UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

# FORM 10-K

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

| | FOR
FISCAL YEAR ENDED May 29, 2004
| | ----------------------------------

||_| | 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   
|Incorporation or Organization)  | Identification No.)

3320 Woodrow
Wilson Avenue, Jackson, Mississippi 39209(Address of principal executive offices) (Zip
Code)

(601) 948-6813 (Registrants telephone number, including area code)

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

Securities registered pursuant to
Section 12 (g) of the Act:    Common Stock, $0.01 par value

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

| | Yes   X    No
| | -------------

Indicate by check mark 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. ( )

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

| | Yes       No  X
| | ---------------

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 November 28, 2003, which was the date of the last
business day of the registrants most recently completed second fiscal quarter, was
$43,336,000.

As of August 2, 2004, 21,838,894
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.

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# TABLE OF CONTENTS

|Part I
|------
|Item  
|1.    
|2.    
|3.    
|4.    
|
|5.    
|      
|6.    
|7.    
|      
|7A.   
|8.    
|9.    
|      
|9A.   
|
|10.   
|11.   
|12.   
|13.   
|14.   
|
|15.   
|      
|      

2

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# 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 year
2004, we sold approximately 605 million dozen shell eggs, which represented about 13% of
domestic shell egg consumption in the United States. Our total flock, which is comprised
of approximately 20 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 the
majority of our shell eggs in 28 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 9
of the 10 largest food retailers in the United States.

We
are also the largest producer and marketer 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 2004, specialty shell eggs
were estimated to represent approximately 8% 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 20% 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 Farmhousebrand 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 5.6% of our total shell egg
dozen volume in fiscal 2004 and 4.1% for fiscal 2003.

We are also a leader in industry consolidation. Since 1989, we have completed ten
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 are currently over 60 producers who each own more than
one million layers and the ten largest producers own approximately 40% of total industry
layers. We believe industry consolidation will continue and we plan to capitalize on
opportunities as they arise.

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 traded on the NASDAQ National Market under the symbol CALM. On
May 28, 2004, the last sale price of our Common Stock was $13.80 per share.Our
fiscal year 2004 ended May 29, 2004 and the first three fiscal quarters of fiscal 2004
ended August 30, 2003, November 29, 2003 and February 28, 2004. All references to a fiscal
year means our fiscal year and all references to a year mean a calendar year.

3

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We
have recently 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 this
Item 1, (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.

Industry
Background

The
United States Department of Agriculture reported that in 2003 the wholesale shell egg
industry was a $4.5 billion market. Shell eggs are a staple food product and 94% of US
homes buy shell eggs according to the 2003 Progressive Grocer Consumer Expenditure
Study. 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 1999, annual per capita consumption in the
United States has varied between 250 and 256 eggs. In 2003, per capita consumption in the
United States was 254 eggs, implying approximately five eggs consumed 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. In 2003, wholesale
shell egg prices averaged 93.8 cents per dozen versus an average of 71.3 cents per dozen
from 1999 to 2002. The current price environment is the result of strong demand for shell
eggs and a slight increase in supply.

Factors
currently influencing demand:

| | - | industry
advertising campaigns successfully promoting the health benefits of eggs;
| | - | ----------------------------------------------------------------------------------

4

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| | - | 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 in eggs; and
| | - | ---------------------------------------------------------------------------------------------------------------------

| | - | increased
demand from the foodservice channel.
| | - | ----------------------------------------------

Factors currently
influencing supply:

| |  | living
space for newly hatched layers will increase 20% by 2008 according to guidelines put in
place by the United Egg Producers, in conjunction with the Food Marketing Institute, both
industry trade 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 production costs. Most shell egg processors are vertically integrated,
manufacturing the majority of the feed they require themselves. Although feed ingredients
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 prices for corn and
soybeans, essential feed ingredients, are significantly higher than in the recent past.
Based on current industry projections for the 2004 fall crop, we expect feed ingredient
prices to decline with the approach of the harvest season in September and October.

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 consummated ten
acquisitions, and built seven new in-line shell egg production and processing
facilities and one pullet growing facility, adding 8 million layers and 1.5 million
growing pullets to our capacity. Each of the new shell egg production facilities generally
provides 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
22.7 million for each of the past five fiscal years. Also, the number of dozens of shell
eggs sold has increased from approximately 117 million in the fiscal year ended May 28,
1988 to an average of approximately 561.8 million over the past five fiscal years. Net
sales amounted to $572.3 million in fiscal 2004 compared to net sales of $69.9 million in
fiscal 1988.

Although
we have made no acquisitions in the past four fiscal years, 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 Farmhousebrand, we are the leading producer and marketer 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 related to the generic shell egg market, 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.

5

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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 its last fiscal
year represented only approximately 13% 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 88% of our total fiscal           2004 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.

The
commercial production of shell eggs requires a source of baby chicks for laying flock
replacement. We produce approximately 98% of our chicks in our own hatcheries and obtain
the balance from commercial sources. We own breeder facilities producing 13 million pullet
chicks per year in a computer-controlled environment. These pullets are distributed to 20
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 13.0
million 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 $45 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 97% 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 54% to
57% of total cost in the last five years, or an average of approximately 55%. 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.

6

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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 605 million dozen shell eggs sold by us in the fiscal year ended May           29,
2004, 458 million were produced by Company 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 58.4% of net
sales in the fiscal 2004 and 63.0% of net sales for fiscal 2003. One customer accounted
for 11.9% of net sales during fiscal 2004 and 12.8% of net sales for fiscal 2003, and two
affiliated customers, on a combined basis, accounted for 26.8% of net sales during fiscal
2004 and 21.3% of net sales for fiscal 2003.

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 delivery trucks or are picked up by
our customers at our warehouses.

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.

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, eight of our first quarters and five of our fourth quarters
have resulted in net operating losses.

According
to U.S. Department of Agriculture reports, since 1999, annual per capita consumption in
the United States has varied between 250 and 256 eggs. While we believe that increased
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 28 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.

7

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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
6.5% of our net sales in fiscal 2004. Farmhousebrand eggs are produced at our
facilities by hens that are not caged, and are provided with a diet of natural grains and
drinking water that is free of hormones or other chemical additives. Farmhouse eggs
accounted for 1.7% of our net sales in fiscal 2004. They are intended to meet the demands
of consumers who are sensitive to environmental and animal welfare issues.

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.

While
the shell egg industry remains highly fragmented, it has been characterized by a growing
concentration of producers. In 2003, 62 producers with one million or more layers owned
84% of the 279 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.

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 20% 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. All of our
processing plants have a resident USDA inspector. 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.

8

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Employees. As
of May 29, 2004, we had a total of approximately 1,520 employees of whom           1,380
worked in egg production, processing and marketing, 90 were engaged in           feed
mill operations and 50 were administrative employees, including officers,           at
our executive offices. About 9% 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.

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. There can be no assurance that shell egg prices will remain at or near current
levels. As the demand for shell eggs has increased in recent years, the supply of shell
eggs has remained level. This has contributed to higher shell egg prices. However, there
is no assurance 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.

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, current 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 popular 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 cost, ranging from 54% to
57% of total 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 soybeans,
essential feed ingredients, have increased in the last few months and are projected to
decline with the approach of the harvest season. 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.

9

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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.

We purchase approximately 25% 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 75% 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.

We
presently have no understandings or agreements with respect to any acquisitions.

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 ended May 31, 2004, and May 31, 2003, one customer accounted for 11.9% of
our net sales and 12.8% of our net sales, respectively, and two affiliated customers, on a
combined basis, accounted for 26.8% and 21.3% of our net sales, respectively. Our top 10
customers accounted for 58.4% and 63.0% 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.

10

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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 assure you 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 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 assure
you that we can continue to pass on these costs, or any additional costs we will face, in
the future.

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

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

11

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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
33.9% of the outstanding shares of our Common Stock, which has one vote per share, and Mr.
Adams owns 90.4% and his son-in-law Adolphus B. Baker, our president, chief operating
officer and one of our directors, owns 9.6% of the outstanding shares of Class A Common
Stock, which has ten votes per share. Mr. Baker and his spouse also own 1.9% of the
outstanding shares of our Common Stock. As a result, currently Mr. Adams and his spouse
possess 65.3%, and Messrs. Adams and Baker and their spouses possess 71.3% 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.

# ITEM 2. PROPERTIES

We
operate farms, processing plants, hatcheries, feed mills, warehouses, offices and other
properties located in Arkansas, Georgia, Kansas, Kentucky, Louisiana, Mississippi, New
Mexico, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Utah. The
facilities currently include two breeding facilities, two hatcheries, two wholesale
distribution centers, 14 feed mills, 19 shell egg production facilities, 18 pullet growing
facilities, and 20 processing and packing facilities Most of our operations are conducted
from properties we own.

In
addition, we operate approximately 242 over-the-road tractors and 392 trailers, most of
which are refrigerated, as well as feed delivery trucks, shell egg pick-up trucks,
bobtail delivery trucks and other miscellaneous vehicles. Of the
tractors and trailers, we own 190 and 150, respectively, and the balance is under
operating leases with certain purchase options.

