Table of Contents

1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549

FORM
FORM 10-K

x ☑
ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For The Fiscal Year
Ended
June 3, 2023
☐
TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended   JUNE 3, 2017

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

the transition period from ____________ to ____________
Commission file number:  000-04892

001-38695
CAL-MAINE FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware
Delaware64-0500378
(State or other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)

(State or other Jurisdiction of Incorporation or Organization)
3320W Woodrow Wilson Ave, Jackson,
(I.R.S. Employer Identification No.)
1052 Highland Colony Pkwy, Suite 200
,
Ridgeland
,
Mississippi  39209-3409
39157
(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12 (b) of the Act:
Title of each class:
Title of each Class:Name of exchange on which registered:
Common Stock,  $0.01 par value per shareThe NASDAQ Global Select Market
Trading Symbol(s)
Name of each exchange on which registered:
Common Stock, $0.01 par value per share
CALM
The
NASDAQ
Global Select Market
Securities registered pursuant to Section 12 (g) of the Act:
NONE

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes x No ¨

Yes
☑
No
☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes¨ No x

☐
No
☑
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed
by Section 13 or 15(d) of the
Securities Exchange Act
of 1934 during the preceding
12 months (or for such
shorter period that the registrant
was required to file such
reports), and (2) has
been subject
to such filing requirements for the past 90 days. Yes x No ¨

Yes
☑
No
☐
Indicate by check mark whether
the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be
submitted and posted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post
such files). Yes x No ¨

Yes
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x☑

No
☐
Indicate
by
check
mark
whether
the
registrant
is
a
large
accelerated
filer,
an
accelerated
filer,
a
non-accelerated
filer,
a
smaller
reporting
company,
or an emerging
growth company.
See the definitions
of “large accelerated
filer,” “accelerated
filer”, “smaller reporting
company”,
and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Large accelerated filer x
Accelerated filer ¨
Non-accelerated filer ¨☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an
emerging
growth company,
indicate by
check mark
if the
registrant has
elected not
to use
the extended
transition period
for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
☐
Indicate by
check mark
whether the registrant
has filed
a report on
and attestation
to its management's
assessment of
the effectiveness
of its
internal control over
financial reporting under
Section 404(b) of
the Sarbanes-Oxley Act
(15 U.S.C.
7262(b)) by the
registered public accounting
firm that prepared or issued its audit report.
☑
(Do not check if a smaller reporting company)
Smaller reporting company ¨
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes¨ No x

☐
No
☑
The aggregate market value, as
reported by The NASDAQ Global Select
Market, of the registrant’s
Common Stock, $0.01 par value,
held by
non-affiliates
at November 26, 2016,25,
2022, which
was the
date of
the last
business day
of the
registrant’s
most recently
completed second
fiscal
quarter, was $1,239,719,614.$

2,435,832,883
.
As of
July 21, 2017,  43,774,052 25,
2023,
44,184,049
shares of
the registrant’s
Common Stock, $0.01
$0.01 par value,
and
4,800,000
shares of
the registrant’s
Class A
Common Stock, $0.01 par value, were outstanding.

DOCUMENTS INCORPORATED
BY REFERENCE
The information called
for by Part
III of this Form
10-K is incorporated
herein by reference
from the registrant’s
Definitive Proxy Statement
for its 2017 2023
annual meeting of
stockholders which will be
filed pursuant to
Regulation 14A not later
than 120 days
after the end
of the fiscal
year covered by this report.

2
TABLE OF CONTENTS
Item

Number

1.
1A.
1B.
2.
3.
4.
5.
6.
7.
7A.
8.
9.
9A.
9B.
9C.
10.
11.
12.
13.
14.
15.
16.
3
PART
I.

FORWARD
FORWARD-LOOKING-LOOKING STATEMENTS

This report contains numerous forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 (the “Securities
“Securities Act”) and
Section 21E of the
Securities Exchange Act
of 1934 (the “Exchange
Act”) relating to
our shell egg
business,
including estimated future production data, expected operatingconstruction schedules, expected capitalprojected construction costs, potential future supply
of and demand
for our products,
potential future corn and
soybean price trends,
potential future impact
on our business
of inflation
and rising interest rates,
potential future impact on
our business of new legislation,
rules or policies, potential outcomes
of legal
proceedings, and other projected
operating data, including anticipated
results of operations
and financial condition. Such forward-looking
forward-
looking statements are identified
by the use
of words such
as “believes,” “intends,” “expects,” “hopes,
“hopes,” “may,” “should,” “plans,” “projected,
“projected,” “contemplates,
“contemplates,” “anticipates”
“anticipates,”
or
similar
words.
Actual production, operating schedules,
outcomes
or
results of operations and other projections and estimates
could
differ
materially
from
those
projected in
the forward-looking statements.
The forward-looking
statements are based
on management’s
current intent, belief,
expectations, estimates,
and projections
regarding our companythe
Company and our
its industry.
These statements
are not
guarantees of
future
performance and involve
risks, uncertainties, assumptions,
and other factors
that are difficult
to predict and might
may be beyond
our
control. The
factors that
could cause
actual results
to differ
materially from
those projected
in the
forward-looking
statements
include, among others, (i) the risk factors set forth in Item 1A Risk Factors and elsewhere in this report as well as those included
in other
reports we
file from
time to
time with
the Securities
and Exchange
Commission (the “SEC”
“SEC”) (including
our Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K), (ii) the risks and hazards inherent in the shell egg business (including
disease, such as avian influenza, pests,
weather conditions,
and potential
for product
recall), including
but not
limited to
the current
outbreak of
highly
pathogenic avian
influenza (“HPAI”)
affecting poultry
in the
United States
(“U.S.”), Canada
and other
countries that
was first
detected in commercial
flocks in the U.S.
in February 2022, (iii)
changes in the demand
for and market prices
of shell eggs and
feed costs, (iv)
our ability
to predict
and meet
demand for cage-free
and other specialty
eggs, (v)
risks, changes,
or obligations
that
could
result
from
our
future
acquisition
of
new
flocks
or
businesses
and
risks
or
changes
that
may
cause
conditions
to
completing
a pending
acquisition not
to be
met, (vi)
risks relating
to increased
costs, rising
inflation and
rising interest
rates,
which
began
in
response
to
market
conditions
caused
in
part
by
the
COVID-19
pandemic
and
which
generally
have
been
exacerbated by
the Russia-Ukraine
War
that began in
February 2022, (vii)
our ability to predict
retain existing customers,
acquire new
customers and meet demand for cage-free grow
our product mix
and other specialty eggs, (v) risks, changes or obligations that could result from our future acquisition of new flocks or businesses, and (vi)(viii) adverse
results in pending
litigation matters. Readers
are cautioned not
to place
undue
reliance
on
forward-looking
statements
because,
while
we
believe
the
assumptions
on
which
the
forward-looking
statements are based
are reasonable,
there can be
no assurance that
these forward-looking
statements will prove
to be accurate.
Further, forward-looking statements because, while we believe the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance these forward-looking statements will prove to be accurate.  Further, the forward‑looking statements included herein
are only made as of the respective dates thereof, or if no date is stated, as of
the
date
hereof.
Except
as otherwise
required
by
law,
we disclaim
any
intent
or
obligation
to
update
publicly update
these forward-looking
forward-
looking statements, whether as a resultbecause of new information, future events, or
otherwise.

