a reporting entity determines when an entity that is
insufficiently capitalized or is not controlled through voting (or similar
rights) should be consolidated. The determination of whether a reporting entity
is required to consolidate another entity is based on, among other things, the
other entity’s purpose and design and the reporting entity’s ability to direct
the activities of the other entity that most significantly impact the other
entity’s economic performance. FAS 167 will require a reporting entity to
provide additional disclosures about its involvement with variable interest
entities and any significant changes in risk exposure due to that involvement. A
reporting entity will be required to disclose how its involvement with a
variable interest entity affects the reporting entity’s financial statements.
FAS 167 will be effective at the start of a reporting entity’s first fiscal year
beginning after November 15, 2009. This statement is effective for the
Company in fiscal 2011.  Early application is not permitted. The
Company is currently evaluating the impact, if any, of adoption of FAS 167 on
its financial statements.




In June
2009, the FASB issued FASB Statement No. 168 “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles – A
Replacement of FASB Statement No. 162” (“FAS 168”). FAS 168 establishes the
FASB Accounting Standards
CodificationTM(Codification) as the
single source of authoritative U.S. generally accepted accounting principles
(U.S. GAAP) recognized by the FASB to be applied by nongovernmental entities.
Rules and interpretive releases of the SEC under authority of federal securities
laws are also sources of authoritative U.S. GAAP for SEC registrants. FAS 168
and the Codification are effective for financial statements issued for interim
and annual periods ending after September 15, 2009, which corresponds to
the Company’s second quarter of fiscal 2010. When effective, the Codification
will supersede all existing non-SEC accounting and reporting standards. All
other non-grandfathered non-SEC accounting literature not included in the
Codification will become nonauthoritative. Following FAS 168, the FASB will not
issue new standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts. Instead, the FASB will issue Accounting Standards
Updates, which will serve only to: (a) update the
Codification; (b) provide background
information about the guidance; and (c) provide the bases for
conclusions on the change(s) in the Codification. The adoption of FAS 168 will
not have an impact on the Company’s consolidated financial
statements.




50


2.  Acquisitions





Hillandale,
LLC Acquisition


The
Company entered into an Agreement to Form a Limited Liability Company, Transfer
Assets Thereto, and Purchase Units of Membership Therein, dated July 28, 2005,
with Hillandale Farms, Inc. and Hillandale Farms of Florida, Inc. (together,
"Hillandale"), and the Hillandale shareholders (the "Agreement"). Under the
terms of the Agreement, the Company acquired 51% of the units of membership in
Hillandale, LLC for cash of approximately $27,000 October 12, 2005. The
remaining 49% of the units of membership in Hillandale, LLC will be acquired in
essentially equal annual installments over a four-year period, with the purchase
price of the units equal to their book value at the time of purchases as
calculated in accordance with the terms of the Agreement. The total preliminary
purchase price was estimated to be as follows:





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





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




Assets
      acquired:Cash
      and cash equivalents
                  
                  $
                  3,918Receivables
                  
                  
                  7,181Inventories
                  
                  
                  11,330Prepaid
      and other assets
                  
                  
                  2,798Property,
      plant and equipment
                  
                  
                  49,531Total
      assets acquired
                  
                  
                  74,758Liabilities
      assumed:Accounts
      payable and accrued expenses
                  
                  
                  3,567Notes
      payable and long-term debt
                  
                  
                  21,794Total
      liabilities assumed
                  
                  
                  25,361Net
      assets acquired
                  
                  $
                  49,397





In August 2006, in accordance with the
Agreement, The Company purchased, for $6,102, an additional 13% of the units of
membership of Hillandale, LLC based on the book value as of July 29,
2006.  In August 2007, in accordance with the Agreement, The Company
purchased, for $6,769, an additional 12% of the units of membership of
Hillandale, LLC based on the book value as of July 28, 2007.  During
fiscal 2008, an early payment of $5,700 was paid on the purchase
obligation.  The Company’s obligation to acquire the remaining 24% of
Hillandale, LLC was recorded at its present value of $19,956 as of May 31, 2008
of which $10,358 is included in current liabilities and $9,598 is included in
other non-current liabilities in the accompanying consolidated balance
sheet.  In August 2008, in accordance with the Agreement, the Company
purchased, for $9,185, an additional 12% of the units of membership of
Hillandale, LLC based on the book value as of July 26,
2008.   During fiscal 2009, early payments of $5,376 were paid on
the purchase obligation.   The Company’s obligation to acquire
the remaining 12% of Hillandale, LLC is recorded at its present value of $8,400
as of May 30, 2009, all of which is included in current liabilities in the
accompanying consolidated balance sheet. The Company will purchase the final 12%
of Hillandale LLC based on the book value of the units of membership as of July
25, 2009.


51


During
fiscal 2009 and 2008, the Company revised the estimated purchase obligation
upward for the remaining 12% and 24% interest, respectively, to be acquired in
Hillandale, LLC, based on the effect of the expected earnings increase on the
book value of the membership units.  For fiscal 2009 and 2008, this
additional cost exceeded the estimated fair value of net assets acquired by
$2,527 and $9,257 respectively, which has been assigned to goodwill on our
consolidated balance sheets.





Hillandale,
LLC's production facilities are principally located in Florida. Hillandale, LLC
is a fully integrated shell egg producer with its own feed mills, hatchery,
production, processing and distribution facilities.





Prior to
the acquisition, the Company 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, the Company's membership in
AEP was accounted for by the equity method. Effective with our acquisition of
Hillandale, LLC, the Company acquired a majority of the membership interest in
AEP. Accordingly, the financial statements of AEP have been consolidated with
our financial statements.  AEP, located in Georgia, processes shell
eggs into liquid and frozen egg products that are sold primarily to food
manufacturers and to the food service industry.  AEP has contract
shell egg production for approximately 50% of its shell egg requirements and
purchases the balance from regional egg markets.





Green
Forest Foods, LLC Acquisition





As of
June 3, 2006, the Company owned 50 percent of Green Forest Foods, LLC, which was
accounted for under the equity method of accounting.  On January 24,
2007, we purchased the remaining 50 percent interest in Green Forest Foods, LLC
for $2,000 in cash. We allocated the purchase price to the net assets acquired
consisting principally of flock inventories and facilities leased under a
capital lease. Effective with the purchase, the results of operations of Green
Forest Foods, LLC are consolidated in the Company’s financial
statements.  Green Forest Foods, LLC located in Green Forest,
Arkansas, had been jointly owned and operated by Pier 44 Properties, LLC, an
unaffiliated entity, and the Company, since January 2006. Subsequent to the
acquisition, the Company paid the capital lease obligation of approximately
$10,500 in full. Green Forest Foods, LLC produces, processes, and markets eggs
from approximately one million laying hens, along with pullet growing for
replacements.





Benton
County Foods, LLC Acquisition





On April
20, 2007, through our 90% owned subsidiary, Benton County Foods, LLC, we
acquired the assets and business of the shell egg division of George’s, Inc., an
unaffiliated entity, located near Siloam Springs, Arkansas.  Benton
County Foods, LLC is a newly formed company jointly owned by the Company and PW3
Holdings, LLC, an unaffiliated entity. The purchase price totaled $10,900 in
cash. The assets acquired include approximately one million laying hens, and a
feed mill in Watts, Oklahoma. As part of this acquisition, Benton County Foods,
LLC will lease growing facilities from George's Inc. for replacement pullets.
CCF Brands (an affiliate of PW3 Holdings, LLC) has a supply agreement in place
for approximately 50 percent of the eggs produced by the Benton County Foods,
LLC. Eggs are marketed to retail food businesses and food service distributors
in the south central region of the United States. The results of operations of
the shell egg business acquired are included in the Company’s consolidated
financial statements subsequent to the acquisition date.


52


On August
10, 2009, we purchased the remaining 10% minority ownership interest in Benton
County Foods, LLC for $508.





Zephyr
Egg, LLC Acquisition





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





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





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





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


53


Tampa
Farms, LLC Acquisition





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





The
assets acquired by the Company include approximately four million laying hens in
modern, in-line facilities, pullet growing facilities, two feed mills and a
fleet of delivery trucks for both eggs and feed.  In addition, the
Company acquired the 4-GrainTM brand
of specialty eggs, certain flocks of contract laying hens, and the Seller’s
12.88% interest in American Egg Products, Inc, which gives us approximately a
99.5% ownership interest in American Egg Products, Inc.  To facilitate
the sale of the Seller’s Business, the Seller transferred all of its assets, but
none of its liabilities, to Tampa Farms, LLC (“Tampa Farms”), a Florida limited
liability company. Under the Agreement, the Seller sold to the Company all of
the issued and outstanding membership interests (the “Membership Interests”) of
Tampa Farms to the Company in accordance with the terms of the
Agreement.