Presently,
we own approximately 15,000 acres of land in various locations throughout our geographic
market area. We have the ability to hatch 16 million pullet chicks annually, grow 13
million pullets annually, house 18 million laying hens and control the production of an
aggregate total of 21 million layers. We also own or control mills that can produce 700
tons per hour of feed, and processing facilities capable of processing 7,000 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.

12

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Over
the past five fiscal years, Cal-Maines capital expenditures have totaled an
aggregate amount of approximately $116.3 million, including the acquisition of the
operations of other businesses. The Companys facilities currently are maintained in
good operable condition and are insured to an extent the Company deems adequate.

# ITEM 3. LEGAL PROCEEDINGS

Chicken
Litter Litigation

On
December 26, 2002, Cal-Maine Farms, Inc. (Cal-Maine Farms), a Delaware
corporation wholly owned by us, was served with process in a civil complaint filed in the
Circuit Court of the First Judicial District of Hinds County, Mississippi, on behalf of
plaintiffs, Hunter McWhorter, his two parents, and Michael Green. In addition to Cal-Maine
Farms, Fred Adams, Adolphus Baker, Charles Collins, R. K. Looper and B. J. Raines,
officers of our company, are among the 50 named defendants. Other defendants include
Cargill, Incorporated, Georges Farms, Inc., Peterson Farms, Inc., Simmons Foods,
Inc., Simmons Poultry Farms, Inc., and Tyson Foods, Inc., each of which is engaged in the
broiler business. Individual defendants that were affiliated with the other corporate
defendants also were named in the suit.

The
suit alleges that plaintiffs suffered medical problems from living near land upon which
litter from the flocks of hens owned by certain of the defendants was spread
as fertilizer. The suit specifically addresses conditions alleged to exist in Washington
County, Arkansas, where there is a relatively high concentration of broiler farms.
Cal-Maine Farms is not engaged in any broiler production and, compared to the broiler
producers, has a very small portion of hens located in Washington County. The suit alleges
actual damages in the amount of $55,000,000 and requests punitive damages in the amount of
$100,000,000. On December 31, 2002, an amended complaint was filed, bringing the number of
plaintiffs to 93.

On
November 7, 2003, an Order of Dismissal Without Prejudice was issued by the First Judicial
District of Hinds County, Mississippi. On December 5, 2003, the plaintiffs elected to
appeal the order to the Mississippi Supreme Court. This appeal is pending.

On
February 3, 2004, Cal-Maine Farms was served with process in a civil complaint filed in
the Circuit Court of Washington County, Arkansas, on behalf of Keith McWhorter and Patsy
McWhorter, individually and as next friends and guardians of Hunter McWhorter, a plaintiff
in the action described above. Other defendants include Alpharma Inc., Alpharma Animal
Health Co., Cargill, Incorporated, Georges Farms, Inc., Peterson Farms, Inc.,
Simmons Foods, Inc., Simmons Poultry Farms, Inc., and Tyson Foods, Inc., each of which is
engaged in the broiler business, and an individual.

The
suit alleges that the plaintiffs have suffered medical problems resulting form living near
land upon which litter from the defendants flocks was spread as
fertilizer. This suit focuses on a feed ingredient that contains arsenic and is alleged to
be in the litter that was spread. This particular feed ingredient is not used in our shell
egg production feed formulation. The suit, like the suit described above, also addresses
conditions alleged to exist in Washington County. The suit seeks unspecified actual
damages and requests unspecified punitive damages. An answer has been filed on behalf of
Cal-Maine Farms and no discovery has taken place. At this stage, it is impossible to
evaluate the potential exposure, if any, of Cal-Maine Farms to damages in this suit.

Going
Private Litigation

On
August 18, 2003, we announced that our Board of Directors had approved a 2,500 to 1
reverse stock split, subject to stockholder approval, in order to effect a going private
transaction. Multiple suits were filed during the fall season of 2003 in the Chancery
Court of New Castle County, Delaware against us, seeking to enjoin the going private
transaction.

The
lawsuits were consolidated by the Chancery Court but were dismissed, prior to any
discovery or trial, as moot cases inasmuch as we elected not to proceed with the going
private transaction.

13

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The
Plaintiffs attorneys petitioned the Delaware court for attorneys fees and were
awarded $831,617.23 by the Chancellor. We have appealed the award of fees to the Supreme
Court of Delaware. Briefs have been submitted, arguments given, but no result has been
announced by the Court.

Contract
Grower Litigation

On
March 23, 2004, a civil complaint was filed against Cal-Maine Foods, Inc. by Olen L.
Wells, a former contract producer. The complaint is pending in the United States District
Court for the Middle District of Georgia. The complaint alleges that we verbally agreed to
place layer-hen flocks in a particular production facility for a period of ten years if
the plaintiff would install a new feeder system in that facility. The complaint seeks
unspecified actual damages. We have filed our answer denying the existence of any such
verbal contract and explaining that all arrangements with contract producers are on a
flock-to-flock basis. Discovery has recently begun. At this stage, it is impossible to
evaluate our potential exposure, if any, to damages in this action.

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

On
April 14, 2004, at a special meeting of shareholders, our stockholders approved amendments
to our Certificate of Incorporation increasing the authorized number of shares of our
Common Stock from 30,000,000 to 60,000,000, and our Class A Common Stock from 1,200,000 to
2,400,000 shares, and effecting a 2-for-1 split of our Common Stock and Class A Common
Stock. The amendments became effective the same day. Unless otherwise indicated or the
context requires, all share and per share information in this Form 10-K annual report has
been restated retroactively to reflect the split.

Each
share of Common Stock is entitled to one vote and each share of Class A Common Stock is
entitled to 10 votes. The following table, based on pre-split shares, shows the number of
votes cast for, against, or withheld, and the number of abstentions and non-votes with
respect to each matter considered at the special meeting of shareholders:

|Matter                           | For        | Against | Withheld | Abstentions | Non-Votes
|-------------------------------- | ---------- | ------- | -------- | ----------- | ---------
|Increase in number of authorized | 21,953,924 | 64,639  | -0-      | 12,164      | -0-      
|Shares of Common Stock          
|Increase in number of authorized | 21,932,355 | -0-     | -0-      | -0-         | -0-      
|Shares of Class A Common Stock  
|Two-for-one Stock Split          | 21,936,501 | 82,932  | -0-      | 11,294      | -0-      

# 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 May 28, 2004 was $13.80 per share.
The following table sets forth the high and low daily sale prices and dividends for four
quarters of fiscal 2003 and fiscal 2004. The sales prices have been adjusted to reflect
the recent 2-for-1 split of our Common Stock effective April 14, 2004, as if the split had
occurred at the beginning of fiscal 2003.

14

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|                  |               
|----------------- | --------------
|Fiscal Year Ended | Fiscal Quarter
|May 29, 2003      | First Quarter 
|                  | Second Quarter
|                  | Third Quarter 
|                  | Fourth Quarter
|May 31, 2004      | First Quarter 
|                  | Second Quarter
|                  | Third Quarter 
|                  | Fourth Quarter

There
is no public trading  market for the Class A Common Stock,  the majority  outstanding
 shares of which are owned by Fred R. Adams, Jr., Chairman of the Board of Directors and
Chief Executive Officer of the Company.

STOCKHOLDERS

At August 2, 2004, there were approximately 236 record holders of our Common Stock and
approximately 9,800 beneficial owners whose shares were held by nominees or broker
dealers.

DIVIDENDS

We
have paid cash dividends on our Common Stock since 1998. Prior to the 2-for-1 stock split,
a cash dividend at the annual 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 on a
post-split basis, thus doubling the aggregate amount of cash dividends payable by us.
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.

UNREGISTERED
SALES OF SECURITIES

No
sales of securities without registration under the Securities Act of 1933 occurred during
our fiscal year ended May 29, 2004.

EQUITY
COMPENSATION PLAN INFORMATION

The
following table contains information, as of May 29, 2004, about our equity compensation
plans, all of which were approved by security holders.

|Plan Category                         | Number of Securities to
Be Issued upon Exercise of
Outstanding Options,
Warrants and Rights
(A) | Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(B) | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (A))
(C)
|------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------
|Equity Compensation Plans Approved by |                                                                                                 |                                                                                 |                                                                                                                                                
|Security Holders(1)                   | 578,200                                                                                         | $1.65                                                                           | 8,000                                                                                                                                          

15

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|(1) | Consists
of our 1993 Stock Option Stock Option Plan and our 1999 Stock Option Plan. See Note
8 Stock Option Plan in our Consolidated Financial Statements
for the year ended May 29, 2004.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

PURCHASES
OF EQUITY SECURITIES

There
were no repurchases of our common stock made by us or any purchaser affiliated with us
during the 2004 fiscal quarter ended May 29, 2004.

