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CAL-MAINE FOODS INC

For the period ended Jun 1, 2024. Filed Jul 23, 2024.

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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2024 · Filed Jul 23, 2024

CALM$67.09-2.5%Stored close · as of Nov 10, 2026

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Item 8. Financial Statements and Supplementary Data

Board of Directors and Stockholders

Ridgeland, Mississippi

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Cal-Maine Foods, Inc. and Subsidiaries as of June 1,

statements of

income, comprehensive

income, stockholders’

equity,

flows for each

of the three

years in the

period ended June

1, 2024, and

the related consolidated

notes and schedule

listed in the

Index

at

Items

15(a)(1)

and

15(a)(2)

(collectively

referred

to

as

the

“consolidated

statements”).

In

our

opinion,

the

present

fairly,

in

all

respects,

the

position

of

Foods,

Inc.

and

Subsidiaries as

of June

1, 2024

and the

results of

their operations

and their

cash flows

for each

of the

three

years

in

the

period

ended

June

1,

2024,

in

conformity

with

in

the

United

States

of

America.

We

audited, in

the standards

of the

Public Company

Accounting Oversight

Board (United

States) (“PCAOB”),

the Cal-Maine

Foods,

Inc.

and Subsidiaries’

as of

June 1,

2024,

based

on

the

in

Control

–

Framework

issued

by

the

of

Organizations of the Treadway

Commission and our report dated July 23, 2024 expressed an unqualified

opinion.

Basis for Opinion

These

are

the

responsibility

of

the

entities’

management.

Our

responsibility

is

to

express an

opinion on

these consolidated

financial statements

our audits.

We

are a

public accounting

firm registered

with the PCAOB and

are required to be

independent with respect to

and Subsidiaries in accordance

with

the

U.S.

federal

the

rules

and

of the

Commission

and

the

PCAOB.

We

conducted

our audits

standards of

the PCAOB.

Those

standards require

that we

plan and

perform

the

audit

to

obtain

about

whether

the

are

free

of

misstatement,

whether

due

to

error

or

fraud.

Our

audits

to

assess

the

risks

of

misstatement of the

whether due to error

or fraud, and performing

procedures that respond

to

those

risks.

Such

examining,

on

a

test

basis,

evidence

the

amounts

and

in

the

consolidated financial

statements. Our

audits also

included evaluating

the accounting

principles used

and significant

made

by management,

as well

as evaluating

the overall

presentation

of the

consolidated financial

statements. We

believe

our

audits provide a reasonable basis for our opinion.

Critical Audit Matter

The

critical

audit

matter

below

is

a

matter

arising

from

the

current

period

audit

of

the

that

were

or

to

be

to

the

Audit

and

that:

(1)

relate

to

accounts

or disclosures

to the

statements and

(2) involved

our especially

challenging,

subjective, or

complex judgments. The

communication of

the critical audit

matter does

not alter in

any way

our opinion on

the

consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,

providing

a separate opinion on the critical audit matter or on the accounts or disclosures to

which it relates.

Contingent Liabilities – Litigation and Claims – Refer to Note 16 in the Consolidated

Financial Statements

Critical Audit Matter Description

Cal-Maine Foods, Inc. and Subsidiaries record liabilities for legal proceedings and claims in those instances where they

can reasonably estimate the amount of the loss and when the liability is probable.

Where the reasonable estimate of the probable

loss is a range, Cal-Maine

Foods, Inc. and Subsidiaries record

the most likely estimate of

the loss, or the low end of

the range if

there is no one best estimate.

Cal-Maine Foods, Inc. and Subsidiaries either disclose the

amount of a possible loss

or range of loss

in

excess

of

if

estimable,

or

states

that

such

an

estimate

cannot

be

made.

Foods,

Inc.

and

Subsidiaries disclose significant

legal proceedings and

claims even where

liability is not

probable or the

amount of the

is not

estimable, or

both, if

Inc. and

Subsidiaries believe

at least

a reasonable

possibility that

a loss

may be incurred.

We identified litigation and claims as a critical

audit matter because of the challenges

auditing management’s judgments

applied

in

determining

the

likelihood

of

loss

related

to

the

resolution

of

such

claims.

Specifically,

auditing

determination of

whether any

contingent loss

arising from

litigation and

claims is

probable, reasonably

possible, or

remote, and the related disclosures, is subjective and requires significant judgment

due to the sensitivity of the issue.

How the Critical Audit Matter was addressed during

the Audit

Addressing the

matter involved

performing procedures

and evaluating

audit evidence

in connection

with forming

our

overall

opinion

on

the

These

testing

the

of

the

relating to the

and Subsidiaries’ evaluation

of the

liability related

proceedings and claims,

controls over determining the likelihood

of a loss

and whether the amount

of loss can be

reasonably estimated, as well

as financial

statement disclosures over the legal proceedings and claims.

These procedures also included obtaining and evaluating

the letters

of audit inquiry with external

legal counsel, evaluating the reasonableness of

Cal-Maine Foods, Inc. and Subsidiaries’ assessment

whether

an

unfavorable

outcome

is

possible

or

probable,

and

estimable,

the

sufficiency

of Cal-Maine

Foods, Inc.

and Subsidiaries’

related

proceedings and

claims and

the

completeness and accuracy of Cal-Maine Foods, Inc. and Subsidiaries’ legal

contingencies.

/s/ Frost, PLLC

We have served

as the Company’s auditor since 2007.

Little Rock, Arkansas

(in thousands, except for par value amounts)

Assets

Current assets:

Cash and cash equivalents

$

237,878

$

292,824

574,499

355,090

Receivables:

Trade receivables, net

138,550

110,980

Income tax receivable

10,459

66,966

Other

13,433

9,267

Total receivables,

net

162,442

187,213

Inventories, net

261,782

284,418

Prepaid expenses and other current assets

5,238

5,380

assets

1,241,839

1,124,925

Property, plant &

equipment, net

857,234

744,540

Investments in unconsolidated entities

11,195

14,449

45,776

44,006

Intangible assets, net

15,996

15,897

Other long-term assets

12,721

10,708

Total assets

$

2,184,761

$

1,954,525

Liabilities and stockholders’ equity

Current liabilities:

Trade accounts payable

$

75,862

$

82,590

Dividends payable

37,760

37,130

Accrued wages and benefits

32,971

38,733

Income tax payable

43,348

8,288

Accrued expenses and other liabilities

37,802

15,990

227,743

182,731

Other noncurrent liabilities

17,109

9,999

Deferred income taxes

142,866

152,212

Total liabilities

387,718

344,942

Commitments and contingencies - see

Note 16

—

—

Stockholders’ equity:

Common stock ($

0.01

par value):

Common stock – authorized

120,000

shares, issued

70,261

shares

Class A convertible common stock – authorized and issued

4,800

shares

Paid-in capital

76,371

72,112

Retained earnings

1,756,395

1,571,112

Accumulated other comprehensive loss, net of tax

(1,773)

(2,886)

Common stock in treasury,

at cost –

26,022

and

26,077

shares in 2024 and 2023,

(31,597)

(30,008)

Total Cal-Maine Foods,

Inc. stockholders’ equity

1,800,147

1,611,081

Noncontrolling interest in consolidated equity

(3,104)

(1,498)

Total stockholders’

equity

1,797,043

1,609,583

Total liabilities and stockholders’

equity

$

2,184,761

$

1,954,525

(in thousands, except per share amounts)

Fiscal years ended

52 weeks

53 weeks

52 weeks

$

$

$

1,777,159

Cost of sales

1,784,872

1,949,760

1,440,100

Gross profit

541,571

1,196,457

337,059

Selling, general and administrative

252,625

232,207

198,631

Gain on involuntary conversions

(23,532)

(3,345)

(5,492)

(Gain) loss on disposal of fixed assets

(131)

Operating income

312,452

967,726

143,537

Other income (expense):

Interest expense

(549)

(583)

(403)

Interest income

32,275

18,553

Patronage dividends

11,331

10,239

10,130

Equity in income of unconsolidated entities

1,420

1,943

Other, net

3,042

1,869

9,820

Total other income

47,519

30,824

22,478

Income before income taxes

359,971

998,550

166,015

83,689

241,818

33,574

276,282

756,732

132,441

Less:

Net loss attributable to noncontrolling interest

(1,606)

(1,292)

(209)

$

277,888

$

758,024

$

132,650

Net income per share attributable to Cal-Maine Foods, Inc.:

Basic

$

5.70

$

15.58

$

2.73

Diluted

$

5.69

$

15.52

$

2.72

Weighted average

shares outstanding:

Basic

48,717

48,648

48,581

Diluted

48,873

48,834

48,734

Consolidated Statements of

Comprehensive Income

Fiscal years ended

$

276,282

$

756,732

$

132,441

Other comprehensive income (loss), before tax:

Unrealized holding gain (loss) available-for-sale securities, net of

reclassification adjustments

1,271

(1,714)

(1,398)

(Increase) decrease in accumulated post-retirement benefits obligation,

net of

reclassification adjustments

(27)

(9)

Other comprehensive income (loss), before tax

1,438

(1,741)

(1,407)

Income tax expense (benefit) related to items of other comprehensive income

(loss)

(451)

(369)

Other comprehensive income (loss), net of tax

1,113

(1,290)

(1,038)

Comprehensive income

277,395

755,442

131,403

Less: comprehensive loss attributable to the noncontrolling interest

(1,606)

(1,292)

(209)

Comprehensive income attributable to Cal-Maine Foods, Inc.