ITEM 1.
BUSINESS

Our Business

Cal-Maine Foods, Inc. (“we,” “us,” “our,” orWe are the “Company”) is the largest
producer and marketerdistributor of shell eggs in the United States. In fiscal 2017,Our mission is to be the most sustainable
producer
and reliable
supplier of
consistent, high
quality fresh
shell eggs
and egg
products
in the
country,
demonstrating
a "Culture
of
Sustainability" in everything we sold approximately 1,031.1 million dozendo, and
creating value for our shareholders,
customers, team members and communities. We sell
most of our shell
eggs which we believe represented approximately 20%in the southwestern,
southeastern, mid-western and
mid-Atlantic regions of domestic shell egg consumption. Our total flock of approximately 36.1 million layersthe
U.S. and 9.5 million pulletsaim to maintain
efficient, state-of-the-art operations located close to our customers. We
were founded in 1957 by the late Fred R. Adams, Jr. and breeders
are headquartered in Ridgeland, Mississippi.
The Company has one reportable
operating segment, which is the largest in the U.S.  production,
grading, packaging, marketing and distribution
of
shell eggs. Our integrated
operations consist of hatching
chicks, growing and maintaining
flocks of pullets, layers
and breeders,
manufacturing feed, and
producing, processing, packaging, and
distributing shell eggs.
Layers are mature
female chickens, pullets
are female chickens usually underless than 18 weeks of age, and breeders are male and female chickens used to produce fertile eggs to
be hatched for egg production
flocks. Our total flock as of
June 3, 2023 consisted of approximately
41.2 million layers and 10.8

million pullets and breeders.
The Company has one operating segment, which is the production, grading, packaging, marketing and distribution of shell eggs.  The majorityMany of our customers rely
on us to provide most of
their shell egg needs, including
specialty and non-specialtyconventional eggs.
Specialty
eggs represent encompass
a broad
range of
products. We
classify nutritionally enhanced, cage free, cage-free,
organic,
brown, free-range,
pasture-raised
and brown eggs nutritionally
enhanced
as specialty products
eggs
for
accounting
and
reporting
purposes.
We
classify
all other
shell
eggs
as non-specialty conventional
products.
While we report separate sales information
for these egg types, there are
many cost factors whichthat are not
specifically available for non-specialty
conventional or
specialty eggs
due to
the nature
of egg
production. We
manage our
operations and
allocate resources
to these
types of eggs on a consolidated basis based on the demands of our customers.


4
We sell most
believe that
an important
competitive advantage
for Cal-Maine
Foods is our
ability to meet
our customers’
evolving needs
with a
favorable product
mix of
conventional and
specialty eggs,
including cage-free,
organic and
other specialty
offerings, as
well
as egg
products.
We
have
also
enhanced
our efforts
to provide
free-range
and pasture
-raised
eggs that
meet
consumers’
evolving choice preferences.
While a small
part of our shell
current business,
the free-range and
pasture-raised eggs
we produce and
sell represent
attractive
offerings
to a
subset of
consumers, and
therefore
our customers,
and
help us
continue
to serve
as the
trusted provider of quality food choices.
Throughout the Company’s history,
we have acquired other companies in the southwestern, southeastern, mid-western and mid-Atlantic regions of the U.S.our industry. Since 1989 through our extensive distribution network to a diverse group of customers, including national and regional grocery store chains, club stores, foodservice distributors and egg product consumers. Some of our sales are completed through co-pack agreements – a common practice in the industry whereby production and processing of certain products is outsourced to another producer.  The strength of our position is evidenced by having the largest market share in the grocery segment for shell eggs.   We sell shell eggs to a majority of large U.S. food retailers.fiscal year ended

June 3, 2023,
We are one of the largest producers and marketers of value-added specialty shell eggs in the U.S. They have been a significant and growing segment of the market in recent years.  A significant number of our food service customers, large restaurant chains, and major retailers, including our largest customers, have committed to exclusive offerings of cage-free eggs by specified future dates. We are working with our customers to ensure a  smooth transition in meeting their goals. Our focus for future expansion at our farms will be environments that are cage-free or with equipment that can easily be converted to cage-free, based on a timeline to meet our customer’s needs.

In fiscal 2017, specialty shell eggs and co-pack specialty shell eggs represented 43.6% and 3.1% of our shell egg sales dollars, respectively, and accounted for approximately 22.9% and 1.6%, respectively, of our total shell egg volumes. In fiscal 2016, specialty shell eggs and co-pack specialty shell eggs represented 29.1% and 2.7% of our shell egg sales dollars, respectively, and accounted for approximately 22.9% and 2.0%, respectively, of our total shell egg volumes.  Prices for specialty eggs are less volatile than non-specialty shell egg prices and are generally higher due to consumer willingness to pay for the perceived increased benefits from those products. We market our specialty shell eggs under the following brands: Egg-Land’s Best®,  Land O’ Lakes®, Farmhouse®, and 4-Grain®.  We are a member of the Egg-Land’s Best, Inc. (“EB”) cooperative and produce, market and distribute Egg-Land’s Best® and Land O’ Lakes® branded eggs, along with our associated joint ventures, under exclusive license agreements for a number of states in the southeast, south central, and southwest U.S. as well as the New York City area.  We market cage-free eggs under our trademarked Farmhouse® brand and distribute them across the southeast and southwest regions of the U.S.  We market organic, cage-free, vegetarian, and omega-3 eggs under our 4-Grain® brand. We also produce, market, and distribute private label specialty shell eggs to several customers.