# 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 2000.

|                                             
|---------------------------------------------
|May 29,
2004                                 
|(Amounts in thousands, except per share data)
|Statement of Operations Data:                
|Net sales                                    
|Cost of sales                                
|                                             
|Gross profit                                 
|Selling, general and administrative          
|                                             
|Operating income (loss)                      
|Other income (expense):                      
|Interest expense (net)                       
|Equity in income (loss) of affiliates        
|Other                                        
|                                             
|                                             
|                                             
|Income (loss) before income tax              
|Income tax expense (benefit)                 
|                                             
|Net income (loss)                            
|                                             
|Net income (loss) per common share           
|                                             
|Diluted                                      
|                                             
|Cash dividends declared per share            
|                                             
|Weighted average shares outstanding:         
|Basic                                        
|                                             
|Diluted                                      
|                                             
|Balance Sheet Data:                          
|Working capital                              
|Total assets                                 
|Total debt (including current portion)       
|Total stockholders' equity                   
|Operating Data:                              
|Total number of layers at                    
|period ended (thousands)                     
|Total shell eggs sold (millions              
|of dozens)                                   

16

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# ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS

Risk
Factors; Forward-Looking Statements

For
information relating to important risks and uncertainties that could materially adversely
affect the Companys business, securities, financial condition or operating results,
reference is made to the disclosure set forth under Item 1 above under the caption
Risk Factors. In addition, because the following discussion includes numerous
forward-looking statements relating to the Company, its 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 May 29, 2004 (52 weeks),
May 31, 2003 (52 weeks) and June 1, 2002 (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 2004 and fiscal 2003. 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 12% 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.

RESULTS OF OPERATIONS

17

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

|                                          
|------------------------------------------
|May 29, 2004                              
|Net sales                                 
|Cost of sales                             
|                                          
|Gross profit                              
|Selling, general & administrative expenses
|                                          
|Operating income  (loss)                  
|Other income (expense)                    
|                                          
|Income (loss) before taxes                
|Income tax expense (benefit)              
|                                          
|Net income  (loss)                        
|                                          

# Fiscal Year Ended May
29, 2004 Compared to Fiscal Year Ended May 31, 2003

Net
Sales.Approximately 96% of our net sales consist of shell egg sales. Approximately 3%
of our net sales include incidental feed sales to outside egg producers, with the 1%
balance consisting of other farming activities. Net sales for the fiscal year ended May
29, 2004 were $572.3 million, an increase of $184.8 million, or 47.7%, from net sales of
$387.5 million for fiscal 2003. Total dozens of eggs sold increased in fiscal 2004 and egg
selling prices increased as compared with prices in fiscal 2003. In fiscal 2004, total
dozens of shell eggs sold were 605.2 million, an increase of 34.5 million dozen, or 6.0%,
compared to 570.7 million dozen sold in fiscal 2003. Consumer demand was good and egg
supply was level, which resulted in higher egg selling prices during fiscal 2004. Our
average selling price of shell eggs increased from $.645 per dozen for fiscal 2003 to
$.914 per dozen for fiscal 2004, an increase of $.269 per dozen, or 41.7%. We believe our
financial results for the past fiscal year have been positively affected by increased
demand, primarily caused by favorable publicity about eggs from the medical community,
increased use of eggs in high protein diets that are currently popular and a level egg
supply within the industry.

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 May 29, 2004 was $396.7 million, an
increase of $81.5 million, or 25.9%, as compared to cost of sales of $315.2 million for
fiscal 2003. Dozens sold, cost of purchases from outside egg producers and cost of feed
ingredients increased in fiscal 2004. During fiscal 2003, we recognized $9.5 million as a
reduction in cost of sales for our share of the settlement of certain class action feed
ingredient lawsuits. The 6.0 % increase in dozens sold was from increases in dozens
produced in Company facilities and in the number of dozens purchased from outside egg
producers. The increase in the cost of the eggs purchased from outside producers was due
to higher egg market selling prices. Feed cost for fiscal 2004 was $.234 per dozen,
compared to $.213 per dozen for the prior fiscal year, an increase of 10.0%. A 41.7%
increase in egg selling prices, offset by higher feed ingredient costs and higher cost of
purchases from outside egg producers, resulted in an increase in gross profit from 18.7%
of net sales for fiscal 2003 to 30.7% of net sales for fiscal 2004.

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 $69.3 million in fiscal 2004, an
increase of $23.3 million as compared to an expense of $46.0 million for fiscal 2003. For
fiscal 2004, we recorded an expense of $22.1 million for stock compensation due to the
increase in the market price of our outstanding common stock from $2.62 at May 31, 2003 to
$13.80 at May 29, 2004, as compared to an expense of $1.1 million for fiscal 2003.
Excluding the $21.0 million increase in stock option expense, the current fiscal year
increase for selling, general and administrative expense was $2.3 million, or 5.0%. The
increase is the net of increases in legal and professional fees, general insurance and
franchise fees, offset by a reduction in bad debt expense. The biggest increase,
approximately $2.4 million was for legal and professional fees, primarily related to our
going private transaction that was terminated in November 2003 and our proposed
underwritten public offering of common stock that was withdrawn in April 2004. In fiscal
2003, one of our customers filed for bankruptcy and we increased our bad debt allowance by
$1.1 million. Due to the increased sales volume in fiscal 2004, general administrative
expenses increased slightly. On a cost per dozen sold basis, excluding the $21.0 million
increase in stock option expense, selling, general and administrative expense was $0.080
for fiscal 2004 as compared to $0.076 for fiscal 2003. As a percent of net sales, selling,
general and administrative expense increased from 11.9% for fiscal 2003 to 12.1% for
fiscal 2004.

18

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Operating
Income .As a result of the above, our operating income was $106.3 million for fiscal
2004, as compared to operating income of $26.3 million for fiscal 2003. As a percent of
net sales, the operating income for fiscal 2004 was 18.6%, as compared to operating income
of 6.8% for fiscal 2003.

Other
Income (Expense).Other income or expense consists of costs or income not directly
charged to, or related to, operations such as interest expense and equity in income of
affiliates. Other expense for fiscal 2004 was $80,000, a decrease of $7.0 million, as
compared to other expense of $7.1 million for fiscal 2003. For fiscal 2004, net interest
expense decreased $1.6 million and other income increased $5.4 million. Net interest
expense decreased as the result of reduced long term debt balances and receipt of $944,000
interest income as part of an income tax refund. Other income for fiscal 2004 increased
from equity in income of affiliates. As a percent of net sales, other expense was 0.1% for
fiscal 2004, as compared to 1.8% for fiscal 2003.

Income
Taxes.For the fiscal year ended May 29, 2004, our pre-tax income was $106.2 million,
as compared to pre-tax income of $19.1 million for fiscal 2003. For fiscal 2004, an income
tax expense of $39.8 million was recorded with an effective tax rate of 37.5%, as compared
to an income tax expense of $6.9 million with an effective tax rate of 36.2% for fiscal
2003.

Net
Income.As a result of the above, net income for fiscal 2004 was $66.4 million, or
$2.78 per basic share, or $2.73 per diluted share, compared to net income of $12.2
million, or $0.52 per basic share, or $.515 per diluted share, for fiscal 2003.

# Fiscal Year Ended May
31, 2003 Compared to Fiscal Year Ended June 1, 2002

Net
Sales.Net sales for the fiscal year ended May 31, 2003 were $387.5 million, an
increase of $61.3 million, or 18.8%, from net sales of $326.2 million for fiscal 2002.
Total dozens of shell eggs sold increased in fiscal 2003 and shell egg selling prices
increased as compared with prices in fiscal 2002. In fiscal 2003, total dozens of shell
eggs sold were 570.7 million, an increase of 8.9 million dozen, or 1.6%, compared to 561.8
million dozen sold in fiscal 2002. Consumer demand was good and shell egg supply remained
level, which resulted in higher shell egg selling prices during fiscal 2003. Our average
selling price of shell eggs increased from $0.549 per dozen for fiscal 2002 to $0.645 per
dozen for fiscal 2003, an increase of $0.096 per dozen, or 17.5%. The average of our total
number of layers increased from 19.2 million in fiscal year 2002 to 19.9 million in fiscal
year 2003.

Cost
of Sales.Cost of sales for the fiscal year ended May 31, 2003 was $315.2 million, an
increase of $23.4 million, or 8.0%, as compared to cost of sales of $291.8 million for the
prior fiscal year. While dozens of shell eggs sold increased, cost of purchases from
outside shell egg producers and cost of feed ingredients increased, offset by our $9.5
million recovery from a class action feed ingredient lawsuit. The 1.6 % increase in dozens
sold was from increases in dozens produced in our facilities and in the number of dozens
purchased from outside shell egg producers. The increase in the cost of the shell eggs
purchased from outside producers was due to higher shell egg market selling prices. Feed
cost for fiscal 2003 was $0.213 per dozen, compared to $0.193 per dozen for the prior
fiscal year, an increase of 10.4%. A 17.5% increase in shell egg selling prices plus the
$9.5 million recovery, offset by higher feed ingredient costs and higher cost of purchases
from outside shell egg producers, resulted in an increase in gross profit from 10.5% of
net sales for fiscal 2002 to 18.7% of net sales for fiscal 2003.