$

279,001

$

756,734

$

131,612

Consolidated Statements of Stockholders’ Equity

Accum.

Other

Comp.

Shares

Amount

Class A

Shares

Class A

Amount

Shares

Amount

Paid In

Capital

Retained

Earnings

Income

(loss)

Noncontrolling

Interest

Total

Balance at May 29, 2021

70,261

$

4,800

$

26,202

$

(27,433)

$

64,044

$

975,977

$

(558)

$

—

1,012,781

—

—

—

—

(81)

(1,014)

3,945

—

—

—

2,931

0.874

Common

—

—

—

—

—

—

—

(38,578)

—

—

(38,578)

—

—

—

—

—

—

—

(4,195)

—

—

(4,195)

Contributions

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

132,650

—

(209)

132,441

Other comprehensive loss, net of tax

—

—

—

—

—

—

—

—

(1,038)

—

(1,038)

Balance at May 28, 2022

70,261

4,800

—

26,121

(28,447)

67,989

1,065,854

(1,596)

(206)

1,104,345

—

—

—

—

(44)

(1,561)

4,123

—

—

2,562

5.161

Common

—

—

—

—

—

—

—

(227,993)

—

—

(227,993)

—

—

—

—

—

—

—

(24,773)

—

—

(24,773)

—

—

—

—

—

—

—

758,024

—

(1,292)

756,732

Other comprehensive loss, net of tax

—

—

—

—

—

—

—

—

(1,290)

(1,290)

Balance at June 3, 2023

70,261

4,800

26,077

(30,008)

72,112

1,571,112

(2,886)

(1,498)

1,609,583

—

—

—

—

(55)

(1,589)

4,259

—

—

—

2,670

1.889

Common

—

—

—

—

—

—

—

(83,565)

—

—

(83,565)

—

—

—

—

—

—

—

(9,040)

—

—

(9,040)

—

—

—

—

—

—

—

277,888

—

(1,606)

276,282

Other comprehensive income, net of tax

—

—

—

—

—

—

—

—

1,113

—

1,113

Balance at June 1, 2024

70,261

$

4,800

$

26,022

$

(31,597)

$

76,371

$

1,756,395

$

(1,773)

$

(3,104)

$

1,797,043

Fiscal year ended

Cash flows from operating activities:

$

276,282

$

756,732

$

132,441

Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization

80,241

72,234

68,395

Deferred income taxes

(9,672)

24,467

5,676

Stock compensation expense, net of amounts paid

4,358

4,205

4,063

Loss on change in fair value contingent consideration

5,500

—

—

Other operating activities, net

(6,908)

(1,491)

(9,099)

Change in operating assets and liabilities, net of effects from acquisitions:

Increase (decrease) in trade receivables

(27,570)

58,129

(88,063)

Increase (decrease) in inventories

28,800

(21,102)

(36,152)

Increase (decrease) in income taxes payable/receivable

91,567

(42,218)

26,056

Increase in accounts payable and current accrued expenses

9,353

14,944

29,993

Decrease in other operating assets and liabilities

(553)

(2,890)

(7,101)

Net cash provided by operating activities

451,398

863,010

126,209

Cash flows from investing activities:

Purchases of investments

(573,565)

(530,781)

(98,243)

Sales of investments

358,932

291,832

92,703

Acquisition of business, net of cash acquired

(53,746)

—

(44,823)

Investment in unconsolidated entities

(363)

(1,673)

(3,000)

Distributions from unconsolidated entities

3,000

1,500

Purchases of property,

(147,116)

(136,569)

(72,399)

Net proceeds from insurance settlement - property,

—

—

7,655

Net proceeds from disposal of property,

Net cash used in investing activities

(412,586)

(375,111)

(117,021)

Cash flows from financing activities:

Principal payments on finance lease

(214)

(224)

(215)

Purchase of common stock by treasury

(1,688)

(1,643)

(1,127)

Payments of dividends

(91,856)

(252,292)

(6,117)

Contributions

—

—

Net cash used in financing activities

(93,758)

(254,159)

(7,456)

Increase (decrease) in cash and cash equivalents

(54,946)

233,740

1,732

Cash and cash equivalents at beginning of year

292,824

59,084

57,352

Cash and cash equivalents at end of year

$

237,878

$

292,824

$

59,084

Supplemental information:

Income taxes paid

$

35,101

$

258,247

$

1,747

Notes to Consolidated Financial Statements

Note 1 - Summary of Significant Accounting Policies

Nature of Operations

Foods,

Inc.

(“we,”

“us,”

“our,”

or

the

“Company”)

is

engaged

in

the

production,

grading,

packaging,

marketing and distribution

of fresh shell eggs,

including conventional, cage-free,

organic, brown, free

-range, pasture-raised and

nutritionally-enhanced

eggs.

The

Company,

which

is

headquartered

in

Ridgeland,

Mississippi,

is

the

largest

and

distributor of fresh shell eggs in the United States and sells most of its shell eggs throughout

the majority of the United States.

Principles of Consolidation

The consolidated financial statements include

the accounts of all wholly-owned

subsidiaries and of majority-owned subsidiaries

over which we exercise control. All significant intercompany transactions and

accounts have been eliminated in consolidation.

The

fiscal

year-end

is

on

the

Saturday

closest

to

May 31.

The

fiscal

years

ending

on

June

1,

and

May

28,

2022 included

weeks and the fiscal year ended June 3, 2023 included

weeks.

Use of Estimates

The preparation of the consolidated financial statements in conformity

with generally accepted accounting principles (“GAAP”)

in the United States of America requires management to make

estimates and assumptions that affect the amounts

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.

We

bank

accounts

that

are

insured

by

the

Federal

Deposit

Insurance

Corporation

up

to

$

250,000

. The

Company

routinely

maintains

cash

balances

with

certain

institutions

in

excess

of

federally

insured

amounts.

The

Company has not experienced any loss in such accounts. The Company manages this risk through maintaining cash deposits and

other highly liquid investments in high quality financial institutions.

We

primarily utilize a

cash management system

with a series of

separate accounts consisting

of lockbox accounts

for receiving

cash, concentration

accounts to which

funds are moved,

and zero-balance disbursement

accounts for funding

accounts payable.

Checks issued,

but not

presented to

the banks

for payment,

in negative

book cash

balances,

accounts payable.

Investment Securities Available-for-Sale

has determined

that its

debt securities

are available-for-sale

investments. We

classify these

securities as

current

because the amounts invested are available for current operations. Available

-for-sale securities are carried at fair value, based on

quoted market prices as of the balance sheet date, with unrealized gains and losses recorded in other comprehensive income. The

amortized cost of debt securities is adjusted for amortization

of premiums and accretion of discounts to maturity and

is recorded

in interest income. The Company regularly evaluates changes to the rating of

its debt securities by credit agencies and economic

to assess

and

record any

expected

credit losses

through

allowance for

credit losses,

limited to

the amount

that fair

value was less than the amortized cost basis.

The cost

basis for

realized gains

and losses

on available-for-sale

securities is

determined by

the specific

identification method.

Gains and losses are recognized in other income (expenses) as Other,

net in the Company’s Consolidated

Statements of Income.

Interest and dividends on securities classified as available-for-sale

are recorded in interest income.

Trade Receivables

Trade receivables are stated at their carrying

values, which include a reserve for credit losses. At June 1, 2024

and June 3, 2023,

reserves for credit losses were $

thousand, respectively.

The Company extends credit to customers

based

on an

evaluation of

each customer’s

financial condition

and credit

history.

Collateral is

not required.

minimizes exposure to

counter party credit

risk through credit analysis

and approvals, credit

limits, and monitoring

procedures.

In determining our

reserve for

credit losses, receivables

are assigned an

expected loss based

on historical loss

information adjusted

as

needed

for

economic

and

other

factors.

At

June

1,

and

June

3,

2023,

one

accounted

for

26.8

% and

30.1

% of the Company’s trade accounts receivable,

Inventories

Inventories of eggs, feed,

supplies and flocks

are valued principally

at the lower

of cost (first-in,

first-out method) or

net realizable

value.