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





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





Inventories
                    
                    $
                    11,971Prepaid
      expenses
                    
                    
                    350Other
      investments
                    
                    
                    901Property,
      plant, and equipment
                    
                    
                    33,222Intangible
      assets
                    
                    
                    10,600Goodwill
                    
                    
                    4,600Total
      asset acquired
                    
                    
                    61,644Total
      liabilities assumed
                    
                    
                    -Net
      assets acquired
                    
                    $
                    61,644





The
purchase price exceeded the fair values of the tangible assets acquired by
$15,200.  Of this amount $10,600 represents the cost of acquired
intangible assets, which is made up of franchise rights of $1,900 (8-year useful
life) and a customer relationship intangible of $8,700 (8-year useful life). The
remainder of the excess purchase price, amounting to $4,600 was recorded as
goodwill, of which the entire amount is expected to be deductible for tax
purposes.  The goodwill arising from the acquisition consists largely
of the synergies and economies of scale expected from combining the operations
of the Company and Tampa Farms, LLC.


54


The
following unaudited pro forma information was prepared assuming that the
acquisitions of Zephyr Egg, LLC and Tampa Farms, LLC had taken place at the
beginning of fiscal 2008. In preparing the pro forma financial information,
various assumptions were made; therefore, the Company does not imply that the
future results will be indicative of the following pro forma
information:




May
      30, 2009
                  
                  
                  May
      31, 2008Net
      sales
                  
                  $
                  992,054
                  
                  
                  $
                  1,157,285Net
      income
                  
                  
                  81,301
                  
                  
                  
                  175,298Net
      income per share – basic
                  
                  
                  3.42
                  
                  
                  
                  7.40Net
      income per share - diluted
                  
                  
                  3.41
                  
                  
                  
                  7.39





3.  Investment
in Affiliates





The
Company owns 50% each of Specialty Eggs LLC and Delta Egg Farm, LLC ("Delta
Egg") and 33.3% of Dallas Reinsurance, Co., LTD. as of May 30,
2009.  Investment in affiliates, recorded using the equity method of
accounting are included in “Other Investments” in the accompanying consolidated
balance sheets and totaled $16,444 and $12,189 at May 30, 2009 and at May 31,
2008, respectively.  Equity in income of $2,612, $6,324, and $1,699,
from these entities has been included in the consolidated statements of income
for fiscal 2009, 2008, and 2007, respectively.





The
Company is a guarantor of 50% of Delta Egg's long-term debt, which totaled
approximately $13,750 at May 30, 2009.  Delta Egg's long-term debt is
secured by substantially all fixed assets of Delta Egg and is due in monthly
installments through fiscal 2018.  Delta Egg is engaged in the
production, processing and distribution of shell eggs.  The other 50%
owner also guarantees 50% of the debt.  The guarantee arose when Delta
Egg borrowed funds to construct its production and processing facility in
1999.  The guarantee would be required if Delta Egg is not able to pay
the debt.  Management of the Company believes this possibility is
unlikely because Delta Egg is now well capitalized.





At May
30, 2009 and May 31, 2008, "Other Investments" as shown on the Company's
consolidated balance sheet include the cost of an investment in Egg-Land's Best,
Inc., in which the Company has a 29.1% and 25.9% equity interest, respectively
at those dates. Egg-Land’s Best operates as a cooperative.   The
Company cannot exert significant influence over Egg-Land's Best, Inc.'s
operating and financial activities; therefore, the Company accounts for this
investment using the cost method.   The carrying value of this
investment at May 30, 2009 and May 31, 2008 was $768 and $440,
respectively.


55


4.  Inventories





Inventories
consisted of the following:





May
      30 2009
                  
                  
                  May
      31 2008Flocks
                  
                  $
                  64,040
                  
                  
                  $
                  49,176Eggs
                  
                  
                  6,880
                  
                  
                  
                  5,095Feed
      and supplies
                  
                  
                  26,615
                  
                  
                  
                  22,495$
                  97,535
                  
                  
                  $
                  76,766





5.
Prepaid expenses and Other Current Assets





Prepaid
expenses and other current assets consisted of the following at May 30, 2009 and
May 31, 2008:





May
      30, 2009
                  
                  
                  May
      31, 2008Refundable
      income taxes
                  
                  $
                  16,065
                  
                  
                  $
                  2,292Prepaid
      insurance
                  
                  
                  660
                  
                  
                  
                  1,843Other
      prepaid expenses
                  
                  
                  459
                  
                  
                  
                  404Other
      current assets
                  
                  
                  290
                  
                  
                  
                  172$
                  17,474
                  
                  
                  $
                  4,711





6.  Goodwill
and Other Intangible Assets





Goodwill
and other intangibles consisted of the following:





Other IntangiblesGoodwill
                
                
                Franchise
                  rights
                
                
                Customer
                  relationships
                
                
                Non-compete
                  agreements
                
                
                TotalBalance
      June 2, 2007
                
                $
                4,195
                
                
                $
                354
                
                
                $
                -
                
                
                $
                -
                
                
                $
                4,549Additions
                
                
                9,257
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                9,257Amortization
                
                
                -
                
                
                
                (52
                )
                
                
                -
                
                
                
                -
                
                
                
                (52
                )Balance
      May 31, 2008
                
                
                13,452
                
                
                
                302
                
                
                
                -
                
                
                
                -
                
                
                
                13,754Additions
                
                
                9,003
                
                
                
                3,979
                
                
                
                10,900
                
                
                
                1,500
                
                
                
                25,382Amortization
                
                
                -
                
                
                
                (367
                )
                
                
                (796
                )
                
                
                (462
                )
                
                
                (1,625
                )Balance
      May 30, 2009
                
                $
                22,455
                
                
                $
                3,914
                
                
                $
                10,104
                
                
                $
                1,038
                
                
                $
                37,511





For the
Other Intangibles listed above, the gross carrying amounts and accumulated
amortization are as follows:





May 30, 2009
                
                
                May 31, 2008Gross carrying
                  amount
                
                
                Accumulated
                  amortization
                
                
                Gross carrying
                  amount
                
                
                Accumulated
                  amortizationAmortized
      intangible assets:Franchise
      rights
                
                $
                5,284
                
                
                $
                (1,370
                )
                
                $
                1,305
                
                
                $
                (1,003
                )Customer
      relationships
                
                
                10,900
                
                
                
                (796
                )
                
                
                -
                
                
                
                -Non-compete
      agreements
                
                
                1,500
                
                
                
                (462
                )
                
                
                -
                
                
                
                -Total
                
                $
                17,684
                
                
                $
                (2,628
                )
                
                $
                1,305
                
                
                $
                (1,003
                )


56


No
significant residual value is estimated for these intangible assets. Aggregate
amortization expense for the years ended May 30, 2009, and May 31, 2008, totaled
$1,625 and $52, respectively. The following table represents the total estimated
amortization of intangible assets for the five succeeding years:





For
      fiscal period
                  
                  Estimated
      amortization expense2010
                  
                  $
                  2,3832011
                  
                  
                  2,3832012
                  
                  
                  1,9222013
                  
                  
                  1,8832014
                  
                  
                  1,883Thereafter
                  
                  
                  4,602Total
                  
                  $
                  15,056





7.
Property, Plant and Equipment





Property,
plant and equipment consisted of the following:





May
      30
                  
                  
                  May
      312009
                  
                  
                  2008Land
      and improvements
                  
                  $
                  57,277
                  
                  
                  $
                  44,923Buildings
      and improvements
                  
                  
                  196,339
                  
                  
                  
                  167,312Machinery
      and equipment
                  
                  
                  220,170
                  
                  
                  
                  183,155Construction-in-progress
                  
                  
                  5,541
                  
                  
                  
                  14,936479,327
                  
                  
                  
                  410,326Less:
      accumulated depreciation
                  
                  
                  229,369
                  
                  
                  
                  203,833$
                  249,958
                  
                  
                  $
                  206,493





Depreciation expense was $27,933, $24,965 and $21,164 in
fiscal 2009, 2008 and 2007, respectively.





We are
constructing a new integrated layer production complex in Farwell, TX to replace
our Albuquerque, New Mexico complex, which ceased egg production in fiscal 2007.
We expected to complete this facility in January 2010 at a cost of approximately
$30 million.  As of May 30, 2009 capital expenditures related to
construction of this complex totaled $27.2 million.  The remaining
future capital expenditures will be funded by cash flows from operations or
additional borrowings as necessary.  Due to the fire at this facility
subsequent to year end as explained in note 17, completion of this facility may
be delayed by up to one year.