19

---

Selling,
General and Administrative Expenses.Selling, general and administrative expense was
$46.0 million in fiscal 2003, an increase of $3.7 million, or 8.7%, as compared to an
expense of $42.3 million for fiscal 2002. The increase was due to increases in insurance
expense, bad debt reserves and value of our stock option plan. Due to overall increases in
the insurance market during fiscal 2003, the cost of general business and property
insurance increased $1.0 million. In the fourth quarter of fiscal 2003, one of our
customers filed for bankruptcy and we increased our bad debt allowance by $1.1 million.
Due to the increase in the market quote of our Common Stock, from $1.79 per share at June
2, 2002 to $2.62 per share at May 31, 2003, the increased value of $1.1 million of our
stock option plan liability was recorded. Other selling, general and administrative
expenses, including delivery, increased approximately $500,000. As a percent of net sales,
selling, general and administrative expense decreased from 12.9% for fiscal 2002 to 11.9%
for fiscal 2003 due to higher average shell egg selling prices in fiscal 2003.

Operating
Income (Loss).As a result of the above, our operating income was $26.3 million for
fiscal 2003, as compared to an operating loss of $7.9 million for fiscal 2002. As a
percent of net sales, the operating income for fiscal 2003 was 6.8%, as compared to an
operating loss of 2.4% for fiscal 2002.

Other
Income (Expense).Other expense for fiscal 2003 was $7.1 million, a decrease of $1.3
million, as compared to other expense of $8.4 million for fiscal 2002. For fiscal 2003,
equity in income of affiliates amounted to $442,000 of income as compared to a loss of
$480,000 in fiscal 2002. Interest expense decreased $308,000, or 3.6% in fiscal 2003 as
compared to fiscal 2002. As a percent of net sales, other expense was 1.9% in fiscal 2003
and 2.6% in fiscal 2002.

Income
Taxes.As a result of the above, our pre-tax income was $19.1 million for fiscal 2003,
compared to a pre-tax loss of $16.4 million for fiscal 2002. We had an income tax expense
of $6.9 million in fiscal 2003 with an effective tax rate of 36.2%, as compared to income
tax benefit of $5.8 million with an effective tax rate of 35.4% for fiscal 2002

Net
Income (Loss).As a result of the above, net income for fiscal 2003 was $12.2 million,
or $0.51 per diluted share, compared to a net loss of $10.6 million, or $0.45 per basic
and diluted share, for fiscal 2002.

Capital Resources and Liquidity.Our working capital at May 29, 2004 was $92.9
million compared to $27.7 million at May 31, 2003. Our current ratio was 2.58 at May 29,
2004 as compared with 1.48 at May 31, 2003. 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 inventories and receivable balances in anticipation of the holiday season.
Seasonal borrowing needs frequently are higher during these periods than during other
fiscal periods. We have a $35 million line of credit with three banks, $1.8 million of
which was utilized as a standby letter of credit at May 29, 2004. Our long-term debt at
that date, including current maturities, totaled $90.0 million, as compared to $108.2
million at May 31, 2003.

For
the fiscal year ended May 29, 2004, $85.1 million in net cash was provided by operating
activities. This compares to $30.7 million of net cash for fiscal year ended May 31, 2003.
In fiscal 2004, $8.6 million was used for purchases of property, plant and equipment,
$594,000 was received from sales of property, plant and equipment, and $2.0 million was
used for construction projects. Net cash of $33.9 million was used in investments and an
increase in notes receivable. Approximately $8.4 million was received from the exercise of
stock options, and $746,000 was used for payments of dividends on our common stock.
Borrowings of $5.0 million were received in additional long-term debt and $20.0 million
was received in restructuring and re-pricing certain other long-term debt. Payments of
$43.2 million were made on long-term debt. The net result was an increase in cash and cash
equivalents of approximately $30.5 million.

20

---

For
the fiscal year ended May 31, 2003, $30.7 million was provided by operating activities. We
received $529,000 net proceeds from disposal of property, plant and equipment and $205,000
in net cash activities from notes receivable and investments. In fiscal 2003, $7.5 million
was used for construction projects and $5.0 million for purchases of property, plant and
equipment. Approximately $587,000 was used for dividend payments on the common stock.
Principal payments of $10.1 million were made on long-term debt and $7.0 million was
repaid on borrowings on the line of credit. The net result of these activities was an
increase in cash and cash equivalents of $1.2 million for fiscal 2003.

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); (2) limit dividends to
an aggregate amount not to exceed $500,000 per quarter (allowed if no default), capital
expenditures (not to exceed depreciation for the same four fiscal quarters), lease
obligations and additional long-term borrowings (total funded debt to total capitalization
not to exceed 70%); and (3) maintain various current and cash-flow coverage ratios (1.25
to 1), among other restrictions. At May 29, 2004, 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.

During
2004, we completed construction, which began in fiscal 2001, of a shell egg production and
processing facility in Guthrie, Kentucky. We project capital expenditures of an aggregate
of $12.0 million during fiscal 2005.

We
currently have a $2.5 million deferred tax liability due to a subsidiarys change
from a cash basis to an accrual basis taxpayer on May 29, 1988. The Taxpayer Relief Act of
1997 provides that this liability is payable ratably over the 20 years beginning in fiscal
1999. However, such taxes will be due in their entirety in the first fiscal year in which
there is a change in ownership control so that we no longer qualify as a family
farming corporation. We are currently making annual payments of approximately
$150,000 related to this liability. However, while these current payments reduce cash
balances, payment of the $2.5 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 9 of Notes to
Consolidated Financial Statements.

# Off-Balance Sheet
Arrangements

We
have no existing off-balance sheet arrangements as defined under SEC 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 6, and on lease obligations in Note 5, of Notes to Consolidated Financial Statements.

|                        
|------------------------
|Long-term debt          
|Operating leases        
|Purchase obligations (a)
|Total                   

(a)  Purchase
obligations consist of contracts for future delivery of commodities.           These
amounts do not include items already recorded in accounts payable or other
          current liabilities at year-end.

Impact of Recently Issued Accounting Standards.In
the first quarter of fiscal 2003, we adopted Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS
No. 144). SFAS No. 144 supersedes Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed of, (SFAS No. 121); however, it retains the fundamental provisions of SFAS
No. 121 related to the recognition and measurement of the impairment of long-lived assets
to be held and used. In addition, SFAS No. 144 provides more guidance on
estimating cash flows when performing a recoverability test, requires that a long-lived
asset to be disposed other than by sale (e.g., abandoned) be classified as held and
used until it is disposed of, and establishes more restrictive criteria to classify
an asset as held for sale. The adoption of SFAS No. 144 had no effect our
consolidated results of operations or financial position.

21

---

In
the fourth quarter of fiscal 2004, we adopted Financial Accounting Standards Board
Interpretation No. 46, Consolidation of Variable Interest Entities, an
interpretation of Accounting Research Bulletin No. 51 (the
Interpretation). The Interpretation requires the consolidation of entities in
which an enterprise absorbs a majority of the entitys expected losses, receives a
majority of the entitys expected residual returns, or both, as a result of
ownership, contractual or other financial interests in the entity. Currently, entities are
generally consolidated by an enterprise when it has a controlling financial interest
through ownership of a majority voting interest in the entity. We have investments in
various affiliates established for the purpose of production, processing and distribution
of shell eggs. These entities are primarily funded with financing from third party
lenders, which is secured by first liens on the assets of the entities. The creditors of
the entities do not have recourse to us, except for one entity for which we guarantee 50%
of its debt. Our adoption of this interpretation had no effect on our consolidated results
or financial position. Currently, these investments are recorded as investments on the
equity method of accounting, recording our share of the net income or loss. We have the
ability to exercise significant influence over operating and financial policies of these
affiliated entities. However, we do not have a controlling interest in the respective
entities. At May 29, 2004, our aggregate net investment in these entities totaled $6.0
million. The portion of the debt guaranteed was $6.6 million at May 29, 2004. These
amounts represent our maximum exposure to loss at May 29, 2004 as a result of our
involvement with these entities.

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

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

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

Inventories.  Inventories
of eggs, feed, supplies and livestock are valued principally at           the lower of
cost (first-in, first-out method) or market. If market prices for           eggs and feed
grains move substantially lower, we would record adjustments to           write-down the
carrying values of eggs and feed inventories to fair market           value. The cost
associated with flock inventories, consisting principally of           chick purchases,
feed, labor, contractor payments and overhead costs, are           accumulated during the
growing period of approximately 18 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. 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. As part of this reevaluation, we
estimate the future cash flows expected to result from the use of the asset and its
eventual disposal. If the sum of the expected future cash flows (undiscounted and without
interest charges) is 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.

22

---

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. The combined total assets and total liabilities of these companies were
approximately $37 million and $17million, respectively, at May 29, 2004. We are a
guarantor of approximately $6.6 million of long-term debt of one of the affiliates.

Goodwill.   At
May 29, 2004, our goodwill balance represented 1.1% of total assets and           2.2% of
stockholders equity. Goodwill relates to the fiscal 1999           acquisition of
Hudson Brothers, Inc. We elected to adopt, as of June 3, 2001,           Statement of
Financial Accounting Standards No. 142, Goodwill and Other           Intangible
Assets (SFAS 142). Under SFAS 142, goodwill and indefinite           lived
intangible assets are no longer amortized but are reviewed annually or           more
frequently if impairment indicators arise, for impairment. An impairment           loss
would be recorded if the recorded goodwill exceeds its implied fair value.           We
have only one operating segment, which is our sole reporting unit.           Accordingly,
goodwill is tested for impairment at the entity level. Significant           adverse
industry or economic changes, or other factors not anticipated could           result in
an impairment charge to reduce recorded goodwill.

