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 June 2, 2007





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 Stock
              Market
                LLC




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 o   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
o    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
o





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, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):


Large
      accelerated filer  o  Accelerated
      filer  x Non-accelerated
      filer  o





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


Yes 
      o   No
x


1








The
      aggregate market value, as reported by the NASDAQ National Market, of the
      registrant’s Common Stock, $0.01 par value, held by non-affiliates at December
      2, 2006, which was the date of the last business day of the registrant’s most
      recently completed second fiscal quarter, was $ 96,860,500





As
      of
      August 10 **,** 2007,
      21,192,691 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.





2


**TABLE
      OF CONTENTS**





**Part
      I**





PageItem
            
            Number1.
            Business
            41A.
            Risk
                Factors
            121B.
            Unresolved
                Staff Comments
            162.
            Properties
            163.
            Legal
                Proceedings
            174.
            Submission
                of Matters to a Vote of Security Holders
            17**Part
                II**5.
            Market
                for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases ofEquity
                Securities
            186.
            Selected
                Financial Data
            207.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            217A.
            Quantitative
                and Qualitative Disclosures About Market Risk
            298.
            Financial
                Statements and Supplementary Data
            299.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            589A.
            Controls
                and Procedures
            589B.
            Other
                Information
            58**Part
                III**10.
            Directors
                and Executive Officers of the Registrant
            5911.
            Executive
                Compensation
            5912.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            5913.
            Certain
                Relationships and Related Transactions
            5914.
            Principal
                Accountant Fees and Services
            59**Part
                IV**15.
            Exhibits
                and Financial Statement Schedules
            60Signatures
            64








3


**PART
      I**





**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 2007, we sold
      approximately 685 million dozen shell eggs, which represented about 15.5% of
      domestic shell egg consumption in the United States. Our total flock of
      approximately 23 million layers and 5 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.





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 reduced cholesterol,
      cage free and organic eggs and are a rapidly growing segment of the market.
      In
      fiscal 2007, specialty shell eggs represented approximately 15% of our shell
      egg
      dollar sales. Retail prices for specialty eggs are higher than standard shell
      eggs due to consumer willingness to pay for the increased benefits from those
      products. We market our specialty shell eggs under two distinct brands: *Egg-Land's
      Best* ( *TM* )
      and *Farmhouse* ( *TM* ). ** We
      own a
      25.9% equity interest in Egg-Land's Best, Inc., which markets the leading brand
      in the specialty shell egg segment. 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 *Farmhouse* brand
      and
      distribute those shell eggs across the southeast and southwest regions of the
      United States. We also produce market and distribute private label specialty
      shell eggs to several customers. Sales of specialty shell eggs accounted for
      approximately 8.7% of our total shell egg dozen volume in fiscal
      2007.





We
      are
      also a leader in industry consolidation. Since 1989, we have completed thirteen
      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 60 producers
      who each own more than one million layers and the ten largest producers own
      approximately 43% of total industry layers. We believe industry consolidation
      will continue and we plan to capitalize on opportunities as they
      arise.





**Hillandale
      Acquisition**





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





In
      August
      2006, in accordance with the Agreement, we purchased, for $6.1 million, an
      additional 13% of the Units of Hillandale, LLC based on their book value as
      of
      July 29, 2006. Our obligation to acquire the remaining 36% of Hillandale, LLC
      is
      recorded at its present value of $15.3 million as of June 2, 2007 of which
      $5.4
      million is included in current liabilities and $9.9 million is included in
      other
      non-current liabilities in the accompanying consolidated balance sheet. We
      will
      purchase an additional 12% of Hillandale, LLC based on the book value of the
      Membership Units as of July 29, 2007.


4








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




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




**Certain
      Other Acquisitions**





During
      fiscal 2007, we completed two other 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.


5


**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, 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 Stock Market LLC (“NASDAQ”) under the
      symbol “CALM”.  On
      June
      1, 2007, the last sale price of our Common Stock on NASDAQ was $13.46 per
      share *.* Our
      fiscal year 2007 ended June 2, 2007 and the first three fiscal quarters of
      fiscal 2007 ended September 2, 2006, December 2, 2006 and March 3, 2007. 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.








IMPORTANT
      FACTORS RELATING TO 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 below under the following
      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.







6


****** **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 reports, since 2000, annual per capita
      consumption in the United States has varied between 252 and 257 eggs. In 2006,
      per capita consumption in the United States was 256 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. 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 2007, wholesale large shell egg prices in the southeast region
      averaged 93.0 cents per dozen compared to an average of 84.1 cents per dozen
      for
      fiscal years 2004 to 2006. For the past few months, total egg production has
      been, 1 to 1 1/2% less than prior years. For the next few months of the calendar
      year, USDA statistics indicate that egg supply should continue to be slightly
      below that of a year earlier. This should result in a favorable egg market
      for
      producers.





Factors
      currently influencing demand:





-
            industry
                advertising campaigns successfully promoting the health benefits
                of
                eggs;-
            positive
                announcements from the medical community highlighting eggs as a good
                source of protein;-
            increased
                consumption resulting from the factors noted above as well as the
                reduced
                level of cholesterol ineggs;
                and-
            increased
                demand from the foodservice
                channel.





Factors
      currently influencing supply:


-
            living
                space for newly hatched layers will have increased 20% by 2008 according
                to guidelines put in placein
                2002 by the United Egg Producers, in conjunction with the Food Marketing
                Institute, both industrytrade
                associations; and-
            the
                process to bring new shell egg production capacity online has become
                more
                complex than in the past,increasing
                the time it takes to bring new capacity to
                market.





**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. Current feed
      prices are higher than the previous year. Forecasts vary widely for prices
      over
      the next year, with some dry conditions currently reported in the Midwest and
      a
      much stronger demand for corn from ethanol plants.







7


**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 thirteen 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 6.8 million at May 28, 1988 to an average
      of
      approximately 25.8 million for the past five fiscal years. Also, the number
      of
      dozens of shell eggs sold has increased from approximately 117.0 million in
      the
      fiscal year ended May 28, 1988 to an average of approximately 624.0 million
      over
      the past five fiscal years. Net sales amounted to $598.1 million in fiscal
      2007
      compared to net sales of $69.9 million in fiscal 1988.




We
      propose 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 *Farmhouse* brand,
      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.





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 15.5% 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 90% of our total fiscal 2007 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 their facilities and are paid a fee based on
      production with incentives for performance.


8





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 29
      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 1.5 million dozen of 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 $63 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 57% of total 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.





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 level 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
      685 million dozen shell eggs sold by us in the fiscal year ended June 2, 2007,
      536 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 67.4% of net sales in fiscal 2007 and 66.8% of
      net
      sales for fiscal 2006. Two affiliated customers, Wal-Mart Stores and Sam’s
      Clubs, on a combined basis, accounted for 36.9% of net sales during fiscal
      2007
      and 36.6% of net sales for fiscal 2006.


9





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, since 2000, annual per capita
      consumption in the United States has varied between 252 and 257 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.








***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, nine of our first quarters and six of our fourth quarters have
      resulted in net operating losses.





***Specialty
      Eggs.*** We
      also
      produce specialty eggs such as *Egg-Land’s
      Best* *’* and *Farmhouse* eggs. *Egg-Land’s
      Best* *’* ** eggs
      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
      Best* *’* ** eggs *,* 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
      Best* *’* eggs
      accounted for approximately 11.2% of our shell egg dollar sales in fiscal 2007. *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 4.0% of our shell egg dollar sales
      in
      fiscal 2007. They are intended to meet the demands of consumers who are
      sensitive to environmental and animal welfare issues. The statistical data
      concerning specialty egg sales reflects the upward trend of specialty 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. Although we are the largest combined producer, processor,
      and distributor of shell eggs in the United States, we do not occupy a
      controlling market position in any area where our eggs are
      sold.


10





While
      the
      shell egg industry remains highly fragmented, it has been characterized by
      a
      growing concentration of producers . In
      2006,
      60 producers with one million or more layers owned 87% of the 290 million total
      U.S. layers, compared with the 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 Tradenames*** *.* We
      own
      the trade names *Farmhouse,
      Rio Grande* and *Sunups* .
      We do
      not own any patents or proprietary technologies. We produce and market *Egg-Land's
      Best(TM)* eggs
      under license agreements with EB. We own a 25.9% 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 FDA, the USDA, the
      Environmental Protection Agency, the 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.





***Employees*** *.* As
      of
      June 2, 2007, we had a total of approximately 1,600 employees of whom 1,450
      worked in egg production, processing and marketing, 80 were engaged in feed
      mill
      operations and 70 were administrative employees, including officers, at our
      executive offices. Approximately 4% 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.








11


**** **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 have experienced an upward trend since 2002
      and rose to historical highs in late 2003 and early 2004. In the early fall
      of
      2004, the demand trend related to the popular diets faded dramatically. During
      the time of increased demand, the egg industry had geared up to produce more
      eggs, resulting in an oversupply of eggs. In March 2005, the egg industry took
      action to better align the size of laying flocks with current demand needs.
      Current U.S. Department of Agriculture statistics indicate a reduced flock
      size
      that is now more in line with current demand. There can be no assurance that
      shell egg prices will remain at or near current levels and that the supply
      of
      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 57% 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, are higher this year as compared to last
      year.
      However, there are wide swings in corn and soybean meal prices because of dry
      conditions in the Midwest and widely varying forecast projections for the 2007
      fall harvest season in September and October. ****** 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.


12





**We
      purchase approximately 22% 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 78% 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 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 2007, 2006, and 2005, two affiliated customers, Wal-Mart Stores
      and
      Sam’s Clubs, on a combined basis, accounted for 36.9%, 36.6%, and 30.9% of our
      net sales, respectively. Our top 10 customers accounted for 67.4%, 66.8%, and
      64.7% 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.





13





**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.





**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, 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.





14


**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
      are controlled by a principal stockholder.**





** Fred
      R.
      Adams, Jr., our Chairman of the Board and Chief Executive Officer, and his
      spouse own 36.1% of the outstanding shares of our Common Stock, which has one
      vote per share, and Mr. Adams owns 90.1% and his son-in-law, Adolphus B. Baker,
      our president, chief operating officer and one of our directors, owns 9.9%
      of
      the outstanding shares of Class A Common Stock, which has ten votes per share.
      Mr. Baker and his spouse also own 1.6% of the outstanding shares of our Common
      Stock. As a result, currently Mr. Adams and his spouse possess 64.8%, and
      Messrs. Adams and Baker and their spouses possess 70.8% 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 National 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.


15





**** **ITEM
      1B. UNRESOLVED STAFF COMMENTS**





**** Not
      applicable




**** **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, South
      Carolina, Tennessee, Texas and Utah. The facilities currently include two
      breeding facilities, two hatcheries, four wholesale distribution centers, 16
      feed mills, 29 shell egg production facilities, 19 pullet growing facilities,
      and 28 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 17,000 acres of land in various locations throughout our
      geographic market area. We have the ability to hatch 15.5 million pullet chicks
      annually, grow 13 million pullets annually, house 24 million laying hens and
      control the production of an aggregate total of 26 million layers. We also
      own
      or control mills that can produce 570 tons per hour of feed, and processing
      facilities capable of processing 8,800 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 $67.6 million. The Company’s facilities
      currently are maintained in good operable condition and are insured to an extent
      the Company deems adequate.