We are a leader in industry consolidation. Since 1989, we have completed twenty
23 acquisitions ranging
in size from 600,000
160 thousand layers to
7.5 million layers. DespiteMost
recently,
effective on May 30, 2021, the Company acquired
the remaining 50% membership interest in Red River Valley
Egg Farm, LLC
(“Red River”), which owns and operates a market that has been characterized by increasing consolidation, thespecialty shell egg production industry remains highly fragmented. At December 31, 2016, 56 producers, owning at least onecomplex that includes 1.7 million layers, ownedcage-free hens. For a
further
description
of
this
transaction,
refer
to
Part
II.
Item
8.
Notes
to
the
Consolidated
Financial
Statements,
. We are also focused on additional ways to enhance our product mix and support new opportunities in the restaurant,
institutional and
commercial food
preparation area.
Beginning in fiscal
2022, we have
invested approximately 97%
$32.3 million in
Meadowcreek Foods,
LLC (“Meadowcreek”),
an egg
products operation
focused on
offering
hard-cooked eggs.
In addition
to
growth through
acquisitions, we
have also
grown by
making substantial
investments in
our business,
primarily to
increase our
cage-free production capacity.
When
we
use
“we,”
“us,”
“our,”
or
the
“Company”
in
this
report,
we
mean
Cal-Maine
Foods,
Inc.
and
our
consolidated
subsidiaries,
unless
otherwise
indicated
or
the
context
otherwise
requires.
The
Company’s
fiscal
year-end
is
on
the
Saturday
closest to May
31. Our
fiscal year
2023 and
fourth quarter ended
June 3, 2023,
included 53 weeks
and 14
weeks, respectively.
The first three fiscal quarters of total industry layers. The ten largest producers owned approximately 58% of total industry layers. We believe industry consolidation will continuefiscal 2023 ended August 27, 2022,
November 26, 2022, and we planFebruary 25, 2023, all included 13
weeks.
All references herein to capitalize on opportunities as they arise.a fiscal year means our fiscal year and all references
to a year mean a calendar year.

Industry Background
Based on historical consumption trends, we believe general demand for shell eggs increases in line with overall population growth, averaging growth of about 1% per year. In  2013 and 2014,  consumption of eggs grew approximately 2% per year.  In 2015, egg consumption decreased approximately 4% over the prior year primarily due to a shortage of eggs resulting from an outbreak of avian influenza ("AI") in the spring of that year.  According to the U.S.
Department of Agriculture (“USDA”) Agricultural
Marketing Service, in 2022 approximately
71% of table
eggs produced in the U.S.
were sold as shell
eggs, with 56.6% sold through food
at home outlets such
as grocery and convenience
stores, 12.4% sold to
food-away-from home channels such
as restaurants and 1.7% exported.
The USDA estimated that in
2022
approximately 29.6%
of eggs
produced in
the U.S.
were sold
as egg
products (shell
eggs broken
and sold
in liquid,
frozen, or
dried
form)
to
institutions
(e.g.
companies
producing
baked
goods).
For
information
about
egg
producers
in
the
U.S.,
see
“Competition” below.
Our
industry
has
been
greatly
impacted
by
the
outbreaks
of
highly
pathogenic
avian
influenza
(“HPAI”),
first
detected
in
commercial flocks in
the U.S. in
February 2022 and
continuing during our
fiscal 2023. For
additional information regarding HPAI
and its impact
on our industry
and business, see
Given
historical
consumption
trends,
we believe
that general
demand
for
eggs in
the U.S.
increases basically
in line
with the
overall
U.S.
population
growth;
however,
specific
events
can
impact
egg
supply
and
consumption
in
a
particular
period,
as
occurred with the 2015 HPAI outbreak,
the COVID-19 pandemic (particularly during 2020), and the most recent HPAI
outbreak
starting in
early 2022.
According to
the USDA’s
Economic Research
Service, estimated
annual per
capita U.S. consumption since 2000
in the
United States between 2018
and 2022 varied, between 249 and 275ranging from 279 to 292 eggs. In calendar year 2016, 2022,
per capita U.S. consumption
was estimated to
be 275279 eggs,
or approximately five 5.4
eggs per
person per week.  Per
According to
the USDA,
the decline in
consumption
was primarily
due to limited
availability caused
by the outbreak
of HPAI.
As of July
18, 2023,
the USDA projects
that the
per
capita consumption
will increase
in calendar
year 2023
and 2024
to 282.6
and 292.7,
respectively.
The USDA
calculates per
capita consumption is determined by dividing the
total supply of eggs by the entire populationshell egg disappearance in the U.S. (i.e. all eggs supplied domestically by the egg industry are consumed).U.S. population.
 

Slightly over 30% of eggs produced in the U.S. are sold as egg products (shell eggs broken and sold in liquid, frozen, or dried form) to institutions (e.g. companies producing baked goods) with most of the balance sold to food service and retail consumers (e.g. through grocery and convenience stores) and a relatively small amount exported. Our sales are predominately to retail consumers; in fiscal 2017 and 2016, approximately 2% and 4% of our net sales was egg products, respectively.


Prices for Shell Eggs

Wholesale shell
egg sales
Shell
prices are
a critical
component of
revenue for
the Company.
Wholesale shell
egg prices
are volatile,
cyclical, and impacted
by a critical component number
of profitability forfactors, including
consumer demand, seasonal
fluctuations, the Company number
and the industry as a whole. While there are many pricing mechanisms, we believe the majority productivity
of shell eggs sold laying hens
in the U.S.
and outbreaks of
agricultural diseases such
as HPAI.
While we use
several different pricing mechanisms
in pricing
agreements with
our customers,
we believe
the majority
of conventional
shell eggs
sold in
the U.S.
in the
retail and
foodservice channels
are sold
at prices
that take
into account,
in varying
ways, independently
quoted wholesale
market prices,
such as those published
by Urner Barry Publications,
Inc. (“UB”) for shell
eggs, however, grain-based and cost
plus arrangements
are being
utilized in
the food
service channel
and some
western markets.
We
sell the
majority of
our conventional
shell eggs
based on formulas that take into account, in varying ways, independently
quoted regional wholesale market prices for shell eggs
calm-20230603_10Kp5i0
5
or formulas related
to our costs of production,
which include the cost
of corn and soybean
meal. We
do not sell eggs
directly to
consumers or set the prices at which eggs are sold atto consumers.
The weekly
average price for
the southeast region
for large white
conventional shell
eggs as quoted
by UB is
shown below for
the past three
fiscal years along
with the five-year average
price. As further
discussed in
, conventional
shell egg prices related
rose during
the fourth quarter
of fiscal 2022
and first three
quarters of fiscal
2023, due
to the Urner Barry wholesale quotationreduced
supply related
to the HPAI
outbreak first
detected in
commercial flocks
in February
2022,
steady shell egg demand
and higher production costs. Conventional shell
egg prices continued to rise
into the fourth quarter
of fiscal 2023 followed by a substantial decline,
as demand for shell eggs began to decrease in line
with typical seasonal variance
and as
supply increased
due to
the repopulating
of HPAI
-affected
layer flocks.
The actual
prices that
we realize
on any
given
transaction will not necessarily equal quoted market prices because of
the individualized terms that we negotiate with individual
customers which are influenced by many factors. Depending on market conditions, input costs
and individualized
contract terms,
the price we receive
per dozen eggs in any
given transaction may be
more than or less than
our farm production and
other costs
per dozen.
Specialty eggs
are typically
sold at
prices and
terms negotiated
directly with
customers. Historically,
prices for
specialty eggs
have
experienced
less
volatility
than
prices
for
conventional
shell
eggs
and
have
generally
been
higher
due
to
customer
and
consumer willingness to pay more for specialty eggs. WeHowever, throughout most of
fiscal 2023 conventional egg prices exceeded
specialty egg prices. Conventional
egg prices generally respond
more quickly to market conditions
because we sell the majority
of our non-specialty conventional
shell eggs atbased on
formulas that adjust periodically
and take into account,
in varying ways, independently
quoted regional wholesale market prices related to Urner Barry Spot Egg Market Quotationsfor shell eggs or
formulas related to our costs of production which include
production. Because the costmajority of corn our
specialty eggs
are typically
sold at prices
and soybean meal.  For fiscal 2017, wholesale large shell terms negotiated
directly with
customers, specialty
egg prices in the southeast region,
do not fluctuate
as
much as quoted by Urner Barry, averaged $0.85 compared with $1.79 for fiscal 2016, evidencing their volatility. Egg prices during fiscal 2016 were impacted by the outbreak of avian influenza ("AI") primarily in the upper Midwestern U.S. from April to June 2015, which initially caused a significant reduction in egg supplies and an increase in egg prices. There were no positive tests for AI at any of our locations. Based on USDA reports, the subsequent repopulation of the national laying hen flock, eventually above pre-AI levels, with a younger, more productive hen population, along with reduced demand for egg products resulted in an oversupply of eggs, leading to decreased egg prices in fiscal 2017.