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

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

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

# ITEM 7A. 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 one percent (1%)
adverse move (decrease) in interest rates would adversely affect the net fair value of our
debt by $4.0 million at May 29, 2004. We are a party to no other market risk sensitive
instruments requiring disclosure.

23

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# ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent
Registered Public Accounting Firm

The Board of Directors
and StockholdersCal-Maine Foods, Inc.

We have audited the accompanying
consolidated balance sheets of Cal-Maine Foods, Inc. and subsidiaries as of May 29, 2004
and May 31, 2003, and the related consolidated statements of operations,
stockholders equity, and cash flows for the years ended May 29, 2004, May 31, 2003,
and June 1, 2002. Our audits also included the financial statement schedule listed in the
index at Item 15(d). These financial statements 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 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 May 29, 2004 and May 31,
2003, and the consolidated results of its operations and its cash flows for each of the
years ended May 29, 2004, May 31, 2003 and June 1, 2002, in conformity with U.S. generally
accepted accounting principles.

/s/ Ernst & Young
LLP

New Orleans, Louisiana
July 8, 2004

24

---

Cal-Maine Foods, Inc.
and SubsidiariesConsolidated Balance Sheets (in thousands, except per share amounts)

|                                                                         
|-------------------------------------------------------------------------
|Assets                                                                   
|Current assets:                                                          
|Cash and cash equivalents                                                
|Investments                                                              
|Receivables:                                                             
|Trade receivables, less allowance for doubtful                           
|accounts of $90 in 2004 and $1,158 in 2003                               
|Other                                                                    
|                                                                         
|                                                                         
|Recoverable federal and state income taxes                               
|Inventories                                                              
|Prepaid expenses and other current assets                                
|                                                                         
|Total current assets                                                     
|Other assets:                                                            
|Notes receivable and investments                                         
|Goodwill                                                                 
|Other                                                                    
|                                                                         
|                                                                         
|Property, plant and equipment, less accumulated                          
|depreciation                                                             
|                                                                         
|Total assets                                                             
|                                                                         
|Liabilities and stockholders' equity                                     
|Current liabilities:                                                     
|Trade accounts payable                                                   
|Accrued wages and benefits                                               
|Accrued expenses and other liabilities                                   
|Current maturities of long-term debt                                     
|Deferred income taxes                                                    
|                                                                         
|Total current liabilities                                                
|Long-term debt, less current maturities                                  
|Other noncurrent liabilities                                             
|Deferred income taxes                                                    
|                                                                         
|Total liabilities                                                        
|Stockholders' equity:                                                    
|Common stock, $.01 par value:                                            
|Authorized shares - 60,000 in 2004 and 30,000 in 2003                    
|Issued and outstanding shares - 35,130 in 2004 and 17,565 in 2003        
|Class A common stock, $.01 par value:                                    
|Authorized shares - 2,400 in 2004 and 1,200 in 2003                      
|Issued and outstanding shares - 2,400 in 2004 and 1,200 in 2003          
|Paid-in capital                                                          
|Retained earnings                                                        
|Common stock in treasury (13,307 shares in 2004 and 7,001 shares in 2003)
|                                                                         
|Total stockholders' equity                                               
|                                                                         
|Total liabilities and stockholders' equity                               
|                                                                         

| | See
accompanying notes.
| | -----------------------

25

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Cal-Maine Foods, Inc.
and SubsidiariesConsolidated Statements of Operations (in thousands, except per share
amounts)

|                                     
|-------------------------------------
|May 29
2004                          
|Net sales                            
|Cost of sales                        
|                                     
|Gross profit                         
|Selling, general and administrative  
|                                     
|Operating income (loss)              
|Other income (expense):              
|Interest expense                     
|Interest income                      
|Equity in income (loss) of affiliates
|Other, net                           
|                                     
|                                     
|                                     
|Income (loss) before income taxes    
|Income tax expense (benefit)         
|                                     
|Net income (loss)                    
|                                     
|Net income (loss) per share:         
|Basic                                
|                                     
|Diluted                              
|                                     
|Weighted average shares outstanding: 
|Basic                                
|                                     
|Diluted                              
|                                     

| | See
accompanying notes.
| | -----------------------

26

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Cal-Maine Foods, Inc.
and SubsidiariesConsolidated Statements of Stockholders Equity (in thousands,
except per share amounts)

|                                 |       
|-------------------------------- | ------
|Shares                           | Amount
|Balance at June 3, 2001          |       
|Purchases of common stock        |       
|For treasury                     |       
|Cash dividends paid ($.05 per    |       
|common share)                    |       
|Net loss for fiscal 2002         |       
|                                 |       
|Balance at June 1, 2002          |       
|Cash dividends paid ($.05 per    |       
|common share)                    |       
|Net income for fiscal 2003       |       
|                                 |       
|Balance at May 31, 2003          |       
|Two-for-one stock split effected |       
|in the form of a stock           |       
|dividend                         |       
|Cash dividends paid ($.05 per    |       
|common share)                    |       
|Issuance of common stock from    |       
|Treasury                         |       
|Net income for fiscal 2004       |       
|                                 |       
|Balance at May 29, 2004          |       
|                                 |       

| | See
accompanying notes.
| | -----------------------

27

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Cal-Maine Foods, Inc.
and SubsidiariesConsolidated Statements of Cash Flows (in thousands)

|                                                           
|-----------------------------------------------------------
|May 29
2004                                                
|Cash flows from operating activities                       
|Net income (loss)                                          
|Adjustments to reconcile net income (loss) to net cash     
|provided by operating activities:                          
|Depreciation and amortization                              
|Deferred income taxes                                      
|Equity in (income) loss of affiliates                      
|Gain on disposal of property, plant and equipment          
|Change in operating assets and liabilities:                
|Receivables and other assets                               
|Inventories                                                
|Accounts payable, accrued expenses and other liabilities   
|                                                           
|Net cash provided by operating activities                  
|Cash flows from investing activities                       
|Purchases of investments                                   
|Purchases of property, plant and equipment                 
|Payments received on notes receivable and from investments 
|Increase in notes receivable and investments               
|Net proceeds from disposal of property, plant and equipment
|                                                           
|Net cash used in investing activities                      
|Cash flows from financing activities                       
|Net borrowings (payments) on note payable to bank          
|Long-term borrowings                                       
|Principal payments on long-term debt                       
|Proceeds from issuance of common stock from treasury       
|Purchases of common stock for treasury                     
|Payments of dividends                                      
|                                                           
|Net cash provided by (used in) financing activities        
|                                                           
|Increase (decrease) in cash and cash equivalents           
|Cash and cash equivalents at beginning of year             
|                                                           
|Cash and cash equivalents at end of year                   
|                                                           
|Non-cash investing activity - note receivable for          
|sale of livestock                                          
|                                                           

| | See
accompanying notes.
| | -----------------------

28

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Cal-Maine Foods, Inc.
and SubsidiariesNotes to Consolidated
Financial Statements(in thousands, except share and per share amounts)May 29,
2004

|1. | Significant
Accounting Policies
|-- | -------------------------------

# Principles of
Consolidation

The consolidated financial statements
include the accounts of Cal-Maine Foods, Inc. and its subsidiaries (the
Company) all of which are wholly-owned. All significant intercompany
transactions and accounts have been eliminated in consolidation.

# Business

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

Primarily all of the Companys
sales are to wholesale egg buyers in the southeastern, southwestern, mid-western and
mid-Atlantic regions of the United States. Credit is extended based upon an evaluation of
each customers financial condition and credit history and generally collateral is
not required. Credit losses have consistently been within managements expectations.
One customer accounted for 11.9%, 12.8% and 13.3% of the Companys net sales in
fiscal 2004, 2003 and 2002, respectively. Another customer accounted for 26.8%, 21.3% and
19.2% of the Companys net sales in fiscal 2004, 2003 and 2002, respectively.

# Use of Estimates

The preparation of the consolidated
financial statements in conformity with accounting principles general accepted in the
United States 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 include primarily
pre-funded municipal bonds and certificates of deposit with maturities of three to six
months when purchased. Due to the nature of the investments, the cost at May 29, 2004
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 $21,943 at May
29, 2004 and $18,914 at May 31, 2003. Trade receivables are presented net of allowance for
doubtful accounts of $90 at May 29, 2004 and $1,158 at May 31, 2003.

29

---

# 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 18 weeks. Flock costs are
amortized over the productive lives of the flocks, generally one to two years.

# Property, Plant and
Equipment

Property, plant and equipment are
stated at cost. Depreciation is provided by the straight-line method over the estimated
useful lives, which are 15 to 25 years for buildings and improvements and 3 to 12 years
for machinery and equipment. We expense repair and maintenance costs as incurred.