16


**** ITEM
      3. LEGAL PROCEEDINGS




**Chicken
      Litter Litigation**





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




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





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


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





**State
      of Oklahoma Watershed Pollution Litigation**





On
      June
      18, 2005, the State of Oklahoma filed suit in the U.S. District Court for the
      Northern District of Oklahoma against a number of companies including us and
      Cal-Maine Farms. An Answer on behalf of us and Cal-Maine Farms was filed on
      October 3, 2005. The State of Oklahoma claims that through the disposal of
      chicken litter the defendants have polluted the Illinois River Watershed. This
      watershed provides water to eastern Oklahoma. The Complaint seeks injunctive
      relief and monetary damages. We do not anticipate that we will be materially
      affected by any injunctive relief granted or monetary damages awarded.





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





**ITEM
      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.





17





**PART
      II.**





**** **ITEM
      5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND**


**ISSUER
      PURCHASES OF EQUITY SECURITIES**





Our
      Common Stock is traded on the NASDAQ National Market under the symbol “CALM”.
      The last reported sale price for our Common Stock on August 10, 2007 was $15.69
      per share. The following table sets forth the high and low daily sale prices
      and
      dividends per share for four quarters of fiscal 2006 and fiscal
      2007.




Sales
                Price
            DividendsFiscal
                Year Ended
            Fiscal
                Quarter
            High
            LowJune
                3, 2006
            First
                Quarter
            $
                6.90
            $
                5.55
            $0.0125Second
                Quarter
            7.01
            5.75
            $0.0125Third
                Quarter
            7.44
            6.08
            $0.0125Fourth
                Quarter
            7.90
            6.03
            $0.0125June
                2, 2007
            First
                Quarter
            $
                7.58
            $
                6.29
            $0.0125Second
                Quarter
            8.45
            6.14
            $0.0125Third
                Quarter
            14.49
            7.91
            $0.0125Fourth
                Quarter
            14.07
            11.33
            $0.0125







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 (90.1%) and his son-in-law Adolphus
      Baker, President, Chief Operating Officer and Director of the Company
      (9.9%).





**STOCKHOLDERS**





At
      August
      6, 2007, there were approximately 276 ** record
      holders of our Common Stock and approximately 6,050 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
      full quarters shown in the table above. We expect to pay cash dividends on
      our
      Common Stock at the same annual rate of $0.05 per share. Since 1998, 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. Our Board of Directors will continue to
      consider the declaration of cash dividends in the future in light of our results
      of operations, financial condition, capital requirements for possible
      acquisitions and new construction, and other relevant economic factors. In
      addition, under the terms of agreements with our principal lenders, we are
      subject to various financial covenants, including a limitation on our ability
      to
      pay cash dividends in an aggregate amount not to exceed $500,000 per
      quarter.





**RECENT
      SALES OF UNREGISTERED SECURITIES**





No
      sales
      of securities without registration under the Securities Act of 1933 occurred
      during our fiscal year ended June 2, 2007.





18





**EQUITY
      COMPENSATION PLAN INFORMATION**




On
      July
      28, 2005, our Board of Directors approved the Cal-Maine Foods, Inc. 2005
      Incentive Stock Option Plan (the “ISO Plan”) and reserved 500,000 shares of
      Common Stock for issuance upon exercise of options granted under the ISO Plan.
      Options issued pursuant to the ISO Plan may be granted to any of our
      employees.





On
      July
      28, 2005, our Board of Directors also approved the Cal-Maine Foods, Inc. Stock
      Appreciation Rights Plan (the “Rights Plan”). The Rights Plan covers 1,000,000
      shares of Common Stock of the Company. Stock Appreciation Rights (“SARs”) may be
      granted under the Rights Plan to any employee or member of the Board of
      Directors.





On
      August
      24, 2006, in accordance with provisions of the Rights Plan, our Board of
      Directors approved an amendment to the Rights Plan providing that exercises
      of
      SARs under the Rights Plan be settled in cash and not with shares of our Common
      Stock.




The
      following table contains information, as of June 2, 2007, about our equity
      compensation plans, all of which were approved by our shareholders .




**Number
                  of Shares of Common****Stock
                  Remaining Available for****Number
                  of Shares of Common**
              
              **Weighted**
                **Average**
              
              **Future
                  Issuance**
                **Under****Stock
                  To Be Issued upon Exercise of**
              
              **Exercise**
                **Price
                  of**
              
              **Equity
                  Compensation Plans****Outstanding
                  Options**
              
              **Outstanding
                  Options**
              
              **(Excluding
                  Shares****Reflected
                  in**
                **Column
                  (A))****Plan
                  Category**
              
              **(A)**
              
              **(B)**
              
              **(C)**1993
                  and 1999 Stock Option Plan
              
              47,600
              
              $2.07
              
              8,0002005
                  Incentive Stock Option Plan.
              
              336,000
              
              $5.93
              
              140,0002005
                  Stock Appreciation Rights Plan
              
              (1)
              
              $5.95
              
              385,000(2)




(1) Settled
        in cash, effective August 24, 2006, as noted in discussion preceding
        table.
  (2) Shares
        are not actually issued, but are credited solely for purposes of determining
        the
        amount of cash settlement measure against the closing price of our Common
        Stock
        on an exercise date


See
      Note
      9 “Stock Option Plan” in our Consolidated Financial Statements for the fiscal
      year ended June 2, 2007.





19


**** **ITEM
      6. SELECTED FINANCIAL DATA**





The
      per
      share data shown in the following table has been adjusted to reflect the 2-for-1
      split of our Common Stock effective April 14, 2004, as if the split had occurred
      at the beginning of fiscal year 2003.




Fiscal
                    Years EndedJune
                    2
                
                
                June
                    3
                
                
                May
                    28
                
                
                May
                    29
                
                
                May
                    312007
                
                
                2006
                
                
                2005
                
                
                2004
                
                
                200352
                    wks
                
                
                53
                    wks
                
                
                52
                    wks
                
                
                52
                    wks
                
                
                52
                    wks(Amounts
                    in thousands, except per share and operating data)**Statement
                    of Operations Data:**Net
                    sales
                
                $
                598,128
                
                $
                477,555
                
                $
                375,266
                
                $
                572,331
                
                $
                387,462Cost
                    of sales
                
                
                479,504
                
                
                415,338
                
                
                339,833
                
                
                396,704
                
                
                315,169Gross
                    profit
                
                
                118,624
                
                
                62,217
                
                
                35,433
                
                
                175,627
                
                
                72,293Selling,
                    general and administrative
                
                
                60,394
                
                
                57,702
                
                
                47,758
                
                
                69,305
                
                
                46,029Operating
                    income (loss)
                
                
                58,230
                
                
                4,515
                
                
                (12,325
                )
                
                106,322
                
                
                26,264Other
                    income (expense):Interest
                    expense (net of non cashinterest
                    expense & interestincome)
                
                
                (4,993
                )
                
                (5,582
                )
                
                (4,222
                )
                
                (6,527
                )
                
                (8,096
                )Interest
                    expense - non cash
                
                
                (882
                )
                
                (1,284
                )
                
                -
                
                
                -
                
                
                -Equity
                    in income (loss) of affiliates
                
                
                1,699
                
                
                (757
                )
                
                (88
                )
                
                5,923
                
                
                442Non-controlling
                    interest
                
                
                286
                
                
                165
                
                
                -
                
                
                -
                
                
                -Other
                    (net)
                
                
                1,921
                
                
                1,465
                
                
                1,227
                
                
                524
                
                
                527(1,969
                )
                
                (5,993
                )
                
                (3,083
                )
                
                (80
                )
                
                (7,127
                )Income
                    (loss) before income tax
                
                
                56,261
                
                
                (1,478
                )
                
                (15,408
                )
                
                106,242
                
                
                19,137Income
                    tax expense (benefit)
                
                
                19,605
                
                
                (465
                )
                
                (5,050
                )
                
                39,800
                
                
                6,925Net
                    income (loss)
                
                $
                36,656
                
                $
                (1,013
                )
                $
                (10,358
                )
                $
                66,442
                
                $
                12,212Net
                    income (loss) per common share:Basic
                
                $
                1.56
                
                $
                (0.04
                )
                $
                (0.43
                )
                $
                2.78
                
                $
                0.52Diluted
                
                $
                1.55
                
                $
                (0.04
                )
                $
                (0.43
                )
                $
                2.73
                
                $
                0.52Cash
                    dividends declared per share *
                
                $
                0.05
                
                $
                0.05
                
                $
                0.05
                
                $
                0.05
                
                $
                0.05Weighted
                    average shares outstanding:Basic
                
                
                23,526
                
                
                23,496
                
                
                23,834
                
                
                23,874
                
                
                23,528Diluted
                
                
                23,599
                
                
                23,496
                
                
                23,834
                
                
                24,342
                
                
                23,724**Balance
                    Sheet Data:**Working
                    capital
                
                $
                80,552
                
                $
                60,800
                
                $
                73,587
                
                $
                92,949
                
                $
                27,749Total
                    assets
                
                
                364,568
                
                
                317,118
                
                
                269,534
                
                
                301,559
                
                
                235,392Total
                    debt (including current maturities)
                
                
                112,852
                
                
                103,912
                
                
                82,994
                
                
                90,031
                
                
                108,244Total
                    stockholders’ equity
                
                
                155,739
                
                
                119,775
                
                
                121,855
                
                
                140,165
                
                
                66,085**Operating
                    Data:**Total
                    number of layers at period ended (thousands)
                
                
                23,181
                
                
                23,276
                
                
                18,164
                
                
                20,318
                
                
                19,877Total
                    shell eggs sold (millions of dozens)
                
                
                685.4
                
                
                683.1
                
                
                575.4
                
                
                605.2
                
                
                570.7


* Class
      A
      shares paid at 95% of the common stock dividend rate.





20


**** **ITEM
      7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL**


**CONDITION
      AND 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."








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 June
      2,
      2007 (52 weeks), June 3, 2006 (53 weeks), and May 28, 2005 (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 96% of our net sales
      in
      fiscal 2007 and 94% in fiscal 2006. Egg products accounted for approximately
      2%
      of our net sales in fiscal 2007 and 2% in fiscal 2006. 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 10% 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
      also
      own the eggs produced. Also, shell eggs are purchased, as needed, for resale
      by
      us from outside producers.