conventional pricing.
Feed Costs for Shell Egg Production

Feed is a primary cost component in
the production of shell eggs and represents over half
represented 63.1% of industryour fiscal 2023 farm level
production costs. Most
We
routinely fill
our storage
bins during
harvest season
when prices
for feed
ingredients, primarily
corn and
to a
lesser extent
soybean meal,
are generally
lower.
To
ensure continued
availability of
feed ingredients,
we may
enter into
contracts for
future
purchases
of
corn
and
soybean meal,
and
as part
of these
contracts,
we
may
lock-in
the basis
portion
of our
grain
purchases
several months in advance.
Basis is the difference between the local cash price for grain and the applicable futures price. A basis
calm-20230603_10Kp6i0
6
contract is a common transaction in the grain market that allows us to lock-in a basis level for a specific delivery period and wait
to set
the futures
price at
a later
date. Furthermore,
due to
the more
limited supply
for organic
ingredients,
we may
commit to
purchase organic ingredients in advance to help assure supply.
Ordinarily, we do not enter into long-term contracts beyond a year
to
purchase
corn
and
soybean
meal
or
hedge
against
increases
in
the
prices
of
corn
and
soybean
meal.
As
the
quality
and
composition of feed is a critical factor in the nutritional value of shell egg producers, including us, are vertically integrated, manufacturing eggs and health of our chickens, we formulate
and produce
the vast
majority of
our own
feed at
our feed
mills located
near our
production plants.
Our annual
feed requirements
for fiscal
2023 were 2.0 million tons of finished
feed, of which we manufactured 1.9 million
tons. We currently
have the feed they require for their operations. Although feed ingredients, primarilycapacity to store
182 thousand tons of corn and soybean meal, are available from a number of sources, prices for ingredients can fluctuate and are affected by weather, speculators, and various supply and demand factors. Our feed cost per dozen eggs produced for fiscal 2017 was 3.6% lower than fiscal 2016.  Adequate stocks from increased U.S. acreage and large per acre yields for both corn and soybeans in 2016 combined withwe replenish these stores as needed
throughout the 2017 crop should provide adequate domestic supplies for both of ouryear.
Our primary feed ingredients, during fiscal 2018.

Growth Strategyand Acquisitions

For many years, we have pursued a growth strategy focused on the acquisition of existing shell egg production and processing facilities, as well as the construction of new and more efficient facilities.  Since the beginning of fiscal 1989, we have completed 20 acquisitions. In addition, we have built numerous “in-line” shell egg production and processing facilities as well as pullet growing facilities which added to our capacity.  The capacity increases have been accompanied by the retirement of older and less efficient facilities.  The “in-line” facilities provide gathering, grading and packaging of shell eggs by less labor-intensive, more efficient, mechanical means.  We continue to upgrade and modify our facilities, and invest in new facilities, to meet changing demand as many food service customers, restaurant chains, and retailers have committed to exclusive offerings of cage-free eggs over the next several years.
corn
 
Our total flock, including pullets, layers and breeders increased from approximately 32.8 million at the end of fiscal 2012 to approximately 45.6 million as of June 3, 2017.  The dozens of shell eggs sold increased from approximately 884.3 million in fiscal 2012 to approximately 1,031.1 million for fiscal 2017.  

During fiscal 2017, we acquired substantially all of the egg production, processing and distribution assets of Foodonics International, Inc. and of Happy Hen Egg Farms, Inc., whichsoybean meal, are discussed in detail later in this report.
commodities subject
 
We continue to pursue opportunitiesvolatile price changes due to acquire companies engaged
weather, various
supply and
demand factors,
transportation and
storage costs,
speculators and
agricultural, energy
and trade
policies in the production and sale of shell eggs.  We will continue to evaluate and selectively pursue acquisitions that will expand our shell egg production capabilities in existing markets and broaden our geographic reach. We have extensive experience identifying, valuing, executing, and integrating acquisitions and we intend to leverage that experience in the evaluation and execution of future acquisitions. We will seek to acquire regional shell egg businesses with significant market share and long-standing customer relationships. We believe enhancing our national presence will help us further strengthen our relationships with existing customers, many of whom have operations across
the U.S.

and internationally and most recently
the Russia-Ukraine War.
While we do not import corn
or soy directly from the region,
the
Federal antitrust laws require regulatory approvalRussia-Ukraine War
has had
a negative
impact on
the worldwide
supply of acquisitions that exceed certain threshold levels of significance, and we are subject to federal and state laws prohibiting anti-competitive conduct.   We believe our sales of shell eggs
grain, including
corn, putting
upward pressure
on

prices.
We
purchase
the
vast
majority
of
our
corn
and
soybean
meal
from
U.S
sources
but
may
be
forced
to
purchase
during the last fiscal year represented approximately 20% internationally
when
U.S.
supplies are
not
readily
available.
Feed
grains
are
currently
available
from
an
adequate
number
of domestic shell egg sales, making us the largest producer and distributor of shell eggs
sources in the U.S. However, because the shell egg production and distribution industry is so fragmented, we believe there are many acquisition opportunities available to us that would not be restricted pursuant to antitrust laws.
As a point
 
of reference, a multi-year comparison
Through exclusive license agreements with EB in several key territories and our trademarked Farmhouse® and 4Grain® brands, we are one
of the leading producersaverage of daily closing prices
per Chicago Board of
Trade for each period in our fiscal calendar are
shown below for corn and marketers of value-added specialty shell eggs. We also produce, market, and distribute private label specialty shell eggs to several customers. Since selling prices of specialty shell eggs are generally less volatile than non-specialty shell egg prices, we believe growing our specialty eggs business will enhance the stability of our margins.  We expect the price of specialty eggs to remain at a premium to regular shell eggs, and intend to grow our specialty shell egg business.

