CAL-MAINE FOODS INC

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 May

31, 2025 and June 1,

2024, the related consolidated statements

of income, comprehensive income, stockholders’

equity, and cash

flows for each of the three years in the period ended May 31, 2025, 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 financial

statements”). In

our

opinion,

the

present

fairly,

in

all

respects,

the

position

of

Foods,

Inc.

and

Subsidiaries as of

and June 1,

2024, and the

results of their

operations and their

cash flows for

each of the

three

years in

the period

ended May

31, 2025,

in conformity

with accounting

principles generally

accepted in

the United

States of

America.

We

also have

audited, in

of the

Public Company

Accounting Oversight

Board (United

States) (“PCAOB”),

the Cal-Maine

Foods, Inc.

and Subsidiaries’ internal

as of

May 31,

2025,

based

on

the

criteria

in

Control

–

Framework

issued

by

the

of

Organizations of the Treadway Commission and our report dated July 22, 2025 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

our audits.

We

are a

public accounting

firm registered

with the PCAOB

and are required to be independent with respect

to Cal-Maine Foods, Inc. and Subsidiaries in accordance

with

federal securities

regulations of

Commission and

the

PCAOB.

We

conducted our

audits in

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

performing

to

assess

the

risks

of

misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures

that respond to

those

risks.

Such

examining,

on

a

test

basis,

evidence

the

amounts

and

disclosures

in

the

statements. Our

audits also

included evaluating

the accounting

principles used

and significant

estimates

made by

management, as

well as

evaluating the

overall presentation

of the

statements. We

believe our

audits provide a reasonable basis for our opinion.

Critical Audit Matter

The

critical

audit

matter

communicated

below

is

a

matter

arising

from

the

current

period

audit

of

the

that were

communicated or

be

communicated to

the Audit

Committee and

that: (1)

relate to

accounts or

disclosures that

are material

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

accruals

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 liability

is not

estimable, or

both, if

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 the

related 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

audit evidence

in connection

with forming

our

overall

opinion

on

the

statements.

These

testing

the

of

the

the Cal-Maine

Foods, Inc.

and Subsidiaries’

the liability

and claims,

controls over determining

the likelihood of

a loss and

whether the amount

of loss can

be reasonably estimated,

as well as

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,

evaluating

the

sufficiency of

Cal-Maine Foods,

Inc. and

Subsidiaries’ disclosures

and claims

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

$

499,392

$

237,878

892,708

574,499

Receivables:

Trade receivables, net

244,079

138,550

Income tax receivable

13,057

10,459

Other

15,225

13,433

Total receivables, net

272,361

162,442

Inventories, net

295,670

261,782

Prepaid expenses and other current assets

7,979

5,238

Total current assets

1,968,110

1,241,839

Property, plant & equipment, net

1,026,684

857,234

Investments in unconsolidated entities

11,095

11,195

46,776

45,776

Intangible assets, net

15,157

15,996

Other assets

16,797

12,721

Total assets

$

3,084,619

$

2,184,761

Liabilities and stockholders’ equity

Current liabilities:

Trade accounts payable

$

101,033

$

75,862

Dividends payable

114,163

37,760

Accrued wages and benefits

60,263

32,971

Income tax payable

—

43,348

Accrued expenses and other current liabilities

32,912

37,802

Total current liabilities

308,371

227,743

Other liabilities

55,582

17,109

Deferred income taxes

154,651

142,866

Total liabilities

518,604

387,718

Commitments and contingencies - see

Note 16

—

—

Stockholders’ equity:

Common stock ($

0.01

par value):

Common stock – authorized

120,000

shares, issued

75,061

and

70,261

shares in

2025 and 2024, respectively

Class A convertible common stock – authorized and issued

4,800

shares in 2024

—

Paid-in capital

80,845

76,371

Retained earnings

2,565,928

1,756,395

Accumulated other comprehensive loss, net of tax

(1,007)

(1,773)

Common stock in treasury, at cost –

26,567

and

26,022

shares in 2025 and 2024,

respectively

(85,893)

(31,597)

Total Cal-Maine Foods, Inc. stockholders’ equity

2,560,624

1,800,147

Noncontrolling interest in consolidated equity

5,391

(3,104)

Total stockholders’ equity

2,566,015

1,797,043

Total liabilities and stockholders’ equity

$

3,084,619

$

2,184,761

(in thousands, except per share amounts)

Net sales

$

$

$

Cost of sales

2,411,000

1,784,872

1,949,760

Gross profit

1,850,885

541,571

1,196,457

Selling, general and administrative

314,449

252,625

232,207

(Gain) loss on involuntary conversions

(23,532)

(3,345)

(Gain) loss on disposal of fixed assets

(259)

(131)

Operating income

1,536,539

312,452

967,726

Other income (expense):

Interest expense

(612)

(549)

(583)

Interest income

48,671

32,275

18,553

Patronage dividends

11,197

11,331

10,239

Equity in income of unconsolidated entities

6,221

1,420

Other, net

1,126

3,042

1,869

Total other income

66,603

47,519

30,824

Income before income taxes

1,603,142

359,971

998,550

Income tax expense

384,910

83,689

241,818

276,282

756,732

Less:

Net loss attributable to noncontrolling interest

(1,816)

(1,606)

(1,292)

$

$

277,888

$

758,024

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

Basic

$

25.04

$

5.70

$

15.58

Diluted

$

24.95

$

5.69

$

15.52

Weighted average shares outstanding:

Basic

48,719

48,717

48,648

Diluted

48,891

48,873

48,834

Consolidated Statements of

Comprehensive Income

$

$

276,282

$

756,732

Other comprehensive income (loss), before tax:

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

reclassification adjustments

1,271

(1,714)

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

reclassification adjustments

(27)

Other comprehensive income (loss), before tax

1,438

(1,741)

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

(loss)

(451)

Other comprehensive income (loss), net of tax

1,113

(1,290)

Comprehensive income

1,218,998

277,395

755,442

Less: comprehensive loss attributable to the noncontrolling interest

(1,816)

(1,606)

(1,292)

Comprehensive income attributable to Cal-Maine Foods, Inc.