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





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





The
      purchase of Hillandale, LLC, AEP and Hillandale Farms, LLC described above
      in
      Part 1, Item 1, is collectively referred to below as the “Hillandale
      Purchase".









































21








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 SalesFiscalYears
                EndedJune
                2, 2007
            
            June
                3, 2006
            
            May
                28, 2005Net
                sales
            
            
            100.00
            %
            
            100.00
            %
            
            100.00
            %Cost
                of sales
            
            
            80.2
            
            
            87.0
            
            
            90.6Gross
                profit
            
            
            19.8
            
            
            13.0
            
            
            9.4Selling,
                general & administrative expenses
            
            
            10.1
            
            
            12.1
            
            
            12.7Operating
                income (loss)
            
            
            9.7
            
            
            0
                .9
            
            
            (3.3
            )Other
                income (expense)
            
            
            (0.3
            )
            
            (1.2
            )
            
            (0.8
            )Income
                (loss) before taxes
            
            
            9.4
            
            
            (0.3
            )
            
            (4.1
            )Income
                tax expense (benefit)
            
            
            3.3
            
            
            (0.1
            )
            
            (1.3
            )Net
                income (loss)
            
            
            6.1
            %
            
            (0.2
            )%
            
            (2.8
            )%







***Fiscal
      Year Ended June 2, 2007 Compared to Fiscal Year Ended June 3,
      2006***





*Net
      Sales.* In
      fiscal
      2007, approximately 96% of our net sales consisted of shell egg sales and
      approximately 2% was for incidental feed sales to outside egg producers, with
      the 2% balance consisting of sales of egg products.  Net
      sales
      for the fiscal year ended June 2, 2007 were $598.1 million, an increase of
      $120.5 million, or 25.2%, from net sales of $477.6 million for fiscal 2006.
      Total dozens of eggs sold and egg selling prices increased as compared to fiscal
      2006. In fiscal 2007 total dozens of shell eggs sold were 685.4 million, an
      increase of 2.3 million dozen, or .3%, compared to 683.1 million sold in fiscal
      2006. Our average selling price of shell eggs increased from $.672 per dozen
      for
      fiscal 2006 to $.832 per dozen for fiscal 2007, an increase of $.160 per dozen,
      or 23.8%. 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. During fiscal
      2004, consumer demand increased, partially due to the popularity of high protein
      diets. Egg producers increased egg supply to meet consumer demand. During our
      second fiscal 2005 quarter, consumer demand decreased to normal levels. At
      the
      same time, egg supply continued at the higher levels and resulted in a drop
      in
      egg selling prices for the remainder of fiscal 2005. During fiscal 2006,
      consumer demand improved slightly, but egg supply continued at higher levels.
      During fiscal 2007, consumer demand remained steady, but egg supply was lower,
      which resulted in stronger egg prices.











*Cost
      of Sales.* Cost
      of
      sales consists of costs directly related to production and processing of shell
      eggs, including feed costs, and purchases of shell eggs from outside egg
      producers. Cost of sales for the fiscal year ended June 2, 2007 was $479.5
      million, an increase of $64.2 million, or 15.5%, as compared to cost of sales
      of
      $415.3 million for fiscal 2006. On a comparable basis, dozens produced
      decreased, dozens purchased from outside shell egg producers increased and
      cost
      of feed ingredients increased in fiscal 2007. The cost of the shell eggs
      purchased from outside producers increased due to improved egg market selling
      prices. Feed cost for fiscal 2007 was $.252 per dozen, compared to $.206 per
      dozen for the prior fiscal year, an increase of 22.3%. 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 13% of net sales for fiscal 2006 to 19.8% of net sales
      for
      fiscal 2007.





*Selling,
      General and Administrative Expenses.* Selling,
      general and administrative expenses include costs of marketing, distribution,
      accounting and corporate overhead. ** Selling,
      general and administrative expense was $60.4 million in fiscal 2007, an increase
      of $2.7 million as compared to $57.7 million for fiscal 2006. The increase
      in
      selling, general, and administrative expenses is primarily attributable to
      an
      increase of $1.8 million in franchise fees for specialty egg sales, and an
      increase of $2.2 million in our equity compensation plan expense, with an
      overall decrease in delivery costs. The cost of the stock based compensation
      plans is dependent on the price of the Company's common stock, which increased
      from $7.19 at June 3, 2006 to $13.46 at June 2, 2007. Overall, delivery costs
      have decreased, due to a reduction in the number of Company long haul trucks,
      increased back haul loads and the increased use of contract trucking. Selling,
      general and administrative expense was $.088 per dozen sold for fiscal 2007
      as
      compared to $0.084 for fiscal 2006. As a percent of net sales, selling, general
      and administrative expense decreased from 12.1% for fiscal 2006 to 10.1% for
      fiscal 2007


22





*Operating
      Income (Loss).* As
      a
      result of the above, our operating income was $58.2 million for fiscal 2007,
      as
      compared to operating income of $4.5 million for fiscal 2006. The operating
      income as a percent of sales for fiscal 2007 was 9.7%, as compared to operating
      income of .9% for fiscal 2006. **





*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 2007 was $2.0 million as compared to other expense of $6.0
      million for fiscal 2006, a decrease of $4.0 million. Net interest expense for
      fiscal 2007 decreased by $1.0 million, due to lower average long-term debt
      balances. In fiscal 2007, we reduced interest expense by capitalizing $566,000
      of interest in connection with the construction of egg products and spent hen
      processing facilities in Waelder, TX. The non-cash interest expense, as
      explained below, decreased by $402,000. The reduction of other expense is
      attributable primarily to the increase in net income of affiliates. The non-cash
      expense is imputed on our non-interest bearing obligation to acquire the
      remaining membership units of Hillandale, LLC’s over the remaining acquisition
      period culminating with us having a 100% interest in Hillandale, LLC. As a
      percent of net sales, other expense was .3% for fiscal 2007, as compared to
      1.2%
      for fiscal 2006.





*Income
      Taxes.* For
      the
      fiscal year ended, June 2, 2007, our pre-tax income was $56.3 million, as
      compared to a pre-tax loss of $1.5 million for fiscal 2006. Income tax expense
      of $19.6 million was recorded for fiscal 2007 with an effective income tax
      rate
      of 34.8%, as compared to an income tax benefit of $465,000 for fiscal 2006
      with
      an effective income tax rate of 31.5%. 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 such as Hillandale, LLC.





*Net
      Income.* As
      a
      result of the above, net income for fiscal 2007 was $36.7 million, or $1.56
      per
      basic share and $1.55 per diluted share, compared to net loss of $1.0 million,
      or $0.04 per basic and diluted share for fiscal 2006.








***Fiscal
      Year Ended June 3, 2006 Compared to Fiscal Year Ended May 28,
      2005***





*Net
      Sales.* In
      fiscal
      2006, approximately 94% of our net sales consisted of shell egg sales and
      approximately 4% was for incidental feed sales to outside egg producers, with
      the 2% balance consisting of sales of egg products.  Net
      sales
      for the fiscal year ended June 3, 2006 were $477.6 million, an increase of
      $102.3 million, or 27.2%, from net sales of $375.3 million for fiscal 2005.
      The
      Hillandale Purchase accounted for $82.0 million of the increase. Excluding
      the
      Hillandale Purchase, on a comparable basis, net sales increased $20.3 million,
      or 5.4%. Total dozens of eggs sold and egg selling prices increased as compared
      to fiscal 2005. In fiscal 2006, total dozens of shell eggs sold were 683.1
      million, including 118.6 million dozen sold by entities consolidated in the
      Hillandale Purchase, an increase of 107.7 million dozen, or 18.7%, compared
      to
      575.4 million dozen sold in fiscal 2005. On a comparable basis, excluding the
      Hillandale Purchase, dozens sold decreased 10.9 million dozen. Our average
      selling price of shell eggs increased from $.625 per dozen for fiscal 2005
      to
      $.672 per dozen for fiscal 2006, an increase of $.047 per dozen, or 7.5%. 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. During fiscal 2004, consumer
      demand increased, partially due to the popularity of high protein diets. Egg
      producers increased egg supply to meet consumer demand. During our second fiscal
      2005 quarter, consumer demand decreased to normal levels. At the same time,
      egg
      supply continued at the higher levels and resulted in a drop in egg selling
      prices for the remainder of fiscal 2005. During fiscal 2006, consumer demand
      improved slightly, but egg supply continued at higher levels.


23








*Cost
      of Sales.* Cost
      of
      sales consists of costs directly related to production and processing of shell
      eggs, including feed costs, and purchases of shell eggs from outside egg
      producers. Cost of sales for the fiscal year ended June 3, 2006 was $415.3
      million, an increase of $75.5 million, or 22.2%, as compared to cost of sales
      of
      $339.8 million for fiscal 2005. The cost of sales for entities consolidated
      with
      the Hillandale Purchase accounted for $76.6 million of the increase. Excluding
      the Hillandale Purchase, on a comparable basis, cost of sales decreased $1.1
      million. On a comparable basis, dozens produced, dozens purchased from outside
      shell egg producers and cost of feed ingredients decreased in fiscal 2006.
      The
      cost of the shell eggs purchased from outside producers increased slightly
      due
      to improved egg market selling prices. Feed cost for fiscal 2006 was $.206
      per
      dozen, compared to $.225 per dozen for the prior fiscal year, a decrease of
      8.4%. An increase in egg selling prices, a decrease in feed ingredient costs,
      offset by a higher cost of purchases from outside egg producers, resulted in
      an
      increase in gross profit from 9.4% of net sales for fiscal 2005 to 13.0% of
      net
      sales for fiscal 2006.





*Selling,
      General and Administrative Expenses.* Selling,
      general and administrative expenses include costs of marketing, distribution,
      accounting and corporate overhead. ** Selling,
      general and administrative expense was $57.7 million in fiscal 2006, an increase
      of $9.9 million as compared to $47.8 million for fiscal 2005. Selling, general
      and administrative expense consolidated with the Hillandale Purchase accounted
      for $9.5 million of the increase. Excluding the Hillandale Purchase, selling,
      general and administrative expense increased $400,000. Total insurance costs
      decreased $2.7 million and bad debt expense resulted in a net recovery of
      $500,000. These cost reductions were offset by an increase of $2.2 million
      in
      franchise fees for specialty egg sales and an increase in our equity
      compensation plan expense. In fiscal 2005, we recorded a benefit of $1.3
      million, applicable to stock options and Tandem Stock Appreciation Rights
      accounted for under the variable plan accounting requirements of APB Opinion
      No.25, “Accounting for Stock Issued to Employees”. The market price of our
      outstanding common stock ranged from $13.80 at May 29, 2004 to $6.76 at May
      28,
      2005 and $7.19 at June 3, 2006. Delivery costs, including fuel costs, have
      also
      increased. Selling, general and administrative expense was $0.084 per dozen
      sold
      for fiscal 2006 as compared to $0.083 for fiscal 2005. As a percent of net
      sales, selling, general and administrative expense decreased from 12.7% for
      fiscal 2005 to 12.1% for fiscal 2006.





*Operating
      Income (Loss).* As
      a
      result of the above, our operating income was $4.5 million for fiscal 2006,
      as
      compared to operating loss of $12.3 million for fiscal 2005. As a percent of
      net
      sales, the operating income for fiscal 2006 was 0.9%, as compared to operating
      loss of 3.3% for fiscal 2005.





*Other
      Income (Expense).* Other
      income or expense consists of costs or income not directly charged to, or
      related to, operations such as equity in income of affiliates and interest
      expense.  Other
      expense for fiscal 2006 was $6.0 million as compared to other expense of $3.1
      million 2005, an increase of $2.9 million. For fiscal 2006, net interest expense
      increased $2.6 million, the net result of a $1.6 million increase in interest
      expense, a $1.3 million increase in non-cash interest expense and a $600,000
      decrease in interest income. Interest expense increased due to higher long-term
      debt balances and less interest income was received due to lower cash equivalent
      investments. The non-cash expense is imputed on our non-interest bearing
      obligation to acquire 49% of Hillandale, LLC’s membership units over a four year
      period. Other income for fiscal 2006 decreased due to net losses of affiliates.
      As a percent of net sales, other expense was 1.2% for fiscal 2006, as compared
      to 0.8% for fiscal 2005.





*Income
      Taxes.* For
      the
      fiscal year ended June 3, 2006, our pre-tax loss was $1.5 million, as compared
      to pre-tax loss of $15.4 million for fiscal 2005. For fiscal 2006, an income
      tax
      benefit of $465,000 was recorded with an effective tax rate of 31.5%, as
      compared to an income tax benefit of $5.0 million with an effective tax rate
      of
      32.8% for fiscal 2005. 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 49% of Hillandale, LLC’s profits and losses
      held by its minority owners.