The construction of new, more efficient production and processing facilities is also an integral part of our growth strategy.  Such construction requires compliance with applicable environmental laws and regulations, including the receipt of permits that could cause schedule delays, although we have not experienced any significant delays in the past.

soybean meal:
Shell EggsEgg Production

Production. Our operations are fully integrated. We hatch chicks, grow and maintain flockspercentage of pullets, layers, and breeders, manufacture feed, and produce, process, package, and distribute shell eggs.  We produce approximately 84% dozens produced to sold
was 92.3%
of our total shell eggs sold in fiscal 2023,
with 92%91.8% of such production
coming from company-owned facilities,
and the other 8% coming8.2% from contract
producers. Under a
typical arrangement with
a contract producer,
we
own
the
flock,
furnish
all feed
and
critical
supplies,
own
the
shell
eggs
produced
and
assume
market
risks.
The contract
producers own and operate their facilities and are paid a fee based on production
with incentives for performance. We purchase approximately 16% of the total shell eggs we sell from outside producers.

The commercial production of shell eggs requires a source of baby chicks for laying flock replacement. We producehatch the majority of
our chicks in
our own breeder
farms and hatcheries
in a
computer-controlled environment and obtain
the balance from
commercial
sources. The chicks are grown in our own hatcheriespullet farms and obtainare placed into the balance from commercial sources. We own breeder and hatchery facilities capable of producing 21.2 million pullet chicks per year in a computer-controlled environment. These pullets are distributed to 43 state-of-the-art laying operations around the southwestern, southeastern, mid-western and mid-Atlantic regions of the U.S. The facilities produce an average of 2.4 million dozen shell eggs per day. The shell eggs are processed, graded and packaged predominantly without handling by human hands. We have spent a cumulative total of $310.5 million over the past five years to expand and upgrade our facilities with the most advanced equipment and technology available in our industry. We believe our constant attention to production efficiencies and focus on automation throughout the supply chain enables us to be a low cost supplier in all the markets in which we compete.
flock once they reach maturity.

Feed cost represents the largest element of our farm egg production cost, ranging from 58% to 69% of total farm production cost in the last five fiscal years. Although feed ingredients are available from a number of sources, we have little, if any, control over the prices of the ingredients we purchase, which are affected by weather, speculators, and various supply and demand factors.  For example, the severe drought in the summer of 2012 and resulting damage to the national corn and soybean crop resulted in high and volatile feed costs.  Increases in feed costs unaccompanied by increases in the selling price of eggs can have a material adverse effect on our operations.  High feed costs can encourage shell egg producers to reduce production, resulting in higher egg prices.  Alternatively, low feed costs can encourage industry overproduction, possibly resulting in lower egg prices. 

7
After the eggs are
produced, they are
cleaned, graded and
packaged. Substantially all of
our farms have
modern “in-line” facilities to
which
mechanically
gather,
clean,
grade
and
package
the
eggs
at
the
location
where
they
are
laid.
The
in-line
facilities
generate
significant efficiencies
and package the eggs produced.  The increased use of in-line facilities has generated significant cost
savings compared
to the
cost of
eggs produced
from non-in-line facilities.  In addition
facilities, which
process eggs
that
have
been
laid
at
another
location
and
transported
to greater efficiency, the
processing
facility.
The
in-line
facilities
also
produce
a
higher
percentage of USDA Grade A eggs, which sell at higher prices. Eggs
produced on farms owned by contractors are brought to our
processing plants
to be graded
and packaged.
Because shell eggs
are perishable,
we do not
maintain large
egg inventories. Our

egg
inventory
averaged
six
days
of
sales
during
fiscal
2023.
We
believe
our
constant
focus
on
production
efficiencies
and
Sinceautomation throughout the supply chain enable us to be a low-cost supplier
in our markets.
We
are proud
to have
created and
upheld
what we
believe is
a leading
poultry
Animal Welfare
Program
(“AWP”).
We
have
aligned our AWP with
regulatory, veterinary
and our third-party certifying bodies’ guidance to govern welfare of
animals in our
direct care, our contract farmers’ care and our farmer-suppliers’
care. We continually
review our program to monitor and evolve
standards that guide how we hatch chicks, rear pullets and nurture
breeder and layer hens. At each stage of
our animals’ lives, we
are dedicated to providing welfare conditions aligned
to our commitment to the principles of the internationally
recognized
Five
Freedoms of Animal Welfare
. Our standards apply to
our enterprise and are
tailored for our owned and
contract grower operations
with oversights and approvals from senior members of our compliance team.
We
do not
use artificial
hormones in
the production
of our
eggs. Hormone
use in
the poultry
and egg
production industry
has
been
effectively
banned
in
the U.S.
since
the
1950s.
We
have
an
extensive
written
protocol
that
allows
the
use
of
medically
important
antibiotics
only
when
animal
health
is
at
risk,
consistent
with
guidance
from
the
United
States
Food
and
Drug
Administration
(“FDA”)
and
the
Guidance
for
Judicious
Therapeutic
Use
of
Antimicrobials
in
Poultry,
developed
by
the
American Association of Avian Pathologists. When antibiotics are medically necessary, a licensed veterinary
doctor will approve
and administer approved doses for a restricted period. Our programs are designed to ensure antibiotics are ordered and used only
when necessary and records of their usage – when and where – are maintained to monitor compliance with our protocols. We
do
not use antibiotics for growth promotion or performance enhancement.
Specialty Eggs
We
are
one
of
the
largest
producers
and
marketers
of
value-added
specialty
shell
eggs
in
the
U.S.,
which
continues
to
be
a
significant and growing segment
of the market.
We classify cage-free, organic, brown, free-range, pasture-raised and
nutritionally
enhanced as specialty eggs for accounting and
reporting purposes. Specialty eggs are intended to
meet the demands of consumers
sensitive to environmental, health and/or animal welfare issues and
to comply with state requirements for cage-free eggs.
As defined by the USDA, eggs packed in USDA grade
marked consumer packages labeled as cage-free are
laid by hens that are
able to roam vertically and horizontally in indoor houses and have access to fresh food and water.
Cage-free systems must allow
hens to
exhibit natural
behaviors and
include enrichments
such as
scratch areas,
perches and
nests. Hens
must have
access to
litter, protection from predators and be
able to move in a barn in a manner that promotes bird welfare.
Ten
states
have
passed
legislation
or
regulations
mandating
minimum
space
or
cage-free
requirements
for
egg
production
or
mandated the sale of
only cage-free eggs and
egg products in
their states, with implementation
of these laws ranging
from January
2022 to January 2026. These states represent approximately 27% of the U.S. total population according to the 2020 U.S. Census.
California,
Massachusetts, and Colorado, which collectively represent approximately 16% of the total estimated
U.S. population
have cage-free legislation in effect currently.
In May 2023, the U.S. Supreme Court upheld as
constitutional California’s law that
requires the sale of
only cage-free eggs
in that state and
regardless of the state
in which the eggs
are produced. Although
we do
not sell the majority of our eggs in these ten states, these state laws have impacted
egg production practices nationally.
A significant number of our customers previously announced goals to
offer cage-free eggs exclusively on or before 2026, subject
in most cases to availability of supply,
affordability and consumer demand, among other contingencies. Some of these customers
have recently
changed those
goals to
offer 70%
cage-free eggs
by the
end of
2030. Our
customers typically
do not
commit to
long-term purchases
of specific quantities
or types of
eggs with us,
and as a
result, it is
difficult to
accurately predict
customer
requirements for cage-free eggs. We are focused on adjusting our cage-free production capacity with a goal of meeting the future
needs of our customers in light of changing
state requirements and our customer’s
goals. As always, we strive to offer a product
mix that aligns with current and anticipated customer purchase decisions. We are engaging with our customers to help them meet
their announced goals and needs. We have invested significant capital in
recent years to acquire and construct
cage-free facilities,
and we expect our focus for future expansion will continue
to include cage-free facilities. Our volume of cage-free egg sales has
continued to increase and account for a larger share of our product mix. Cage-free sales represented approximately 20.1% of our
total net
shell sales
for
fiscal
year
2023.
At the
same time,
we understand
the importance
of our
continued
ability to
provide
conventional eggs in order to provide our customers with a variety
of egg choices and to address hunger in our communities.
8
We are a member of the Eggland’s
Best, Inc. cooperative (“EB”) and produce, market, distribute and sell
Egg-Land’s
Best®
and
Land O’
Lakes®
branded eggs
under license
from EB at
our facilities under
EB guidelines.
Land O’
Lakes®
branded eggs
are
produced by hens that are fed a
whole-grain vegetarian diet. Our
Farmhouse Eggs
® brand eggs are produced at our
facilities by
cage-free hens
that are
provided with
a vegetarian
diet. We
market organic,
vegetarian and
omega-3 eggs
under our
4-Grain®
brand, which
consists of
conventional and
cage-free eggs.
We
also produce,
market and
distribute private
label specialty
shell
eggs to several customers.
Egg Products
Egg products are shell eggs broken
and sold in liquid, frozen, or
dried form. We
sell liquid and frozen egg products
primarily to
the institutional, foodservice and food manufacturing sectors in the U.S. Our egg products are perishable, we maintain very lowprimarily
sold through our wholly
owned subsidiaries American Egg Products, LLC located in Georgia
and Texas Egg Products, LLC located
in Texas.
During March 2023,
MeadowCreek Food,
LLC (“Meadowcreek”),
a majority-owned subsidiary,
began operations with
a focus
on being a
leading provider of
hard-cooked eggs. We
serve as the
preferred provider to
supply specialty and
conventional eggs
that MeadowCreek
needs to
manufacture egg inventories, usually consisting
products. MeadowCreek’s
marketing plan
is designed
to extend
our reach
in the
foodservice and retail marketplace and bring
new opportunities in the restaurant,
institutional and industrial food products arenas.
Summary of approximately four days of production.Conventional and Specialty Shell Egg and Egg Product
Sales