$

1,220,814

$

279,001

$

756,734

Consolidated Statements of Stockholders’ Equity

Accum.

Other

Comp.

Shares

Amount

Class A

Shares

Class A

Amount

Treasury

Shares

Treasury

Amount

Paid In

Capital

Retained

Earnings

Income

(loss)

Noncontrolling

Interest

Total

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 loss, 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

—

—

—

—

(7)

(3,900)

4,474

—

—

—

Conversion of Class A Shares

4,800

(4,800)

(48)

—

—

—

—

—

—

—

Repurchase of Shares

—

—

—

—

(50,396)

—

—

—

—

(50,396)

Contributions to Crepini Foods LLC

—

—

—

—

—

—

—

—

—

6,485

6,485

Acquisition of noncontrolling interest in

MeadowCreek Foods LLC

—

—

—

—

—

—

—

(3,826)

—

3,826

—

8.319

Common

—

—

—

—

—

—

—

(378,062)

—

—

(378,062)

—

—

—

—

—

—

—

(28,627)

—

—

(28,627)

—

—

—

—

—

—

—

—

(1,816)

Other comprehensive income, net of tax

—

—

—

—

—

—

—

—

—

Balance at May 31, 2025

75,061

$

—

$

—

26,567

$

(85,893)

$

80,845

$

2,565,928

$

(1,007)

$

5,391

$

2,566,015

Fiscal year ended

Cash flows from operating activities:

$

$

276,282

$

756,732

Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation and amortization

94,021

80,241

72,234

Deferred income taxes

11,570

(9,672)

24,467

Stock compensation expense, net of amounts paid

4,527

4,358

4,205

Loss on change in fair value contingent consideration

15,000

5,500

—

Other operating activities, net

(15,426)

(6,908)

(1,491)

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

(Increase) decrease in trade receivables

(104,997)

(27,570)

58,129

(Increase) decrease in inventories

(12,224)

28,800

(21,102)

Increase (decrease) in income taxes payable/receivable

(45,946)

91,567

(42,218)

Increase in accounts payable and current accrued expenses

65,311

9,353

14,944

Decrease in other operating assets and liabilities

(5,334)

(553)

(2,890)

Net cash provided by operating activities

1,224,734

451,398

863,010

Cash flows from investing activities:

Purchases of investments

(1,213,593)

(573,565)

(530,781)

Sales of investments

907,640

358,932

291,832

Acquisition of businesses, net of cash acquired

(116,193)

(53,746)

—

Investment in unconsolidated entities

—

(363)

(1,673)

Distributions from unconsolidated entities

4,050

3,000

1,500

Purchases of property, plant and equipment

(161,255)

(147,116)

(136,569)

Net proceeds from disposal of property, plant and equipment

3,882

Net cash used in investing activities

(575,469)

(412,586)

(375,111)

Cash flows from financing activities:

Principal payments on long-term debt

(2,481)

—

—

Principal payments on finance lease

—

(214)

(224)

Purchase of common stock by treasury

(53,953)

(1,688)

(1,643)

Payments of dividends

(330,290)

(91,856)

(252,292)

Net cash used in financing activities

(386,724)

(93,758)

(254,159)

Increase (decrease) in cash and cash equivalents

262,541

(54,946)

233,740

Cash, cash equivalents and restricted cash at beginning of year

237,878

292,824

59,084

Cash, cash equivalents and restricted cash at end of year

$

500,419

$

237,878

$

292,824

Supplemental information:

Income taxes paid

$

426,172

$

35,101

$

258,247

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

grading,

packaging,

marketing and distribution of fresh shell eggs, including

conventional, cage-free, organic, brown, free-range, pasture-raised and

nutritionally-enhanced eggs, as well

as egg products

and a variety of

prepared foods. The Company,

which is headquartered in

Ridgeland, Mississippi, is the largest

producer 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 Company’s fiscal year-end is on the Saturday closest to May 31. The fiscal years ending on May 31, 2025 and June 1, 2024

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 and 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.

Investment Securities Available-for-Sale

The Company has determined that its debt

securities are available-for-sale investments and are

classified as current because the

amounts

invested

are

available for

current

Available-for-sale

are

carried

at

fair

value,

based

on

quoted

market

prices

as

of

the

balance

sheet

date,

with

unrealized

gains

and

losses

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

conditions 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

(expense) as “Other, net” in

the Company’s Consolidated Statements of

Income.

Interest

and

dividends

on

as

available-for-sale

are

in

“Interest

income”

in

the

Trade Receivables

Trade receivables are stated at their

carrying values, which include a

reserve for credit losses. At

May 31, 2025 and June

1, 2024,

reserves for credit losses were $

thousand and $

thousand, respectively. The Company extends credit to customers based

on an

each customer’s

financial condition

and credit

history.

Collateral is

generally not

required. The

Company

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

and

other

forward-looking

At

May

31,

and

June

1,

2024,

one

accounted

for

28.1

% and

26.8

% of the Company’s trade accounts receivable, respectively.

of

eggs,

feed,

supplies

and flocks

are valued

principally

at

the

lower of

cost

or

net

realizable value.

The

cost

of

inventories is determined by either the first-in, first-out method or the weighted-average method.

The

cost

with

flocks,

consisting

principally

of

chicks,

feed,

labor,

contractor

payments

and

costs,

are

accumulated during a growing period of approximately

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.

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

to

years for

buildings and

improvements and

to

years for

machinery and

equipment. Expenditures

that significantly

extend the

useful life

of the

related assets

are capitalized.

Normal repairs

and maintenance

are expensed

as

incurred. When property, plant, and equipment

are retired, sold, or

otherwise disposed of, the

asset’s carrying amount and related

accumulated depreciation are removed from the accounts and

any gain or loss is included in

operations. When certain events or

changes

in

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 operating

decisions. Under

the equity

method, original

investments are

recorded at

cost and

adjusted by

the

Company’s share of

undistributed earnings

or losses

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.

the

excess

of

the

price

over

the

fair

value

of

the

net

assets

acquired.

is

evaluated for

impairment at

least annually

or more

frequently if

impairment indicators

arise by

first performing

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

are initially

recorded at

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

accumulated

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

changes in operating

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.

