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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(mark one)

For the quarterly period ended November 29, 2003

OR

For the transition period from ____________ to ____________

Commission file number: 000-04892

CAL-MAINE FOODS, INC.
(Exact name of registrant as specified in its charter)

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

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

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

Yes   X     No_____

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

Yes_____   No   X  

        Number of shares outstanding of each of the issuer’s classes of common stock (exclusive of treasury shares), as of December 30, 2003.

CAL-MAINE FOODS, INC.

INDEX

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

        See notes to condensed consolidated financial statements.

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CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)

See notes to condensed consolidated financial statements.

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CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

See notes to condensed consolidated financial statements.

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CAL-MAINE FOODS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(in thousands, except share amounts)
November 29, 2003
(unaudited)

        The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ended November 29, 2003 are not necessarily indicative of the results that may be expected for the year ending May 29, 2004.

        The balance sheet at May 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

        For further information, refer to the consolidated financial statements and footnotes thereto included in Cal-Maine Foods, Inc.‘s annual report on Form 10-K for the fiscal year ended May 31, 2003.

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):

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        In its Form 8-K filing dated November 6, 2003, the Company announced the termination of it’s proposed going private transaction.

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

OVERVIEW

        Cal-Maine Foods, Inc. (the" Company") is primarily engaged in the production, grading, packing and sale of fresh shell eggs. The Company's fiscal year end is the Saturday closest to May 31.

        The Company’s operations are fully integrated. At its facilities it hatches chicks, grows pullets, manufactures feed, and produces, processes, and distributes shell eggs. The Company currently is the largest producer and distributor of fresh shell eggs in the United States. Shell egg sales, including feed sales to outside egg producers, account for 99% of the Company’s net sales. The Company primarily markets its shell eggs in the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States. Shell eggs are sold directly by the Company primarily to national and regional supermarket chains.

        The Company currently uses contract producers for approximately 13% of its total egg production. Contract producers operate under agreements with the Company for the use of their facilities in the production of shell eggs by layers owned by the Company, which owns the eggs produced. Also, shell eggs are purchased from outside producers for resale, as needed, by the Company.

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

        The Company’s cost of production is materially affected by feed costs, which average about 55% of the Company’s total farm egg production cost. Changes in feed costs result in changes in the Company’s 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 the Company has little or no control.

        According to U.S. Department of Agriculture reports, laying hen numbers on December 1, 2003 were slightly lower than a year ago. Current industry projections are that, for the year ahead, laying hen numbers will be very close to this past year. Corn and soybean prices are projected to be somewhat higher in the year ahead and could result in higher feed ingredient cost. Based upon the past few years, the prices should be within the moderate range.

RESULTS OF OPERATIONS

        The following table sets forth, for the periods indicated, certain items from the Company’s Condensed Consolidated Statements of Operations expressed as a percentage of net sales.

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NET SALES

        Net sales for the second quarter of fiscal 2004 were $149.9 million, an increase of $54.9 million, or 57.8% as compared to net sales of $95.0 million for the second quarter of fiscal 2003. Total dozens of eggs sold increased in the current quarter and egg selling prices increased as compared with prices last year. Dozens sold for the current quarter were 153.7 million dozen, an increase of 8.8 million dozen, or 6.1% as compared to the second quarter of last year. The new egg production and processing facility at Guthrie, KY provided about half of the increase in dozens sold, with additional dozens purchased from outside egg producers making up the balance. Domestic demand for eggs is good, and overall egg supply is balanced. This resulted in higher egg selling prices during the current quarter. The Company’s net average selling price per dozen for the fiscal 2004 second quarter was $.944, compared to $.622 for the second quarter of last year, an increase of 51.8%. The Company’s net average selling price is the blended price for all sizes and grades of shell eggs, including non-graded egg sales, breaking stock and undergrades

        Net sales for the twenty-six weeks ended November 29, 2003 were $264.3 million, an increase of $87.1 million, or 49.2%. As in the current quarter, total dozens sold increased and net egg selling prices increased. Dozens sold for the current twenty-six week period were 300.7 million as compared to 280.9 million for last fiscal year, an increase of 19.8 million dozen, or 7.0%. Over half of the increase in dozens sold was provided by the Company’s facilities. As discussed above, favorable egg market conditions resulted in increased egg selling prices. For the current twenty-six week period, the Company’s net average selling price per dozen was $.847, compared to $.598 per dozen last year, an increase of $.249 per dozen, or 41.6%.

        The Company believes its financial results for recent periods have been positively affected by favorable publicity about eggs from the medical community and increased use of eggs in high protein diets that are currently popular.

COST OF SALES

        Total cost of sales for the second quarter ended November 29, 2003 was $99.2 million, an increase of $19.6 million, or 24.6%, as compared to the cost of sales of $79.6 million for last year’s second quarter. The increase is due to increases in dozens sold, higher costs of eggs purchased from outside producers and a small increase in the cost of feed ingredients. Dozens of eggs sold increased 8.8 million for the current quarter. Due to the increase in egg selling prices, the cost of these outside purchases increased sharply, as reflected in the Company’s 51.8% increase in average egg selling prices. Feed cost for the second quarter ended November 29, 2003 was $.229 per dozen, an incr