10-Q/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q/A
(Amendment No. 1)


Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Amendment No. 1 to quarterly report on Form 10-Q for the quarterly period ended March 3, 2007


Commission file number: 000-04892

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

Delaware
64-0500378
(State or other Jurisdiction of
(I.R.S. Employer Identification No.)
Incorporation or Organization)
  

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

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


The undersigned registrant hereby amends its Quarterly Report on Form 10-Q for the quarter ended March 3, 2007 (the “Form 10-Q”) solely for the purpose of correcting an inadvertent error in the amount of its originally reported “Total liabilities” as of March 3, 2007. No other changes to the Form 10-Q are made, except for the filing of updated Exhibits 31.1, 31.2 and 32.0.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
CAL-MAINE FOODS, INC.

Date: April 30, 2007
By:  /s/ Charles F. Collins
Charles F. Collins
Vice President Controller
(Principal Accounting Officer)
 
 
PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

   
March 3, 2007
  
June 3, 2006
 
   
(unaudited)
  
(note1)
  
ASSETS
              
Current assets:
              
Cash and cash equivalents
  
$
15,134
  
$
13,295
  
Investments
    
28,600
   
25,000
  
Trade and other receivables
    
40,525
   
24,955
  
Recoverable federal income taxes
    
836
   
1,177
  
Inventories
    
62,855
    
57,843
  
Prepaid expenses and other current assets
    
1,266
   
3,408
  
Total current assets
    
149,216
    
125,678
  
               
Notes receivable and investments
    
8,241
    
8,316
  
Goodwill
    
4,195
    
4,016
  
Other assets
    
2,550
    
2,833
  
               
Property, plant and equipment
    
363,209
    
339,831
  
Less accumulated depreciation
    
(178,278
)
  
(163,556
)
     
184,931
    
176,275
  
TOTAL ASSETS
  
$
349,133
  
$
317,118
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
Current liabilities:
          
Accounts payable and accrued expenses
  
$
53,482
  
$
34,642
  
Current maturities of purchase obligation
    
5,435
    
6,884
  
Current maturities of long-term debt
    
13,610
    
11,902
  
Deferred income taxes
    
11,610
    
11,450
  
Total current liabilities
    
84,137
    
64,878
  
               
Long-term debt, less current maturities
    
94,383
    
92,010
  
Minority interest
    
923
    
919
  
Purchase obligation, less current maturities
    
9,673
    
16,751
  
Other non-current liabilities
    
3,701
    
3,860
  
Deferred income taxes
    
18,705
    
18,925
  
Total liabilities
    
211,522
    
197,343
  
               
Stockholders’ equity:
              
Common stock $0.01 par value per share:
              
Authorized shares - 60,000
              
Issued 35,130 shares and 21,158 shares outstanding at March 3, 2007 and 21,103 shares at June 3, 2006
   
351
   
351
  
Class A common stock $0.01 par value per share, authorized issued and outstanding 2,400 shares at March 3, 2007 and June 3, 2006
    
24
    
24
  
Paid-in capital
    
28,955
    
28,700
  
Retained earnings
    
129,679
    
112,183
  
Common stock in treasury-13,972 shares at March 3, 2007 and 14,027 at June 3, 2006
    
(21,398
)
  
(21,483
)
Total stockholders’ equity
    
137,611
    
119,775
  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
349,133
  
$
317,118
  

See notes to condensed consolidated financial statements.
 
-2-

CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
UNAUDITED
 
   
13 Weeks Ended
  
39 Weeks Ended
  
   
March 3, 2007 
  
February 25, 2006 
  
March 3, 2007 
  
February 25, 2006 
  
Net sales
  
$
175,211
  
$
130,107
  
$
428,256
  
$
348,150
  
Cost of sales
    
131,029
    
104,134
    
350,712
    
303,408
  
Gross profit
    
44,182
   
25,973
    
77,544
   
44,742
  
Selling, general and administrative
    
16,902
    
15,493
    
45,830
    
43,140
  
Operating income
    
27,280
   
10,480
    
31,714
   
1,602
  
Other income (expense):
                          
Interest expense, net
    
(1,639
)
  
(1,906
)
  
(5,198
)
  
(5,895
)
Other
    
1,956
    
1,346
    
2,637
    
1,090
  
     
317
    
(560
)
  
(2,561
)
  
(4,805
)
Income (loss) before income taxes
    
27,597
   
9,920
    
29,153
    
(3,203
)
Income tax expense (benefit)
    
10,194
   
1,930
    
10,780
    
(2,400
)
Net income (loss)
  
$
17,403
  
$
7,990
  
$
18,373
  
$
(803
)
Net income (loss) per common share:
                          
Basic
  
$
0.74
  
$
0.34
  
$
0.78
  
$
(0.03
)
Diluted
  
$
0.74
  
$
0.34
  
$
0.78
  
$
(0.03
)
Dividends per common share
  
$
0.0125
  
$
0.0125
  
$
0.0375
  
$
0.0375
  
Weighted average shares outstanding:
                          
Basic
    
23,519
    
23,497
    
23,508
    
23,494
  
Diluted
    
23,578
    
23,680
    
23,583
    
23,494
  
 
See notes to condensed consolidated financial statements.
 