# Impairment of Long-Lived
Assets

The Company continually reevaluates
the carrying value of its long-lived assets for events or changes in circumstances which
indicate that the carrying value may not be recoverable. As part of this reevaluation, the
Company estimates the future cash flows expected to result from the use of the asset and
its eventual disposal. If the sum of the expected future cash flows (undiscounted and
without interest charges) is less than the carrying amount of the asset, an impairment
loss is recognized through a charge to operations.

# 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

The Company adopted Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
(SFAS 142), effective June 3, 2001. 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. Accordingly, the Company ceased amortization
of goodwill in fiscal 2002. No impairment loss was recognized as a result of the annual
impairment tests performed in fiscal 2004, 2003 and 2002.

# Revenue Recognition and
Delivery Costs

Revenue is recognized when product is
delivered to customers.

Costs to deliver product to customers are
included in selling, general and administrative expenses in the accompanying consolidated
statements of operations and totaled $18,172, $18,234 and $17,954 in fiscal 2004, 2003 and
2002, respectively.

30

---

# Advertising Costs

The Company expenses advertising
costs as incurred. Total advertising costs were $564 in fiscal 2004, $471 in fiscal 2003,
and $547 in fiscal 2002.

# Income Taxes

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

# Stock Based Compensation

The Company accounts for stock option
grants in accordance with APB Opinion No. 25, Accounting for Stock Issued to
Employees.

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

|                                    | (in thousands, except per share amounts): | 
|----------------------------------- | ----------------------------------------- | 
|
|
|Net income (loss)                   |                                           | 
|Add:  Stock-based employee          |                                           | 
|compensation expense included in    |                                           | 
|reported net income                 |                                           | 
|Deduct:  Total stock-based employee |                                           | 
|compensation expense determined     |                                           | 
|under fair value-based method for   |                                           | 
|all awards                          |                                           | 
|                                    |                                           | 
|Pro forma net income (loss)         |                                           | 
|                                    |                                           | 
|Earnings per share:                 |                                           | 
|Basic-- as reported                 |                                           | 
|                                    |                                           | 
|Basic-- pro forma                   |                                           | 
|                                    |                                           | 
|Diluted-- as reported               |                                           | 
|                                    |                                           | 
|Diluted-- pro forma                 |                                           | 
|                                    |                                           | 

The fair value of our stock options
were estimated as of the date of the grant using a Black-Scholes option pricing model with
the following weighted-average assumptions for the prior year grants: risk-free interest
rate of 3.00% ; a dividend yield of 1.00%; expected volatility of 39.2%; and a weighted
average expected life of the options of 5 years

# Net Income (Loss) per
Common Share

Basic earnings (loss) per share are
based on the weighted average common shares outstanding. Diluted earnings (loss) per share
include any dilutive effects of options and warrants.

31

---

# Stock Split

On April 14, 2004, the shareholders
of the Company approved amendments to the Certificate of Incorporation to facilitate a
two-for-one stock split approved by the Board of Directors on January 26, 2004. The split
was effected in the form of a stock dividend paid on April 23, 2004 to stockholders of
record on April 14, 2004. All share and per share data in the financial statements have
been adjusted to reflect this stock split.

# Impact of Recently
Issued Accounting Standards

In January 2003, the Financial
Accounting Standards Board issued Interpretation No. 46, Consolidation of Variable
Interest Entities, an interpretation of Accounting Research Bulletin No. 51(the Interpretation). The Interpretation requires the consolidation of
entities in which an enterprise absorbs a majority of the entitys expected losses,
receives a majority of the entitys expected residual returns, or both, as a result
of ownership, contractual or other financial interests in the entity. The Companys
adoption of this interpretation in the fourth quarter of fiscal 2004 had no effect on the
Companys consolidated results of operations or financial position.

# Fiscal Year

The Companys fiscal year-end is
on the Saturday nearest May 31, which was May 29, 2004, May 31, 2003 and June 1, 2002, for
the most recent three fiscal years.

|2. | Investment
in Affiliates
|-- | ------------------------

The Company owns 50% of Cumberland
Milling JV, Specialty Eggs LLC and Delta Egg Farm, LLC (Delta Egg) and 44% of
American Egg Products, Inc. at May 29, 2004. Investment in affiliates, recorded using the
equity method of accounting, totaled $9,948 and $5,230 at May 29, 2004 and at May 31,
2003, respectively. Equity in income or (loss) of $5,924, $442 and ($480) from these
entities have been included in the consolidated statements of operations for fiscal 2004,
2003 and 2002, respectively.

The Company is a guarantor of 50% of
Delta Eggs long-term debt, which totaled approximately $13.2 million at May 29,
2004. 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 profitable and is now well capitalized.

|3. | Inventories
|-- | -----------

Inventories consisted of the
following:

|                  | May 292004 |  | May 312003 |       
|----------------- | ---------- |  | ---------- | ------
|Flocks            |            |  | $          | 34,011
|Eggs              |            |  |            | 2,831 
|Feed and supplies |            |  |            | 12,781
|Livestock         |            |  |            | 273   
|                  |            | 
|                  |            |  | $          | 49,896
|                  |            | 

32

---

|4. | Property,
Plant and Equipment
|-- | -----------------------------

Property, plant and equipment
consisted of the following:

|                              | May 292004 |  | May 312003 |        
|----------------------------- | ---------- |  | ---------- | -------
|Land and improvements         |            |  | $          | 35,386 
|Buildings and improvements    |            |  |            | 102,595
|Machinery and equipment       |            |  |            | 135,355
|Construction-in-progress      |            |  |            | 2,286  
|                              |            | 
|                              |            |  |            | 275,622
|Less accumulated depreciation |            |  |            | 143,564
|                              |            | 
|                              |            |  | $          | 132,058
|                              |            | 

Depreciation expense was $16,520,
$16,370 and $17,067 in fiscal 2004, 2003 and 2002, respectively.

|5. | Leases
|-- | ------

Future minimum payments under
noncancelable operating leases that have initial or remaining noncancelable terms in
excess of one year at May 29, 2004 are as follows:

|                             | 
|---------------------------- | 
|2005                         | 
|2006                         | 
|2007                         | 
|2008                         | 
|2009                         | 
|Thereafter                   | 
|                             | 
|Total minimum lease payments | 
|                             | 

Substantially all of the leases
provide that the Company pay 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 $9,193, $9,457 and $9,122 in fiscal 2004, 2003 and 2002,
respectively. Included in rent expense are vehicle rents totaling $1,766, $2,336 and
$2,444 in fiscal 2004, 2003 and 2002, respectively.

33

---

|6. | Credit
Facilities and Long-Term Debt
|-- | ------------------------------------

Long-term debt consisted of the
following:

|                                                            | May 292004 |  | May 312003 |       
|----------------------------------------------------------- | ---------- |  | ---------- | ------
|Note payable at 6.7%; due in monthly installments of $100,  |            |  |            |       
|plus interest, maturing in 2009                             |            |  | $          | 12,000
|Note payable at 8.26%; due in monthly installments of $155, |            | 
|including interest, maturing in 2015                        |            |  |            | 15,724
|Series A Senior Secured Notes at 6.87%; due in annual       |            | 
|principal installments of $1,917 beginning in December      |            | 
|2002 through 2008 with interest due semi-annually           |            |  |            | 7,667 
|Series B Senior Secured Notes at 7.18%; due in annual       |            | 
|principal installments of $2,143 beginning in December      |            | 
|2003 through 2009 with interest due semi-annually           |            |  |            | 12,857
|Industrial revenue bonds at 6.10%; due in monthly           |            | 
|installments of $146, including interest, maturing in 2011  |            |  |            | 9,829 
|Note payable at 7.5%; due in monthly installments of        |            | 
|$36, including interest, maturing in 2011                   |            |  |            | 2,369 
|Note payable at 7.06%; due in monthly installments of       |            | 
|$53, including interest, maturing in 2015                   |            |  |            | 5,705 
|Note payable at 6.87%; due in monthly installments of       |            | 
|$45, plus interest, maturing in 2015                        |            |  |            | 4,870 
|Note payable at 6.80%; due in monthly installments of       |            | 
|$165, plus interest, maturing in 2013                       |            |  |            | 19,010
|Note payable at fixed rates of 7% to 8.25%,  paid in 2004   |            |  |            | --    
|Note payable at a variable rate, paid in 2004               |            |  |            | --    
|                                                            |            | 
|                                                            |            |  |            | 90,031
|Less current maturities                                     |            |  |            | 9,597 
|                                                            |            | 
|                                                            |            |  | $          | 80,434
|                                                            |            | 

The aggregate annual fiscal year
maturities of long-term debt at May 29, 2004 are as follows:

|           | 
|---------- | 
|2005       | 
|2006       | 
|2007       | 
|2008       | 
|2009       | 
|Thereafter | 
|           | 
|           | 
|           | 

34

---

The Company has a $35,000 line of
credit with three banks. The line of credit, which expires on December 31, 2005, is
limited in availability based upon accounts receivable and inventories. The Company had
$33.4 millionavailable to borrow under the line of credit at May 29, 2004.
Borrowings under the line of credit bear interest at 3% above the federal funds rate.
Facilities fees of 0.5% per annum are payable quarterly on the unused portion of the line.