The

cost

with

flocks,

consisting

principally

of

chicks,

feed,

labor,

contractor

and

costs,

are

accumulated during a growing period

weeks. Flock costs are amortized

to cost of sales over

the productive

lives of the flocks, generally

one

to

two years

. As the amortization period of the flocks is relatively short, disclosure of the gross

cost and accumulated amortization is omitted. Flock mortality is charged

to cost of sales as incurred.

Plant and Equipment

are stated at

cost. Depreciation is

provided by the

straight-line method over

the estimated useful

lives, which

are

to

years for

buildings and

improvements

and

to

years for

machinery and

equipment. Repairs

and

maintenance are expensed as incurred.

Expenditures that increase the

value or productive capacity of

assets are capitalized. When

property,

plant, and

equipment are

retired, sold,

or otherwise

disposed of,

the asset’s

carrying amount

and related

depreciation are

removed from

the accounts

and any

gain or

loss is

operations. When

certain events

or changes

in

operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of

the carrying amounts.

Investments in Unconsolidated Entities

The equity method

of accounting is used

when the Company can

exert significant influence

over an entity,

but does not control

its financial

and

decisions.

Under

the

equity

method,

original

investments

are recorded

at

cost

and

adjusted

by

the

Company’s share of undistributed earnings

or losses of

these entities. Equity

investments without readily

determinable fair values,

when

the

Company

does

not

have

the

ability

to

exercise

influence

over

the

investee,

are

at

cost,

less

impairment, plus or minus observable price changes.

Membership in cooperatives are recorded at cost, plus or minus any

allocated equities and retains.

the

excess

of

the

price

over

the

fair

value

of

the

net

assets

is

for

at

least annually

or more

frequently

if

indicators

arise

by

first

a qualitative

assessment to determine whether a quantitative goodwill test is necessary. After assessing the totality of events or circumstances,

if we determine it is

more likely than not

that the fair value of

a reporting unit is less

than its carrying amount,

then we perform

additional quantitative tests to determine the magnitude of any impairment.

Intangible Assets

Intangible assets are

initially recorded at

fair value

in business

acquisitions, which include

franchise rights, customer

relationships,

non-compete agreements, trademarks and right of use intangibles. They are amortized over their estimated useful lives of

to

years. The

gross

cost

and

of

intangible

assets

are

removed

when

the

amounts

are

fully

amortized and

the asset is

no longer

in use or

the contract

has expired. When

certain events or

operating conditions

occur, asset lives may

be adjusted and an

impairment assessment may be

performed on the recoverability

of the carrying amounts.

Indefinite life assets are recorded at fair value in business acquisitions and

represent water rights. They are not amortized, but

are reviewed for impairment at least annually or more frequently if

impairment indicators arise.

Accrued Self Insurance

We use a combination of insurance

and self-insurance mechanisms to provide coverage for the potential liabilities for health and

welfare,

workers’

compensation,

auto

and

general

risks.

Liabilities

with

our

risks

retained

are

estimated, in part, by considering claims experience, demographic factors,

severity factors and other actuarial assumptions.

Dividend Payable

We

accrue dividends at

the end of

each quarter according

to the Company’s

dividend policy adopted

by its Board

of Directors.

pays a dividend

of its Common

Stock and

Class A Common

Stock on

a quarterly basis

for each

quarter for which the Company reports net income attributable to Cal-Maine

Foods, Inc. computed in accordance with GAAP in

equal to

one-third (1/3)

of such

quarterly income.

Dividends

of record

as of

the 60th

day

following the last day of such quarter, except for the fourth fiscal quarter.

For the fourth quarter, the Company pays dividends to

shareholders of

record on

the 65th

day after

the quarter

end. Dividends

are payable

on the

15th day

following the

record date.

Following a quarter for which the Company does not report net income

attributable to Cal-Maine Foods, Inc., the Company will

not pay a dividend

for a subsequent profitable

quarter until the Company

is profitable on a cumulative

basis computed from the

date of the most recent quarter

for which a dividend was paid.

The dividend policy is subject to

periodic review by the Board of

Directors.

Treasury Stock

stock purchases

are accounted

for under

the cost

method whereby

the entire

cost of

the acquired

stock is

recorded as

treasury

stock. The

grant

of

stock

through

the

share-based

plans

is

funded

through

the

issuance of

treasury stock. Gains

and losses

on the

subsequent reissuance

of shares

share-

based compensation plans are credited or charged to paid-in

capital in excess of par value using the average-cost method.

Revenue Recognition

The

Company

recognizes

revenue

through

sale of

its products

to

through

retail, foodservice

and

other

channels.

The

majority

of

the

revenue

is

derived

from

or

contracts

with

based

upon

the

ordering

its

with

a

single

of

delivering

the

product.

The

Company

believes

the

is

met

upon

and

acceptance

of

the

product

by

our

customers,

which

occurs

upon

shipment or delivery to a customer

based on terms of the

sale. Costs paid to third

party brokers to obtain agreements are

expensed

as the Company’s agreements are

generally less than one year.

Revenues are

recognized in

that reflects

the net

consideration we

expect to

receive in

exchange for

delivery of

the

products. The Company periodically offers sales incentives or other programs such as rebates,

discounts, coupons, volume-based

incentives, guaranteed

other programs.

records an

estimated allowance

for costs

associated with

these

programs, which

a reduction in

revenue at the

time of sale

using historical trends

and projected redemption

rates

of

each

The

Company

regularly

reviews these

and

any

difference

between

the

costs and

actual

realization of these programs would be recognized the subsequent period.

Shipping and Distribution

Costs

to

deliver

product

to

are

in

selling,

general

and

in

the

accompanying

Consolidated Statements

of Income

and totaled

$

72.7

77.5

million, and

$

62.7

million in

fiscal years

and

2022, respectively.

Income Taxes

Income

taxes

are

accounted

for

using

the

method.

Deferred

income

taxes

reflect

the

net

tax

effects

of

differences

between

the

amounts

of

assets

and

for

purposes

and

the

amounts

used

for

income tax purposes. The

Company’s policy with respect

to evaluating

uncertain tax

positions is

based upon whether

believes it

is more

likely than

not the

uncertain

tax positions

will be

sustained upon

review by

the taxing

authorities. The

tax

positions must meet the more-likely-than-not

recognition threshold with consideration

given to the amounts and

probabilities of

the outcomes

be realized

upon settlement

using the

facts, circumstances

and information

at the

reporting date.

The

Company

will reflect

only

the portion

of the

tax benefit

that will

be

sustained

upon resolution

of the

position

and

interest on the portion of the tax benefit not recognized. The Company initially and subsequently measures the largest amount

of

tax benefit

that is

greater than

50% likely

to be

realized upon

settlement with

a taxing

authority that

has full

knowledge of

all

relevant

information. The

Company

records

and

penalties on

uncertain

tax

positions

as

a

component

of

income

tax

expense. Based

upon management’s

assessment, there

are no uncertain

tax positions expected

to have a

material impact on

the

Company’s consolidated

financial statements.

Stock Based Compensation

The

Company

recognizes

all

share-based

to

and

directors,

grants

of

employee

stock

options,

restricted stock and performance-based shares, in the Consolidated Statements

of Income based on their fair values. The benefits

of

tax

deductions

in

excess

of

cost

are

reported

as

a

financing

cash

flow. See

Note 14 – Stock

Compensation Plans

for more information.

Business Combinations

The Company applies the acquisition

method of accounting, which

requires that once control is obtained,

all the assets acquired

and liabilities assumed,

including amounts

attributable to noncontrolling

interests, are recorded

at their respective

fair values at

the date of acquisition. We

determine the fair values of identifiable assets and liabilities

internally,

which requires estimates and

the

use

of

various

techniques.

When

a

market

value

is

not

readily

available,

our

methodology

considers the remaining estimated life of the assets acquired and

what management believes is the market value for those assets.

We

typically use the income

method approach for

intangible assets acquired in

a business combination. Significant

estimates in

valuing certain intangible assets include, but

are not limited to,

the amount and timing of

future cash flows, growth rates,

discount

rates and useful

lives. The excess

of the purchase

price over fair

values of identifiable

assets and liabilities

goodwill.

Gain on Involuntary Conversions

maintains insurance

for both

property damage

and business

interruption relating

to catastrophic

events, such

as

fires, hurricanes,

tornadoes

acts of

God, and

is eligible

to participate

in U.S.

Department

of Agriculture

(“USDA”)

indemnity

and

programs

for

certain

losses

due

to

disease

such as

highly

avian

(“HPAI”).

Specifically, the Animal

Health Protection Act authorizes the USDA to provide indemnity

payments to producers for

birds and eggs

that must be

destroyed during a

disease response. Payments

received under these

programs are based

on the fair

market value

of the

poultry and/or

eggs at

the time

that HPAI

virus is

detected in

the flock.

Other covered

costs include

feed,

depopulation and

disposal costs,

and virus

elimination costs.

The USDA

does not

provide indemnity

for income

or production

losses

suffered

due

to

downtime

or

other

disruptions

nor

for

indirect

continuing

expenses.