The
following
table
sets
forth
the
contribution
as
a
percentage
of
revenue
and
volumes
of
dozens
sold
of
conventional
and
specialty shell egg and egg product sales for the following fiscal years:
2023
2022
2021
Revenue
Volume
Revenue
Volume
Revenue
Volume
Conventional Eggs
65.2
%
65.3
%
59.8
%
69.0
%
56.8
%
73.2
%
Specialty Eggs
Egg-Land’s Best®
14.7
%
16.6
%
19.2
%
15.9
%
20.9
%
13.5
%
Other Specialty Eggs
15.7
%
18.1
%
17.3
%
15.1
%
19.1
%
13.3
%
Total Specialty Eggs
30.4
%
34.7
%
36.5
%
31.0
%
40.0
%
26.8
%
Egg production activities are subject to risks inherent in the agriculture industry, such as weather conditionsProducts
3.9
%
3.4
%
2.7
%
Marketing and disease.  These risks are outside our control and could have a material adverse effect on our operations.  The marketability of shell eggs is subject to risks such as possible changes in food consumption preferences and practices reflecting perceived health concerns.Distribution

We operate in a cyclical industry with total demand that is generally steady and a product that is generally price-inelastic.  Thus, small increases in production or decreases in demand can have a large adverse effect on prices and vice-versa.  However, economic conditions in the egg industry are expected to exhibit less cyclicality in the future.  The industry is concentrating into fewer but stronger hands, which should help lessen the extreme cyclicality of the past.
Marketing. Of the 1,031.1 million dozen shell eggsIn fiscal 2023, we sold by us in fiscal 2017, our flocks produced 870.3 million.

We sell our shell eggs in 38 states through
the southwestern, southeastern, mid-western and mid-Atlantic regions
of the U.S.
through our extensive
distribution network
to a diverse group
of customers, including
national and local regional
grocery
store chains,
club stores,
companies servicing
independent supermarkets
in the
U.S., foodservice
distributors and
egg product
consumers. We utilize electronic ordering Some of
our sales
are completed through
co-pack agreements –
a common practice
in the
industry whereby production
and invoicing systems
processing of
certain products
are outsourced
to another
producer.
Although we
face intense
competition
from numerous
other companies,
we believe
that enable us to manage inventorywe
have the
largest market
share for certain customers. Our top ten customers accounted for an aggregate
the sale
of 69.5%, 70.6%, and 67.9% of net sales dollars for fiscal 2017, 2016, and 2015, respectively. Two customers, Wal-Mart Stores and Sam’s Club, on a combined basis, accounted for 28.9%, 28.9%, and 25.7% of net sales dollars during fiscal 2017, 2016, and 2015, respectively.shell
eggs in
the grocery
segment, including

large U.S. food retailers.
The majority of eggs sold are sold based on the daily
or short-term needs of our customers. Most sales to established
accounts are on open account with
payment terms ranging from
seven to 30
days. Although we
have established long-term relationships
with many of
our customers, many
most of them are free to acquire shell eggs from other sources.

The shell eggs we
sell are either delivered to
our customers’ warehouse or retail
stores, either by our own
fleet or contracted refrigerated
delivery trucks, or are picked up by our customers at our processing facilities.