-3-
 
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED

   
39 Weeks Ended
  
   
March 3, 2007
  
February 25, 2006
  
           
Cash flows provided by operating activities
  
$
36,959
  
$
13,622
  
               
Cash flows from investing activities:
              
Net (increase) / decrease in investments
    
(3,600
)
  
10,784
  
Acquisitions of businesses, net of cash acquired
    
(1,152
)
  
(23,804
)
Purchases of property, plant and equipment
    
(17,071
)
  
(6,939
)
Payments received on notes receivable and from investments
    
846
    
1,755
  
Increase in notes receivable and investments
    
(1,180
)
  
(519
)
Net proceeds from sale of property, plant and equipment
    
402
    
1,637
  
Net cash used in investing activities
    
(21,755
)
  
(17,086
)
               
Cash flows from financing activities:
              
Proceeds from issuance of common stock from treasury
    
177
    
73
  
Payment of purchase obligation
    
(6,102
)
  
-
  
Proceeds from long-term borrowings
    
3,000
    
28,000
  
Principal payments on long-term debt
   
(9,563
)
  
(29,814
)
Payment of dividends
    
(877
)
  
(877
)
Net cash used in financing activities
    
(13,365
)
  
( 2,618
)
Net change in cash and cash equivalents
    
1,839
    
(6,082
)
               
Cash and cash equivalents at beginning of period
    
13,295
    
20,221
  
Cash and cash equivalents at end of period
  
$
15,134
  
$
14,139
  

See notes to condensed consolidated financial statements.
 
-4-

CAL-MAINE FOODS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(in thousands, except share amounts)
March 3, 2007
 
 
1.
Presentation of Interim Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the thirteen-week and thirty-nine week periods ended March 3, 2007 are not necessarily indicative of the results that may be expected for the year ending June 2, 2007.

The balance sheet at June 3, 2006 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
 
For further information, refer to the consolidated financial statements and footnotes thereto included in Cal-Maine Foods, Inc.'s annual report on Form 10-K for the fiscal year ended June 3, 2006.

Green Forest Foods, LLC Acquisition

On January 24, 2007, we entered into an agreement to buy the remaining 50 percent interest in Green Forest Foods, LLC, owned by Pier 44 Properties, LLC. Green Forest Foods, LLC located in Green Forest, Arkansas, had been jointly owned and operated by Pier 44 Properties, LLC and Cal-Maine Foods, Inc. since January 2006. Effective January 27, 2007, we became the sole owner and operator of Green Forest Foods, and it became a fully consolidated entity. Prior to this purchase, we accounted for our investment in Green Forest Foods, LLC under the equity method. The acquisition cost was $2 million in cash. We also assumed $11.0 million in liabilities, primarily obligations for fixed assets subject to capital leases. Pro forma information with respect to the acquisition is insignificant to the Company’s consolidated financial statements and accordingly has not been presented.
 
Green Forest Foods produces, processes, and markets eggs from approximately one million laying hens, along with pullet growing for replacements. 

Hillandale Acquisition

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

In August 2006, in accordance with the Agreement, we purchased, for $6.1 million, an additional 13% of the Units of Hillandale, LLC based on their book value as of July 29, 2006. Our ownership of Hillandale, LLC currently is 64%. Our obligation to acquire the remaining 36% of Hillandale, LLC is recorded at its present value of $15.1 million as of March 3, 2007 of which $5.4 million is included in current liabilities and $9.7 million is included in other non-current liabilities in the accompanying consolidated balance sheet. We will purchase an additional 12% of Hillandale LLC based on the book value of the Membership Units as of July 29, 2007.

Prior to the acquisition of our Units of Membership in Hillandale, LLC, we had a 44% membership interest in American Egg Products, LLC (“AEP”) and Hillandale, LLC had a 27.5% membership interest in AEP. Prior to the acquisition of Hillandale, LLC, our membership interest in AEP was accounted for by the equity method. Effective with our acquisition of Hillandale, LLC, we own a majority of the membership interests in AEP. Accordingly, the financial statements of AEP have been consolidated with our financial statements effective July 29, 2005.
 
-5-

We gained effective control of the Hillandale, LLC operations upon signing of the Agreement. Accordingly, the acquisition date for accounting purposes was July 28, 2005. The operations of Hillandale, LLC were consolidated with our operations beginning July 29, 2005.
 
 The unaudited financial information in the table below summarizes the combined results of our operations and Hillandale, LLC, on a pro forma basis, as though we had been combined as of the beginning of the earliest period presented. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the earliest period presented.
 