Recoveries

received

for

property damage, business

interruption and disease

outbreaks in excess

of the net

book value

of damaged assets,

including poultry,

clean-up and

demolition costs,

direct post-event

costs are

recorded within

“Gain on

involuntary conversions”

in the

period received or committed when all contingencies associated with the

recoveries are resolved.

Loss Contingencies

Certain conditions may exist as of the date the financial statements are issued that may result in a loss to the Company but which

will only be

resolved when one

or more future

events occur or

fail to occur.

management and

its legal counsel

assess

such

liabilities,

and

such

inherently

involves

an

exercise

of

judgment.

In

assessing

loss

contingencies

related

pending against

or unasserted

claims that

in such

proceedings, the

legal counsel evaluates

the perceived merits

of any legal

proceedings or unasserted

claims as well

as the perceived merits of the amount of relief sought or expected to be

sought therein.

If the assessment

of a contingency

indicates it is

probable that

a material loss

has been incurred

and the amount

of the liability

can be

estimated, the

estimated liability

would be accrued

in the Company’s

financial statements.

If the assessment

indicates a

potentially material loss contingency is

not probable, but is reasonably possible,

or is probable but cannot be estimated,

then the

nature of the

contingent liability,

together with an

estimate of the

range of possible

loss if determinable

and material, would

be

disclosed. Loss

contingencies considered

remote are

generally not

disclosed unless

they involve

guarantees, in

which case

the

nature of the guarantee would be disclosed.

The Company expenses the costs of litigation as they are incurred.

New Accounting Pronouncements and Policies

No new accounting pronouncement issued or effective

during the fiscal year had or is expected to have a material impact on

our

Note 2 – Acquisition

On

October 4, 2023

, the

Company announced

the acquisition

of the

assets of

Fassio Egg

Farms, Inc.

(“Fassio”), related

to its

shell

egg

and

Fassio

owned

and

operated

shell

egg

and

processing facilities

with a

capacity at

the time

of acquisition

1.2

million laying

hens, primarily

cage-free, a

feed mill,

pullets, a

fertilizer production

and composting

operation and

land located

in Erda,

Utah, outside

Salt Lake City.

The

Company accounted for the acquisition as a business combination.

The following

table summarizes

the consideration

paid for

the Fassio

the amounts

of assets

acquired and

assumed recognized at the acquisition date (in thousands):

Cash consideration paid

$

53,746

Fair value of contingent consideration

1,000

Total estimated purchase

54,746

Recognized amounts of identifiable assets acquired and

liabilities assumed

Inventory

$

6,164

44,540

Intangible assets

2,272

Other long-term assets

Liabilities assumed

(143)

Total identifiable

net assets

52,976

1,770

$

54,746

Inventory consisted

primarily of

flock, feed

ingredients, packaging,

and egg

inventory.

Flock inventory

was valued at

value

as

believes

that

its

value

best

approximates

its

fair

value.

Feed

ingredients,

packaging

and

egg

inventory were all valued based on market prices as of September 30, 2023.

plant and

equipment were

valued utilizing

the cost

approach which

is based

on replacement

or reproduction

the assets and subtracting any depreciation resulting from physical deterioration

and/or functional or economic obsolescence.

Intangible

assets

consisted

of

water

rights

within

the

property

Water

rights

were

valued

using

the

sales

comparison approach.

Contingent

was

and

future

cash

payment

to

the

sellers

on

the

meeting

certain

return

on

profitability

milestones over

a

three-year

period,

commencing

on

the date

of

the

acquisition. The fair value of the contingent consideration

is estimated using a discounted cash flow

model. Key assumptions and

unobservable inputs that require significant

judgement used in the estimate include

weighted average cost of capital,

egg prices,

revenue

and

over

the

period

for

which

the

is

measured,

and

the

probability

assessments

with

respect

to

the

likelihood

of

achieving

the

forecasted

projections.

A

range

of

outcomes

cannot

be

reasonably estimated due to market volatility of egg prices.

Goodwill represents the excess of the purchase price of the acquired business over the acquisition date fair value of the net assets

in

with

the Fassio

is primarily

attributable

to improved

efficiencies

from

integrating the assets of Fassio

with the operations of the

Company. The Company recognized goodwill of $

1.8

million as a result

of the acquisition.

Note 3 - Investment Securities Available

-for-Sale

The following presents

the Company’s investment securities available-for-sale

1, 2024 and

(in thousands):

Amortized

Cost

Gains

Losses

Estimated Fair

Value

$

4,100

$

—

$

$

4,059

137,856

—

137,735

233,289

—

232,592

3,505

—

3,491

154,520

—

154,269

3,154

—

3,124

39,239

—

39,229

$

575,663

$

—

$

1,164

$

574,499

Amortized

Cost

Gains

Losses

Estimated Fair

Value

$

16,571

$

—

$

$

16,296

56,486

—

56,409

139,979

—

1,402

138,577

—

—

101,240

—

100,769

13,459

—

13,308

29,069

—

29,056

$

357,479

$

—

$

2,389

$

355,090

Proceeds

from

the

maturities

of

available-for-sale

were

$

358.9

$

291.8

and

$

92.7

million

during fiscal 2024, 2023,

Gross realized gains for

fiscal 2024, 2023, and

2022 were $

thousand, respectively. Gross realized losses for

fiscal 2024, 2023, and

2022 were $

and $

thousand, respectively.

There was

no

allowance for credit losses at June 1, 2024 and June 3, 2023.

Actual maturities

may differ

from contractual

maturities as some

borrowers have

the right to

call or prepay

obligations with

or

without penalties. Contractual maturities of investment securities at June

1, 2024 are as follows (in thousands):

Estimated Fair Value

Within one year

$

397,917

1-5 years

176,582

Total

$

574,499

Note 4 - Fair Value

Measures

is required

to categorize

both financial

and nonfinancial

liabilities based

on the

following fair

value

hierarchy. The

fair value

of an

asset is

the price

at which

the asset

could be

sold in

an orderly

transaction between

unrelated,

knowledgeable, and willing

parties able to engage in

the transaction. A liability’s

fair value is defined

as the amount that would

be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be

paid to settle

the liability with the creditor.

Level 1

  • Quoted prices in active markets for identical assets or liabilities

Level 2

  • Inputs

other than

quoted

prices included

in Level

1 that

are observable

for the

asset or

liability,

either

directly or indirectly,

including:

o

Quoted prices for similar assets or liabilities in active markets

o

Quoted prices for identical or similar assets in non-active markets

o

Inputs other than quoted prices that are observable for the asset or liability

o

Inputs derived principally from or corroborated by other observable market

data

Level 3

  • Unobservable inputs

for the asset

or liability supported

by little or

no market activity

and are significant

to the fair value of the assets or liabilities

The disclosure of fair value of certain financial assets and liabilities recorded

at cost are as follows:

Cash and cash equivalents, accounts receivable,

and accounts payable:

The carrying amount approximates fair value due to the

short maturity of these instruments.

Assets and Liabilities Measured at Fair

Value

on a Recurring Basis

In accordance with

the fair value hierarchy

described above, the

following table shows the

fair value of our

financial assets and

liabilities that are required to be measured at fair value on a recurring basis as of

June 1, 2024 and June 3, 2023 (in thousands):

Level 1

Level 2

Level 3

Balance

$

—

$

4,059

$

—

$

4,059

—

137,735

—

137,735

—

232,592

—

232,592

—

3,491

—

3,491

—

154,269

—

154,269

—

3,124

—

3,124

—

39,229

—

39,229

Total investment

securities available-for-sale

measured at fair value

$

—

$

574,499

$

—

$

574,499

Liabilities

Contingent consideration

—

—

6,500

6,500

Total liabilities measured

at fair value

$

—

$

—

$

6,500

$

6,500

Level 1

Level 2

Level 3

Balance

$

—

$

16,296

$

—

$

16,296

—

56,409

—

56,409

—

138,577

—

138,577

—

—

—

100,769

—

100,769

—

13,308

—

13,308

—

29,056

—

29,056

Total investment

securities available-for-sale

measured at fair value

$

—

$

355,090

$

—

$

355,090

Investment securities – available-for-sale are all classified as Level 2 and

consist of securities with maturities of three months or

longer when purchased. Observable inputs for these securities are yields, credit

risks, default rates, and volatility.

Contingent

classified

as

Level

consists

of

the

to

pay

an

earnout

to

the

sellers

of

Fassio

contingent on the

acquired business meeting

certain return on

profitability milestones over

a

three-year

period, commencing on

the date of

the acquisition. The fair

value of the

contingent consideration is

estimated using a

discounted cash flow

model. Key

assumptions and

unobservable inputs

that require

significant judgement

used in

the estimate

include weighted

average cost

of

capital, egg prices,

projected revenue and

expenses over the period

for which the contingent

consideration is measured,

and the

probability assessments with respect

to the likelihood of

achieving the forecasted projections.