24


*Net
      Income.* As
      a
      result of the above, net loss for fiscal 2006 was  $1.0
      million, or $0.04 per basic and diluted share, compared to net loss of $10.4
      million, or $0.43 per basic and diluted share, for fiscal 2005.








***Capital
      Resources and Liquidity*** *.* Our
      working capital at June 2, 2007 was $80.6 million compared to $60.8 million
      at
      June 3, 2006. Our current ratio was 2.06 at June 2, 2007 as compared with 1.94
      at June 3, 2006. Our need for working capital generally is highest in the first
      and second fiscal quarters ending in August and November. During the first
      quarter shell egg prices are normally at seasonal lows. In the second quarter,
      we usually build inventory balances in anticipation of the holiday season.
      Seasonal borrowing needs frequently are higher during these periods than during
      other fiscal periods. We have a $40 million line of credit with three banks,
      $2.7 million of which was utilized as a standby letter of credit at June 2,
      2007. Our long-term debt at that date, including current maturities, totaled
      $112.9 million, as compared to $103.9 million at June 3, 2006.





For
      the
      fiscal year ended June 2, 2007, $59.7 million in net cash was provided by
      operating activities. This compares to $20.9 million of net cash provided for
      the fiscal year ended June 3, 2006. In fiscal 2007, $12.1 million was used
      for
      acquisition of businesses; $23.5 was used for purchases of property, plant
      and
      equipment. Net cash of $14.5 million was used for investments and $251,000
      received on notes receivable. In fiscal 2007, we received $503,000 from the
      disposal of property, plant and equipment. As part of our stock option plan,
      approximately $262,000 was received for sales of common stock from the treasury,
      and $1.2 million was used for payments of dividends on our common stock.
      Proceeds from long-term borrowings of $29.5 million were received and payments
      of $31.2 million were made on long-term debt. In accord with the Hillandale,
      LLC
      purchase agreement, we made a payment of $6.1 million on our long term purchase
      obligation. The net result was an increase in cash and cash equivalents of
      approximately $1.7 million .





For
      the
      fiscal year ended June 3, 2006, $20.9 million in net cash was provided by
      operating activities. This compares to $9.6 million of net cash provided for
      fiscal year ended May 28, 2005. In fiscal 2006, $23.7 million was used for
      acquisitions of businesses, $12.3 million was used for purchases of property,
      plant and equipment, and $2.6 million was received from sales of property,
      plant
      and equipment. Net cash of $10.4 million was provided by investments and
      $200,000 received on notes receivable. As part of our stock option plan,
      approximately $100,000 was received for sales of common stock from the treasury,
      and $1.2 million was used for payments of dividends on our common stock.
      Proceeds from long-term borrowings of $28.0 million were received in additional
      long-term debt and payments of $31.9 million were made on long-term debt. The
      net result was a decrease in cash and cash equivalents of approximately $6.9
      million .




Substantially
      all trade receivables and inventories collateralize our revolving line of credit
      and property, plant and equipment collateralize our long-term debt under our
      loan agreements with our lenders. Unless otherwise approved by our lenders,
      we
      are required by provisions of these loan agreements to (1) maintain minimum
      levels of working capital (ratio of not less than 1.25 to 1) and net worth
      (minimum of $90.0 million tangible net worth adjusted for earnings); (2) limit
      dividends to an aggregate amount not to exceed $500,000 per quarter (allowed
      if
      no default), capital expenditures less exclusions (not to exceed 125% of
      depreciation for the same four fiscal quarters), lease obligations and
      additional long-term borrowings (total funded debt to total capitalization
      not
      to exceed 55%); and (3) maintain various cash-flow coverage ratios (1.25 to
      1),
      among other restrictions. At June 2, 2007, we were in compliance with the
      provisions of all loan agreements. Under certain of the loan agreements, the
      lenders have the option to require the prepayment of any outstanding borrowings
      in the event we undergo a change in control.





Under
      the
      terms of our Agreement with Hillandale and the Hillandale shareholders, a new
      Florida limited liability company named Hillandale, LLC was formed. In fiscal
      2006, we purchased 51% of the Units of Membership in Hillandale, LLC, with
      the
      remaining Units to be acquired in essentially equal annual installments over
      a
      four-year period. The purchase price of the Units is equal to their book value
      as calculated in accordance with the terms of the Agreement. In fiscal 2007,
      we
      purchased, pursuant to the Agreement, an additional 13% of the Units of
      Membership for $6.1 million from our cash balances. We have recorded the
      obligation to acquire the remaining 36% at its present value of $15.3 million.
      The actual remaining purchase price may be higher or lower when the Hillandale
      Purchase is completed. Future funding is expected to be provided by our cash
      balances and borrowings under our revolving credit agreement.





25


Capital
      expenditure requirements are expected to be for the normal repair and
      replacement of our facilities. In addition, we have plans to construct a new
      integrated layer production complex in West Texas to replace our Albuquerque,
      New Mexico complex, which has ceased egg production. The expected cost is
      approximately $30.0 million.





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.





We
      currently have a $1.8 million deferred tax liability due to a subsidiary's
      change from a cash basis to an accrual basis taxpayer on May 29, 1988. The
      Taxpayer Relief Act of 1997 provides that this liability is payable ratably
      over
      the 20 years beginning in fiscal 1999. However, such taxes will be due in their
      entirety in the first fiscal year in which there is a change in ownership
      control so that we no longer qualify as a family farming corporation. We are
      currently making annual payments of approximately $150,000 related to this
      liability. However, while these current payments reduce cash balances, payment
      of the $1.8 million deferred tax liability would not impact our consolidated
      statement of operations or stockholders' equity, as these taxes have been
      accrued and are reflected on our consolidated balance sheet. See Note 10 of
      Notes to Consolidated Financial Statements.





We
      believe that our existing cash and investments, as well as our unused lines
      of
      credit, if needed, will satisfy our foreseeable working capital requirements
      for
      at least the next twelve months.





***Off-Balance
      Sheet Arrangements***





We
      have
      no existing off-balance sheet arrangements as defined under Securities and
      Exchange Commission regulations.





***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 does not reflect the obligations
      incurred by us for the Hillandale acquisition, 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. Our ownership of Hillandale, LLC currently is 64%. We will incur
      costs for our purchase of the remaining 36% of the Units of Membership over
      the
      remaining three years, which will culminate with us having a 100% equity
      interest in Hillandale, LLC. Our obligation to acquire the remaining 36% of
      Hillandale, LLC is recorded at its present value of $15.3 million as of June
      2,
      2007 of which $5.4 million is included in current liabilities and $9.9 million
      is included in other non-current liabilities in the accompanying consolidated
      balance sheet.




Total
            2008
            2009
            2010
            2011
            2012
            Over
                5 yearsLong-term
                debt
            $112,852
            $13,442
            $11,770
            $12,000
            $9,817
            $8,154
            $57,669Operating
                leases
            12,106
            4,510
            2,506
            2,094
            1,310
            780
            906Total
            $124,958
            $17,952
            $14,276
            $14,094
            $11,127
            $8,934
            $58,575





26


***Impact
      of Recently Issued Accounting Standards*** ***.***





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) Statement No. 123
      (revised 2004) (“SFAS No.123(R)”), "Share-Based Payment," which is a revision of
      SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS
      No. 123(R) supersedes Accounting Principles Board (“APB”) Opinion
      No. 25, "Accounting for Stock Issued to Employees", and amends SFAS
      No. 95, "Statement of Cash Flows". SFAS No. 123(R) requires all
      share-based payments to employees, including grants of employee stock options,
      restricted stock and performance-based shares to be recognized in the income
      statement based on their fair values. SFAS No. 123(R) also requires the
      benefits of tax deductions in excess of recognized compensation cost to be
      reported as a financing cash flow, rather than as an operating cash flow as
      required under current literature. This requirement will reduce net operating
      cash flows and increase net financing cash flows in periods after adoption.
      In
      the first quarter of fiscal 2007, The Company adopted SFAS No. 123(R) using
      the modified prospective method. Under the modified prospective method,
      compensation costs are recognized for all share-based payments granted after
      the
      adoption of SFAS No. 123(R) and for all awards granted to employees prior
      to the adoption date of SFAS No. 123(R) that remain unvested on the
      adoption date. Accordingly, no restatements were made to prior periods. The
      Company recognized stock based compensation expense of $218 for equity awards
      and $1,650 for liability awards in fiscal 2007.





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





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





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





In
      February 2007, the FASB issued SFAS No. 159, "Establishing the Fair Value Option
      for Financial Assets and Liabilities", to permit all entities to choose to
      elect
      to measure eligible financial instruments at fair value. SFAS No. 159 applies
      to
      fiscal years beginning after November 15, 2007, with early adoption permitted
      for an entity that has also elected to apply the provisions of SFAS No. 157.
      An
      entity is prohibited from retrospectively applying SFAS No. 159, unless it
      chooses early adoption. Management is currently evaluating the impact of SFAS
      No. 159 on its 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.


27





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 in 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 $6.4 million at June 2, 2007. The combined total
      assets and total liabilities of these companies were approximately $24 million
      and $11 million, respectively, at June 2, 2007. We are a guarantor of
      approximately $4.8 million of long-term debt of one of the
      affiliates.





*Goodwill.* At
      June
      2, 2007, our goodwill balance represented 1.2% of total assets and 2.7% of
      stockholders’ equity. Goodwill relates to the fiscal 1999 acquisition of Hudson
      Brothers, Inc., the fiscal 2006 acquisition of Hillandale Farms, LLC, and the
      fiscal 2007 acquisition of Green Forest Foods, LLC. 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.





28


*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. QUANTITATIVE AND 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 $3.9 million at June 2, 2007. 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.




29


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 June 2,
      2007. 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;




·
            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 June
      2,
      2007 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 Moore Stephens Frost 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.





30


**** 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 management’s assessment, included in the accompanying Management’s
      Report on Internal Control, that Cal-Maine Foods, Inc. and Subsidiaries
      maintained effective internal control over financial reporting as of June 2,
      2007, based on criteria established in *Internal
      Control - Integrated Framework* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission (the
      COSO criteria). 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.
      Our responsibility is to express an opinion on management’s assessment and an
      opinion on the effectiveness of 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 included obtaining an understanding of internal control
      over
      financial reporting, evaluating management’s assessment, testing and evaluating
      the design and operating effectiveness of internal control, and performing
      such
      other procedures as we considered necessary in the circumstances. We believe
      that 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 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 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, management’s assessment that the company maintained effective internal
      control over financial reporting as of June 2, 2007, is fairly stated, in all
      material respects, based on the COSO criteria. Also in our opinion, the company
      maintained, in all material respects, effective internal control over financial
      reporting as of June 2, 2007, based on the COSO criteria.










/s/
      Moore
      Stephens Frost


Little
      Rock, Arkansas


August
      13, 2007






31




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 June 2, 2007, and the related consolidated statements
      of
      operations, stockholders’ equity and cash flows for the year then ended. Our
      audit also included the 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 audit. The consolidated financial
      statements of Cal-Maine Foods, Inc. and Subsidiaries as of June 3, 2006, and
      the
      related consolidated statements of operations, stockholders’ equity and cash
      flows for the two years ended June 3, 2006 and May 28, 2005, were audited by
      other auditors whose report dated August 11, 2006, expressed an unqualified
      opinion on those statements.