Insurance Liabilities and Restricted Cash

The

Company

uses

a

combination

of

insurance

and

self-insurance

programs,

a

wholly-owned

captive

insurance

subsidiary (the “Captive”) to

provide coverage for the

potential liabilities for workers’

compensation, auto liability and general

liability risks. Liabilities

associated with

these risks

that are retained

by the

Company are not

discounted and are

estimated, in

part, by considering historical claims experience, severity

factors and other actuarial assumptions. These liabilities

are recorded

within “Accrued

expenses and

other current

liabilities” in

Consolidated Balance

Sheets and

were $

8.0

million

and $

4.9

million at May 31, 2025 and June 1, 2024, respectively.

The Captive maintains certain levels

of cash and cash

equivalents which are restricted in

use to secure the

insurer’s obligations

for workers’ compensation, auto

liability and general liability

programs.

31, 2025, restricted cash

was $

1.0

million

and is recorded within “Prepaid expenses and other current assets” in the Company’s Consolidated Balance Sheets.

The Company also

maintains a medical plan

covering substantially all full-time

employees. Under the plan,

the Company self-

insures its

portion of

medical claims

and uses

stop-loss insurance

to limit

its portion

of medical

claims to

$

275,000

per occurrence.

with

these

risks

are

estimated

in

part

by

considering

historical

claims

experience,

medical

cost

trends,

demographic factors, severity factors and other actuarial assumptions.

The Company’s expenses including

accruals for incurred

but not reported claims were

22.8

23.0

21.9

million in fiscal years 2025,

2024, and 2023,

respectively. The

liability recorded for

incurred but not

reported claims was

$

3.0

2.8

million as of

May 31, 2025,

and

June

1,

2024,

respectively

and

are

within

“Accrued

and

other

current

liabilities”

in

the

Dividend Payable

Dividends are accrued at the end of each quarter

according to the Company’s dividend

policy adopted by its Board of Directors

(“Board”). The Company pays

a dividend to stockholders

of its 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 an amount equal

to

one-third

(1/3) of such quarterly net income. Dividends are paid to stockholders

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 stockholders 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

is profitable

on a

cumulative basis

computed from

of the

most

recent quarter for which a dividend was paid. The dividend policy is subject to periodic review by the Board.

Revenue Recognition

recognizes revenue

through sale

of its

products to

customers through

retail, foodservice

distribution

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

the

is

met

upon

delivery

and

acceptance

of

the

product

by

our

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

an amount

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 sales

and other programs.

The Company records

an estimated allowance

for costs associated

with these

programs, which is recorded

as a reduction in

revenue at the time

of sale using historical

trends and projected redemption

rates

of

each program.

regularly reviews

these estimates

and

any difference

estimated costs

realization of these programs would be recognized the subsequent period.

Shipping and Distribution

Costs

to

deliver

product

to

are

in

selling,

general

and

administrative

in

the

accompanying

Consolidated Statements of

Income and totaled

$

93.5

72.7

77.5

million in fiscal

years 2025, 2024,

and

2023, respectively.

Income Taxes

Income

taxes

are

accounted

for

using

the

liability

method.

Deferred

income

taxes

reflect

the

net

tax

effects

of

temporary

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 management

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

that could

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.

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

valuation

techniques.

When

a

market

value

is

not

readily

available,

our

valuation

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

liabilities is

recorded as

goodwill.

Gain (Loss) on Involuntary Conversions

maintains insurance

for both

property damage

and business

interruption relating

to catastrophic

events, such

as

fires, hurricanes,

tornadoes and

other acts

of God,

and is

eligible to

participate in

U.S. Department

of Agriculture

(“USDA”)

indemnity

and

compensation programs

for certain

losses due

to disease

such

as highly

pathogenic 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

or less

than the

net book

damaged assets,

including poultry, clean-up and

demolition costs,

direct post-event

costs are recorded

within “Gain (loss)

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 consolidated

are issued

a loss

to the

Company

but which will only be resolved

when one or more future events

occur or fail to occur. The Company’s management and its legal

counsel assess

such contingent

liabilities, and

such assessment

inherently involves

an exercise

of judgment.

In assessing

loss

contingencies related

to legal

proceedings that

are pending

against the

Company or

unasserted claims

such

proceedings, the Company’s

legal counsel evaluates the

perceived merits of any

legal proceedings or unasserted claims

as well

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

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 consolidated 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

In November 2023,

the Financial Accounting Standards

Board (“FASB

”) issued Accounting Standards

Update (“ASU”) 2023-

07,

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

. This ASU requires enhanced disclosures

about significant

segment expenses

regularly provided

to the

chief operating

decision maker

included within

each reported

measure of segment profit or

loss, and requires all

annual disclosures currently required by

Topic 280

to be included in

interim

periods. The Company adopted ASU 2023-07 effective

fiscal year 2025. The pronouncement was adopted retrospectively

to all

prior periods presented. For additional information, refer to

Note 15 - Segment Reporting

.

In December 2023, the FASB issued ASU 2023-09,

Income Taxes (Topic

740. – Improvements to Income Tax

Disclosures

. This

ASU

requires

that

an

entity,

on

an

annual

basis,

disclose

income

tax

information,

related

to

the

rate

reconciliation and income

taxes paid. The

ASU is intended

to enhance the

transparency and decision

usefulness of income

tax

disclosures.

ASU

2023-09

is

for

annual

periods

after

December

15,

The

Company

is

evaluating the impact of ASU 2023-09 on its consolidated financial statement disclosures.

In

November

2024,

the

FASB

issued

ASU

2024-03,

Income

Statement

—

Reporting

Comprehensive

Income

—

Expense

Disaggregation Disclosures (Subtopic

220-40)

. The objective of ASU 2024-03 is to improve

disclosures about a public entity’s

expenses, primarily through

additional disaggregation of

income statement expenses. Additionally,

in January 2025,

the FASB

further

clarified

the

date

of

ASU

2024-03

with

the

issuance of ASU

2025-01.