See further discussion in

Note 2 -

Acquisition

.

The following table shows the beginning and ending balances in fair value of

the contingent consideration:

Fassio Contingent Consideration

Balance, June 4, 2023

—

Acquisition of Fassio

$

1,000

Fair value adjustments

5,500

Balance, June 1, 2024

$

6,500

Adjustments to the fair value of contingent

consideration are recorded within selling, general and

administrative expenses in the

Note 5 - Inventories

Inventories consisted of the following (in thousands):

Flocks, net of amortization

$

149,985

$

164,540

Eggs and egg products

25,217

28,318

Feed and supplies

86,580

91,560

$

261,782

$

284,418

We grow and maintain

flocks of layers (mature female chickens), pullets (female chickens under 18 weeks of age), and breeders

(male and female

chickens used to

produce fertile eggs

to hatch for

egg production flocks).

Our total flock

at June 1,

June 3,

2023, consisted

11.8

10.8

million pullets

and breeders

and

39.9

41.2

million

layers, respectively.

The Company expensed amortization and mortality associated with the

flocks to cost of sales as follows (in thousands):

$

198,298

$

186,973

$

160,107

Mortality

10,640

10,455

8,011

Total flock costs charged

to cost of sales

$

208,938

$

197,428

$

168,118

Note 6 - Property,

Plant and Equipment

consisted of the following (in thousands):

Land and improvements

$

131,051

$

117,279

Buildings and improvements

627,121

552,669

Machinery and equipment

782,736

715,205

Construction-in-progress

121,266

98,605

1,662,174

1,483,758

Less: accumulated depreciation

804,940

739,218

$

857,234

$

744,540

Depreciation expense

was $

77.2

69.4

$

65.8

million in

the fiscal

years ended

June 1,

2024, June

and May 28, 2022, respectively.

Note 7 - Investment in Unconsolidated Entities

As

of

June

1,

and

June

3,

2023,

the

Company

owned

%

in

Eggs,

LLC

(“Specialty

Eggs”)

and

Southwest

Specialty Eggs,

LLC (“Southwest

Specialty Eggs”),

using the

equity method

of accounting.

Eggs owns the Egg-Land’s Best franchise for most of Georgia and South Carolina, as

well as a portion of western

North Carolina

and eastern Alabama. Southwest Specialty Eggs owns the Egg-Land’s

Best franchise for Arizona, southern California and Clark

County, Nevada (including

Las Vegas).

Equity method investments are included

in “Investments in unconsolidated entities”

in the accompanying Consolidated Balance

Sheets and totaled $

8.2

9.7

million at June 1, 2024 and June 3, 2023, respectively.

Equity in income of

unconsolidated entities of $

1.4

1.9

million from these entities

has been included

in the Consolidated Statements of Income for fiscal 2024, 2023,

The consolidated financial information for the Company’s

unconsolidated joint ventures was as follows (in thousands):

For the fiscal year ended

$

159,698

$

222,602

$

145,281

2,840

1,492

3,942

Total assets

31,578

27,784

42,971

Total liabilities

15,468

9,854

21,892

Total equity

16,110

17,930

21,079

The following relates to the Company’s

transactions with these unconsolidated affiliates (in thousands):

For the fiscal year ended

Sales to unconsolidated entities

$

100,553

$

136,351

$

94,311

Purchases from unconsolidated entities

63,916

75,024

60,016

Distributions from unconsolidated entities

3,000

1,500

Accounts receivable from unconsolidated entities

$

8,490

$

4,719

Accounts payable to unconsolidated entities

1,233

3,187

Note 8 - Goodwill and Other Intangible Assets

Goodwill and other intangibles consisted of the following (in thousands):

Other Intangibles

Franchise

Customer

Non-compete

Right of

Water

Total

rights

relationships

Use

rights

Trademark

intangibles

Balance May 28, 2022

$

44,006

$

15,071

$

1,326

$

$

$

$

$

62,137

—

(1,657)

(356)

(152)

(18)

—

(51)

(2,234)

Balance June 3, 2023

44,006

13,414

—

59,903

Additions

1,770

—

—

—

2,222

—

4,042

—

(1,627)

(362)

(134)

—

—

(50)

(2,173)

Balance June 1, 2024

$

45,776

$

11,787

$

$

$

—

$

2,942

$

$

61,772

For the Other Intangibles listed above, the gross carrying amounts and

accumulated amortization are as follows (in thousands):

Gross carrying

Accumulated

Gross carrying

Accumulated

amount

amount

Other intangible assets:

Franchise rights

$

29,284

$

(17,497)

$

29,284

$

(15,870)

Customer relationships

2,900

(2,292)

9,644

(8,674)

Non-compete agreements

1,500

(876)

1,450

(742)

Water rights *

2,942

—

—

Trademark

(365)

(315)

Total

$

37,026

$

(21,030)

$

41,498

$

(25,601)

Water rights are

an indefinite life intangible asset.

No significant residual value is estimated for these

intangible assets. Aggregate amortization expense for fiscal years 2024, 2023,

and 2022 totaled $

2.2

The following table presents the total estimated amortization of intangible

assets for the five succeeding years (in thousands):

For fiscal year

Estimated amortization expense

$

2,040

1,836

1,833

1,763

1,701

Thereafter

3,881

Total

$

13,054

Note 9 - Employee Benefit Plans

The Company maintains a medical plan that is qualified under Section

401(a) of the Internal Revenue Code and is not subject to

tax under present income tax laws. The plan is funded by contributions from the Company and its employees. Under its plan, the

Company

self-insures

its

portion

of

medical

claims

for

all

full-time

employees. The

Company

uses

stop-loss

to

limit

its

portion

of

medical

claims

to

$

275,000

per

occurrence. The

for

incurred but not

reported claims were approximately

$

23.0

21.9

million, and $

24.6

million in fiscal years

The liability recorded

for incurred but

not reported claims

was $

2.8

2.9

million as of

June

1,

and

June

3,

2023,

and

are

classified

within

“Accrued

and

other

liabilities”

in

the

has a KSOP

plan that

covers substantially

all employees

(the “Plan”). The

Company makes

contributions to

the

Plan at a rate

of

% of participants’

eligible compensation, plus

an additional amount

determined at the

discretion of the

Board

of Directors. Contributions can

be made in cash or

Common Stock, and vest immediately.

cash

contributions to the Plan were $

4.3

4.3

million, and $

3.9

million in fiscal years 2024, 2023 and 2022, respectively. The

Company did

no

t make direct contributions of the Company’s

Common Stock in fiscal years 2024, 2023, or 2022. Dividends on

the Company’s Common Stock are paid to the Plan in cash. The Plan acquires the Company’s Common Stock, which is listed on

the Nasdaq Global Select Market,

by using the dividends and the Company’s

cash contributions

to purchase shares in the public

markets. The Plan sells Common

Stock on the Nasdaq

to pay benefits to

Plan participants. Participants may

make contributions

to

the

Plan

up

to

the

maximum

allowed

by

Revenue

Service

regulations. The

Company

does

not

match

participant

contributions.

Deferred Compensation Plans

The

Company

has

with

certain

officers

for

to

be

made

over

specified

periods

beginning when the officers

reach age

or over as specified in the

agreements. Amounts accrued for

the agreements are based

upon

earned

over

the

service

period

of

each officer.

Payments

made

under

these

agreements were $

thousand in fiscal years

2024, 2023 and 2022.

The liability recorded

related to these agreements was $

1.0

million at June 1, 2024 and June 3, 2023, respectively and are classified

within “Other noncurrent liabilities” in the Company’s

The

Company

sponsors

an

unfunded,

non-qualified

plan,

which

was

amended

and

restated

December 1, 2021 (the “Amended DC Plan”) to expand eligibility for participation from named officers only to a select group of

management or highly

compensated employees of

the Company,

expand the investment options

available and add the

ability of

participants

to

make

elective

deferrals.

Participants

may

be

awarded

incentive

contributions

(“Awards”)

under

the

Amended DC Plan.

Awards

vest on December 31

st

of the fifth year

after such contribution is

credited to the

Amended DC Plan

or, if earlier, the participant’s attainment of age

with

years of service. Awards issued under the Amended DC

Plan were $

thousand in fiscal

Payments made

Amended

DC Plan were $

thousand in fiscal 2024,

2023 and 2022, respectively. The liability recorded

for the Amended

DC Plan was $

5.1

4.6

4.5

million at June

1, 2024, June 3,

2023 and 2022,

and is classified within “Other noncurrent liabilities” in the Company’s

Deferred compensation

expense for

both plans

totaled $

thousand and

$

thousand in

2023,

Other Postretirement Employee Benefits

maintains an

unfunded postretirement

medical plan to

provide limited

health benefits to

certain qualified

retired

and officers.