Substantially all trade receivables
and inventories collateralize the line of credit and property, plant and equipment
collateralize the long-term debt. The Company is required, by certain provisions of the
loan agreements, to maintain minimum levels of working capital and net worth; to limit
dividends, capital expenditures and additional long-term borrowings; and to maintain
various current, debt-to-equity and interest coverage ratios. Additionally, 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 $7,386, $8,435 and $8,915
was paid during fiscal 2004, 2003 and 2002, respectively. Interest of $419 and $316 was
capitalized for construction of certain facilities during fiscal 2003 and 2002,
respectively. No interest was capitalized during fiscal 2004.

|7. | 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 $100 for each occurrence. The Companys
expenses, including accruals for incurred but not reported claims, were approximately
$5,911, $6,258 and $4,790 in fiscal 2004, 2003 and 2002, respectively.

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

The Company has an employee stock
ownership plan (ESOP) that covers substantially all employees. The Company makes
contributions to the ESOP of 3% of participants compensation, plus an additional
amount determined at the discretion of the Board of Directors. Contributions may be made
in cash or the Companys common stock. Company contributions to the ESOP vest
immediately. The Companys contributions to the plan were $1,755, $2,056 and $1,183
in fiscal 2004, 2003 and 2002, 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 life of each officer. Deferred compensation expense totaled approximately $80 in
fiscal 2004 and $50 in fiscal 2003 and 2002.

|8. | Stock
Option Plan
|-- | -----------------

The Company has elected to follow APB
No. 25 and related Interpretations in accounting for its employee stock options because,
as discussed below, the alternative fair value accounting provided for under Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, (SFAS No. 123), requires use of option valuation models that were not
developed for use in valuing employee stock options.

Pro forma information regarding net
income and net income per share is required by SFAS No. 123, and has been determined as if
the Company had accounted for its employee stock options under the fair value method of
that Statement. The fair value for these options was estimated at the date of grant using
a Black-Scholes option pricing model with the following weighted-average assumptions for
fiscal 2003: risk-free interest rate of 3%; dividend yield of 1%; volatility factor of the
expected market price of the Companys common stock of .39, and a weighted-average
expected life of the options of 5 years. No options were granted by the Company during
fiscal 2004 and 2002. The weighted-average fair value of options granted during fiscal
2003 was $ $.72.

35

---

A summary of the Companys stock
option activity and related information is as follows:

|                            | Shares |  | Weighted-Average
Exercise Price
|--------------------------- | ------ |  | -------------------------------
|Outstanding at June 3, 2001 |        |  |                                
|Exercised                   |        |  |                                
|Forfeited                   |        |  |                                
|                            |       
|Outstanding at June 1, 2002 |        |  |                                
|Granted                     |        |  |                                
|Exercised                   |        |  |                                
|                            |       
|Outstanding at May 31, 2003 |        |  |                                
|Exercised                   |        |  |                                
|Forfeited                   |        |  |                                
|                            |       
|Outstanding at May 29, 2004 |        |  |                                
|                            |       

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 May 29, 2004, no shares were
available for grant under the 1993 plan.

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. Compensation expense (benefit) of $23,225, $1,119 and $(240) applicable to this
plan was recognized in fiscal 2004, 2003 and 2002, respectively.

The weighted average remaining
contractual life of the options outstanding was 6 years at May 29, 2004, 7 years at May
31, 2003 and 6 years at June 1, 2002. Of the total options outstanding, 25,000, 551,200
and 407,600 were exercisable at May 29, 2004, May 31, 2003 and June 1, 2002, respectively.

|9. | Income
Taxes
|-- | ------------

Income tax expense (benefit)
consisted of the following:

|          | Fiscal year ended | 
|--------- | ----------------- | 
|
|Current:  |                   | 
|Federal   |                   | 
|State     |                   | 
|          |                  
|          |                   | 
|Deferred: |                   | 
|Federal   |                   | 
|State     |                   | 
|          |                  
|          |                   | 
|          |                  
|          |                   | 
|          |                  

36

---

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

|                                 | May 292004 |  | May 312003 |       
|-------------------------------- | ---------- |  | ---------- | ------
|Deferred tax liabilities:        |            |  |            |       
|Property, plant and equipment    |            |  | $          | 15,420
|Cash basis temporary differences |            |  |            | 2,230 
|Inventories                      |            |  |            | 12,818
|Investment in affiliates         |            |  |            | 2,604 
|Other                            |            |  |            | 1,153 
|                                 |            | 
|Total deferred tax liabilities   |            |  |            | 34,225
|Deferred tax assets:             |            | 
|Accrued expenses                 |            |  |            | 3,862 
|Federal and state net operating  |            | 
|loss carryforwards               |            |  |            | --    
|Other                            |            |  |            | 263   
|                                 |            | 
|Total deferred tax assets        |            |  |            | 4,125 
|                                 |            | 
|Net deferred tax liabilities     |            |  | $          | 30,100
|                                 |            | 

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

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

|                                       | Fiscal year ended | 
|-------------------------------------- | ----------------- | 
|
|Statutory federal income tax (benefit) |                   | 
|State income taxes (benefit), net      |                   | 
|Other, net (benefit)                   |                   | 
|                                       |                   | 
|                                       |                   | 
|                                       |                   | 

Federal and state income taxes of
$41,868, $1,610, and $100 were paid in fiscal 2004, 2003 and 2002, respectively. Federal
and state income taxes of $6,875, $1,377 and $164 were refunded in fiscal 2004, 2003 and
2002, respectively.

37

---

|10. | 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 $90.6 million. 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 $4.0 million at May 29, 2004. 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.

In fiscal 2003 and 2002, the Company
recognized $9,466 and $1,862, respectively, in vendor settlements pertaining to
overcharges for vitamins purchased by the Company over a number of years. The settlements
are reflected in the accompanying consolidated financial statements as a reduction of cost
of sales.

38

---

# Quarterly Financial
Data:  (unaudited, amounts in thousands, except per share data)

|                       | Fiscal Year 2004 | 
|---------------------- | ---------------- | 
|
|Net sales              |                  | 
|Gross profit           |                  | 
|Net income             |                  | 
|Net income  per share: |                  | 
|Basic                  |                  | 
|Diluted                |                  | 

|                             | Fiscal Year 2003 | 
|---------------------------- | ---------------- | 
|
|Net sales                    |                  | 
|Gross profit                 |                  | 
|Net income (loss)            |                  | 
|Net income (loss) per share: |                  | 
|Basic                        |                  | 
|Diluted                      |                  | 

|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURENone.
|------- | -----------------------------------------------------------------------------------------

|ITEM 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

We
maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in reports we file pursuant to rules under Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our
Chief Executive Officer and Chief Financial Officer have concluded that our disclosure
controls and procedures are effective based on their evaluation of such controls and
procedures as of the end of fiscal year 2004. There have been no changes in our internal
control over financial reporting based on their evaluation of such internal control in the
fourth quarter of 2004 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

39

---

# 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 2004 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 2004 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 2004 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 2004 Annual Meeting
of Shareholders.

|ITEM 14. | PRINCIPAL
ACCOUNTING 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 2004 Annual Meeting of
Shareholders.

40

---

# PART IV

|ITEM 15. | EXHIBITS,
FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
|-------- | -----------------------------------------------------------------

| | (a) | 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:
| | -----------------------------------------------------------------------------------------------------------------

| | Report
of Independent Registered Public Accounting FirmConsolidated
Balance Sheets  May 29, 2004 and May 31, 2003.Consolidated
Statements of Operations  Years Ended May 29, 2004, May 31, 2003 and June 1, 2002.Consolidated
Statements of Changes in Shareholders Equity for the Years Ended May 29, 2004, May
31, 2003 and June 1, 2002.Consolidated
Statements of Cash Flows for the Years Ended May 29, 2004, May 31, 2003 and June 1, 2002.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Notes
to Consolidated Financial Statements.
| | -------------------------------------------

| | Unaudited
Quarterly Financial Data
| | ----------------------------------

| | (b) | Reports
on Form 8-K
| | --- | -------------------

| | (i) | Form
8-K dated March 29, 2004, reporting under Item 7                Financial
Statements and Exhibits, and under Item 12 Results                of
Operations and Financial Condition, the issuance by the Company of a
               press release announcing its financial results for the quarter ended
February                28, 2004.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii) | Form
8-K dated April 14, 2004, reporting under Item 5 Other Events and
               Required FD Disclosure, and under Item 7 Financial Statements
and                Exhibits, the issuance by the Company of a press release
announcing that                its shareholders, at a special meeting, had approved
amendments to the                Registrants certificate of incorporation to: (i)
increase the number of                authorized shares of Common Stock to 60 million
shares; (ii) increase the number                of authorized shares of Class A Common
Stock to 2.4 million shares: and (iii)                issue one additional share for each
issued share of the same class held by                shareholders of record as of the
close of business on April 14, 2004.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c) | Exhibits
Required by Item 601 of Regulation S-KThe
following exhibits are filed herewith or incorporated by reference:
| | --- | ----------------------------------------------------------------------------------------------------------------------