 
 
 39 Weeks Ended
  
   
March 3, 2007
  
 February 25, 2006
  
Net sales
  
$
428,256
  
$
361,124
  
Net income (loss)
  
$
18,373
  
$
(4,959
)
Basic net income (loss) per share
  
$
0.78
  
$
(0.21
)
Diluted net income (loss) per share
  
$
0.78
  
$
(0.21
)
 
Stock Based Compensation

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) Statement No. 123 (revised 2004)(“SFAS No.123(R)”), "Share-Based Payment," which is a revision of SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123(R) supersedes Accounting Principles Board (“APB”) Opinion No. 25, "Accounting for Stock Issued to Employees", and amends SFAS No. 95, "Statement of Cash Flows". SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, restricted stock and performance-based shares to be recognized in the income statement based on their fair values. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. In the first quarter of fiscal 2007, we adopted SFAS No. 123(R) using the modified prospective method. Under the modified prospective method, compensation cost will be recognized for all share-based payments granted after the adoption of SFAS No. 123(R) and for all awards granted to employees prior to the adoption date of SFAS No. 123(R) that remain unvested on the adoption date. Accordingly, no restatements were made to prior periods. We recognized stock based compensation expense of $1,269 and $1,522 for the thirteen week and thirty-nine week periods ended March 3, 2007.

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

Our stock-based compensation plans are described in note 1 of the notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 3, 2006. On August 24, 2006, in accordance with provisions of our 2005 Stock Appreciation Rights Plan (the “SARs Plan”), our Board of Directors approved an amendment to the SARs Plan providing that exercises under the SARs Plan be settled in cash and not with shares of our common stock.

A summary of our equity award activity and related information for the thirty-nine weeks ended March 3, 2007 is as follows:

           
Weighted
      
       
 Weighted
  
Average
      
   
Number
  
Exercise
  
Remaining
  
Aggregate
  
   
of
  
Price
  
Contractual
  
Intrinsic
  
   
Options
  
Per Share
  
Life (in Years)
  
Value
  
Outstanding, June 3, 2006
    
473,400
  
$
4.97
              
Granted
   
-
   
-
              
Exercised
    
55,600
   
3.18
              
Forfeited
    
-
   
-
              
Outstanding, March 3, 2007
    
417,800
  
$
5.21
    
7.59
  
$
3,351
  
                           
Exercisable, March 3, 2007
    
104,240
  
$
3.99
    
6.73
  
$
840
  

-6-
 
The number and weighted average grant-date fair value of non-vested equity awards was as follows:

       
Weighted
  
     
Average
  
       
Grant-Date
  
   
Number
  
Fair
  
   
of
  
Value
  
   
Shares
  
 Per Share
  
Nonvested, June 3, 2006
    
395,760
  
$
2.56
  
Granted
   
-
   
-
 
Vested
   
(82,200
)
  
2.52
  
Forfeited
   
-
   
-
 
               
Nonvested, March 3, 2007
    
313,560
  
$
2.58
  

A summary of our liability award activity and related information for the thirty-nine weeks ended March 3, 2007 is as follows:
 
           
Weighted
      
       
Weighted
  
Average
      
   
Number
 
Average
  
Remaining
  
Aggregate
  
   
Of
 
Strike Price
  
Contractual
  
Intrinsic
  
   
Rights
  
Per Right
  
Life (in Years)
  
Value
  
Outstanding, June 3, 2006
    
586,000
  
$
5.69
              
Granted
   
15,000
  
$
6.93
              
Exercised
    
56,400
 
$
5.01
              
Forfeited
    
-
   
-
              
                           
Outstanding, March 3, 2007
    
544,600
  
$
5.80
    
8.29
  
$
3,406 822
  
                           
Exercisable, March 3, 2007
    
123,320
  
$
5.19
    
7.65
  
$
846
  

-7-
 
 The fair value of liability awards was estimated as of March 3, 2007 using a Black-Scholes option pricing model using the following weighted-average assumptions: risk-free interest rate of 4.5%; dividend yield of 1%; volatility factor of the expected market price of our stock of 36.8%; and a weighted-average expected life of the rights of 4.75 years.
 
2.
Inventories

Inventories consisted of the following:
 
   
March 3, 2007
  
June 3, 2006
  
           
Flocks
  
$
38,806
  
$
39,092
  
Eggs
   
5,452
    
3,820
  
Feed and supplies
    
18,597
    
14,931
  
   
$
62,855
  
$
57,843
  

3.
Legal Proceedings
 
We are defendants in certain legal actions. It is our opinion, based on advice of legal counsel, that the outcome of these actions will not have a material adverse effect on our consolidated financial position or operations. Please refer to Part II, Item 1, of this report for a description of certain pending legal proceedings.
 
4.
Net Income (Loss) per Common Share

Basic earnings (loss) per share are based on the weighted average common shares outstanding. Diluted earnings per share include any dilutive effects of options and warrants. Options and warrants representing 182,793 shares were excluded from the calculation of diluted earnings per share for the thirty-nine week period ended February 25, 2006 because of the net loss for the period.
 
-8-
 
PART II. OTHER INFORMATION


ITEM 6. EXHIBITS

Exhibit No.
  
Description
 
Certification of The Chief Executive Officer
 
Certification of The Chief Financial Officer
 
Written statement of The Chief Executive Officer and The Chief Financial Officer
 
-9-