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 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 that our audit provides 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 June 2, 2007, and the consolidated results
      of
      its operations and its cash flows for the year 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), the effectiveness of Cal-Maine Foods, Inc.
      and
      Subsidiaries internal control over financial reporting as of June 2, 2007,
      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 13, 2007, expressed an unqualified opinion
      thereon.

















/s/
      Moore
      Stephens Frost


Little
      Rock, Arkansas


August
      13, 2007


32














Report
      of
      Independent Registered Public Accounting Firm







The
      Board
      of Directors and Stockholders


Cal-Maine
      Foods, Inc.








We
      have
      audited the accompanying consolidated balance sheet of Cal-Maine Foods, Inc.
      and
      subsidiaries as of June 3, 2006, and the related consolidated statements of
      operations, stockholders’ equity, and cash flows for the two years ended June 3,
      2006 and May 28, 2005. Our audits also included the financial statement schedule
      listed in the Index at Item 15(c). These financial statements and schedule
      are
      the responsibility of the Company’s management. Our responsibility is to express
      an opinion on these 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 audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of Cal-Maine Foods,
      Inc.
      and subsidiaries at June 3, 2006, and the consolidated results of their
      operations and their cash flows for each of the years ended June 3, 2006 and
      May
      28, 2005, in conformity with U.S. generally accepted accounting principles.
      Also, in our opinion, the related financial statement schedule, when considered
      in relation to the basic 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), the effectiveness of Cal-Maine Foods Inc.’s
      internal control over financial reporting as of June 3, 2006, based on criteria
      established in Internal Control — Integrated Framework issued by the Committee
      of Sponsoring Organizations of the Treadway Commission and our report dated
      August 11, 2006 expressed an unqualified opinion thereon.







/s/
      Ernst
& Young LLP









New
      Orleans, Louisiana


August
      11, 2006





33


**Cal-Maine
      Foods, Inc. and Subsidiaries**


**Consolidated
      Balance Sheets**


*(in
      thousands, except for par value amounts)*


June
                2
            
            June
                32007
            
            2006**Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            15,032
            
            $
            13,295Investments
            
            
            39,500
            
            
            25,000Receivables:Trade
                receivables, less allowance for doubtfulaccounts
                of $150 in 2007 and $346 in 2006
            
            
            37,096
            
            
            23,804Other
            
            
            1,084
            
            
            1,15138,180
            
            
            24,955Recoverable
                federal and state income taxes
            
            
            0
            
            
            1,177Inventories
            
            
            62,208
            
            
            57,843Prepaid
                expenses and other current assets
            
            
            1,390
            
            
            3,408Total
                current assets
            
            
            156,310
            
            
            125,678Other
                assets:Notes
                receivable and investments
            
            
            7,913
            
            
            8,316Goodwill
            
            
            4,195
            
            
            4,016Other
            
            
            2,560
            
            
            2,83314,668
            
            
            15,165Property,
                plant and equipment, less accumulateddepreciation
            
            
            193,590
            
            
            176,275Total
                assets
            
            $
            364,568
            
            $
            317,118**Liabilities
                and stockholders' equity**Current
                liabilities:Trade
                accounts payable
            
            $
            27,978
            
            $
            24,190Accrued
                wages and benefits
            
            
            7,273
            
            
            6,262Accrued
                expenses and other liabilities
            
            
            9,800
            
            
            4,190Current
                maturities of purchase obligation
            
            
            5,435
            
            
            6,884Current
                maturities of long-term debt
            
            
            13,442
            
            
            11,902Deferred
                income taxes
            
            
            11,830
            
            
            11,450Total
                current liabilities
            
            
            75,758
            
            
            64,878Long-term
                debt, less current maturities
            
            
            99,410
            
            
            92,010Non-controlling
                interests in consolidated entities
            
            
            1,894
            
            
            919Purchase
                obligation, less current maturities
            
            
            9,867
            
            
            16,751Other
                noncurrent liabilities
            
            
            2,150
            
            
            3,860Deferred
                income taxes
            
            
            19,750
            
            
            18,925Total
                liabilities
            
            
            208,829
            
            
            197,343Stockholders'
                equity:Common
                stock, $.01 par valueAuthorized
                shares - 60,000 in 2007 and 2006Issued
                35,130 shares and 21,193 shares outstanding in 2007
              and
                21,103 shares in 2006
            
            
            351
            
            
            351Class
                A common stock, $.01 par valueAuthorized
                shares - 2,400 in 2007 and 2006Issued
                and outstanding shares - 2,400 in 2007 and 2006
            
            
            24
            
            
            24Paid-in
                capital
            
            
            29,043
            
            
            28,700Retained
                earnings
            
            
            147,667
            
            
            112,183Common
                stock in treasury-13,937 shares in 2007and
                14,039 in 2006
            
            
            (21,346
            )
            
            (21,483
            )Total
                stockholders' equity
            
            
            155,739
            
            
            119,775Total
                liabilities and stockholders' equity
            
            $
            364,568
            
            $
            317,118





*See
      accompanying notes.*





34


**Cal-Maine
      Foods, Inc. and Subsidiaries**


**Consolidated
      Statements of Operations**


*(in
      thousands, except per share amounts)*








Fiscal
                years endedJune
                2
            
            June
                3
            
            May
                282007
            
            2006
            
            2005Net
                sales
            
            $
            598,128
            
            $
            477,555
            
            $
            375,266Cost
                of sales
            
            
            479,504
            
            
            415,338
            
            
            339,833Gross
                profit
            
            
            118,624
            
            
            62,217
            
            
            35,433Selling,
                general and administrative
            
            
            60,394
            
            
            57,702
            
            
            47,758Operating
                income (loss)
            
            
            58,230
            
            
            4,515
            
            
            (12,325
            )Other
                income (expense):Interest
                expense
            
            
            (6,987
            )
            
            (7,949
            )
            
            (5,906
            )Interest
                income
            
            
            1,112
            
            
            1,083
            
            
            1,684Equity
                in income (loss) of affiliates
            
            
            1,699
            
            
            (757
            )
            
            (88
            )Non-controlling
                interest
            
            
            286
            
            
            165
            
            
            -Other,
                net
            
            
            1,921
            
            
            1,465
            
            
            1,227(1,969
            )
            
            (5,993
            )
            
            (3,083
            )Income
                (loss) before income taxes
            
            
            56,261
            
            
            (1,478
            )
            
            (15,408
            )Income
                tax expense (benefit)
            
            
            19,605
            
            
            (465
            )
            
            (5,050
            )Net
                income (loss)
            
            $
            36,656
            
            $
            (1,013
            )
            $
            (10,358
            )Net
                income (loss) per share:Basic
            
            $
            1.56
            
            $
            (0.04
            )
            $
            (0.43
            )Diluted
            
            $
            1.55
            
            $
            (0.04
            )
            $
            (0.43
            )Weighted
                average shares outstanding:Basic
            
            
            23,526
            
            
            23,496
            
            
            23,834Diluted
            
            
            23,599
            
            
            23,496
            
            
            23,834





*See
      accompanying notes.*





35


**Cal-Maine
      Foods, Inc. and Subsidiaries**


**Consolidated
      Statements of Stockholders' Equity**


*(in
      thousands)*




**Common
                Stock****Class
                A**
            
            **Class
                A**
            
            **Treasury**
            
            **Treasury**
            
            **Paid-in**
            
            **Retained****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Capital**
            
            **Earnings**
            
            **Total**Balance
                at May 29, 2004
            
            
            35,130
            
            $
            351
            
            
            2,400
            
            $
            24
            
            
            13,307
            
            $
            (12,426
            )
            $
            26,308
            
            $
            125,908
            
            $
            140,165Purchase
                of treasury stock
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            943
            
            
            (9,344
            )
            
            -
            
            
            -
            
            
            (9,344
            )Cash
                dividends paid ($.05per
                common share) *
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,184
            )
            
            (1,184
            )Issuance
                of commonstock
                from treasury
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (207
            )
            
            263
            
            
            2,313
            
            
            -
            
            
            2,576Net
                loss for fiscal 2005
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (10,358
            )
            
            (10,358
            )Balance
                at May 28, 2005
            
            
            35,130
            
            
            351
            
            
            2,400
            
            
            24
            
            
            14,043
            
            
            (21,507
            )
            
            28,621
            
            
            114,366
            
            
            121,855Cash
                dividends paid ($.05per
                common share) *
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,170
            )
            
            (1,170
            )Issuance
                of commonstock
                from treasury
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (4
            )
            
            24
            
            
            79
            
            
            -
            
            
            103Net
                loss for fiscal 2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,013
            )
            
            (1,013
            )Balance
                at June 3, 2006
            
            
            35,130
            
            
            351
            
            
            2,400
            
            
            24
            
            
            14,039
            
            
            (21,483
            )
            
            28,700
            
            
            112,183
            
            
            119,775Cash
                dividends paid ($.05per
                common share) *
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,172
            )
            
            (1,172
            )Issuance
                of commonstock
                from treasury
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (102
            )
            
            137
            
            
            125
            
            
            -
            
            
            262Vesting
                of stock based
              compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            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
            
            $
            155,739








*Class
      A
      shares paid at 95% of the common stock dividend rate.


*See
      accompanying notes.*


36


**Cal-Maine
      Foods, Inc. and Subsidiaries**


**Consolidated
      Statements of Cash Flows**


*(in
      thousands)*




Fiscal
                year endedJune
                2
            
            June
                3
            
            May
                282007
            
            2006
            
            2005**Cash
                flows from operating activities**Net
                income (loss)
            
            $
            36,656
            
            $
            (1,013
            )
            $
            (10,358
            )Adjustments
                to reconcile net income (loss)to
                net cash provided by operating activities:Depreciation
                and amortization
            
            
            21,476
            
            
            20,569
            
            
            16,441Deferred
                income taxes
            
            
            1,205
            
            
            985
            
            
            (710
            )Equity
                in (income) loss of affiliates
            
            
            (1,699
            )
            
            757
            
            
            88Gain
                (loss) on disposal of property, plant andequipment
            
            
            38
            
            
            (1,108
            )
            
            (599
            )Interest
                on purchase obligation
            
            
            882
            
            
            1,284
            
            
            -Net
                change in Non-controlling interest in consolidated
                entities
            
            
            975
            
            
            (165
            )
            
            -Change
                in operating assets and liabilities, netof
                effects from acquisitionsReceivables
                and other assets
            
            
            (8,097
            )
            
            3,244
            
            
            4,835Inventories
            
            
            47
            
            
            2,136
            
            
            3,624Accounts
                payable, accrued expensesand
                other liabilities
            
            
            8,241
            
            
            (5,758
            )
            
            (3,707
            )Net
                cash provided by operating activities
            
            
            59,724
            
            
            20,931
            
            
            9,614**Cash
                flows from investing activities**Purchases
                of investments
            
            
            (43,250
            )
            
            (60,823
            )
            
            (89,499
            )Sales
                of investments
            
            
            28,750
            
            
            71,207
            
            
            75,581Acquisition
                of businesses, net of cash acquired
            
            
            (12,053
            )
            
            (23,756
            )
            
            -Payments
                received on notes receivable andfrom
                investments
            
            
            1,453
            
            
            2,288
            
            
            2,170Purchases
                of property, plant and equipment
            
            
            (23,472
            )
            
            (12,372
            )
            
            (11,977
            )Increase
                in notes receivable and investments
            