57


8.  Leases





Future
minimum payments under noncancelable operating leases that have initial or
remaining noncancelable terms in excess of one year at May 30, 2009 are as
follows:





2010
                  
                  $
                  2,6592011
                  
                  
                  1,7182012
                  
                  
                  1,1652013
                  
                  
                  9772014
                  
                  
                  449Thereafter
                  
                  
                  1,022Total
      minimum lease payments
                  
                  $
                  7,990





Substantially
all of the leases provide that the Company pays taxes, maintenance, insurance
and certain other operating expenses applicable to the leased
assets.  The Company has guaranteed under certain operating leases the
residual value of transportation equipment at the expiration of the
leases.  Rent expense was $3,864, $5,032 and $8,390 in fiscal 2009,
2008 and 2007, respectively, primarily for the lease of certain operating
facilities, equipment and transportation equipment.  Included in rent
expense are vehicle rents totaling $661, $660 and $840 in fiscal 2009, 2008 and
2007, respectively.


58


9.  Credit
Facilities and Long-Term Debt


Long-term
debt consisted of the following:





May
      30
                  
                  
                  May
      312009
                  
                  
                  2008Line
      of credit at no net cost, due in its entirety in 2011
                  
                  $
                  25,161
                  
                  
                  $
                  -Note
      payable at 5.99%, due in monthly principal installments of $150, plus
      interest, maturing in 2021
                  
                  
                  23,500
                  
                  
                  
                  25,300Series
      A Senior Secured Notes at 5.45%, due in monthly installments of $176, plus
      interest, beginning in January 2009 through 2018
                  
                  
                  18,947
                  
                  
                  
                  -Note
      payable at 6.35%, due in monthly principal installments of $100, plus
      interest, maturing in 2017
                  
                  
                  17,500
                  
                  
                  
                  18,700Note
      payable at 8.26%, due in monthly installments of $155, including interest,
      maturing in 2015
                  
                  
                  12,242
                  
                  
                  
                  13,057Note
      payable at 6.80%, due in monthly principal installments of $165, plus
      interest, maturing in 2014
                  
                  
                  9,110
                  
                  
                  
                  11,090Note
      payable at 6.40%, due in monthly principal installments of $35, plus
      interest, maturing in 2018
                  
                  
                  5,660
                  
                  
                  
                  6,080Note
      payable at 7.06%, due in monthly installments of $53, including interest,
      maturing in 2015
                  
                  
                  4,325
                  
                  
                  
                  4,641Note
      payable at 6.87%, due in monthly installments of $45, including interest,
      maturing in 2015
                  
                  
                  3,678
                  
                  
                  
                  3,950Industrial
      revenue bonds at 6.10%, due in monthly installments of $146, including
      interest, maturing in 2011
                  
                  
                  3,024
                  
                  
                  
                  4,537Note
      payable at 6.07%, due in monthly principal installments of $33, plus
      interest, maturing in 2015
                  
                  
                  2,168
                  
                  
                  
                  2,567Series
      B Senior Secured Notes at 7.18%, due in annual principal installments of
      $2,143 through 2009 with interest due semi-annually
                  
                  
                  2,143
                  
                  
                  
                  4,286Note
      payable at 5.80%, due in annual principal installments of $250 through
      2015 with interest due quarterly
                  
                  
                  1,500
                  
                  
                  
                  1,750Note
      payable at 7.5%, due in monthly installments of $36, including interest,
      maturing in 2012
                  
                  
                  831
                  
                  
                  
                  1,187Other
                  
                  
                  -
                  
                  
                  
                  5129,789
                  
                  
                  
                  97,150Less
      current maturities
                  
                  
                  13,806
                  
                  
                  
                  11,470$
                  115,983
                  
                  
                  $
                  85,680


59


The
aggregate annual fiscal year maturities of long-term debt at May 30, 2009 are as
follows:





2010
                  
                  $
                  13,8062011
                  
                  
                  36,7842012
                  
                  
                  9,9602013
                  
                  
                  10,0662014
                  
                  
                  9,430Thereafter
                  
                  
                  49,743$
                  129,789





The
Company has a $40,000 line of credit with three banks, $3,933 and $2,700 of
which was utilized for standby letters of credit at May 30, 2009 and May 31,
2008, respectively.  The balance of the credit facility remains
undrawn.  The line of credit, which expires on December 31, 2009, is
limited in availability based upon accounts receivable and
inventories.  The Company had $36,067 available to borrow under the
line of credit at May 30, 2009.  Borrowings under the line of credit
bear interest at margins (1.5% at May 30, 2009) above the federal funds rate
based upon the Company's leverage, as defined.  Facilities fees of
0.3% per annum are payable quarterly on the unused portion of the
line.





The
Company also has a line of credit with a financial institution limited to the
par value of auction rate securities held at the financial
institution.  The Company has utilized $25,161 of this $33,150 line as
of May 30, 2009.  Interest expense on this revolving line of credit is
equal ot the interest income we receive on the auction rate securities held in
our account.  Borrowings on the line of credit become due and payable
as the auction rate securities are liquidated.  Accordingly, we have
classified borrowings under this revolving line of credit as long-term debt,
since the auction rate securities that collateralize this debt are
correspondingly classified as long-term.





Substantially
all trade receivables, auction rate securities and inventories collateralize our
lines of credit and property, plant and equipment collateralize our notes
payable and senior secured notes. Unless otherwise approved by our lenders, we
are required by provisions of our loan agreements to (1) maintain minimum levels
of working capital (ratio of not less than 1.25 to 1) and net worth (minimum of
$90.0 million tangible net worth, plus 45% of cumulative net income); (2) limit
dividends paid in any given quarter to not exceed an amount equal to one third
of the previous quarter’s consolidated net income (allowed if no events of
default), capital expenditures not to exceed $60,000,000 in any twelve month
period, lease obligations and additional long-term borrowings (total funded debt
to total capitalization not to exceed 55%); and (3) maintain various current and
cash-flow coverage ratios (1.25 to 1), among other restrictions. At May 30,
2009, we were in compliance with the financial covenant requirements of all loan
agreements. Under certain of the loan agreements, the lenders have the option to
require the prepayment of any outstanding borrowings in the event we undergo a
change in control, as defined.  Our debt agreements also require the
Chief Executive Officer of the Company, or his family, to maintain ownership of
not less than 50% of the outstanding voting stock of the Company.





Interest
of $6,679, $7,697 and $6,992 was paid during fiscal 2009, 2008 and 2007,
respectively.  Interest of $515, $395 and $566 was capitalized for
construction of certain facilities during fiscal 2009, 2008 and 2007,
respectively.


60


10.  Employee
Benefit Plans





The
Company maintains a medical plan that is qualified under Section 401(a) of the
Internal Revenue Code and not subject to tax under present income tax
laws.  Under its plan, the Company self-insures, in part, coverage for
substantially all full-time employees with coverage by insurance carriers for
certain stop-loss provisions for losses greater than $200 for substantially all
participants.  The Company's medical plan expense including accruals
for incurred but not reported claims were approximately $6,507, $4,081 and
$4,632 in fiscal 2009, 2008 and 2007, respectively.





The
Company has a 401(k) plan which covers substantially all
employees.  Participants in the Plan may contribute up to the maximum
allowed by Internal Revenue Service regulations.  The Company does not
make contributions to the 401(k) plan.





The
Company has an employee stock ownership plan (ESOP) that covers substantially
all employees.  The Company makes contributions to the ESOP of 3% of
participants' compensation, plus an additional amount determined at the
discretion of the Board of Directors.  Contributions may be made in
cash or the Company's common stock.  Company contributions to the ESOP
vest immediately.  The Company's contributions to the plan were
$1,154, $1,214, $1,115 and in fiscal 2009, 2008 and 2007,
respectively.





The
Company has deferred compensation agreements with certain officers for payments
to be made over specified periods beginning when the officers reach age 65 or
over as specified in the agreements.  Amounts accrued for these
agreements are based upon deferred compensation earned over the estimated
remaining service period of each officer.  Deferred compensation
expense totaled approximately $71 in fiscal 2009, $206 in fiscal 2008 and $37 in
fiscal 2007.





In
December 2006, the Company adopted an additional deferred compensation plan to
provide deferred compensation to named officers of the Company.  In
fiscal 2009, we expensed, $118 applicable to an award.  An award of
$154 was expensed in fiscal 2008.





11.  Stock
Compensation Plans





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


61


On July
28, 2005, the Company’s Board of Directors also approved the Cal-Maine Foods,
Inc. Stock Appreciation Rights Plan (the "Rights Plan"). The Rights Plan covers
1,000,000 shares of common stock of the Company. Stock Appreciation Rights
("SARs") may be granted to any employee or non-employee member of the Board of
Directors. Upon exercise of a SAR, the holder will receive cash equal to the
difference between the fair market value of a single share of common stock at
the time of exercise and the strike price which is equal to the fair market
value of a single share of common stock on the date of the grant. The SARs have
a ten-year term and vest over five years. On August 17, 2005, the Company issued
592,500 SARs, under the Rights Plan, with a strike price of $5.93 and, on August
26, 2005, the Company issued 22,500 SARs with a strike price of $6.71. On August
24, 2006 the Company issued 15,000 SAR's with a strike price of $6.93. The
Rights Plan was ratified by the Company’s shareholders at the annual meeting of
shareholders on October 13, 2005.