Retired non-officers

and

spouses are

eligible for

coverage

until attainment

of Medicare

eligibility,

at

which time coverage

ceases. Retired officers

and spouses

are eligible for

lifetime benefits under

the plan. Officers,

who retired

prior to May 1, 2012 and their spouses must participate in Medicare

Plans A and B. Officers, who retire on or after May 1, 2012

and their spouses must participate in Medicare Plans A, B, and D.

The plan is accounted for

in accordance with ASC

715, Compensation – Retirement Benefits (“ASC

715”), whereby an employer

recognizes the funded status of a defined benefit postretirement plan as

an asset or liability, and recognizes changes in the funded

status in the year the change occurs through comprehensive income. Additionally,

this expense is recognized on an accrual basis

over the employees’ approximate period of employment. The liability associated with the plan was $

2.6

2.7

million

at

June

1,

and

June

3,

2023,

The

with

ASC

are

immaterial

to

the

Company’s financial statements.

Effective

March 1,

2023,

adopted

a non-qualified

supplemental

executive retirement

plan

(“SERP”) and

a split

dollar life insurance plan (“Split Dollar Plan”) designed

to provide deferred compensation and a pre-retirement

death benefit for

a

select

group

of

or

highly

compensated

of

the

Company.

Provided

the

vesting

are

met,

participants in the SERP are eligible to receive an aggregate retirement benefit of $

500,000

, which is paid in annual installments

of $

50,000

for

10 years

. A participant

becomes vested in

the retirement benefit

over

five years

of plan participation

at

% per

year. If a participant becomes disabled, attains the retirement age of 65, or the Company experiences a change in control, vesting

will be

accelerated to

%. If

a participant

dies while

employed, he

or she

will not

receive any

benefits under

the SERP,

but

their beneficiaries

will instead be

entitled to the

life insurance benefit

provided under

the Split Dollar

Plan, which

is $500,000.

The liability recorded for these plans was $

thousand at June 1, 2024 and June 3, 2023, respectively, and is

classified within “Other noncurrent liabilities” in the Company’s

Note 10 - Credit Facility

For

fiscal

years

2024,

and

2022,

expense

was

$

$

and

$

primarily related to commitment fees on the Credit Facility described below.

On May

26, 2023,

we entered

into the

First Amendment

(the “Amendment”)

to the

Amended and

Restated Credit

Agreement,

dated November 15, 2021 (as amended, the “Credit Agreement”).

The Amendment replaced the London Interbank Offered Rate

interest rate benchmark

with the secured overnight

financing rate as administered

by the Federal Reserve

Bank of New York

or

a successor

administrator

of the

secured overnight

financing

rate (“SOFR”).

has a

five

-year term.

The

Credit

for

a

senior

secured

revolving

credit

facility

(the

“Credit

Facility”

or

“Revolver”)

in

an

initial

aggregate principal

up to

$

million, which

includes a

$

million sublimit

for the

issuance of

standby letters

of

credit and a $

million sublimit for swingline loans.

The Credit Facility also includes

an accordion feature permitting, with

the

consent of BMO

Harris Bank N.A.

(the “Administrative

Agent”), an increase

in the Credit

Facility in the

aggregate up to

$

million by adding one or more

incremental senior secured term loans or increasing one

or more times the revolving commitments

Revolver.

No

amounts were

borrowed under

the facility

as of

June 1,

2024 or

June 3,

2023 or

during fiscal

2024 or

had $

4.7

million of

outstanding standby

letters of

credit issued

at June

1,

The

rate

in

with

loans

made

under

the

Credit

is

based

on,

at

the

election,

either

the

Adjusted Term SOFR Rate plus the

Applicable Margin or the

Base Rate plus

the Applicable Margin. The “Adjusted

Term SOFR”

means with respect to any tenor,

the per annum rate equal to the sum of

(i) Term

SOFR as defined in the Credit Agreement

plus

(ii)

0.10

% (10 basis

points); provided,

if Adjusted Term

SOFR determined

as provided above

shall ever be

less than the

Floor,

then Adjusted

Term

SOFR shall

be deemed

to be

the Floor.

The “Floor”

means the

rate per

annum of

interest equal

to

0.00

%.

The “Base Rate” means a fluctuating rate per annum

equal to the highest of (a) the federal funds rate

plus

0.50

% per annum, (b)

the prime rate of

interest established by the

Administrative Agent, and

(c) the Adjusted Term

SOFR for a

one

-month tenor plus

1.00

%. The

“Applicable Margin”

means

0.00

% to

0.75

% per

annum for

Base Rate

Loans and

1.00

% to

1.75

% per

annum for

SOFR Loans, in

each case depending upon

the Total Funded Debt to

Capitalization Ratio for the

Company at the quarterly

pricing

date. The

Company will

pay a

commitment

fee on

the unused

portion

of the

payable quarterly

from

0.15

% to

0.25

% in each case depending upon the Total Funded Debt to Capitalization Ratio for the Company at the quarterly pricing date.

The

Credit

is

guaranteed

by

all the

current

and

future wholly

-owned

direct

and

indirect

domestic

subsidiaries

of

the

Company (the

“Guarantors”), and

is secured

by a

first-priority perfected

security interest

in substantially

all of

and the Guarantors’ accounts, payment intangibles, instruments (including promissory notes), chattel paper, inventory (including

farm products) and deposit accounts maintained with the Administrative Agent.

The

Credit

for the

Credit

contains

customary

covenants,

restrictions

on

the incurrence

of

liens,

incurrence of

additional debt,

sales of

other fundamental

corporate changes

and investments.

requires maintenance of two financial covenants: (i) a maximum Total Funded Debt to Capitalization Ratio tested

quarterly of no

greater than

%; and (ii) a requirement to maintain Minimum

Tangible Net

Worth at

all times of $

Million plus

% of net

income

(if

net

income

is

positive)

less

permitted

for

each

fiscal

quarter

after

27,

Additionally,

the Credit Agreement

requires that Fred

R. Adams Jr.’s

spouse, natural children,

sons-in-law or grandchildren,

or

any trust,

guardianship, conservatorship

or custodianship

for the primary

benefit of any

of the foregoing,

or any family

limited

partnership, similar limited liability

company or other entity

that

% of the voting control

of such entity is held

by any of the

foregoing, shall maintain

at least

% of the Company's

voting stock. Failure

to satisfy any of

these covenants will constitute

a

default under the terms of

the Credit Agreement. Further,

under the terms of the Credit

Agreement, payment of dividends under

the

current

policy

of

one-third

of

the

net

income

computed

in

with

GAAP

and

payment of other

dividends or repurchases

by the Company

of its capital stock

is allowed, as long

as after giving

effect to such

payments or

repurchases no

default has

occurred and

is continuing

and

the sum

of cash

equivalents of

the

Company and its subsidiaries plus availability under the Credit Facility equals at least $

Agreement also

includes customary

events of

default and

customary remedies

upon the

occurrence of

an event

of

default, including acceleration

of the amounts due

under the Credit Facility

and foreclosure of

the collateral securing

the Credit

Facility.

At June 1, 2024, we were in compliance with the covenant requirements of the

Credit Facility.

Note 11 - Equity

The Company has

two

classes of capital stock: Common Stock and Class

A Common Stock. Except as otherwise required by

law

or

the

Second

Amended

and

Certificate

of

Incorporation

(“Restated

Charter”),

holders

of

shares

of

the

Company’s capital stock vote as a single class on all matters submitted to a vote of the stockholders, with each share

of Common

Stock entitled to

one

vote and each share of Class A Common Stock entitled

to

ten

votes. Holders of capital stock have the right

of cumulative voting

in the election of

directors. The Common

Stock and Class A Common

Stock have equal liquidation

rights

and the same dividend

rights. In the case of any

dividend payable in stock,

holders of Common Stock

are entitled to receive

the

same percentage dividend (payable only in shares of Common Stock) as the holders of Class A Common Stock receive

(payable

only in shares of Class

A Common Stock). Upon liquidation, dissolution,

or winding-up of the Company, the holders of

Common

Stock are entitled to share ratably with

the holders of Class A

Common Stock in all assets available for

distribution after payment

in full

of creditors.

The holders

of Common

Stock and

Class A

are not

entitled to

preemptive or

subscription

rights.

No

class

of

capital

stock

may

be

combined

or

subdivided

unless

the

other

classes

of

capital

stock

are

combined

or

subdivided

in the

same proportion.

No dividend

may be

declared and

paid on

Class A

Common

Stock unless

the dividend

is

payable only to the holders of Class A Common

Stock and a dividend is declared and paid to Common Stock concurrently.

Each share

of Class A

is convertible,

at the option

of its

holder,

into

one

share of

at any

time.

Restated Charter

identifies family

members of

Mr.