            
            (1,202
            )
            
            (2,048
            )
            
            (811
            )Net
                proceeds from disposal of property,plant
                and equipment
            
            
            503
            
            
            2,638
            
            
            879Net
                cash used in investing activities
            
            
            (49,271
            )
            
            (22,866
            )
            
            (23,657
            )**Cash
                flows from financing activities**Long-term
                borrowings
            
            
            29,500
            
            
            28,000
            
            
            2,500Principal
                payments on long-term debt
            
            
            (31,204
            )
            
            (31,924
            )
            
            (9,537
            )Payment
                of purchase obligation
            
            
            (6,102
            )
            
            -
            
            
            -Proceeds
                from issuance of common stock fromtreasury
            
            
            262
            
            
            103
            
            
            314Purchases
                of common stock for treasury
            
            
            -
            
            
            -
            
            
            (9,344
            )Payments
                of dividends
            
            
            (1,172
            )
            
            (1,170
            )
            
            (1,184
            )Net
                cash used in financing activities
            
            
            (8,716
            )
            
            (4,991
            )
            
            (17,251
            )Increase
                (decrease) in cash and cash equivalents
            
            
            1,737
            
            
            (6,926
            )
            
            (31,294
            )Cash
                and cash equivalents at beginning of year
            
            
            13,295
            
            
            20,221
            
            
            51,515Cash
                and cash equivalents at end of year
            
            $
            15,032
            
            $
            13,295
            
            $
            20,221





*See
      accompanying notes.*





37


**Cal-Maine
      Foods, Inc. and Subsidiaries**





**Notes
      to Consolidated Financial Statements**


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


*June
      2, 2007*




**1.
      Significant Accounting Policies**





**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. One customer accounted
      for
      36.9%, 36.6% and 30.9% of the Company's net sales in fiscal 2007, 2006 and
      2005,
      respectively. Another customer accounted for 9.8%, 9.9% and 12.1% of the
      Company's net sales in fiscal 2007, 2006 and 2005, respectively.





**Principles
      of Consolidation**


The
      consolidated financial statements include the accounts of Cal-Maine Foods,
      Inc.
      and its subsidiaries (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.




**Variable
      Interest Entities**




Financial
      Accounting Standards Board Interpretation 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, Company has 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.





The
      Company has a 43% ownership interest in Texas Egg, LLC and leases to Texas
      Egg,
      LLC its operating facility.  Texas Egg, LLC has 50% 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 $1,209 net of elimination of intercompany balances.


38








**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.





**Cash
      Equivalents**


The
      Company considers all highly liquid investments with a maturity of three months
      or less when purchased to be cash equivalents.





**Investments**


Investments
      consist of auction rate securities. We have designated these investments as
      available-for-sale securities and have accounted for them in accordance with
      the
      standards of Statement of Financial Accounting Standards SFAS No.115,
      "Accounting For Certain Investments: Debt and Equity Securities." Due to the
      nature of the investments, the cost at June 2, 2007 and June 3, 2006
      approximates fair value; therefore, accumulated other comprehensive income
      (loss) has not been recognized as a separate component of stockholders'
      equity.





**Trade
      Receivables**


Trade
      receivables are comprised primarily of amounts owed to the Company from
      customers, which amounted to $37,096 at June 2, 2007 and $23,804 at June 3,
      2006. Trade receivables are presented net of allowance for doubtful accounts
      of
      $150 at June 2, 2007 and $346 at June 3, 2006.





**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.





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.





39


**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 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.





**Impairment
      of Long-Lived Assets**


The
      Company reviews the carrying value of property, plant, and equipment 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 and franchise fees which are amortized over ten
      years.





**Goodwill**


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





**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


·
            Collectibility
                is reasonably assured.





Costs
      to
      deliver product to customers are included in selling, general and administrative
      expenses in the accompanying consolidated statements of operations and totaled
      $21,105, $24,560, and $18, 311, in fiscal 2007, 2006 and 2005,
      respectively.





**Advertising
      Costs**


The
      Company expenses advertising costs as incurred. Total advertising costs were
      $745 in fiscal 2007, $875 in fiscal 2006, and $821 in fiscal 2005.





**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.





40


**Stock
      Based Compensation**


In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) Statement No. 123
      (revised 2004)(“SFAS No.123(R)”), "Share-Based Payment," which is a revision of
      SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS
      No. 123(R) supersedes Accounting Principles Board (“APB”) Opinion
      No. 25, "Accounting for Stock Issued to Employees", and amends SFAS
      No. 95, "Statement of Cash Flows". SFAS No. 123(R) requires all
      share-based payments to employees, including grants of employee stock options,
      restricted stock and performance-based shares to be recognized in the income
      statement based on their fair values. SFAS No. 123(R) also requires the
      benefits of tax deductions in excess of recognized compensation cost to be
      reported as a financing cash flow, rather than as an operating cash flow as
      required under current literature. This requirement will reduce net operating
      cash flows and increase net financing cash flows in periods after adoption.
      In
      the first quarter of fiscal 2007, The Company adopted SFAS No. 123(R) using
      the modified prospective method. Under the modified prospective method,
      compensation costs are recognized for all share-based payments granted after
      the
      adoption of SFAS No. 123(R) and for all awards granted to employees prior
      to the adoption date of SFAS No. 123(R) that remain unvested on the
      adoption date. Accordingly, no restatements were made to prior periods. The
      Company recognized stock based compensation expense of $218 for equity awards
      and $1,650 for liability awards in fiscal 2007.





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





The
      following table illustrates the effect on net income (loss) and earnings (loss)
      per share if the Company had applied the fair value recognition provisions
      of
      Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
      Stock-Based Compensation," in the years presented. .







41




Fiscal
                year endedJune
                3
            
            May
                282006
            
            2005Net
                loss
            
            $
            (1,013
            )
            $
            (10,358
            )Add:
                Stock-based employee compensationexpense
                income included in reportednet
                loss
            
            
            256
            
            
            (798
            )Deduct:
                Total stock-based employeecompensation
                (expense) income determinedunder
                fair value based method for all awards
            
            
            (201
            )
            
            400Pro
                forma net loss
            
            $
            (958
            )
            $
            (10,756
            )Net
                loss per share:Basic
                — as reported
            
            $
            (0.04
            )
            $
            (0.43
            )Basic
                — pro forma
            
            $
            (0.04
            )
            $
            (0.45
            )Diluted
                — as reported
            
            $
            (0.04
            )
            $
            (0.43
            )Diluted
                — pro forma
            
            $
            (0.04
            )
            $
            (0.45
            )








**Net
      Income (Loss) per Common Share**


Basic
      net
      income (loss) per share is based on the weighted average common shares
      outstanding. Diluted net income (loss) per share includes any dilutive effects
      of options and warrants outstanding. Stock options representing approximately
      85,000 and 185,000 common shares were excluded from the calculation of dilutive
      net loss per share for the years ended June 3, 2006 and May 28, 2005,
      respectively, because the effect was anti-dilutive.





42


**Impact
      of Recently Issued Accounting Standards**





On
      July 13, 2006, the FASB issued Interpretation No. 48, Accounting for " Uncertainty
      in Income Taxes—an interpretation of FASB Statement No. 109 "
      (“Interpretation 48”) *.* Interpretation 48 clarifies the accounting for uncertainty in income taxes
      recognized in a company's financial statements in accordance with Statement
      No.109 and prescribes a recognition threshold and measurement attribute for
      financial statement disclosure of tax positions taken or expected to be taken
      on
      a tax return. Additionally, Interpretation 48 provides guidance on
      derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure and transition. The Company is required to adopt the
      provisions of Interpretation 48 in the first quarter of fiscal 2008. The Company
      is currently evaluating whether the adoption of Interpretation 48 will have
      a
      material effect on our consolidated financial position, results of operations
      or
      cash flows.





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      ("SFAS") No.157, "Fair Value Measurements". SFAS 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. SFAS
      157 is effective for us on June 1, 2008 and will be applied prospectively.
      The
      provisions of SFAS 157 are not expected to have a material impact on the
      Company's consolidated financial statements.





In
      February 2007, the FASB issued SFAS No. 159, "Establishing the Fair Value Option
      for Financial Assets and Liabilities", to permit all entities to choose to
      elect
      to measure eligible financial instruments at fair value. SFAS No. 159 applies
      to
      fiscal years beginning after November 15, 2007, with early adoption permitted
      for an entity that has also elected to apply the provisions of SFAS No. 157.
      An
      entity is prohibited from retrospectively applying SFAS No. 159, unless it
      chooses early adoption. Management is currently evaluating the impact of SFAS
      No. 159 on its consolidated financial statements.











**Fiscal
      Year**


The
      Company's fiscal year-end is on the Saturday nearest May 31, which was June
      2,
      2007 (52 weeks), June 3, 2006 (53 weeks) and May 28, 2005 (52 weeks), for the
      most recent three fiscal years.





43


**2.
      Acquisitions**


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, we 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 is 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
      October 2005, the Company paid substantially all of Hillandale, LLC’s notes
      payable and long-term debt and obtained a new $28,000 term loan from an
      insurance company secured by substantially all of the property, plant and
      equipment of Hillandale, LLC, and requires monthly principal payments of $150
      plus interest beginning in January 2007 through November 2020. The obligation
      to
      acquire 49% of Hillandale, LLC was recorded at its then present value of $23,600
      million as of June 3, 2006, of which $6,900 million was included in current
      liabilities and $16,700 million was included in non-current liabilities in
      the
      accompanying consolidated balance sheet.





In
      August 2006, in accordance with the Agreement, The Company purchased, for $6.1
      million, an additional 13% of the units of membership of Hillandale, LLC based
      on the book value as of July 29, 2006. The Company’s obligation to acquire the
      remaining 36% of Hillandale, LLC is recorded at its present value of $15.3
      million as of June 2, 2007 of which $5.4 million is included in current
      liabilities and $9.9 million is included in other non-current liabilities in
      the
      accompanying consolidated balance sheet. The
      actual remaining purchase price may be higher or lower when the Hillandale
      Purchase is completed. The Company will purchase an additional 12% of Hillandale LLC based on the
      book
      value of the units of membership as of July 29, 2007.


44





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





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, we own a majority of the membership interest in AEP.
      Accordingly, the financial statements of AEP have been consolidated with our
      financial statements beginning July 29, 2005. AEP, located in Georgia, processes
      shell eggs into liquid and frozen egg products that are sold primarily to food
      manufacturers and to the food service industry. AEP has contract shell egg
      production for approximately 50% of its shell egg requirements and purchases
      the
      balance from regional egg markets.





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. The Hillandale acquisition
      increased our egg production capacity by approximately 30%.





As
      of
      July 28, 2005, Hillandale, LLC owned a 50% ownership interest in Hillandale
      Farms, LLC that was accounted for by the equity method. On October 5, 2005,
      Hillandale, LLC acquired the other 50% interest in Hillandale Farms, LLC for
      $1,000. The purchase price was allocated to the assets acquired and liabilities
      assumed and resulted in approximately $900 of goodwill. Hillandale Farms, LLC
      is
      engaged in the production, processing and distribution of shell
      eggs.