The
Company has reserved 1,000,000 shares under its 1999 Stock Option Plan, all of
which were granted to officers and key employees in fiscal 2000.  Each
stock option granted under the 1999 Stock Option Plan was accompanied by the
grant of a Tandem Stock Appreciation Right ("TSAR").





The
options and TSARs have ten-year terms and vest annually over five years
beginning one year from the grant date.  Upon exercise of a stock
option, the related TSAR is also considered to be exercised, and the holder will
receive a cash payment from the Company equal to the excess of the fair market
value of the Company's common stock and the option exercise
price.   No options are presently outstanding under the 1999
Plan.





Our 1993
Amended and Restated Stock Option Plan was adopted on May 25, 1993, and amended
and restated on October 10, 1996. This Plan was approved by our shareholders on
May 25, 1993. A total of 1,000,000 shares of our common stock was reserved for
issuance under this Plan.





The
exercise price for shares of stock subject to options under the 1993 Amended and
Restated Stock Option Plan were not less than 100 percent of fair market value
of our common stock on the date of grant of the options. There are currently
options outstanding under this Plan for a total of 19,200 shares. All must be
exercised within 10 years of grant. The exercise price is $2.125.





The
Company recognized stock based expense of $218 per year for equity awards in
fiscal 2009, 2008, and 2007.  The Company recognized stock based
compensation expense of $277, $6,853 and $1,650 for liability awards in fiscal
2009, 2008, and 2007, respectively.


62


A summary
of our equity award activity and related information 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
                                                                        
                                                                        
                                                                        89,800
                                                                        
                                                                        
                                                                        
                                                                        2.92Forfeited
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -Outstanding,
      June 2, 2007
                                                                        
                                                                        
                                                                        383,600
                                                                        
                                                                        
                                                                        
                                                                        5.45Granted
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -Exercised
                                                                        
                                                                        
                                                                        124,400
                                                                        
                                                                        
                                                                        
                                                                        5.04Forfeited
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -Outstanding,
      May 31, 2008
                                                                        
                                                                        
                                                                        259,200
                                                                        
                                                                        
                                                                        
                                                                        5.65Granted
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -Exercised
                                                                        
                                                                        
                                                                        72,000
                                                                        
                                                                        
                                                                        
                                                                        5.93Forfeited
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -Outstanding,
      May 30, 2009
                                                                        
                                                                        
                                                                        187,200
                                                                        
                                                                        
                                                                        $
                                                                        5.54
                                                                        
                                                                        5.98
                                                                        
                                                                        $
                                                                        3,525Exercisable,
      May 30, 2009
                                                                        
                                                                        
                                                                        43,200
                                                                        
                                                                        
                                                                        $
                                                                        4.24
                                                                        
                                                                        5.19
                                                                        
                                                                        $
                                                                        870


Unrecognized
share based compensation cost as of May 30, 2009 totaled $436 and will be
recognized over a weighted average period of 2 years.  The intrinsic
value of stock options exercised totaled $1,328, $3,254, and $946 in fiscal
2009, 2008 and 2007, respectively.





A summary
of our liability award activity and related information is as
follows:




WeightedWeighted
                                                                                            
                                                                                            AverageNumber
                                                                                            
                                                                                            Average
                                                                                            
                                                                                            Remaining
                                                                                            
                                                                                            Aggregateof
                                                                                            
                                                                                            Strike Price
                                                                                            
                                                                                            Contractual
                                                                                            
                                                                                            IntrinsicRights
                                                                                            
                                                                                            Per
      Share
                                                                                            
                                                                                            Life
      (in Years)
                                                                                            
                                                                                            ValueOutstanding,
      June 3, 2006
                                                                                            652,000
                                                                                            
                                                                                            $
                                                                                            5.71Granted
                                                                                            15,000
                                                                                            
                                                                                            
                                                                                            6.93Exercised
                                                                                            105,550
                                                                                            
                                                                                            
                                                                                            4.66Forfeited
                                                                                            69,000
                                                                                            
                                                                                            
                                                                                            5.93Outstanding,
      June 2, 2007
                                                                                            492,450
                                                                                            
                                                                                            
                                                                                            5.95Granted
                                                                                            -
                                                                                            
                                                                                            
                                                                                            -Exercised
                                                                                            135,100
                                                                                            
                                                                                            
                                                                                            5.83Forfeited
                                                                                            6,000
                                                                                            
                                                                                            
                                                                                            5.83Outstanding,
      May 31, 2008
                                                                                            351,350
                                                                                            
                                                                                            
                                                                                            5.99Granted
                                                                                            -
                                                                                            
                                                                                            
                                                                                            -Exercised
                                                                                            87,100
                                                                                            
                                                                                            
                                                                                            5.97Forfeited
                                                                                            -
                                                                                            
                                                                                            
                                                                                            -Outstanding,
      May 30, 2009
                                                                                            264,250
                                                                                            
                                                                                            $
                                                                                            6.00
                                                                                            
                                                                                            
                                                                                            6.26
                                                                                            
                                                                                            $
                                                                                            4,854Exercisable,
      May 30, 2009
                                                                                            48,250
                                                                                            
                                                                                            $
                                                                                            5.99
                                                                                            
                                                                                            
                                                                                            6.28
                                                                                            
                                                                                            $
                                                                                            887





Unrecognized
share based compensation cost for liability awards based upon the fair value
determined as of May 30, 2009 was $4,493 and will be recognized over a weighted
average period of 2.5 years.  Total payments for liability awards
exercised totaled $277, $6,853 and $1,650 for fiscal 2009, 2008 and 2007,
respectively.


63


The fair
value of liability awards was estimated as of May 30, 2009, May 31, 2008 and
June 2, 2007 using a Black-Scholes option pricing model using the following
weighted-average assumptions:





May
      30, 2009
                  
                  
                  May
      31, 2008
                  
                  
                  June
      2, 2007Risk-free
      interest rate
                  
                  
                  0.9
                  %
                  
                  
                  2.9
                  %
                  
                  
                  4.9
                  %Dividend
      yield
                  
                  
                  1.0
                  %
                  
                  
                  1.0
                  %
                  
                  
                  1.0
                  %Volatility
      factor of the expected market price of our stock
                  
                  
                  56.6
                  %
                  
                  
                  35.8
                  %
                  
                  
                  34.9
                  %Weighted-average
      expected life of the rights
                  
                  2.5
      years
                  
                  
                  3.5
      years
                  
                  
                  4.5
      years





12.  Income
Taxes





Income
tax expense consisted of the following:





Fiscal
      year endedMay
      30
                  
                  
                  May
      31
                  
                  
                  June
      22009
                  
                  
                  2008
                  
                  
                  2007Current:Federal
                  
                  $
                  28,335
                  
                  
                  $
                  63,406
                  
                  
                  $
                  16,730State
                  
                  
                  2,140
                  
                  
                  
                  12,465
                  
                  
                  
                  1,67030,475
                  
                  
                  
                  75,871
                  
                  
                  
                  18,400Deferred:Federal
                  
                  
                  9,295
                  
                  
                  
                  2,779
                  
                  
                  
                  675State
                  
                  
                  1,740
                  
                  
                  
                  880
                  
                  
                  
                  53011,035
                  
                  
                  
                  3,659
                  
                  
                  
                  1,205$
                  41,510
                  
                  
                  $
                  79,530
                  
                  
                  $
                  19,605





Significant
components of the Company's deferred tax liabilities and assets were as
follows:





May
      30
                  
                  
                  May
      312009
                  
                  
                  2008Deferred
      tax liabilities:Property,
      plant and equipment
                  
                  $
                  25,060
                  
                  
                  $
                  19,082Cash
      basis temporary differences
                  
                  
                  1,471
                  
                  
                  
                  1,634Inventories
                  
                  
                  23,425
                  
                  
                  
                  17,403Investment
      in affiliates
                  
                  
                  2,405
                  
                  
                  
                  2,787Other
                  
                  
                  1,160
                  
                  
                  
                  1,142Total
      deferred tax liabilities
                  
                  
                  53,521
                  
                  
                  
                  42,048Deferred
      tax assets:Accrued
      expenses
                  
                  
                  4,316
                  
                  
                  
                  5,254Discount
      on acquisition purchase price
                  
                  
                  1,398
                  
                  
                  
                  1,212Other
                  
                  
                  1,537
                  
                  
                  
                  891Total
      deferred tax assets
                  
                  
                  7,251
                  
                  
                  
                  7,357Net
      deferred tax liabilities
                  
                  $
                  46,270
                  
                  
                  $
                  34,691




64


Effective
May 29, 1988, the Company could no longer use cash basis accounting for its
farming subsidiary because of tax law changes.  TheTaxpayer Relief Act of 1997
provides that taxes on the cash basis temporary differences as of that date are
generally payable over 20 years beginning in fiscal 1999 or in full in the first
fiscal year in which there is a change in ownership control.  The
Company uses the farm-price method for valuing inventories for income tax
purposes.