Adams (“Immediate

Family Members”)

and arrangements

and entities that are permitted to

receive and hold shares of Class

A Common Stock, with

ten

votes per share, without such shares

converting into shares of Common

Stock, with one vote per share (“Permitted

Transferees”). The Permitted

Transferees include

arrangements and entities such as revocable trusts and limited liability companies that could hold Class A Common Stock

for the

benefit of Immediate Family Members. Each Permitted

Transferee must have a relationship,

specifically defined in the Restated

Charter, with

another Permitted Transferee

or an Immediate Family

Member.

A share of Class A

Common Stock transferred

to

a person other

than a

Permitted Transferee would automatically

convert into Common

Stock with

one vote per

share. Additionally,

the

Charter

a

sunset

provision

to

which

all

of

the

Class

A

Common

Stock

will

automatically

convert

to

Common

Stock

if:

(a)

less

than

4,300,000

shares

of

Class

A

Common

Stock,

in

the

aggregate,

are

beneficially owned by Immediate Family

Members and/or Permitted Transferees,

or (b) if less than

4,600,000

shares of Class A

and Common Stock,

in the aggregate,

are beneficially owned

by Immediate Family

Members and/or Permitted

Transferees.

Note 12 - Net Income per Common Share

Basic net income

per share attributable

to Cal-Maine Foods, Inc.

is based on the

weighted average Common

Stock and Class A

outstanding. Diluted

net income

per share

attributable to

Inc. is

weighted-average

common shares outstanding during the relevant period adjusted for

the dilutive effect of share-based awards.

The following table provides a reconciliation of the

numerators and denominators used to determine basic and

diluted net income

per common share attributable to Cal-Maine Foods, Inc. (amounts in

thousands, except per share data):

Numerator

$

276,282

$

756,732

$

132,441

Less: Net loss attributable to noncontrolling interest

(1,606)

(1,292)

(209)

$

277,888

$

758,024

$

132,650

Denominator

Weighted-average

common shares outstanding, basic

48,717

48,648

48,581

Effect of dilutive securities of restricted shares

Weighted-average

common shares outstanding, diluted

48,873

48,834

48,734

Net income per common share attributable to Cal-Maine Foods, Inc.

Basic

$

5.70

$

15.58

$

2.73

Diluted

$

5.69

$

15.52

$

2.72

Note 13 - Revenue Recognition

Net revenue is primarily generated through the sales

of shell eggs and egg products. The Company’s

shell egg product offerings

include specialty and

conventional shell eggs.

Specialty shell eggs include

cage-free, organic,

brown, free-range, pasture-raised

and nutritionally enhanced eggs. Conventional shell eggs sales represent all other shell egg sales not

sold as specialty shell eggs.

The

egg

offering

include

liquid

and

frozen

egg

and

hard-cooked

eggs.

Liquid

and

frozen egg

products are primarily sold to the institutional, foodservice and food manufacturing sectors. Hard-cooked eggs are sold primarily

within the foodservice and retail channels.

The following table provides revenue disaggregated by product category

(in thousands):

13 Weeks Ended

14 Weeks Ended

52 Weeks Ended

53 Weeks Ended

Conventional shell egg sales

$

372,245

$

395,433

$

1,291,743

$

2,051,961

Specialty shell egg sales

236,786

256,190

925,665

956,993

Egg products

25,015

33,996

89,009

122,270

Other

6,743

3,061

20,026

14,993

$

640,789

$

688,680

$

$

Our largest customer, Walmart

Inc. (including Sam’s Club) accounted for

34.0

%,

34.2

% and

29.5

% of net sales dollars for fiscal

2024, 2023, and 2022, respectively.

Note 14 - Stock Compensation Plans

On

October

2,

2020,

shareholders

the

Amended

and

Foods,

Inc.

Omnibus

Long-Term

Incentive

Plan (the

“LTIP

Plan”). The

purpose of

the LTIP

Plan is

to assist

us and

our subsidiaries

in attracting

and retaining

selected individuals who are expected to contribute to our long-term success. The maximum number of

shares of Common Stock

for

awards

under

the

LTIP

Plan

is

2,000,000

of

which

856,119

shares

remain

for

issuance,

and

may

be

authorized

but

unissued

shares

or

treasury

shares.

Awards

may

be

granted

under

the

LTIP

Plan

to

any

employee,

any

non-

employee member of the Company’s

Board of Directors, and any consultant

who is a natural person and

provides services to us

or one of our subsidiaries (except for incentive stock options, which may be

granted only to our employees).

The only outstanding awards under

the LTIP Plan are restricted stock awards.

The restricted stock vests

three years from the

grant

date, or upon death or

disability, change

in control, or retirement (subject

to certain requirements). The

restricted stock contains

no other service

or performance conditions.

Restricted stock is awarded

in the name of

the recipient and,

except for the right

of

disposal, constitutes issued and outstanding shares of the Company’s Common Stock for all

corporate purposes during the period

of restriction

including the right

to receive

dividends. Compensation

expense is a

fixed amount

based on the

grant date closing

price and is amortized on a straight-line basis over the vesting period. Forfeitures are

recognized as they occur.

Total

stock-based

expense

was

$

4.4

$

4.2

and

$

4.1

million

in

fiscal

2024,

2023,

and

2022,

Our unrecognized

compensation expense

as a

result of

non-vested shares

was $

7.5

million at

June 1,

$

7.2

million at

June 3,

  1. The unrecognized

compensation expense

will be

amortized to

stock compensation

expense over

a period

of

2.1

years.

A summary of our equity award activity and related information for our

restricted stock is as follows:

Number of

Shares

Weighted Average

Grant

Date Fair Value

Outstanding, May 28, 2022

317,844

$

39.12

Granted

84,969

54.10

Vested

(98,684)

38.25

Forfeited

(9,989)

39.69

Outstanding, June 3, 2023

294,140

$

43.72

Granted

86,803

54.94

Vested

(101,660)

37.82

Forfeited

(1,329)

44.68

Outstanding, June 1, 2024

277,954

$

49.38

Note 15 - Income Taxes

Income tax expense consisted of the following:

Fiscal year ended

Current:

Federal

$

83,721

$

180,521

$

24,228

State

9,640

36,830

3,670

93,361

217,351

27,898

Deferred:

Federal

(7,371)

19,952

2,716

State

(2,301)

4,515

2,960

(9,672)

24,467

5,676

$

83,689

$

241,818

$

33,574

Significant components of the Company’s

deferred tax liabilities and assets were as follows:

Deferred tax liabilities:

$

120,402

$

109,590

Inventories

29,297

44,986

Investment in affiliates

1,133

Other

6,437

5,702

Total deferred tax

157,040

161,411

Deferred tax assets:

Accrued expenses

3,230

3,838

State operating loss carryforwards

Other comprehensive income

1,317

Other

9,936

3,966

Total deferred tax

assets

14,174

9,199

Net deferred tax liabilities

$

142,866

$

152,212

The differences between income tax expense at the Company’s effective

income tax rate and income tax expense at the statutory

federal income tax rate were as follows:

Fiscal year end

Statutory federal income tax

$

75,931

$

209,418

$

34,907

State income taxes, net

5,798

32,662

5,237

Tax exempt

interest income

—

—

(9)

Reversal of outside basis in equity investment - Red River

—

—

(7,310)

Non-taxable remeasurement gain - Red River

—

—

(955)

Other, net

1,960

(262)

1,704

$

83,689

$

241,818

$

33,574

As of

June 1,

2024,

we had

no

unrecognized

tax benefits.

Accordingly,

had

no

accrued interest

and

penalties related to uncertain tax positions.

We

are subject

to income

tax in

many jurisdictions

within the

U.S.

We

are currently

not under

audit by

the Internal

Revenue

Service

or

by

any

state

and

local

tax

authorities.

Tax

periods

for

all

years

beginning

with

fiscal

year

remain

open

to

examination by federal and state taxing jurisdictions to which we are

subject.

Note 16 - Commitments and Contingencies

State of Texas

v. Cal-Maine Foods, Inc. d/b/a Wharton;

and Wharton County Foods, LLC

On April 23, 2020, the Company and its subsidiary Wharton County Foods, LLC (“WCF”) were named as defendants in State of

Texas

v.

d/b/a Wharton; and

Wharton County Foods,

LLC, Cause No. 2020-25427,

in the District Court

of Harris County,

Texas. The State

of Texas

(the “State”) asserted claims based on the

Company’s and

WCF’s alleged violation

of

the Texas

Deceptive

Trade

Practices—Consumer

Protection

Act, Tex.

Bus.

& Com.

Code §§

17.41-17.63

(“DTPA”).

The

State claimed

that

and

WCF offered

at

excessive

or exorbitant

prices

during

the

COVID-19

state of

emergency and made misleading

statements about shell

egg prices. The

State sought temporary

and permanent injunctions

against

the Company and WCF to prevent further alleged violations of the DTPA,

along with over $

100,000

in damages. On August 13,

2020, the

court granted

the defendants’

motion to

dismiss the

State’s

original petition

with prejudice.