ASU

2024-03 is effective

for

annual

periods beginning after December

15, 2026, and

interim periods within annual

reporting periods beginning after

December 15,

2027. Early adoption

is permitted and

may be applied

either on a

prospective or retrospective basis.

The Company is

evaluating the impact of ASU 2024-03 on its consolidated financial statement disclosures.

Note 2 – Acquisitions

Acquisition of ISE America, Inc. Assets

June 28, 2024

, the

Company acquired

of

the commercial

production, processing

and egg

products breaking facilities

of ISE America,

Inc. and certain

of its affiliates

(“ISE”). The assets

acquired included commercial

shell egg production and processing facilities with a capacity at the time of acquisition

4.7

million laying hens,

1.0

million cage-free,

and

1.2

million pullets,

4,000

acres of

land, inventories

and an

egg

products breaking facility. The acquired assets also include an extensive customer distribution network across the Northeast and

Mid-Atlantic states, and

production operations

in Maryland, New

Jersey, Delaware and South

Carolina.

The Company accounted

for the acquisition as a business combination.

The

table

summarizes

the

consideration

paid

for

the

ISE

assets

and

the

amounts

of

assets

and

assumed recognized at the acquisition date (in thousands):

Cash consideration paid

$

111,521

Recognized amounts of identifiable assets acquired and liabilities assumed

$

20,547

90,572

Liabilities assumed

(308)

Total identifiable net assets

$

111,521

Inventories consisted primarily of flock, feed ingredients, packaging, and egg inventory. Flock inventory was valued at carrying

value

as

that

its

value

best

approximates

its

fair

value.

Feed

ingredients,

and

egg

inventory were all valued based on market prices as of June 28, 2024.

Intangible assets consisted primarily of customer lists acquired. Customers lists were valued

using the income method approach.

Acquisition of Deal-Rite Feeds, Inc. Assets

February 3, 2025

, the Company

acquired certain assets

of Deal-Rite Feeds,

Inc. and certain

of its affiliates

(“Deal-Rite”)

for approximately

$

4.7

million. The

assets acquired

included two

storage facilities,

usable grain,

vehicles, related

equipment and

a retail

feed sales

business located

in North

Carolina. The

acquired assets

will produce

and deliver

feed to

our

nearby shell egg production facilities. The Company accounted for the acquisition as a business combination.

Goodwill recorded in

connection with the

Deal-Rite acquisition is

primarily attributable to

improved efficiencies from

integrating

the assets of Deal-Rite with the operations of the Company. The Company recognized goodwill of $

1.0

million as a result of the

acquisition.

Other Acquisitions and Investments

September 9, 2024

, the Company completed a strategic investment with Crepini LLC, establishing a new egg products

and prepared

foods venture.

The new

entity, located in

Hopewell Junction,

New York, operates as

6.75

cash to

purchase additional equipment

assets

and fund

working capital

in exchange

for a

% interest

in the

new venture.

Crepini LLC

contributed its

existing assets

and

business in exchange for a

% interest in the new venture.

November

30,

2024,

the

Company

the

remaining

9.23

%

in

our

majority-owned

subsidiary,

MeadowCreek Foods LLC.

Acquisition of Fassio Egg Farms, Inc. Assets

October 4, 2023

, the Company announced the acquisition of the assets of Fassio Egg Farms, Inc. (“Fassio”), related to

its commercial shell

egg production and

processing business. Fassio

owned and operated

commercial shell egg

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 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 consideration

54,746

Recognized amounts of identifiable assets acquired and liabilities assumed

Inventory

$

6,164

44,540

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 carrying

value

as

that

its

value

best

approximates

its

fair

value.

Feed

ingredients,

and

egg

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

Intangible

assets

consisted

of

water

rights

within

the

property

acquired.

Water

rights

were

valued

using

the

sales

comparison approach.

Contingent

consideration liability

was recorded

and represents

future

cash payment

to

the sellers

contingent on

the

acquired business

meeting certain

return on

profitability milestones

over a

three-year

period, commencing

on

of

the

acquisition. The initial

fair value of the

contingent consideration was

estimated using a

discounted cash flow model.

This liability

is recorded within “Other liabilities” in the Company’s Consolidated Balance Sheets.

Goodwill represents the excess of the

purchase price of the acquired

business over the acquisition date fair

value of the net assets

acquired. Goodwill

recorded in

connection with

acquisition 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

the

available-for-sale

as

of

May

31,

and

June

1,

(in

thousands):

Amortized

Cost

Gains

Losses

Estimated Fair

Value

$

21,695

$

$

—

$

21,698

90,880

—

90,830

431,378

—

431,508

5,200

—

5,194

240,655

—

240,395

103,119

—

103,083

Total current investment securities

$

892,927

$

$

$

892,708

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

Asset backed securities

3,154

—

3,124

39,239

—

39,229

Total current investment securities

$

575,663

$

—

$

1,164

$

574,499

Proceeds from the

sales and maturities

of available-for-sale

securities were $

907.6

358.9

291.8

million

during fiscal 2025, 2024, and 2023, respectively.

Gross realized gains for fiscal 2025, 2024, and 2023

were $

thousand, $

thousand, and

$

thousand, respectively.

There were

no

gross realized

losses for

fiscal 2025.

Gross realized

losses for

fiscal

2024, and 2023 were $

thousand, and $

thousand, respectively. There was

no

allowance for credit losses at

May 31, 2025 and

June 1, 2024.