41

---

| | ExhibitNumber | Exhibit
| | ------------- | -------

| | 3.1 | Amended
and Restated Certificate of Incorporation of the Registrant.*
| | --- | ---------------------------------------------------------------------

| | 3.1(a) | Amendment
to Article 4 of the Certificate of Incorporation of the Registrant.
| | ------ | -----------------------------------------------------------------------------

| | 3.2 | By-Laws
of the Registrant, as amended.*
| | --- | ---------------------------------------

| | 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).*
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1(a) | Amendment
to Term Loan Agreement (see Exhibit 10.1) dated as of June 3, 1997           (without
exhibits). **
| | ------- | -------------------------------------------------------------------------------------------------------------

| | 10.1(b) | Amendment
to Term Loan Agreement (see Exhibit 10.1) dated as of March 31, 2004           (without
exhibits).
| | ------- | ------------------------------------------------------------------------------------------------------------

| | 10.1(c) | Amendment
to Term Loan Agreement (see Exhibit 10.1) dated as of April 14, 2004           (without
exhibits).
| | ------- | ------------------------------------------------------------------------------------------------------------

| | 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).*
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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).*
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.4 | Employee
Stock Ownership Plan, as Amended and Restated.* +
| | ---- | ----------------------------------------------------------

| | 10.5 | 1993
Stock Option Plan, as Amended.*+
| | ---- | -------------------------------------

| | 10.6 | Wage
Continuation Plan, dated as of January1, 1986, among R.K. Looper, B.J. Raines, and the
Registrant.*          +
| | ---- | -------------------------------------------------------------------------------------------------------------------

| | 10.6(a) | Amendment
dated October 29, 1997 to Wage Continuation Plan, dated as of January           1, 1986,
between B.J. Raines and the Registrant. ****+
| | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.7 | Wage
Continuation Plan, dated as of July 1, 1986, between Jack Self and the Registrant, as
amended on September 2, 1994.*+
| | ---- | --------------------------------------------------------------------------------------------------------------------------

| | 10.8 | Wage
Continuation Plan, dated as of April 15, 1988, between Joe Wyatt and the Registrant.* +
| | ---- | --------------------------------------------------------------------------------------------

| | 10.9 | Redemption
Agreement, dated March 7, 1994, between the Registrant and Fred R. Adams, Jr.*
| | ---- | -----------------------------------------------------------------------------------------

| | 10.10 | Note
Purchase Agreement, dated December 18, 1997, among Cal-Maine Foods, Inc., 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) ***
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.11 | Wage
Continuation Plan, dated as of January 14, 1999, among Stephen Storm, Charles F. Collins,
Bob          Scott, and the Registrant  *****+
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------

| | 10.12 | Secured
note purchase agreement dated September 28, 1999 among Cal-Maine Foods, Inc., Cal-Maine
Partnership, LTD, and John Hancock Mutual Life Insurance Company, and John Hancock
Variable Life Insurance Company (without exhibits, annexes and disclosure schedules)
******
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.13 | 1999
Stock Option Plan ********+
| | ----- | --------------------------------

42

---

| | 21 | Subsidiaries
of the Registrant
| | -- | ------------------------------

| | 23 | Consent
of Independent Auditors
| | -- | -------------------------------

| | 31.1 | Certification
of Chief Executive Officer
| | ---- | ----------------------------------------

| | 31.2 | Certification
of Chief Financial Officer
| | ---- | ----------------------------------------

| | 32 | Written
Statement of the Chief Executive Officer and the Chief Financial Officer
| | -- | --------------------------------------------------------------------------------

| |  | 
| |  | 

| | + | Management
contract or compensatory plan.
| | - | -----------------------------------------

| | * | Incorporated
by reference to the same exhibit number in Registrant's Form S-1 Registration
                  Statement No. 333-14809.
| | - | -------------------------------------------------------------------------------------------------------------------------------------

| | ** | Incorporated
by reference to the same exhibit number in Registrants Form 10-K for fiscal year
ended May 31, 1997.
| | -- | ------------------------------------------------------------------------------------------------------------------

| | *** | Incorporated
by reference to the same exhibit number in Registrants Form 10-Q for the quarter
ended November 29, 1997.
| | --- | -----------------------------------------------------------------------------------------------------------------------

| | **** | Incorporated
by reference to the same exhibit number in Registrants Form 10-K for fiscal year
ended May 30, 1998.
| | ---- | ------------------------------------------------------------------------------------------------------------------

| | ***** | Incorporated
by reference to the same exhibit number in Registrants Form 10-K for fiscal year
ended May 29, 1999.
| | ----- | ------------------------------------------------------------------------------------------------------------------

| | ****** | Incorporated
by reference to the same exhibit number in Registrants Form 10-Q for the quarter
ended November 27, 1999.
| | ------ | -----------------------------------------------------------------------------------------------------------------------

| | ******* | Incorporated
by reference to the same exhibit number in Registrants Form 8-K, dated September
30, 1999.
| | ------- | --------------------------------------------------------------------------------------------------------

| | ******** | Incorporated
by reference to Registrants form S-8 Registration Statement No. 333-39940, dated
June 23, 2000.
| | -------- | -------------------------------------------------------------------------------------------------------------

| | 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (d) | Financial
Statement Schedules Required by Regulation S-X
| | --- | --------------------------------------------------------

| | The
financial  statement  schedule  required by Regulation S-X is filed at page 44. 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.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

43

---

# 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 10thday of August,
2004.

| | CAL-MAINE FOODS, INC.
| | ---------------------
| | By:                  
| |                      

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 Chief Executive Officer                         | August 12, 2004
|Fred R. Adams, Jr.        | (Principal Executive Officer)                                            
|                          |                                                                          
|/s/  Richard K. Looper    | Vice Chairman of the Board and Director                                   | August 12 2004 
|Richard K. Looper         |                                                                          
|                          |                                                                          
|/s/  Adolphus B. Baker    | President and Director                                                    | August 12 2004 
|Adolphus B. Baker         |                                                                          
|                          |                                                                          
|/s/  Bobby J. Raines      | Vice President, Chief Financial Officer,Treasurer, Secretary and Director | August 12 2004 
|Bobby J. Raines           | (Principal Financial Officer)                                            
|                          |                                                                          
|/s/  Charles F. Collins   | Vice President, Controller and Director                                   | August 12 2004 
|Charles F. Collins        | (Principal Accounting Officer)                                           
|                          |                                                                          
|/s/  Jack B. Self         | Vice President and Director                                               | August 12 2004 
|Jack B. Self              |                                                                          
|                          |                                                                          
|/s/  Joe M. Wyatt         | Vice President and Director                                               | August 12 2004 
|Joe M. Wyatt              |                                                                          
|                          |                                                                          
|/s/  W. D.  Cox           | Director                                                                  | August 12 2004 
|W. D.  Cox               
|                          |                                                                          
|/s/  R.   Faser  Triplett | Director                                                                  | August 12 2004 
|R.   Faser  Triplett     
|                          |                                                                          
|/s/  Letitia C. Hughes    | Director                                                                  | August 12 2004 
|Letitia C. Hughes        

44

---

# SCHEDULE II VALUATION
AND QUALIFYING ACCOUNTSYears ended May 29,
2004, May 31, 2003, and June 1, 2002(in thousands)

|Description                     | Balance at
Beginning
of Period |  | Chargedto
Cost and
Expense |       | Write-off
of
Accounts |   | Balance at End
of Period |  
|------------------------------- | ------------------------------ |  | -------------------------- | ----- | --------------------- | - | ------------------------ | -
|Year ended May 29, 2004:        |                                |  |                            |       |                       |   |                          |  
|Allowance for doubtful accounts |                                |  | $                          | 1,158 |                       | $ | 279                      |  
|                                |                                |  |                            |      
|Year ended May 31, 2003:        |                                | 
|Allowance for doubtful accounts |                                |  | $                          | 175   |                       | $ | 1,279                    |  
|                                |                                |  |                            |      
|Year ended June 1, 2002:        |                                | 
|Allowance for doubtful accounts |                                |  | $                          | 590   |                       | $ | (5                       | )
|                                |                                |  |                            |      

S-1

---

# CAL-MAINE FOODS,
INC.Form 10-K for the
fiscal yearEnded May 29, 2004EXHIBIT INDEX

|ExhibitNumber | Exhibit
|------------- | -------

|3.1(a) | Amendment
to Article 4 of Certificate of Incorporation dated as of April 14, 2004
|------ | ---------------------------------------------------------------------------------

|10.1(b) | Amendment
to Term Loan Agreement dated as of April 14, 2004 (without exhibits).
|------- | -------------------------------------------------------------------------------

|10.1(c) | Amendment
to Term Loan Agreement dated as of April 14, 2004 (without exhibits).
|------- | -------------------------------------------------------------------------------

|21 | Subsidiaries
of Cal-Maine Foods, Inc
|-- | ------------------------------------

|23 | Consent
of Independent Auditors
|-- | -------------------------------

|31.1 | Certification
of The Chief Executive Officer
|---- | --------------------------------------------

|31.2 | Certification
of The Chief Financial Officer
|---- | --------------------------------------------

|32 | Written
Statement of The Chief Executive Officer and Chief Financial Officer
|-- | ----------------------------------------------------------------------------