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




Fiscal
                Year EndedJune
                3 2006
            
            May
                28 2005Net
                sales
            
            $
            490,529
            
            $
            456,018Net
                loss
            
            $
            (5,169
            )
            $
            (29,326
            )Basic
                net loss per share
            
            $
            (0.22
            )
            $
            (1.25
            )Diluted
                net loss per share
            
            $
            (0.22
            )
            $
            (1.25
            )





**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
      million 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 Cal-Maine
      Foods, Inc. since January 2006. Subsequent to the acquisition, the Company
      paid
      the capital lease obligation of approximately $10.5 million in full. Green
      Forest Foods, LLC produces, processes, and markets eggs from approximately
      one
      million laying hens, along with pullet growing for replacements.


45





**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 $10.9 million 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 will be 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.





Pro
      forma
      information and the allocation of the purchase price to the net assets acquired
      with respect to the acquisitions of Green Forest Foods, LLC and Benton County
      Foods, LLC is not significant to the Company’s consolidated financial statements
      and accordingly has not been presented.





**3.
      Investment in Affiliates**





The
      Company owns 50% each of Specialty Eggs LLC and Delta Egg Farm, LLC ("Delta
      Egg") as of June 2, 2007. Investment in affiliates, recorded using the equity
      method of accounting, totaled $6,428 and $6,763 at June 2, 2007 and at June
      3,
      2006, respectively. Equity in income or (loss) of $1,699, ($757), and ($88)
      from
      these entities have been included in the consolidated statements of operations
      for fiscal 2007, 2006 and 2005, respectively.





The
      Company is a guarantor of 50% of Delta Egg's long-term debt, which totaled
      approximately $9,544 at June 2, 2007. Delta Egg's long-term debt is secured
      by
      substantially all fixed assets of Delta Egg and is due in monthly installments
      through fiscal 2009. 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.





46


At
      June
      2, 2007, and June 3, 2006, "Notes receivable and investments" as shown on the
      Company's consolidated balance sheet includes the cost of an investment in
      Egg-Land's Best, Inc., in which the Company has a 25.9% equity interest as
      of
      June 2, 2007 and had a 25.7% equity interest as of June 3, 2006. The Company
      can
      not 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 June 2, 2007, and
      June
      3, 2006, was $440.








**4.
      Inventories**





Inventories
      consisted of the following:





June
                2
            
            June
                32007
            
            2006Flocks
            
            $
            40,773
            
            $
            39,092Eggs
            
            
            4,704
            
            
            3,820Feed
                and supplies
            
            
            16,731
            
            
            14,931$
            62,208
            
            $
            57,843








**5.
      Property, Plant and Equipment**





Property,
      plant and equipment consisted of the following:





June
                2
            
            June
                32007
            
            2006Land
                and improvements
            
            $
            43,222
            
            $
            40,741Buildings
                and improvements
            
            
            163,946
            
            
            133,884Machinery
                and equipment
            
            
            168,422
            
            
            158,791Construction-in-progress
            
            
            726
            
            
            6,415376,316
            
            
            339,831Less
                accumulated depreciation
            
            
            182,726
            
            
            163,556$
            193,590
            
            $
            176,275





Depreciation
      expense was $21,164, $20,417 and $16,367 in fiscal 2007, 2006 and 2005,
      respectively.





47


**6.
      Leases**





Future
      minimum payments under noncancelable operating leases that have initial or
      remaining noncancelable terms in excess of one year at June 2, 2007 are as
      follows:





2008
            
            $
            4,5102009
            
            
            2,5062010
            
            
            2,0942011
            
            
            1,3102012
            
            
            780Thereafter
            
            
            906Total
                minimum lease payments
            
            $
            12,106





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
      $8,390, $9,918 and $8,109 in fiscal 2007, 2006 and 2005, respectively, primarily
      for the lease of certain operating facilities, equipment and transportation
      equipment. Included in rent expense are vehicle rents totaling $840, $1,049
      and
      $1,318 in fiscal 2007, 2006 and 2005, respectively.







48


**7.
      Credit Facilities and Long-Term Debt**


Long-term
      debt consisted of the following:





June
                2
            
            June
                32007
            
            2006Note
                payable at 5.99%; due in monthlyinstallments
                of $150, plus interest, beginning inJanuary
                2007 through 2020
            
            $
            27,100
            
            $
            28,000Note
                payable at 6.35%, due in monthly principalinstallments
                of $100, plus interest, maturing in 2017
            
            
            19,900
            
            
            -Note
                payable at 8.26%; due in monthly installmentsof
                $155, including interest, maturing in 2015
            
            
            13,808
            
            
            14,500Note
                payable at 6.80%; due in monthly installmentsof
                $165, plus interest, maturing in 2013
            
            
            13,070
            
            
            15,050Note
                payable at 6.40%, due in monthly principalinstallments
                of $35, plus interest, maturing in 2017
            
            
            6,500
            
            
            -Series
                B Senior Secured Notes at 7.18%; due inannual
                principal installments of $2,143 beginning inDecember
                2003 through 2009 with interest duesemi-annually
            
            
            6,429
            
            
            8,571Industrial
                revenue bonds at 6.10%; due inmonthly
                installments of $146, including interest,maturing
                in 2011
            
            
            5,961
            
            
            7,301Note
                payable at 7.06%; due in monthly installmentsof
                $53, including interest, maturing in 2015
            
            
            4,936
            
            
            5,211Note
                payable at 6.87%; due in monthly installmentsof
                $45, including interest, maturing in 2015
            
            
            4,204
            
            
            4,441Note
                payable at 6.07%, due in monthly principalinstallments
                of $33, plus interest, maturing in 2017
            
            
            2,966
            
            
            -Note
                payable at 6.75%;due in monthly principalinstallments
                of $25, plus interest, maturing in 2009
            
            
            2,525
            
            
            2,825Note
                payable at 5.8%; due in annual principalinstallments
                of $250 beginning in April 2006 through2015
                with interest due quarterly
            
            
            2,000
            
            
            2,250Series
                A Senior Secured Notes at 6.87%; due inannual
                principal installments of $1,917 beginning inDecember
                2002 through 2008 with interest duesemi-annually
            
            
            1,917
            
            
            3,833Note
                payable at 7.5%; due in monthly installmentsof
                $36, including interest, maturing in 2011
            
            
            1,516
            
            
            1,822Other
            
            
            20
            
            
            508Note
                payable at 6.7%; due in monthly installmentsof
                $100, plus interest, maturing in 2009
            
            
            -
            
            
            9,600112,852
            
            
            103,912Less
                current maturities
            
            
            13,442
            
            
            11,902$
            99,410
            
            $
            92,010








49


The
      aggregate annual fiscal year maturities of long-term debt at June 2, 2007 are
      as
      follows:





2008
            
            $
            13,4422009
            
            
            11,7702010
            
            
            12,0002011
            
            
            9,8172012
            
            
            8,154Thereafter
            
            
            57,669$
            112,852





The
      Company has a $40,000 line of credit with three banks, $2,700 of which was
      utilized for a standby letter of credit at June 2, 2007 and June 3, 2006. The
      balance of the credit facility remains undrawn. The line of credit, which
      expires on December 31, 2008, is limited in availability based upon accounts
      receivable and inventories. The Company had $37,300 available to borrow under
      the line of credit at June 2, 2007. Borrowings under the line of credit bear
      interest at margins above the federal funds rate based upon the Company's
      leverage. As of June 2, 2007 the margin was 1.5%. Facilities fees of 0.3% per
      annum are payable quarterly on the unused portion of the line.





Substantially
      all trade receivables and inventories collateralize our line of credit and
      property, plant and equipment collateralize our long-term debt under our loan
      agreements with our lenders. Unless otherwise approved by our lenders, we are
      required by provisions of these loan agreements to (1) maintain minimum levels
      of working capital (ratio of not less than 1.25 to 1) and net worth (minimum
      of
      $90.0 million tangible net worth, and 45% of cumulative net income); (2) limit
      dividends to an aggregate amount not to exceed $500,000 per quarter (allowed
      if
      no default), capital expenditures less exclusions (not to exceed 125% of
      depreciation for the same four fiscal quarters), lease obligations and
      additional long-term borrowings (total funded debt to total capitalization
      not
      to exceed 55%); and (3) maintain various current and cash-flow coverage ratios
      (1.25 to 1), among other restrictions. At June 2, 2007, 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. The
      Chief Executive Officer of the Company, or his family, must maintain ownership
      of not less than 50% of the outstanding voting stock of the
      Company.





Interest
      of $6,992, $7,198 and $5,860 was paid during fiscal 2007, 2006 and 2005,
      respectively. Interest of $566, $222 and $72 was capitalized for construction
      of
      certain facilities during fiscal 2007, 2006 and 2005, respectively.








**8.
      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 $150 for each occurrence. The
      Company's expenses including accruals for incurred but not reported claims,
      were
      approximately $4,632, $5,128 and $7,065 in fiscal 2007, 2006 and 2005,
      respectively.





50


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 $1,115, $1,069 and $1,643 in fiscal
      2007, 2006 and 2005, 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
      $37
      in fiscal 2007, $59 in fiscal 2006 and $72 in fiscal 2005 .





In
      December 2006, the Company adopted an additional deferred compensation plan
      to
      provide deferred compensation to named officers of the Company. As of June
      2,
      2007 no awards have been made under this plan.





**9.
      Stock Compensation Plans**





On
      July
      28, 2005, our 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 our employees. The options
      may
      have a term of up to ten years and generally will vest ratably over five years.
      On August 17, 2005, we issued 360,000 options with an exercise price of $5.93.
      The options have ten-year terms and vest over five years beginning from the
      date
      of grant. The ISO Plan was ratified by our shareholders at our annual meeting
      of
      shareholders on October 13, 2005.





On
      July
      28, 2005, our Board of Directors also approved the Cal-Maine Foods, Inc. Stock
      Appreciation Rights Plan (the "Rights Plan"). The Rights Plan covers 1,000,000
      shares of common stock of the Company. Stock Appreciation Rights ("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 shares of our common stock equal
      to
      the difference between the fair market value of a single share of common stock
      at the time of exercise and the strike price which is equal to the fair market
      value of a single share of common stock on the date of the grant. The SARs
      have
      a ten-year term and vest over five years. On August 17, 2005, we issued 592,500
      SARs, under the Rights Plan, with a strike price of $5.93 and, on August 26,
      2005, we issued 22,500 SARs with a strike price of $6.71. On August 24, 2006
      we
      issued 15,000 SARs with a strike price of $6.93. The Rights Plan was ratified
      by
      our shareholders at our annual meeting of shareholders on October 13, 2005.
      On
      August 24, 2006, in accordance with provisions of our Rights Plan, our Board
      of
      Directors approved an amendment to the Rights Plan providing that exercises
      under the Rights Plan be settled in cash and not with shares of our common
      stock. No shares of our common stock have been issued, nor will be issued,
      under
      the Rights Plan.


51





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. At June 2, 2007,
      8,000
      shares were available for grant under the 1999 plan.





The
      Company has reserved 1,600,000 shares under its 1993 Stock Option Plan. The
      options have ten-year terms and vest annually over five years beginning one
      year
      from the grant date. At
      June
      2, 2007, no shares were available for grant under the 1993 plan.