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 May 31, 2025 are as follows (in thousands):

Estimated Fair Value

Within one year

$

449,577

1-5 years

443,131

Total

$

892,708

Note 4 - Fair Value Measures

is required

to categorize

both financial

and nonfinancial

liabilities based

on the

following fair

value

hierarchy. The

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

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 May 31, 2025 and June 1, 2024 (in thousands):

Level 1

Level 2

Level 3

Balance

$

—

$

21,698

$

—

$

21,698

—

90,830

—

90,830

—

431,508

—

431,508

—

5,194

—

5,194

—

240,395

—

240,395

—

103,083

—

103,083

Total investment securities available-for-sale

measured at fair value

$

—

$

892,708

$

—

$

892,708

Contingent consideration

—

—

21,500

21,500

Total liabilities measured at fair value

$

—

$

—

$

21,500

$

21,500

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

Asset backed securities

—

3,124

—

3,124

—

39,229

—

39,229

Total investment securities available-for-sale

measured at fair value

$

—

$

574,499

$

—

$

574,499

Contingent consideration

—

—

6,500

6,500

Total liabilities measured at fair value

$

—

$

—

$

6,500

$

6,500

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

consideration

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 1, 2024

$

6,500

Fair value adjustments

15,000

Balance, May 31, 2025

$

21,500

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

$

166,507

$

149,985

Eggs and egg products

29,743

25,217

Feed and supplies

99,420

86,580

$

295,670

$

261,782

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 May 31, 2025 and

June 1,

2024, consisted

11.5

million and

11.8

million pullets

and breeders

and

48.3

million and

39.9

million

layers, respectively.

The Company expensed amortization and mortality associated with the flocks to cost of sales as follows (in thousands):

$

196,248

$

198,298

$

186,973

Mortality

10,619

10,640

10,455

Total flock costs charged to cost of sales

$

206,867

$

208,938

$

197,428

Note 6 - Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

Land and improvements

$

158,627

$

131,051

Buildings and improvements

722,552

627,121

Machinery and equipment

876,024

782,736

Construction-in-progress

148,621

121,266

1,905,824

1,662,174

Less: accumulated depreciation

879,140

804,940

$

1,026,684

$

857,234

Depreciation expense was $

91.1

77.2

69.4

million in the fiscal years

ended May 31, 2025, June 1,

2024,

and June 3, 2023, respectively.

Note 7 - Investment in Unconsolidated Entities

As of May 31,

2025 and June 1,

2024, the Company owned

% of Specialty Eggs,

LLC (“Specialty Eggs”) and

of Southwest

Specialty Eggs, LLC

(“Southwest Specialty Eggs”),

which are accounted

for using the

equity method of

accounting. Specialty

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 $

10.3

8.2

million at May 31, 2025 and June 1, 2024, respectively.

Equity in income

of unconsolidated entities

of $

6.2

1.4

thousand from

these entities

has been included

in the Consolidated Statements of Income for fiscal 2025, 2024, and 2023, respectively.

The following relates to the Company’s transactions with these unconsolidated affiliates (in thousands):

For the fiscal year ended

Sales to unconsolidated entities

$

110,106

$

100,553

$

136,351

Purchases from unconsolidated entities

76,167

63,916

75,024

Distributions from unconsolidated entities

4,050

3,000

1,500

Accounts receivable from unconsolidated entities

$

5,090

$

8,490

Accounts payable to unconsolidated entities

1,233

Note 8 - Goodwill and Other Intangible Assets

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

Other Intangibles

Franchise

Customer

Non-compete

Water

Total

rights

rights

Trademark

intangibles

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

Additions

1,000

—

—

2,319

—

(1,596)

(353)

(157)

—

(52)

(2,158)

Balance May 31, 2025

$

46,776

$

10,191

$

$

$

2,942

$

$

61,933

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

$

(19,093)

$

29,284

$

(17,497)

Customer relationships

1,700

(745)

2,900

(2,292)

Non-compete agreements

1,435

(683)

1,500

(876)

Water rights *

2,942

—

2,942

—

Trademark

(17)

(365)

Total

$

35,695

$

(20,538)

$

37,026

$

(21,030)

Water rights are an indefinite life intangible asset.

No significant residual value

is estimated for these

intangible assets. Aggregate amortization

expense for fiscal years

2025, 2024,

and 2023 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

$

1,984

1,981

1,911

1,849

1,758

Thereafter

2,732

Total

$

12,215

Note 9 - Employee Benefit Plans

KSOP

has a

KSOP plan

that covers

of the

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. Contributions

can

be

made

in

cash

or

the

Common

Stock,

and

vest

immediately. The

Company’s cash contributions to the Plan were $

5.5

4.3

4.3

million in fiscal years 2025, 2024 and 2023,

The Company did

no

t make direct

contributions of the

Common Stock in

fiscal years 2025,

2024, or

2023. Dividends

on the

to the

Plan in

cash. The Plan

acquires the

Common

Stock, which

is listed

on the

Nasdaq Global

Select Market,

by using

the dividends

and the

cash contributions

to

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 and Other Postretirement Plans

The Company maintains several deferred compensation and other

postretirement plans for certain officers and

a select group of

management and

highly compensated

employees of

The liability

recorded related

to these

agreements was $

4.1

3.8

million at May

31, 2025 and

June 1, 2024,

respectively and is

classified within “Accrued

expenses and other

current liabilities”

and “Other

liabilities” in

Consolidated Balance

Sheets. The

related expense

for these

plans

was $

1.5

1.2

thousand in fiscal 2025, 2024 and 2023, respectively.

Note 10 - Credit Facility

For

fiscal

years

2025,

and

2023,

expense

was

$

$

and

$

respectively,

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

On November 15,

2021, we entered

into an Amended

and Restated Credit

Agreement (as amended,

the “Credit Agreement”)

with

a five-year

term. The

Credit Agreement

provides for

a senior

secured revolving

credit facility

(the “Credit

Facility” or

“Revolver”)

in an initial aggregate principal amount of 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 under the Revolver.

No

amounts were borrowed under

the Credit Facility as

of May 31, 2025

or June 1,

2024 or

during fiscal 2025 or fiscal 2024. The Company had $

4.7

million of outstanding standby letters of credit issued under the Credit

Facility at May 31, 2025.

On May 26, 2023, we

entered into the First Amendment

(the “First Amendment”) to the

Credit Agreement, which 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”). The interest rate

in

connection with

loans made under

Facility 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

Facility 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

Facility is

guaranteed by

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

in

substantially

all

of

the

Company’s 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 Agreement

contains customary covenants,

including restrictions on

the incurrence of

liens, incurrence of

debt, sales of

assets and other

fundamental corporate changes

and investments. The

Credit Agreement 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 restricted payments for each fiscal quarter after November 27, 2021.