The
differences between income tax expense (benefit) at the Company's effective
income tax rate and income tax expense (benefit) at the statutory federal income
tax rate were as follows:





Fiscal
      year endMay
      30
                    
                    
                    May
      31
                    
                    
                    June
      22009
                    
                    
                    2008
                    
                    
                    2007Statutory
      federal income tax
                    
                    $
                    42,353
                    
                    
                    $
                    80,287
                    
                    
                    $
                    19,598State
      income taxes net
                    
                    
                    2,522
                    
                    
                    
                    8,675
                    
                    
                    
                    1,430Domestic
      manufacturers deduction
                    
                    
                    (1,819
                    )
                    
                    
                    (4,115
                    )
                    
                    
                    (526
                    )Non-taxable  Hillandale,
      LLC income
                    
                    
                    (1,152
                    )
                    
                    
                    (5,022
                    )
                    
                    
                    (449
                    )Tax
      exempt interest income
                    
                    
                    (557
                    )
                    
                    
                    (872
                    )
                    
                    
                    (278
                    )Other,
      net
                    
                    
                    163
                    
                    
                    
                    577
                    
                    
                    
                    (170
                    )$
                    41,510
                    
                    
                    $
                    79,530
                    
                    
                    $
                    19,605





Federal
and state income taxes of $44,327, $82,223, and $15,679 were paid in fiscal
2009, 2008, and 2007, respectively. Federal and state income taxes of $1,985,
$1,039, and $1,426 were refunded in fiscal 2009, 2008, and 2007,
respectively.





Effective
June 3, 2007, we adopted FASB Interpretation No. 48 “Accounting for Uncertainty
in Income Taxes” (“FIN 48”). FIN 48 clarifies the accounting for income taxes by
prescribing the minimum recognition threshold a tax position is required to meet
before being recognized in the financial statements. FIN 48 also provides
guidance on derecognition, measurement, classification, interest and penalties,
accounting in interim periods, disclosure and transition. We had no significant
unrecognized tax benefits at May 30, 2009 or at May 31, 2008. Accordingly, we do
not have any interest or penalties related to uncertain tax positions. However,
if interest or penalties were to be incurred related to uncertain tax positions,
such amounts would be recognized in income tax expense. Tax periods for all
years after fiscal 2005 remain open to examination by the federal and state
taxing jurisdictions to which we are subject.





13.
Other Matters





The
carrying amounts in the consolidated balance sheet for cash and cash
equivalents, accounts receivable, notes receivable and investments and accounts
payable approximate their fair values. The fair value of the Company's long-term
debt is estimated to be $130,868.  The fair values for notes receivable and
long-term debt are estimated using discounted cash flow analysis, based on the
Company's current incremental borrowing rates for similar
arrangements.




65


The
Company's interest expense is sensitive to changes in the general level of U.S.
interest rates.  The Company maintains certain of its debt as fixed rate in
nature to mitigate the impact of fluctuations in interest rates.  Under its
current policies, the Company does not use interest rate derivative instruments
to manage its exposure to interest rate changes.  A one percent (1%)
adverse move (decrease) in interest rates would adversely affect the net fair
value of the Company's debt by $4,289 at May 30, 2009.  The Company is a
party to no other market risk sensitive instruments requiring
disclosure.





Contingencies





The
Company is the defendant in certain legal actions.  The Company intends to
vigorously defend its position, regarding this litigation. The ultimate outcome
of this litigation cannot presently be determined. Consequently, no estimate of
any possible loss related to this litigation can reasonably be determined.
However, in management’s opinion, the likelihood of a material adverse outcome
is remote.  Accordingly, adjustments, if any, which might result from
the resolution of this matter, have not been reflected in the financial
statements. These legal actions are discussed below.





Chicken Litter
Litigation





Cal-Maine
Farms, Inc. is presently a defendant in two personal injury cases in the Circuit
Court of Washington County, Arkansas.  Those cases are styled, McWhorter vs. Alpharma,
Inc.,et
al., and
Carroll,et
al. vs.
Alpharma, Inc.,et
al.  Cal-Maine Farms, Inc. was named as a defendant in the
McWhorter case
on February 3, 2004.  It was named as a defendant in the Carroll case on May
2, 2005.  Co-defendants in both cases include other integrated poultry
companies such as Tyson Foods, Inc., Cargill, Incorporated, George’s Farms,
Inc., Peterson Farms, Inc., Simmons Foods, Inc., and Simmons Poultry Farms,
Inc.  The manufacturers of an additive for broiler feed are also
included as defendants.  Those defendants are Alpharma, Inc. and
Alpharma Animal Health, Co.





Both
cases allege that the plaintiffs have suffered medical problems resulting from
living near land upon which “litter” from the defendants’ flocks was spread as
fertilizer.  The McWhorter case
focuses on mold and fungi allegedly created by the application of
litter.  The Carroll case also
alleges injury from mold and fungi, but focuses primarily on the broiler feed
ingredient as the cause of the alleged medical injuries.  No trial
date for either the Carroll or McWhorter case has
been set.





Several
other separate, but related, cases were prosecuted in the same venue by the same
attorneys.  The same theories of liability were prosecuted in all of
the cases.  No Cal-Maine Company was named as a defendant in any of
those other cases.  The plaintiffs selected one of those cases, Green,et
al. vs.
Alpharma, Inc., et
al., as a bellwether case to go to trial first.  All of the
poultry defendants were granted summary judgment in the Green case on August
2, 2006.  On May 8, 2008, however, the Arkansas Supreme Court reversed
the summary judgment in favor of the poultry defendants and remanded the case
for trial.  Green was re-tried on
remand in April, 2009.  The jury found for the defense and awarded the
plaintiffs in that case nothing.  It is not presently known whether
the plaintiffs in the McWhorter and Carroll cases will
continue to prosecute those cases.


66


State of Oklahoma Watershed
Pollution Litigation





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





Some
dispositive motions have been filed jointly by all defendants.  Some
of those motions were rejected by the Court, and others were left unresolved
after oral arguments.  In February, 2008, a hearing was had on the
plaintiff’s motion for preliminary injunctive relief.  The principal
relief sought was a moratorium on litter application in the
watershed.  The district court denied the plaintiff’s
motion.





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





On July
22, 2009, the Court entered its Order dismissing all claims for damages by the
plaintiff in this action because much of the land and water which the plaintiff
claims to have been polluted is actually owned by the Cherokee Nation, a
separate sovereignty not represented by the State of Oklahoma.  The
dismissal was without prejudice to re-file a claim for damages, but the Court
ruled that no such re-filing can occur unless the Cherokee Nation joins the
litigation.  It is not known whether the Cherokee Nation will join the
litigation.  While this ruling may be reconsidered or appealed, it
removes, at least temporarily, the threat of a judgment for monetary damages
against us.  Unless outstanding motions for summary judgment are
granted, the action will proceed to trial for a determination of whether the
plaintiff is entitled to injunctive relief.





The case
is set for trial in Tulsa, Oklahoma beginning September 21, 2009.





Egg Antitrust
Litigation





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




67


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




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




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




The
Pennsylvania court has entered a series of orders related to case management and
scheduling.  On April 30, 2009, the Company filed motions to dismiss both
the direct purchaser consolidated case and the indirect purchaser consolidated
case.  The plaintiffs have not yet responded to those
motions.  There is no definite schedule in either consolidated case
for discovery, class certification proceedings, or filing motions for summary
judgment.  No trial date has been set in either consolidated
case.




Florida civil investigative
demand




On
November 4, 2008, the Company received an antitrust civil investigative demand
from the Attorney General of the State of Florida.  The demand seeks
production of documents and responses to interrogatories relating to the
production and sale of eggs and egg products.  The Company is cooperating
with this investigation and expects to provide responsive information.  No
allegations of wrongdoing have been made against the Company in this
matter.