A
      summary
      of our equity award activity and related information for the fiscal year ended
      June 2, 2007 is as follows:





WeightedWeighted
            
            AverageNumber
            
            Exercise
            
            Remaining
            
            Aggregateof
            
            Price
            
            Contractual
            
            IntrinsicOptions
            
            Per
                Share
            
            Life
                (in Years)
            
            ValueOutstanding
                at May 28, 2005
            
            
            128,800
            
            $
            1.91Granted
            
            
            360,000
            
            
            5.93Exercised
            
            
            15,400
            
            
            1.82Outstanding,
                June 3, 2006
            
            
            473,400
            
            
            4.97Granted
            
            
            -
            
            
            -Exercised
            
            
            89,800
            
            
            2.92Forfeited
            
            
            -
            
            
            -Outstanding,
                June 2, 2007
            
            
            383,600
            
            $
            5.45
            
            
            7.34
            
            $
            4,019Exercisable,
                June 2, 2007
            
            
            99,520
            
            $
            4.67
            
            
            7.29
            
            $
            875







52


The
      number and weighted average grant-date fair value of non-vested equity awards
      in
      fiscal 2007 was as follows:





WeightedAverageGrant-DateNumber
            
            Fairof
            
            ValueShares
            
            Per
                ShareNonvested,
                June 3, 2006
            
            
            395,760
            
            $
            2.56Granted
            
            
            -
            
            
            -Vested
            
            
            (89,880
            )
            
            2.43Forfeited
            
            
            -
            
            
            -Nonvested,
                June 2, 2007
            
            
            305,880
            
            $
            2.61





A
      summary
      of our liability award activity and related information for the fiscal year
      ended June 2, 2007 is as follows:




WeightedWeighted
            
            AverageNumber
            
            Average
            
            Remaining
            
            AggregateOf
            
            Strike
                Price
            
            Contractual
            
            IntrinsicRights
            
            Per
                Right
            
            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
            
            $
            5.95
            
            
            8.21
            
            $
            3,700Exercisable,
                June 2, 2007
            
            
            98,610
            
            $
            4.66
            
            
            8.08
            
            $
            756










The
      fair value of liability awards was estimated as of June 2, 2007 using a
      Black-Scholes option pricing model using the following weighted-average
      assumptions: risk-free interest rate of 4.9%; dividend yield of 1%; volatility
      factor of the expected market price of our stock of 34.9%; and a
      weighted-average expected life of the rights of 4.50 years.








53


**10.
      Income Taxes**





Income
      tax expense (benefit) consisted of the following:







Fiscal
                year endedJune
                2
            
            June
                3
            
            May
                282007
            
            2006
            
            2005Current:Federal
            
            $
            16,730
            
            $
            (1,450
            )
            $
            (3,899
            )State
            
            
            1,670
            
            
            -
            
            
            (387
            )18,400
            
            
            (1,450
            )
            
            (4,286
            )Deferred:Federal
            
            
            675
            
            
            1,245
            
            
            (672
            )State
            
            
            530
            
            
            (260
            )
            
            (92
            )1,205
            
            
            985
            
            
            (764
            )$
            19,605
            
            $
            (465
            )
            $
            (5,050
            )





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





June
                2
            
            June
                32007
            
            2006Deferred
                tax liabilities:Property,
                plant and equipment
            
            $
            16,163
            
            $
            16,217Cash
                basis temporary differences
            
            
            1,752
            
            
            1,911Inventories
            
            
            14,001
            
            
            12,636Investment
                in affiliates
            
            
            2,135
            
            
            1,686Other
            
            
            1,012
            
            
            1,553Total
                deferred tax liabilities
            
            
            35,063
            
            
            34,003Deferred
                tax assets:Accrued
                expenses
            
            
            2,777
            
            
            2,384Discount
                on acquisition purchase price
            
            
            471
            
            
            372Amortization
                of non-compete contracts
            
            
            184
            
            
            209Job
                tax credit carry forward
            
            
            -
            
            
            250Other
            
            
            51
            
            
            413Total
                deferred tax assets
            
            
            3,483
            
            
            3,628Net
                deferred tax liabilities
            
            $
            31,580
            
            $
            30,375





54


Effective
      May 29, 1988, the Company could no longer use cash basis accounting for its
      farming subsidiary because of tax law changes. The *Taxpayer 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 endJune
                2
            
            June
                3
            
            May
                282007
            
            2006
            
            2005Statutory
                federal income tax (benefit)
            
            $
            19,598
            
            $
            (518
            )
            $
            (5,393
            )State
                income taxes (benefit), net
            
            
            1,430
            
            
            (169
            )
            
            (311
            )Non-taxable
                (deductible) Hillandale,LLC
                income (loss)
            
            
            (449
            )
            
            750
            
            
            -Tax
                exempt interest income
            
            
            (278
            )
            
            (634
            )
            
            -Other,
                net
            
            
            (696
            )
            
            106
            
            
            654$
            19,605
            
            $
            (465
            )
            $
            (5,050
            )





Federal
      and state income taxes of $194, $128, and $391 were paid in fiscal 2007, 2006
      and 2005, respectively. Federal and state income taxes of $1,426, $7,077 and
      $3,062 were refunded in fiscal 2007, 2006 and 2005, respectively.





**11.
      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 $115,200.  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.




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 $3,875 at June 2, 2007.  The Company is a
      party to no other market risk sensitive instruments requiring
      disclosure.





The
      Company is the defendant in certain legal actions.  It is the opinion of
      management, based on advice of legal counsel, that the outcome of these actions
      will not have a material adverse effect on the Company's consolidated financial
      position or operations.





55







**12.
      Quarterly Financial Data:** (unaudited, amount in thousands, except per share data):







Fiscal
                Year 2007First
            
            Second
            
            Third
            
            FourthQuarter
            
            Quarter
            
            Quarter
            
            QuarterNet
                sales
            
            $
            115,308
            
            $
            137,737
            
            $
            175,211
            
            $
            169,872Gross
                profit
            
            
            8,407
            
            
            24,955
            
            
            44,182
            
            
            41,080Net
                income (loss)
            
            
            (5,431
            )
            
            6,401
            
            
            17,403
            
            
            18,283Net
                income (loss) per share:Basic
            
            $
            (0.23
            )
            $
            0.27
            
            $
            0.74
            
            $
            0.78Diluted
            
            $
            (0.23
            )
            $
            0.27
            
            $
            0.74
            
            $
            0.77








Fiscal
                Year 2006First
            
            Second
            
            Third
            
            FourthQuarter
            
            Quarter
            
            Quarter
            
            QuarterNet
                sales
            
            $
            79,756
            
            $
            138,288
            
            $
            130,107
            
            $
            129,404Gross
                profit
            
            
            960
            
            
            17,809
            
            
            25,973
            
            
            17,475Net
                income (loss)
            
            
            (8,108
            )
            
            (685
            )
            
            7,990
            
            
            (210
            )Net
                income (loss) per share:Basic
            
            $
            (0.35
            )
            $
            (0.03
            )
            $
            0.34
            
            $
            (0.01
            )Diluted
            
            $
            (0.35
            )
            $
            (0.03
            )
            $
            0.34
            
            $
            (0.01
            )





56


**SCHEDULE
      II - VALUATION AND QUALIFYING ACCOUNTS**


**Years
      ended June 2, 2007, June 3, 2006, and May 28, 2005**


**(** ***in
      thousands*** **)**





**Balance
                at**
            
            **Charged
                to**
            
            **Write-off**
            
            **Balance
                at****Beginning**
              **of**
            
            **Cost
                and Expense**
            
            **of**
              **Accounts**
            
            **End**
              **of****Description**
            
            **Period**
            
            
            
            
            
            **Period**Year
                ended June 2, 2007:Allowance
                for doubtful accounts
            
            $
            346
            
            $
            612
            
            $
            808
            
            $
            150Year
                ended June 3, 2006:Allowance
                for doubtful accounts
            
            $
            92
            
            $
            892
            
            $
            638
            
            $
            346Year
                ended May 28, 2005:Allowance
                for doubtful accounts
            
            $
            90
            
            $
            253
            
            $
            251
            
            $
            92








57








**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 June 2, 2007.





***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)  ***Attestation*** **** ***Report
      of the Registrant’s Public Accounting Firm***





The
      attestation report of Moore Stephens Frost 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 June 2, 2007, 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
      June 2, 2007, that has materially affected, or is reasonably likely to
      materially affect, our internal control over financial reporting.





**ITEM
      9B OTHER INFORMATION**




Not
      applicable


58





**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
      2007 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 2007 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 2007 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 2007 Annual Meeting of Shareholders.





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





The
      information concerning principal accounting 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
      2007 Annual Meeting of Shareholders.





59


**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.





Consolidated
      Balance Sheets - June 2, 2007 and June 3, 2006.





Consolidated
      Statements of Operations - Years Ended June 2, 2007, June 3, 2006 and May 28,
      2005.





Consolidated
      Statements of Changes in Shareholders' Equity for the Years Ended


June
      2,
      2007, June 3, 2006 and May 28, 2005.





Consolidated
      Statements of Cash Flows for the Years Ended June 2, 2007, June 3, 2006 and
      May
      28, 2005.





Notes
      to
      Consolidated Financial Statements.





( a)(2) Financial
      Statement Schedule





Schedule
      II - Valuation and Qualifying Accounts





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:





Exhibit
                Number
              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. (1)
  60
  4.1
              See
                  Exhibits 3.1 and 3.2 as to the rights of holders of the Registrant’s
                  common stock.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)10.15
              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)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)
  61
  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)10.12
              1999
                  Stock Option Plan (6)+10.13
              2005
                  Stock Option Plan (10)+10.14
              2005
                  Stock Appreciation Rights Plan (11)+21
              Subsidiaries
                  of the Registrant23.1
              Consent
                  of Moore Stephens Frost23.2
              Consent
                  of Ernst & Young LLP31.1
              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.(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.
  62
  (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
                  endedJune
                  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.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.(c)
              Financial
                  Statement Schedules Required by Regulation
                  S-X


The
      financial statement schedule required by Regulation S-X is filed at page 57.
      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.


63


**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
      13th  day
      of
      August, 2007.





CAL-MAINE
      FOODS, INC.





/s/
      Fred
      R. Adams, Jr.


Fred
      R.
      Adams, Jr.


Chairman
      of the Board and


Chief
      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
            
            08/13/2007Fred
                R. Adams, Jr.
            
            Chief
                Executive Officer(Principal
                Executive Officer)/s/
                Richard K. Looper
            
            Vice
                Chairman of the Board
            
            08/13/2007Richard
                K. Looper
            
            and
                Director/s/
                Adolphus B. Baker
            
            President
                and Director
            
            08/13/2007Adolphus
                B. Baker/s/
                Timothy A. Dawson
            
            Vice
                President, Chief Financial
            
            08/13/2007Timothy
                A. Dawson
            
            Officer
                and Director(Principal
                Financial Officer)/s/
                Charles F. Collins
            
            Vice
                President, Controller
            
            08/13/2007Charles
                F. Collins
            
            (Principal
                Accounting Officer)/s/
                Letitia C. Hughes
            
            Director
            
            08/13/2007Letitia
                C. HughesDirectorR.
                Faser Triplett/s/
                James E. Poole
            
            Director
            
            08/13/2007James
                E. Poole


64








CAL-MAINE
      FOODS, INC.


Form
      10-K
      for the fiscal year


Ended
      June 2, 2007


EXHIBIT
      INDEX





ExhibitNumber
              Exhibit21
              Subsidiaries
                  of Cal-Maine Foods, Inc23.1
              Consent
                  of Moore Stephens Frost23.2
              Consent
                  of Ernst & Young LLP31.1
              Certification
                  of The Chief Executive Officer31.2
              Certification
                  of The Chief Financial Officer32
              Written
                  Statement of The Chief Executive Officer and Chief Financial
                  Officer


65