On March

25, 2025,

entered into

the Second

Amendment (the

“Second Amendment”)

to the

Credit Agreement.

Under the

Credit Agreement,

a Change

of Control

is an

event of

default. The

Second Amendment

amended the

definition of

Change of

Control to

exclude from

that definition

the conversion

(the “Class

A Conversion”)

of all

outstanding shares

of the

Company’s Class A Common Stock into Common Stock which occurred on April 14, 2025.

The Second

Amendment states

that after

A Conversion,

Change of

Control will

mean any

of the

following: (i)

the

acquisition by

any “person”

or “group”

(as such

terms are

used in

sections 13(d)

and 14(d)

of the

Securities Exchange

Act of

1934, as amended) at any

time of beneficial ownership

of 30.0% or more of

the outstanding capital stock

or other equity interests

of the Company on a fully-diluted

basis, (ii) the failure of individuals

who are members of the

Board (or similar governing body)

of the Company on

the effective date

of the Second

Amendment (together with any

new or replacement directors

whose initial

nomination for election was approved

by a majority of the

directors who were either directors

on the effective date of the Second

Amendment or previously so

approved) to constitute a

majority of the Board

(or similar governing body)

of the Company, or (iii)

any “Change

of Control”

(or words

of like

import), as

defined in

any agreement

or indenture

any issue

of Material

Indebtedness of any Loan Party or any Subsidiary of a Loan Party (each as defined in the Credit Agreement), shall occur.

Further, under

the terms of

the Credit Agreement,

payment of dividends

under the Company’s

current dividend policy

of one-

third of the Company’s net income, computed in accordance

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

dividend payments or repurchases

no default has

occurred and is continuing and the sum of cash and cash equivalents of the Company and its

subsidiaries plus availability under

the Credit Facility equals at least $

The Credit

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 May 31, 2025, we were in compliance with the covenant requirements of the Credit Agreement.

As of May 31, 2025, the Company’s authorized shares of capital stock consisted of

million shares of Common Stock and

million shares of preferred stock, par value $

0.01

per share. As of May 31, 2025,

no

shares of preferred stock were outstanding.

Prior to the conversion of all of the Company’s outstanding shares of Class A Common Stock into Common

Stock (the “Class A

Conversion”), which

occurred on

April 14,

2025, the

Company had

two

classes of

capital stock,

and Class

A

Common Stock,

which were

similar in

most respects

except that

the Common

Stock had

one

vote per

share and

A

had

votes per

share. In

addition, each

share of

Class A

was convertible

into

one

share of

at the

option of

the holder

at any

time, and,

generally,

would automatically

convert into

Common Stock upon

transfer outside of the control of the family of Fred R.

Adams Jr., the Company’s

late founder. Prior to the

Class A Conversion,

Mr. Adams’ family controlled all of the outstanding shares of Class A Common Stock, all of which were held by

DLNL, LLC, a

Delaware limited liability company

(“Daughters’ LLC”), and thereby

controlled a majority of

the Company’s total voting power;

as a result, the Company was a “controlled company” under the rules of The Nasdaq Stock Market.

On February 25, 2025, the Company

entered an Agreement Regarding Conversion

(the “Conversion Agreement”) by and among

the Company, Daughters’ LLC

and its members,

namely Fred R. Adams

Jr.’s four daughters and Adolphus

B. Baker, Board

Chair

and

Mr. Adams’

son-in-law (the

“Members” and

together with

Daughters’ LLC,

the

“Stockholder Parties”).

The

entry into the Conversion Agreement was

a result of the Members

informing the Company that they were

potentially interested

in diversifying

their respective

financial portfolios,

including through

the potential

sale of

all or

a portion

of the

the

Common

Stock

underlying

the

Class

A

Common

Stock,

as

most

of

them

have

become

more

focused

on

their

individual estate planning efforts and philanthropic endeavors.

The Conversion Agreement provided for the following:

●

The approval by

the Board, and

approval by Daughters’

LLC by majority

written consent, of

the Third Amended

and

Restated Certificate of

Incorporation of the

Company (“Third Amended

and Restated Charter”),

which became effective

upon filing with the Delaware Secretary of State on March 27, 2025.

●

The approval

by the

Board of

the Amended

and Restated

Bylaws of

the Company,

which became

effective when

the

Third Amended and Restated Charter became effective.

●

The agreement by the Stockholder Parties not to convert any shares of Class A Common Stock into shares of Common

Stock prior to the later of (i) the effective date of the Third Amended and Restated Charter or (ii) the date the

Company

obtained an amendment to its Credit Agreement such that the Class A Conversion, defined below, would not result in a

“Change of Control” within the meaning of the Credit Agreement. Both conditions were met on March 27, 2025.

●

The agreement by the Stockholder Parties that if Daughters’ LLC converted any Class

A Common Stock into Common

Stock,

it

would

simultaneously

convert

all

(but

not

less

than

all)

Class

A

Common

Stock

into

Common

Stock

(the

“Class A Conversion”).

●

After

the

date

of

the

Class

A

(the

“Class

A

Date”),

and

ending

on

the

12-month

anniversary

of

the

Class

A

Date

(or,

if

earlier,

December 31, 2026),

certain

registration

rights

of

the

Members to offer or sell Common

Stock in a registered offering under the Securities Act of 1933, as amended.

●

The adoption by the

Stockholder Parties of an

amended and restated limited

liability company operating agreement of

Daughters’ LLC, which provided

for certain changes to

permit Daughters’ LLC to

take the actions provided

for in the

Conversion Agreement.

The Conversion Agreement, including the documents contemplated by that agreement, did

not require any Stockholder Party to

convert Class A Common Stock into Common Stock or to sell any Common Stock.

Also on

February 25, 2025,

the Board approved

a new $

million share repurchase

program. The share

repurchase program

authorizes the Company, in management’s discretion, to repurchase Common Stock from time to time for

an aggregate purchase

price up

to $

million (exclusive

of any

fees, taxes,

commissions or

other expenses

such repurchases),

subject to

market

and

other

The

actual

timing,

number

and

value

of

shares

under

the

program

will

be

determined by

including, but

to, the

market

price of the Common Stock and general market and economic conditions.