68





14.   Quarterly
Financial Data:  (unaudited, amount in thousands, except per
share data):





Fiscal
      Year 2009First
                      
                      
                      Second
                      
                      
                      Third
                      
                      
                      FourthQuarter
                      
                      
                      Quarter
                      
                      
                      Quarter
                      
                      
                      QuarterNet
      sales
                      
                      $
                      206,888
                      
                      
                      $
                      238,314
                      
                      
                      $
                      270,009
                      
                      
                      $
                      213,601Gross
      profit
                      
                      
                      40,647
                      
                      
                      
                      58,016
                      
                      
                      
                      68,157
                      
                      
                      
                      37,907Net
      income
                      
                      
                      11,147
                      
                      
                      
                      27,244
                      
                      
                      
                      30,843
                      
                      
                      
                      10,266Net
      income per share:Basic
                      
                      $
                      0.47
                      
                      
                      $
                      1.15
                      
                      
                      $
                      1.30
                      
                      
                      $
                      0.43Diluted
                      
                      $
                      0.47
                      
                      
                      $
                      1.14
                      
                      
                      $
                      1.29
                      
                      
                      $
                      0.43Fiscal
      Year 2008First
                      
                      
                      Second
                      
                      
                      Third
                      
                      
                      FourthQuarter
                      
                      
                      Quarter
                      
                      
                      Quarter
                      
                      
                      QuarterNet
      sales
                      
                      $
                      178,598
                      
                      
                      $
                      223,696
                      
                      
                      $
                      278,017
                      
                      
                      $
                      235,628Gross
      profit
                      
                      
                      45,580
                      
                      
                      
                      76,032
                      
                      
                      
                      104,902
                      
                      
                      
                      72,042Net
      income
                      
                      
                      17,966
                      
                      
                      
                      40,154
                      
                      
                      
                      57,183
                      
                      
                      
                      36,558Net
      income per share:Basic
                      
                      $
                      .76
                      
                      
                      $
                      1.70
                      
                      
                      $
                      2.41
                      
                      
                      $
                      1.54Diluted
                      
                      $
                      .76
                      
                      
                      $
                      1.69
                      
                      
                      $
                      2.41
                      
                      
                      $
                      1.54





15.
            Description
      of Rights and Privileges of Capital Stock—Capital Structure Consists of
      Common Stock





The
Company has two classes of capital stock: Common Stock and Class A Common Stock.
Holders of shares of the Company’s capital stock vote as a single class on all
matters submitted to a vote of the stockholders, with each share of Common Stock
entitled to one vote and each share of Class A Common Stock entitled to ten
votes.  The Common Stock and Class A Common Stock have equal
liquidation rights.  As of October 2, 2008, the Common Stock and Class
A Common Stock have the same dividend rights, whereas previously the Class A
Common Stock received an amount equal to 95% of any cash dividend payable on a
share of Common Stock.  In the case of any stock dividend, holders of
Common Stock are entitled to receive the same percentage dividend (payable only
in shares of Common Stock) as the holders of Class A Common Stock receive
(payable only in shares of Class A Common Stock). Upon liquidation, dissolution,
or winding-up of the Company, the holders of Common Stock are entitled to share
ratably with the holders of Class A Common Stock in all assets available for
distribution after payment in full of creditors. The Class A Common Stock may
only be issued to Fred R. Adams, Jr., the Company’s Chief Executive Officer, and
members of his immediate family, as defined. In the event any share of Class A
Common Stock, by operation of law or otherwise is, or shall be deemed to be
owned by any person other than Mr. Adams or a member of his immediate family,
the voting power of such stock will be reduced from ten votes per share to one
vote per share. Also, shares of Class A Common Stock shall be automatically
converted into Common Stock on a share per share basis in the event the
beneficial or record ownership of any such share of Class A Common Stock is
transferred to any person other than Mr. Adams or a member of his immediate
family. Each share of Class A Common Stock is convertible, at the option of its
holder, into one share of Common Stock at any time. The holders of Common Stock
and Class A Common Stock are not entitled to preemptive or subscription rights.
In any merger, consolidation or business combination, the consideration to be
received per share by holders of Common Stock must be identical to that received
by holders of Class A Common Stock, except that if any such transaction in which
shares of Capital Stock are distributed, such shares may differ as to voting
rights to the extent that voting rights now differ among the classes of Capital
Stock. No class of Capital Stock may be combined or subdivided unless the other
classes of Capital Stock are combined or subdivided in the same proportion. No
dividend may be declared and paid on Class A Common Stock unless the dividend is
payable only to the holders of Class A Common Stock and a dividend payable to
Common Stock is declared and paid concurrently in respect of outstanding shares
of Common Stock in the same number of shares of Common Stock per outstanding
share.


69


16.  Fair
Value  Measures


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




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




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





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





•
            Level
      3 - Unobservable inputs for the asset or liability that are supported by
      little or no market activity and that are significant to the fair value of
      the assets or liabilities.





Level 2


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


70


Level 3


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




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





Assets
Measured at Fair Value on a Recurring Basis


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





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





The
following is a reconciliation of the beginning and ending balances for assets
measured at fair value on a recurring basis using significant unobservable
inputs (Level 3) during the period ended May 30, 2009:





Investment securities
                  (Non-Current)(Auction Rate Securities)
                
                
                TotalBeginning
      balance
                
                $
                40,754
                
                
                $
                40,754Total
      gains – (realized/unrealized)Included
      in earnings (or changes in net assets), net
                
                
                544
                
                
                
                544Included
      in other comprehensive income, net
                
                
                852
                
                
                
                852Purchases,
      issuances, and settlements
                
                
                (9,000
                )
                
                
                (9,000
                )Transfers
      in and/or out of Level 3
                
                
                -
                
                
                
                --Ending
      balance
                
                $
                33,150
                
                
                $
                33,150




71


Gains
(realized and unrealized) included in earnings (or changes in net assets) for
the period ended May 30, 2009, are reported in other income as
follows:





Other IncomeTotal
      gains included in earnings (or changes in net assets)for
      the period ended May 30, 2009
                  
                  $
                  544Change
      in unrealized gains relatingto
      assets still held at May 30, 2009
                  
                  $
                  852





In
February 2007, the FASB issued FASB Statement No. 159, "Establishing the Fair
Value Option for Financial Assets and Liabilities" (“FAS 159”), to permit all
entities to choose to elect to measure eligible financial instruments at fair
value. We adopted FAS 159 effective June 1, 2008.   We have
elected the fair value option for our Auction Rate Security
Rights.  We agreed to accept these Auction Rate Security Rights from
UBS on November 3, 2008.





UBS’s
obligations under the Rights are not secured by its assets and do not require
UBS to obtain any financing to support its performance obligations under the
Rights.  UBS has disclaimed any assurance that it will have sufficient
financial resources to satisfy its obligations under the Rights.





The
Rights represent a firm agreement in accordance with FASB Statement No. 133
“Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”),
which defines a firm agreement as an agreement binding on both parties and
usually legally enforceable, with the following characteristics: (a) the
agreement specifies all significant terms, including the quantity to be
exchanged, the fixed price, and the timing of the transaction, and (b) the
agreement includes a disincentive for nonperformance that is sufficiently large
to make performance probable.  The enforceability of the Rights
results in a put option and should be recognized as a free standing asset
separate from the auction rate securities.   Upon acceptance of
the offer from UBS, we recorded the Rights asset at its estimated fair value of
$4,713 and recognized an unrealized gain of $4,713 in investment income,
net.   We subsequently recorded a $1,899 decrease in the fair
value of the Rights in investment income, net in the Consolidated Statements of
Income for the year ended May 30, 2009, for a total fair value of $2,814 at May
30, 2009.   The Rights do not meet the definition of a derivative
instrument under FAS 133, because the underlying securities are not readily
convertible to cash.  Therefore, we have elected to measure the Rights
at fair value under FAS 159, which permits an entity to measure certain items at
fair value, to mitigate volatility in reported earnings from the changes in the
fair value of the auction rate securities.  As a result, unrealized
gains and losses will be included in earnings in future periods.  We
expect that future changes in the fair value of the Rights will largely mitigate
fair value movements in the related auction rate securities.





The
Rights are valued at $2,814 on our consolidated balance sheet at May 30,
2009.  They are included in the total amount for “Investments
securities trading” in the noncurrent asset portion of our consolidated balance
sheet.  The auction rate securities are measured at fair value using
the assumptions discussed previously.   According to the fair
value hierarchy established by FAS 157, the Company determined that the
assumptions use to measure these securities are level 3
assumptions.    Accordingly, the assumptions used to measure
the rights are level 3 assumptions.  The value of the rights is the
difference between the par value and fair value of our auction rate
securities.


72


17.  Subsequent
Event





On July
9, 2009, the Company’s egg complex in Farwell, Texas, was damaged by a
fire.  The 700 acre facility includes a processing plant, feed mill,
two pullet houses, and nine layer houses.  The fire completely
destroyed four of the nine layer houses, with additional loss of laying hens at
a fifth house due to smoke inhalation.  There were no personal
injuries and minimal physical damage was sustained to the rest of the
complex.