We
are a member
of the Eggland’s
Best, Inc. cooperative
and produce, market,
distribute and
sell
Egg-Land’s
Best®
and
Land
O’ Lakes®
branded eggs directly and through
our joint ventures, Specialty
Eggs, LLC and Southwest
Specialty Eggs, LLC, under
exclusive
license
agreements
in
Alabama,
Arizona,
Florida,
Georgia,
Louisiana,
Mississippi
and
Texas,
and
in
portions
of
Arkansas, California,
Nevada, North
Carolina,
Oklahoma and
South Carolina.
We
also have
an exclusive
license in New
York
City in addition
to exclusivity in
select New York
metropolitan areas, including
areas within New
Jersey and Pennsylvania.
As
discussed above under “Specialty Eggs,” we also sell our own Farmhouse
Eggs® and 4Grain® branded eggs.
9
During
2022,
the
Company
joined
in
the
formation
of
a
new
egg
farmer
cooperative
in
the
western
United
States.
ProEgg,
Inc.(“ProEgg”) is comprised
of leading egg production
companies, including Cal-Maine
Foods, servicing retail and
foodservice
shell egg customers in 13 western states. ProEgg is a producer-owned
cooperative organized under the Capper-Volstead
Act.
The Company’s
top priority in joining
as a member of
ProEgg is serving
our valued customers in
this important market
region.
Our
membership
in
ProEgg
is
expected
to
provide
benefits
for
its
customers,
including
supply
chain
stability
and
enhanced
reliability. Initially,
Cal-Maine Foods’ customer relationships and customer support are expected to remain the same. We
expect
that starting January
1, 2024, each
producer member
will sell through
ProEgg the
shell eggs at prices generallyit
produces for
sale in the
western
states covered by the cooperative. Customers will
have a single point of
contact for their shell egg
purchases, as ProEgg will have
a dedicated team to market and sell the members’ combined egg production
in the region.
Customers
Our top
three customers
accounted for
an aggregate of
50.1%, 45.9%
and 48.6% of
net sales dollars
for fiscal 2023
,
2022, and
2021,
respectively.
Our largest
customer,
Walmart
Inc. (including
Sam's Club),
accounted for
34.2%, 29.5%
and 29.8%
of net
sales dollars for fiscal 2023, 2022 and 2021, respectively.
In fiscal 2023,
approximately 85.3% of
our revenue related
to independently quoted wholesale market prices or at formulassales to retail
customers, 10.8% to
sales to foodservice
providers
and 3.9%
to egg products
sales. Retail customers
include primarily
national and
regional grocery
store chains,
club stores, and
companies
servicing
independent
supermarkets
in the
U.S. Foodservice
customers
include
primarily
companies that
sell food
products and related items to our costs of production. Wholesale prices are subject to wide fluctuations.  restaurants, healthcare and education facilities and
hotels.
Competition
The pricesproduction, processing,
and distribution of shell
eggs reflect fluctuationsis an intensely
competitive business, which
has traditionally attracted
large numbers of
producers in the quoted market and changes in corn and soybean meal prices, and the results of our shellUnited
States. Shell egg operations are materially affected by changes in market quotations and feed costs.  Egg prices reflect a number of economic conditions, such as the supply of eggs and the demand level, which, in turn, are influenced by a number of factors we cannot control.  No representation can be made as to the future level of prices.

According to USDA reports, for the past five years, U.S. annual per capita egg consumption grew from 255 in 2012 to 275 in 2016. Looking ahead, we believe fast food restaurant consumption, high protein diet trends, industry advertising campaigns, and improved nutritional reputation of eggs related to better scientific understanding of the role of cholesterol in diets may result in increased per capita egg consumption levels; however, no assurance can be given that per capita consumption will not decline in the future.
competition
 
We sell the majority of our shell eggs across the southwestern, southeastern, mid-western and mid-Atlantic regions of the U.S. We are a major factor in egg marketing in a majority of these states.  Many states in our market area are egg deficit regions where production of fresh shell eggs is less than total consumption.  Competition from other producers in specific market areas is generally based on price, service, and quality of product.  Strong competition exists in each of our markets.

Seasonality. Retail sales of shell eggs are greatest during the fall and winter months and lowest during the summer months.  Prices for shell eggs fluctuate in response to seasonal demand factors and a natural increase in egg production during the spring and early summer. We generally experience lower sales and net income in our fourth and first fiscal quarters ending in May and August, respectively. During the past ten fiscal years, two of our first quarters resulted in net operating losses, and during this same period, three of our fourth quarters resulted in net operating losses.

Specialty Eggs. We produce specialty eggs such as Egg-Land’s Best®, Land O’ Lakes®, 4Grain®, and Farmhouse® branded eggs.  Specialty eggs are intended to meet the demands of consumers who are sensitive to environmental, health and/or animal welfare issues.  Specialty shell eggs are becoming a more significant segment of the shell egg market.  During our fiscal 2016 an increasing number of large restaurant chains, food service companies and grocery chains, including our largest customers, announced goals to transition to a cage-free egg supply chain by specified future dates.    For fiscal 2017, specialty eggs accounted for 43.6% of our shell egg dollar sales and 22.9% of our shell egg dozens sold, as compared to 29.1% of shell egg dollar sales and 22.9% of shell egg dozens sold in fiscal 2016.  Additionally, specialty eggs sold through our co-pack arrangements accounted for an additional 3.1% of shell egg dollar sales and 1.6% of shell egg dozens sold in fiscal 2017, compared with 2.7% of shell egg dollar sales and 2.0% of shell egg dozens sold in fiscal 2016.  We produce and process Egg-Land’s Best® and Land O’ Lakes® branded eggs under license from EB at our facilities under EB guidelines.  The product is marketed to our established base of customers at premium prices compared to non-specialty shell eggs. Egg-Land’s Best® branded eggs accounted for approximately 23.2% of our shell egg dollar sales in fiscal 2017, compared to 16.8% in fiscal 2016. Based on dozens sold, Egg-Land’s Best® branded eggs accounted for 12.5% of dozens sold for fiscal 2017, compared to 13.6% in fiscal 2016.  Land O’ Lakes® branded eggs are produced by hens that are fed a whole grain diet, free of animal fat and animal by-products.  Farmhouse® brand eggs are produced at our facilities by cage-free hens that are provided with a diet of all grain, vegetarian feed.  We market organic, wholesome, cage-free, vegetarian, and omega-3 eggs under our 4-Grain® brand, which consists of both caged and cage-free eggs.  Farmhouse®, Land O’ Lakes®, 4Grain® and other non-Egg-Land’s Best® specialty eggs accounted for 20.4% of our shell egg dollar sales in fiscal 2017, compared to 12.3% in fiscal 2016, and 10.4% of dozens sold for fiscal 2017, compared to 9.3% for fiscal 2016.
 
Egg Products.  Egg products are shell eggs broken and sold in liquid, frozen, or dried form.In fiscal 2017 egg products represented approximately 2% of our net sales compared with approximately 4% in fiscal 2016.  We sell egg products primarily into the institutional and food service sectors in the U.S.  Our egg products are sold through our wholly owned subsidiary American Egg Products, LLC located in Blackshear, Georgia and our consolidated subsidiary Texas Egg Products, LLC located in Waelder, Texas.  Prices for egg products are related to Urner Barry quoted price levels.