The Class A Conversion occurred on April 14, 2025, at which time the Company was no longer a controlled company under the

rules of The

Nasdaq Stock Market.

On April 15,

2025, the Company

filed a Certificate

of Retirement with

the Delaware Secretary

of

State,

retiring

the

Class

A

Common

Stock.

Promptly

thereafter,

the

Company

filed

the

Fourth

Amended

and

Restated

Certificate of Incorporation with

the Delaware Secretary of

State, which became effective

upon filing, reflecting the

retirement

of the Class A Common Stock.

On April 15, 2025,

in connection with the

offer and sale (the “Offering”)

of

2,978,740

shares of Common Stock

by the Members,

the Company entered into

a stock repurchase agreement

with the Members, pursuant

to which the Company

agreed to repurchase

551,876

shares

of

Common

Stock

(the

“Repurchased

Shares”),

which

were

not

in

the

Offering,

contingent

upon

completion of the

Offering, at the

per share price

paid by the

underwriter in the

Offering, resulting in

a total purchase

price of

million. The

Offering and

the Company’s purchase

of the

Repurchased Shares

pursuant to

the stock

agreement were completed on

April 17, 2025

. The Company incurred expenses of $

1.7

million in connection with the Offering.

Pursuant to the Conversion Agreement, the Selling Stockholders will reimburse the Company $

thousand.

As of May 31, 2025, no shares other than the Repurchased Shares had

been repurchased under the Company’s share repurchase

program, leaving $

million available under the program.

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. All

Class A

were converted

into Common

Stock on

April 14,

2025. Diluted

net income per share attributable to Cal-Maine Foods, Inc. is based on weighted-average Common Stock 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

Less: Net loss attributable to noncontrolling interest

(1,816)

(1,606)

(1,292)

$

$

277,888

$

758,024

Denominator

Weighted-average common shares outstanding, basic

48,719

48,717

48,648

Effect of dilutive securities of restricted shares

Weighted-average common shares outstanding, diluted

48,891

48,873

48,834

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

Basic

$

25.04

$

5.70

$

15.58

Diluted

$

24.95

$

5.69

$

15.52

Note 13 – Stock-Based Compensation

stock-based compensation plan,

the Amended and

Restated Cal-Maine Foods,

Inc. 2012 Omnibus

Long-Term

Incentive Plan (the

“LTIP

Plan”), provides for

the granting of

equity-based awards such

as restricted stock,

performance stock

units and stock options. Awards may be granted under the LTIP

Plan to any employee, any non-employee member of the Board,

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 maximum number of shares of Common Stock available for awards

LTIP

Plan is

2,000,000

of which

813,298

shares remained

available for

issuance as

of May

31, 2025,

and may

be

authorized but unissued shares or treasury shares. Common Stock issued from treasury shares under the plan was

47,700

shares,

86,803

shares and

84,969

shares for fiscal 2025, 2024 and 2023, respectively.

Restricted Stock

Restricted stock

outstanding under

the LTIP

Plan vests

three years

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

compensation

expense

was

$

4.5

$

4.4

and

$

4.2

million

in

fiscal

2025,

2024,

and

2023,

Our unrecognized compensation expense as

a result of non-vested

shares was $

8.0

million at May 31,

2025 and $

7.5

million at

June 1,

2024. 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, 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

Granted

47,700

109.97

Vested

(108,058)

41.32

Forfeited

(4,879)

54.86

Outstanding, May 31, 2025

212,717

$

66.93

Note 14 - Income Taxes

Income tax expense consisted of the following:

Fiscal year ended

Current:

Federal

$

312,000

$

83,721

$

180,521

State

61,340

9,640

36,830

373,340

93,361

217,351

Deferred:

Federal

12,703

(7,371)

19,952

State

(1,133)

(2,301)

4,515

11,570

(9,672)

24,467

$

384,910

$

83,689

$

241,818

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

Deferred tax liabilities:

$

128,789

$

120,402

35,041

29,297

Investment in affiliates

2,205

Other

6,485

6,437

Total deferred tax liabilities

172,520

157,040

Deferred tax assets:

Accrued expenses

3,620

3,230

State operating loss carryforwards

Other comprehensive income

Other

13,473

9,936

Total deferred tax assets

17,869

14,174

Net deferred tax liabilities

$

154,651

$

142,866

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

$

337,042

$

75,931

$

209,418

State income taxes, net

47,169

5,798

32,662

Other, net

1,960

(262)

$

384,910

$

83,689

$

241,818

As of

May 31,

had

no

significant unrecognized tax

benefits. Accordingly,

the Company 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

with

fiscal

year

remain

open

to

examination by federal and state taxing jurisdictions to which we are subject.

Note 15 – Segment Reporting

The

Company

has

one

and

one

reportable

segment,

which

is

the

grading,

packaging,

marketing

and

distribution of shell eggs and egg products. The Company is managed on a consolidated basis.

operating segment

is determined

on the

basis of

our organizational

structure and

information that

is regularly

reviewed by our

Chief Operating Decision Maker

(“CODM”). The Company’s

CODM is Sherman Miller,

President and Chief

Executive Officer.

The CODM reviews

net income, which

is reported on

the Consolidated Statements of

Income, to assess

the

and

make

decisions

on

how

to

allocate

resources

to

the

segment.

The

CODM

utilizes

expense

information regularly provided in the CODM

package in order to assist with assessing

performance and deciding how to allocate

resources,

which

align

with

the

expense

categories

as

disclosed

on

the

face

of

the

Consolidated

Statements

of

Income. The measure of segment assets is reported on the Consolidated Balance Sheet as Total assets.

Revenue primarily derives from the sales of shell eggs and egg products throughout the Unites States. The Company’s shell egg

product offerings

include specialty

and

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

shell

eggs.

The

egg

include

liquid

and

frozen

egg

as

well

as

ready-to-eat

such

as

hard-cooked

eggs,

egg

wraps,

protein

pancakes,

crepes

and

wrap-ups.

Other

sales

represent

feed

sales,

miscellaneous byproducts and resale products.