On September

11, 2020,

the State filed a

notice of appeal,

which was assigned

to the Texas

Court of Appeals

for the First District.

On August 16,

2022,

the

appeals

court

reversed

and

remanded

the

case

back

to

the

trial

court

for

further

proceedings.

On

October

31,

2022,

the

Company

and WCF

appealed

the First

District Court’s

decision

to the

Supreme Court

of Texas.

On September

29, 2023,

the

Supreme Court of Texas

denied the Company’s Petition

for Review and remanded to the trial court for further

proceedings. The

district court

entered a

pre-trial order

scheduling pre-trial

proceedings and

tentatively setting

a trial

date for

August 11,

Management believes the risk of material loss related to this matter to be remote.

Kraft Foods Global, Inc. et al. v.

United Egg Producers, Inc. et al.

As previously

reported, on

September 25,

2008, the

Company

was named

as one

of several

in numerous

antitrust

cases involving

the United

States shell

egg

industry.

settled all

cases, except

for

the claims

of certain

plaintiffs who sought

substantial damages allegedly arising

from the purchase of egg

products (as opposed to shell

eggs). These

remaining plaintiffs

are Kraft Food

Global, Inc.,

General Mills, Inc.,

and Nestle USA,

Inc. (the

“Egg Products

Plaintiffs”) and,

until a subsequent settlement was reached as described below,

The Kellogg Company.

On September 13, 2019, the case with the Egg Products Plaintiffs was remanded from a multi-district litigation proceeding in the

United States District Court for

the Eastern District of Pennsylvania, In

re Processed Egg Products Antitrust

Litigation, MDL No.

2002,

to

the

United

States

District

Court

for

the

Northern

District

of

Illinois,

Kraft

Foods

Global,

Inc.

et

al.

v.

United

Egg

Producers, Inc. et

al., Case No.

1:11-cv-8808, for trial. The

Egg Products Plaintiffs alleged

that the Company

and other defendants

violated Section 1

of the Sherman Act,

  1. U.S.C. §

1, by agreeing

to limit the production

of eggs and

thereby illegally to

raise

the prices that plaintiffs paid for processed egg products. In particular, the Egg Products Plaintiffs attacked certain features of the

United Egg Producers animal-welfare guidelines and program used by the

Company and many other egg producers.

On October 24, 2019,

the Company entered into

a confidential settlement agreement

with The Kellogg Company

dismissing all

claims against the

Company for an

amount that did

not have a

material impact on

financial condition or

results

of operations.

On November

11,

2019, a

stipulation

for dismissal

was filed

court, and

on March

28, 2022,

the court

dismissed the Company with prejudice.

The trial of this case began

on October 17, 2023. On December

1, 2023, the jury returned a decision

awarding the Egg Products

Plaintiffs

$

17.8

million

in damages.

If the

jury’s

decision

is ultimately

upheld,

the defendants

would

be jointly

and

severally

liable

for

treble

damages,

or

$

53.3

subject

to

credit

for

the

Kellogg

settlement

described

above

and

certain

other

settlements with

previous

settling defendants,

plus the

Egg Product

Plaintiffs’

attorneys’

fees. This

decision is

not

final and

remains subject

to the

defendants’ motion

for a

directed verdict

noted below

and appeals

by the

parties. During

our

second fiscal quarter

of 2024, we

recorded an accrued

expense of $

19.6

million in selling,

general and

administrative expenses

in the Company’s Condensed Consolidated

Statements of Income and classified as other noncurrent liabilities in the Company’s

Condensed

Balance

Sheets.

The

accrual

our

estimate

of

the

proportional

share

of

the

possible

ultimate

damages

award,

excluding

the

Egg

Product

Plaintiffs’

attorneys’

fees

that

we

believe

would

be

approximately offset

by the credits

noted above.

We

have entered

into a judgment

allocation and

joint defense

agreement with

the

other

major

defendant

in

the

case,

and

are

in

discussions

with

other

their

contributions. Our accrual may change in the future

based on the outcome of those discussions. Our accrual

may also be revised

in whole or in

part in the future

to the

extent we are successful

in further proceedings

in the litigation.

On November 29, 2023,

the defendants, including the Company, filed a motion for judgment as a matter

of law in their favor, known as a directed

verdict,

notwithstanding

the

jury’s

decision.

The

court

has

not

ruled

on

this motion.

The

Company

intends

to

to

vigorously

defend the claims asserted by the Egg Products Plaintiffs.

State of Oklahoma Watershed Pollution

Litigation

On June

18, 2005,

the State

of Oklahoma

filed suit,

in the

District Court

for the

Northern District

of Oklahoma,

against Cal-Maine Foods, Inc. and Tyson Foods, Inc., Cobb-Vantress, Inc., Cargill, Inc., George’s,

Inc., Peterson Farms, Inc. and

Simmons Foods, Inc., and certain

of their affiliates. The State

of Oklahoma claims that through the

disposal of chicken litter the

polluted

the Illinois

River

Watershed.

This

watershed

water to

eastern Oklahoma.

The complaint

sought

injunctive relief and monetary damages, but the claim for monetary

damages was dismissed by the court. Cal-Maine Foods, Inc.

discontinued operations

in the watershed

in or around

  1. Since the litigation

began, Cal-Maine Foods,

Inc. purchased

%

of the membership

interests of

Benton County Foods,

LLC, which is

an ongoing commercial

shell egg operation

within the Illinois

River

Watershed.

Benton

County

Foods,

LLC

is

not

a

defendant

in

the

litigation.

We

also

have

a

number

of

small

contract

producers that operate in the area.

The non-jury trial in the case began in September 2009

and concluded in February 2010. On January 18, 2023, the court entered

findings of

fact and

conclusions of

law in favor

of the

State of

Oklahoma, but

no penalties

were assessed.

The court

found the

defendants liable for state law nuisance, federal

common law nuisance, and state law

trespass. The court also found the

vicariously liable for the actions of

their contract producers. The court directed

the parties to confer in

attempt to reach agreement

on appropriate remedies. On June 12,

2023, the court ordered the parties

to mediate before the retired Tenth

Circuit Chief Judge

Deanell Reece Tacha.

On October

26, 2023, the

parties filed separate

status reports informing

the court

that the mediation

was

unsuccessful. Also on October 26,

2023, the defendants filed a post-trial

motion to dismiss and supporting brief

arguing that the

case should be dismissed due to the state record before the

court, the resulting mootness of the case, and

violation of due process.

On November

10, 2023,

the State of

Oklahoma filed

its response

in opposition

to the

motion to

dismiss and

on November

17,

2023,

the

filed

their

reply.

On

June

26,

2024,

the

district

court

denied

defendants’

motion

to

dismiss.

While

management believes

a reasonable

possibility of

a material

loss from

the case,

at the

present time,

it is

not possible

to

estimate the

monetary exposure,

if any,

to the

Company due

to a

range of

factors, including

the following,

among

others: uncertainties inherent

in any assessment

of potential costs

associated with injunctive

relief or other

penalties based on

a

decision in a

case tried over

13 years ago based

on environmental conditions

that existed at the

time, the lack

of guidance from

the court as to what

might be considered appropriate

remedies, the ongoing litigation

with the State of Oklahoma

and motion to

dismiss before

the court, and

uncertainty regarding

what our proportionate

share of any

remedy would be,

although we believe

that our share compared to the other defendants is small.

Other Matters

In addition to

the above, the Company

is involved in

various other claims

and litigation incidental

to its business. Although

the

outcome of these matters cannot be determined with certainty, management, upon the advice of counsel,

is of the opinion that the

final outcome should not have a material effect on the Company’s

consolidated results of operations or financial position.

Effective on

June 28, 2024

, the

Company acquired

substantially all

the assets

of ISE

America, Inc.

and certain

of its affiliates,

related

to

their

shell

egg

and

with

a

at

the

time

of

of

4.7

million laying hens,

1.0

million cage-free, and

1.2

million pullets, feed

mills, approximately

4,000

acres

of

land,

inventories

and

an

egg

breaking

facility.

The

assets

also

include

an

network across the Northeast and Mid-Atlantic states,

and production operations in Maryland, New Jersey, Delaware

and South Carolina. The purchase price was approximately $

million and was funded with available cash on hand.

SCHEDULE II - VALUATION

AND QUALIFYING ACCOUNTS

Fiscal Years

ended June 1, 2024, June 3, 2023, and May 28, 2022

Description

Balance at

Beginning of Period

Charged to Cost

and Expense

Write-off

of Accounts

Balance at

End of Period

Year

ended June 1, 2024

$

$

$

$

Year

ended June 3, 2023

$

$

(148)

$

$

Year

ended May 28, 2022

$

$

$

$

ITEM

CHANGES

IN

AND

DISAGREEMENTS

WITH

ACCOUNTANTS

ON

ACCOUNTING

AND

FINANCIAL

ContentsView on SEC.gov

The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.