Prior to
the fire, the Farwell complex could house up to 1.5 million laying hens and
accounted for approximately three to four percent of the Company’s weekly
production.  This facility, as well as all of the Company’s other
facilities, are fully insured for their replacement value, including the
estimated loss of production.  It is too early to estimate the total
amount of gain or loss that will ultimately be recognized due to this fire.
Based on preliminary estimates, the Company has determined that the net book
value of plant and equipment lost due to this casualty is approximately $6.8
million. The Company believes that this will have minimal financial impact on
our operations and do not expect any long-term disruption to our
customers.


73


SCHEDULE
II - VALUATION AND QUALIFYING ACCOUNTS


Years
ended May 30, 2009, May 31, 2008, and June 2, 2007


(in thousands)





Balance at
                          
                          
                          
                          
                          
                          Balance atBeginning of
                          
                          Charged to
                          
                          Write-off
                          
                          End ofDescription
                          
                          Period
                          
                          Cost and Expense
                          
                          of Accounts
                          
                          PeriodYear ended May 30,
      2009:Allowance for doubtful
      accounts
                          
                          
                          $
                          313
                          
                          
                          $
                          563
                          
                          
                          $
                          482
                          
                          
                          $
                          394Year ended May 31,
      2008:Allowance for doubtful
      accounts
                          
                          
                          $
                          150
                          
                          
                          $
                          394
                          
                          
                          $
                          231
                          
                          
                          $
                          313Year ended June 2,
      2007:Allowance for doubtful
      accounts
                          
                          
                          $
                          346
                          
                          
                          $
                          612
                          
                          
                          $
                          808
                          
                          
                          $
                          150




74





ITEM 9.  CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





None.





ITEM 9A.  CONTROLS
AND PROCEDURES





Disclosure
Controls and Procedures





Our
disclosure controls and procedures are designed to provide reasonable assurance
that information required to be disclosed by it in its 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 were effective as of May 30,
2009.





Internal
Control Over Financial Reporting





(a)            Management’s
Report on Internal Control Over Financial Reporting





In
accordance with Section 404(a) of the Sarbanes-Oxley Act of 2002 and Item 308(a)
of the Commission’s Regulation S-K, the report of management on our internal
control over financial reporting is set forth in this Annual Report on Form 10-K
under Item 8. Financial Statements and Supplementary Data.





(b)            AttestationReport of the
Registrant’s Public Accounting Firm





The
attestation report of FROST, PLLC on management’s assessment of our internal
control over financial reporting is set forth in this Annual Report on Form 10-K
under Item 8. Financial Statements and Supplementary Data.





(c)            Changes in
Internal Control Over Financial Reporting





In
accordance with Rule 13a-15(c) under the Securities Exchange Act of 1934,
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, together with other financial officers, evaluated the
effectiveness, as of May 30, 2009, of our internal control over financial
reporting.  Management determined that there was no change in our
internal control over financial reporting that occurred during the fourth
quarter ended May 30, 2009, that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.





ITEM
9B.      OTHER INFORMATION





Not
applicable.


75





PART
III





ITEM
10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT





The
information concerning directors and executive officers is incorporated by
reference from our definitive proxy statement which is to be filed pursuant to
Regulation 14A under the Securities Exchange Act of 1934 in connection with our
2009 Annual Meeting of Shareholders.





ITEM
11.  EXECUTIVE COMPENSATION





The
information concerning executive compensation is incorporated by reference from
our definitive proxy statement which is to be filed pursuant to Regulation 14A
under the Securities Exchange Act of 1934 in connection with our 2009 Annual
Meeting of Shareholders.





ITEM 12.
              SECURITY OWNERSHIP OF
      CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER   MATTERS





The
information concerning security ownership of certain beneficial owners and
management and related stockholder matters is incorporated by reference from our
definitive proxy statement which is to be filed pursuant to Regulation 14A under
the Securities Exchange Act of 1934 in connection with our 2009 Annual Meeting
of Shareholders.





ITEM 13.  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS





The
information concerning certain relationships and related transactions is
incorporated by reference from our definitive proxy statement which is to be
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 in
connection with our 2009 Annual Meeting of Shareholders.





ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES





The
information concerning principal accountant fees and services is incorporated by
reference from our definitive proxy statement which is to be filed pursuant to
Regulation 14A under the Securities Exchange Act of 1934 in connection with our
2009 Annual Meeting of Shareholders.


76


PART
IV




ITEM
15. EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES





(a)(1)
            Financial
      Statements





The
following financial statements are filed herewith:





The
following consolidated financial statements of Cal-Maine Foods, Inc. and
subsidiaries are included in Item 8:





Reports
      of Independent Registered Public Accounting Firms.
                                  
                                  36Consolidated
      Balance Sheets – May 30, 2009 and May 31, 2008.
                                  
                                  37Consolidated
      Statements of Income – Fiscal Years Ended May 30, 2009, May 31, 2008 and
      June 2, 2007.
                                  
                                  38Consolidated
      Statements of Changes in Shareholders' Equity for the Fiscal Years Ended
      May 30, 2009, May 31, 2008 and June 2, 2007.
                                  
                                  39Consolidated
      Statements of Cash Flows for the Fiscal Years Ended May 30, 2009, May 31,
      2008 and June 2, 2007.
                                  
                                  40Notes
      to Consolidated Financial Statements.
                                  
                                  41





(a)(2)
            Financial Statement
      Schedule





Schedule
      II – Valuation and Qualifying Accounts
                74





All
other schedules are omitted either because they are not applicable or required,
or because the required information is included in the financial statements or
notes thereto.





(a)(3)
            Exhibits Required by
      Item 601 of Regulation S-K





See
Part (b) of this Item 15.





(b)
            Exhibits Required by
      Item 601 of Regulation S-K





The
following exhibits are filed herewith or incorporated by reference:





ExhibitNumber
                  
                  Exhibit2.1
                  
                  Agreement
      to Form a Limited Liability Company, Transfer Assets Thereto, and Purchase
      Units of Membership Therein, dated July 28, 2005, by and among Hillandale
      Farms of Florida, Inc., Hillandale Farms, Inc., Cal-Maine Foods, Inc. and
      Jack E. Hazen, Jack E. Hazen, Jr., Homer E. Honeycutt, Jr., Orland R.
      Bethel and Dorman W. Mizell.  (9)3.1
                  
                  Amended
      and Restated Certificate of Incorporation of the Registrant.
      (1)3.1(a)
                  
                  Amendment
      to Article 4 of the Certificate of Incorporation of the Registrant.
      (7)3.2
                  
                  By-Laws
      of the Registrant, as amended. (16)4.1
                  
                  See
      Exhibits 3.1 and 3.2 as to the rights of holders of the Registrant’s
      common stock.