The following table provides revenue disaggregated by product category (in thousands):

Conventional shell egg sales

$

2,835,423

$

1,291,743

$

2,051,961

Specialty shell egg sales

1,184,487

925,665

956,993

198,833

89,009

122,270

Other

43,142

20,026

14,993

$

$

$

The following table provides revenue disaggregated by sales channel (in thousands):

Retail

$

3,613,828

$

2,046,230

$

2,693,162

Foodservice

608,166

267,428

427,886

Other

39,891

12,785

25,169

$

$

$

Retail customers include primarily national and regional grocery store chains, club stores, and companies servicing independent

supermarkets

in

the

U.S.

Foodservice

include

that

sell

food

and

related

items

to

restaurants, healthcare and education facilities and hotels.

Our largest customer, Walmart Inc. (including Sam’s Club) accounted for

33.6

%,

34.0

% and

34.2

% of net sales dollars for fiscal

2025, 2024, and 2023, respectively.

Note 16 - Commitments and Contingencies

Civil Investigative Demand

In

March

2025,

the

Company

received

a

Civil

Investigative

Demand

(“CID”)

from

the

Department

of

Justice

(“DOJ”)

in

connection with an antitrust

investigation to determine whether

there is, has been

or may be a

violation of the antitrust

laws by

anticompetitive

conduct

by

and

among

egg

producers.

The

Company

is

complying

with

the

CID

and

cooperating

with

the

investigation.

Management

cannot

predict

the

eventual

scope,

duration

or

outcome

of

these

investigations

and

is

unable

to

estimate the amount or range of potential losses, if any, at this time.

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.

Cal-Maine Foods, Inc. 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 the

Company and

WCF offered

shell eggs

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 an order scheduling pre-trial proceedings and a

pre-trial conference for August 11, 2025. On November 30,

2024, the State filed an amended petition, primarily to address

a procedural deficiency that required the State to generally plead

it

was

seeking

monetary

relief

over

$

1.0

million

restitution,

civil

penalties,

attorney’s

fees

and

costs.

Pre-trial

proceedings are progressing

in accordance with

the court’s schedule. 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.

On September 25,

2008, the Company

was named as

one of

several defendants in

numerous antitrust cases

involving the U.S.

shell

egg

industry.

settled all

of

these 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

defendants

violated Section 1 of the

Sherman Act, 15. 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 with

the 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. On

November 6, 2024, the

court entered a final

judgement against the Company and

other

defendants, jointly

and severally, totaling

$

43.6

million after

trebling. On

December 4,

2024, the

Company filed

a renewed

motion

for judgment as a

matter of law or

for a new trial,

and a motion to alter

or amend the judgment.

On December 13, 2024,

the court

granted defendants’ November 20,

2024 motion to stay

enforcement of the judgment

and entered an agreed

order requiring the

defendants to post security during post-judgment

proceedings and appeal, and stayed proceedings

to enforce the judgment until

the disposition of

the post-judgment motions

and ultimate appeals.

On December 17,

2024, the Company

posted a bond

in the

approximate amount of

$

23.9

million, representing

a portion

of the

total bond

preserve the

right to

appeal the

trial

court’s

decision. Another

defendant posted

a bond

for the

remaining amount.

intends to

vigorously

defend the claims asserted by the Egg Products Plaintiffs.

If the

jury’s

decision is

ultimately upheld,

would be

jointly and

severally liable

with other

defendants for

treble

damages,

or

$

43.6

subject

to

credit

for

certain

settlements

with

previous

settling

defendants,

plus

the

Egg

Product

Plaintiffs’ reasonable attorneys’ fees. 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 Consolidated Balance Sheets. Although less than the

bond posted by

the

Company,

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 defendants remaining in the

case. Our accrual may change in the future to the extent we are successful in further proceedings in the litigation.

State of Oklahoma Watershed Pollution Litigation

On June

18, 2005, the

State of Oklahoma

filed suit, in

the United States

District Court for

the Northern District

of Oklahoma,

against 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

defendants polluted

the Illinois

River Watershed.

This watershed

provides 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 2005. Since

the litigation began, Cal-Maine Foods,

Inc. purchased

%

of the

membership interests

of Benton

County Foods,

LLC, which

is an

ongoing commercial

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.

On June

12, 2023,

the court ordered

the parties to

mediate before

retired Tenth Circuit Chief Judge Deanell Reece Tacha, but the mediation was unsuccessful. On June 26, 2024, the district court

denied defendants’

motion to

dismiss the

case. On

September 13,

2024, a

status hearing

was held

and the

court scheduled

an

evidentiary hearing

for December

3, 2024,

to determine

whether any

legal remedy

is available

the now

14 year

old

record and changed circumstances of the Illinois River watershed.

On June 17, 2025, the court entered an opinion and

order that

found that the State satisfied its burden to show that conditions in the Illinois River watershed have not materially changed since

the original

trial and

the case

in not

moot. The

court instructed

the parties

to submit

proposed forms

of final

judgment. While

management believes there

is a

reasonable possibility of

a material loss

case, at

the present

time, it

is not

possible to

estimate the

amount of

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 14 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

uncertainty

what

our

proportionate

share

of

any

remedy

would

be,

although

we

believe

that

our

share

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.

Note 17 – Subsequent Events

Effective June 2, 2025, the Company completed its previously announced acquisition of Echo Lake Foods, LLC (formerly Echo

Lake Foods,

Inc.) and

certain related

companies (collectively

“Echo Lake

Foods”). Echo

is based

in Burlington,

Wisconsin and produces, packages, markets and distributes prepared foods, including waffles, pancakes, scrambled eggs, frozen

cooked omelets, egg patties,

toast and diced eggs.

The purchase price was

million, excluding expected tax

assets resulting from the transaction, and was funded with available cash on hand.

The Company has not included

certain disclosures due to

the timing of the

transaction relative to the

date of the report containing

these Financial Statements and because the initial accounting for the business combination is incomplete.

ITEM

CHANGES IN

AND DISAGREEMENTS

WITH

ACCOUNTANTS

ON

ACCOUNTING AND

FINANCIAL