77





10.1
                Amended
      and Restated Term Loan Agreement, dated as of May 29, 1990, between
      Cal-Maine Foods, Inc. and Cooperative Centrale Raiffeisen - Boerenleenbank
      B.A., “Rabobank Nederland,” New York Branch, and Amended and Restated
      Revolving Credit Agreement among Cal-Maine Foods, Inc., and Barclays Banks
      PLD (New York) and Cooperatieve Centrale Raiffeisen-Borenleenbank B.A.,
      dated as of 29 May 1990, and amendments thereto (without exhibits).
      (1)10.1(a)
                Amendment
      to Term Loan Agreement (see Exhibit 10.1) dated as of June 3, 1997
      (without exhibits). (2)10.1(b)
                Amendment
      to Term Loan Agreement (see Exhibit 10.1) dated as of March 31, 2004
      (without exhibits). (7)10.1(c)
                Amendment
      to Term Loan Agreement (see Exhibit 10.1) dated as of April 14, 2004
      (without exhibits). (7)10.1(d)
                Amendment
      to Term Loan Agreement (see Exhibit 10.1) dated as of August 6,2004 (without
      exhibits). (8)10.1(e)
                Amendment
      to Term Loan Agreement (see Exhibit 10.1) dated as of March 15,2005 (without
      exhibits). (8)10.1(f)
                Amendment
      to Term Loan Agreement (see Exhibit 10.1) dated as of October 13, 2006
      (without exhibits). (12)10.1(g)
                Second
      Amendment and Restated [through Ninth Amendment] Revolving Credit
      Agreement dated as of February 6, 2002, among Cal-Maine Foods, Inc. and
      (as defined herein) First South, Rabobank and Harris (without exhibits,
      schedules or annex). (15)10.1(h)
                Tenth
      Amendment to Second Amendment and Restated Revolving Credit Agreement,
      dated as of March 15, 2007, among Cal-Maine Foods, Inc. and (as defined
      herein) First South, Rabobank and Harris (without exhibits, schedules or
      annex). (15)10.1(i)
                Eleventh
      Amendment to Second Amendment and Restated Revolving Credit Agreement,
      dated as of November 30, 2007, among Cal-Maine Foods, Inc. and (as defined
      herein) First South, Rabobank and Harris (without exhibits, schedules, or
      annex).  (17)10.1(j)
                Twelfth
      Amendment to Second Amendment and Restated Revolving Credit Agreement,
      dated as of January 30, 2008, among Cal-Maine Foods, Inc. and (as defined
      herein) First South, Rabobank and Harris (without exhibits, schedules, or
      annex).10.2
                Note
      Purchase Agreement, dated as of November 10, 1993, between John Hancock
      Mutual Life Insurance Company and Cal-Maine Foods, Inc., and amendments
      thereto (without exhibits). (1)10.3
                Loan
      Agreement, dated as of May 1, 1991, between Metropolitan Life Insurance
      Corporation and Cal-Maine Foods, Inc., and amendments thereto (without
      exhibits). (1)10.4
                Employee
      Stock Ownership Plan, as Amended and Restated. (1)+10.5
                1993
      Stock Option Plan, as Amended. (1)+10.6
                Wage
      Continuation Plan, dated as of July 1, 1986, between Jack Self and the
      Registrant, as amended on September 2, 1994. (1)+10.7
                Wage
      Continuation Plan, dated as of April 15, 1988, between Joe Wyatt and the
      Registrant. (1)+10.8
                Redemption
      Agreement, dated March 7, 1994, between the Registrant and Fred R. Adams,
      Jr. (1)10.9
                Note
      Purchase Agreement, dated December 18, 1997, among the Registrant,
      Cal-Maine Farms, Inc., Cal-Maine Egg Products, Inc., Cal-Maine
      Partnership, LTD, CMF of Kansas LLC and First South Production Credit
      Association and Metropolitan Life Insurance Company (without exhibits,
      except names of guarantors and forms of
    notes)  (3)




78





10.10
                Wage
      Continuation Plan, dated as of January 14, 1999, among Stephen Storm,
      Charles F. Collins, Bob Scott and the
      Registrant  (4)+10.11
                Secured
      note purchase agreement dated September 28, 1999 among the Registrant,
      Cal-Maine Partnership, LTD, and John Hancock Mutual Life Insurance
      Company, and John Hancock Variable Life Insurance Company (without
      exhibits, annexes and disclosure schedules) (5)10.11(a)
                Amended
      and Restated Second Note Purchase Agreement, dated as of September 30,
      2003, conformed copy reflecting First, Second, and Third Amendments, among
      Cal-Maine Foods, Inc., Cal-Maine Partnership, Ltd., and John Hancock Life
      Insurance Company and John Hancock Variable Life Insurance Company
      (without exhibits, schedules or annex). (15)10.11(b)
                Fourth
      Amendment and Waiver Agreement dated as of March 1, 2007, among Cal-Maine
      Foods, Inc. and Cal-Maine Partnership, LTD, and John Hancock Life
      Insurance Company and John Hancock Variable Life Insurance Company
      (without exhibits, schedules or annex). (15)10.11(c)
                Fifth
      Amendment and Waiver Agreement dated as of May 30, 2007, among Cal-Maine
      Foods, Inc. and Cal-Maine Partnership, LTD, and John Hancock Life
      Insurance Company and John Hancock Variable Life Insurance Company
      (without exhibits, schedules or annex).10.11(d)
                Sixth
      Amendment Agreement, dated as of January 30, 2008, among Cal-Maine Foods,
      Inc. and John Hancock Life Insurance Company and John Hancock Variable
      Life Insurance Company (without exhibits, schedules or annex).
      (18)10.11(e)
                Seventh
      Amendment Agreement, dated as of May 15, 2008, among Cal-Maine Foods, Inc.
      and John Hancock Life Insurance Company and John Hancock Variable Life
      Insurance Company (without exhibits, schedules or
  annex).10.12
                1999
      Stock Option Plan  (6)+10.13
                2005
      Stock Option Plan  (10)+10.14
                2005
      Stock Appreciation Rights Plan  (11)+10.15
                Deferred
      Compensation Plan, dated December 28,
  2006.  (13)10.16
                Loan
      Agreement, dated as of November 13, 2006, between Metropolitan Life
      Insurance Company and Cal-Maine Foods Inc. (without exhibits.)
      (14)21
                Subsidiaries
      of the Registrant23
                Consent
      of FROST, PLLC31.1
                Certification
      of Chief Executive Officer31.2
                Certification
      of Chief Financial Officer32
                Written
      Statement of the Chief Executive Officer and the Chief Financial
      Officer







+
                Management
      contract or compensatory
plan.


79





(1)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form S-1 Registration
      Statement No. 333-14809.(2)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-K for fiscal year
      ended May 31, 1997.(3)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-Q for the quarter
      ended November 29, 1997.(4)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-K for fiscal year
      ended May 29, 1999.(5)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-Q for the quarter
      ended November 27, 1999.(6)
                      Incorporated
      by reference to Registrant’s Form S-8 Registration Statement No.
      333-39940, dated June 23, 2000.(7)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-K for fiscal year
      ended May 29, 2004.(8)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-K for fiscal year
      ended May
      28, 2005.(9)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 8-K, dated July 28,
      2005.(10)
                      Incorporated
      by reference to Appendix B to Registrant’s Proxy Statement for Annual
      Meeting held October 13, 2005.(11)
                      Incorporated
      by reference to Appendix C to Registrant’s Proxy Statement for Annual
      Meeting held October 13, 2005.(12)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-K for fiscal year
      ended June
      3, 2006(13)
                      Incorporated
      by reference to the same exhibit in Registrant's Form 8-K, dated December
      28, 2006.(14)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-Q for the quarter
      ended December 2, 2006(15)
                      Incorporated
      by reference to the same exhibit in Registrant's Form 8-K, dated March 9,
      2007.(16)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 8-K, dated August
      13, 2007.(17)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-Q for the quarter
      ended December 1, 2007(18)
                      Incorporated
      by reference to the same exhibit in Registrant’s Form 10-Q for the quarter
      ended March 1,
2008





The
Company agrees to file with the Securities and Exchange Commission, upon
request, copies of any instrument defining the rights of the holders of its
consolidated long-term debt.


80





(c)
            Financial Statement
      Schedules Required by Regulation
S-X





The
financial statement schedule required by Regulation S-X is filed at page 74. All
other schedules for which provision
is made in the applicable accounting regulations of the Securities and Exchange
Commission are not required under the
related instructions or are inapplicable and therefore have been
omitted.


81


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) 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, in Jackson, Mississippi, on this
11th day
of August, 2009.





CAL-MAINE
FOODS, INC.





/s/ Fred R. Adams, Jr.Fred
      R. Adams, Jr.Chairman
      of the Board andChief
      Executive Officer





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:





Signature
                
                Title
                
                Date/s/ Fred R. Adams, Jr.
                
                Chairman
      of the Board and
                
                August
      11, 2009Fred
      R. Adams, Jr.
                
                Chief
      Executive Officer(Principal
      Executive Officer)/s/  Richard K.
      Looper
                
                Vice
      Chairman of the Board
                
                August
      11, 2009Richard
      K. Looper
                
                and
      Director/s/  Adolphus B.
      Baker
                
                President
      and Director
                
                August
      11, 2009Adolphus
      B. Baker/s/  Timothy A.
      Dawson
                
                Vice
      President, Chief Financial
                
                August
      11, 2009Timothy
      A. Dawson
                
                Officer
      and Director(Principal
      Financial Officer)/s/  Charles F.
      Collins
                
                Vice
      President, Controller
                
                August
      11, 2009Charles
      F. Collins
                
                (Principal
      Accounting Officer)/s/  Letitia C.
      Hughes
                
                Director
                
                August
      11, 2009Letitia
      C. HughesDirector
                
                ___________R.
      Faser Triplett/s/  James E.
    Poole
                
                Director
                
                August
      11, 2009James
      E. Poole/s/  Steve W.
    Sanders
                
                Director
                
                August
      11, 2009Steve
      W. Sanders


82


CAL-MAINE FOODS,
INC.


Form 10-K
for the fiscal year


Ended May
30, 2009


EXHIBIT
INDEX





ExhibitNumber
                    
                    Exhibit21
                    
                    Subsidiaries
      of Cal-Maine Foods, Inc23
                    
                    Consent
      of FROST, PLLC31.1
                    
                    Certification
      of The Chief Executive Officer31.2
                    
                    Certification
      of The Chief Financial Officer32
                    
                    Written
      Statement of The Chief Executive Officer and Chief Financial
      Officer


83