Competition. The production, processing, and distribution of shell eggs is an intensely competitive business, which traditionally has attracted large numbers of producers.  Shell egg competition is generally based on price, service and product
quality.

The U.S. shell
egg production
industry remains
highly fragmented but is characterized by a growing concentrationfragmented.
According to
Egg Industry
Magazine
, the
ten largest
producers
owned approximately
53% of producers. In 2016, 56  producers with one million or more layers owned 97% of the 318.6 million total U.S. layers, compared to 2000, when 63 producers with one million or more layers owned 79% of the 273 million total layers,industry
table egg layer
hens at year-end
2022 and 1990, when 56 producers with one million or more layers owned 64% of the 232 million total layers. 2021.
We
believe a continuation of the industry
consolidation may
continue,
and
we
plan
to
capitalize
on
opportunities
as
they
arise.
We
believe
further
concentration trend will
could
result
in
reduced
cyclicality of shell egg prices, but no assurance can be given in that regard. A continuation
Seasonality
Retail sales of this trend couldshell eggs historically have been highest during the fall and winter months and lowest during the summer months.
Prices for shell eggs fluctuate
in response to seasonal demand
factors and a natural
increase in egg production during
the spring
and early summer.
Historically,
shell egg prices tend
to increase with the
start of the school
year and tend
to be highest prior
to
holiday
periods,
particularly
Thanksgiving,
Christmas
and
Easter.
Consequently,
and
all
other
things
being
equal,
we
would
expect to experience
lower selling prices,
sales volumes and net
income (and may
incur net losses) in
our first and
fourth fiscal
quarters ending in August/September and May/June, respectively. Accordingly, we generally expect our need for
working capital
to be highest during those quarters.
Growth Strategy
Our growth strategy is focused on remaining a
low-cost provider of shell eggs located near
our customers, offering our customers
choices
that
meet
their
requirements
for
eggs
and
egg
products
and
continuing
to
grow
our
focus
on
specialty
eggs
and
egg
products. For example, our
recent investment in MeadowCreek,
discussed under the heading
“Egg Products” above, is
intended
to
extend
our
reach
in
the
foodservice
and
retail
marketplace
and
bring
new
opportunities
in
the
restaurant,
institutional
and
industrial food products arenas.
In light
of the growing
customer demand
and increased
legal requirements
for cage-free
eggs, we
intend to
continue to
closely
evaluate the
need to expand
through selective acquisitions,
with a priority
on those that
will facilitate our
ability to expand
our
cage-free shell
egg production
capabilities in
key locations
and markets.
We
will also create greater competition among fewer producers.
continue to
closely evaluate
the need
to

continue to expand and convert
our own facilities to increase production
of cage-free eggs based on
a timeline designed to meet
Patents the anticipated
needs of
our customers
and Trade Names. comply
with evolving
legal requirements.
As the
ongoing
production
of cage-free
eggs
is
more
costly
than
the
production
of
conventional
eggs,
aligning
our
cage-free
production
capabilities
with
changing
demand for cage-free eggs is important to the success of our business.
10
Trademarks
and License Agreements
We own the trademarksFarmhouse®
Farmhouse Eggs®
,
Sunups®
,
Sunny Meadow®
and
4Grain®
. We do not own any patents or proprietary technologies. We produce and
market
Egg-Land's Best® Best
®
and
Land O’ Lakes®Lakes
® branded eggs under
license agreements with
EB. We
believe these trademarks
and license agreements
are
important to our business.  We do not know of any infringing uses that would materially affect the use of these trademarks, and we actively defend and enforce them.

Government Regulation. 
Our facilities and
operations are subject
to regulation by
various federal, state,
and local agencies,
including, but not
limited to,
the United States Food and Drug Administration (“FDA”), FDA,
USDA, Environmental
Protection
Agency (“EPA”EPA
”), Occupational
Safety and
Health Administration
("OSHA") and
corresponding state agencies among others.or
laws. The applicable regulations relate
to grading, quality control,
labeling, sanitary control and
reuse or
disposal of
waste. Our
shell egg
facilities are
subject to
periodic USDA,
FDA, EPA
and EPA OSHA
inspections. Our
feed
production facilities are
subject to FDA,
EPA
and OSHA regulation
and inspections. In addition, we We
maintain our own
inspection program to ensure compliance with our own standards and customer specifications. We are not aware of any major capital expenditures necessary to comply with current statutes and regulations; however, there can be no assurance that we

to
monitor
compliance
with
our
own
standards
and
customer
specifications.
It
is
possible
that
we
will
be
required
to
incur
will not significant
costs
for
compliance
with
such
statutes
and
regulations.
In
the
future,
additional
rules
could
be required to incur significant costs for compliance with such statutes and regulations in the future.  In addition, rules are often
proposed
that,
if
adopted, as proposed, could increase our costs. For example,
Ten
states
have
passed
legislation
or
regulations
mandating
minimum
space
or
cage-free
requirements
for
egg
production
or
mandated the sale of
only cage-free eggs and
egg products in April 2016
their states, with implementation
of these laws ranging
from January
2022 to January 2026. These states represent approximately 27% of the USDA Agricultural Marketing Service proposed rulesU.S. total population according to the 2020 U.S. Census.
California,
Massachusetts, and Colorado, which collectively represent approximately 16% of the total estimated
U.S. population
have cage-free legislation in effect currently.
In May 2023, the U.S. Supreme Court upheld as
constitutional California’s law that if adopted, will change requirements,
requires the sale of only cage-free eggs in that state and increase our costs to produce organic eggs. Asregardless of July 2017,the
state in which the proposed rules have not become effective.eggs are produced.

Environmental Regulation
Environmental Regulation. Our operations and facilities are subject to various federal, state, and local environmental, health and safety laws and regulations
governing,
among
other
things,
the
generation,
storage,
handling,
use,
transportation,
disposal,
and
remediation
of
hazardous
materials. Under these laws and regulations, we are required tomust obtain permits from governmental authorities,
including, but not limited to,
wastewater discharge
permits. We
have made, and
will continue to make,
capital and other expenditures
relating to compliance
with existing environmental, health and safety laws and regulations and permits. We are not currently aware of any major capital
expenditures
necessary
to
comply
with
such
laws
and
regulations;
however, because
as
environmental,
health
and
safety
laws
and
regulations are becoming
increasingly more stringent,
including those relating to
animal wastes and wastewater discharges, there can be no assurance
it is
possible that we will not be requiredhave to incur significant costs for compliance with such
laws and regulations in the future.

Human Capital Resources
Employees.  
As of June 3, 2017,2023, we had 3,5782,976 employees, of whom 2,9762,305 worked in egg production, processing,
and marketing, 178207 worked
in
feed
mill operations
and 424 were administrative employees,464, including
our
executive officers.officers,
were
administrative
employees. Approximately 3.9%
5.4% of
our
personnel
are part-time.
part-time, and we
utilize
temporary
employment
agencies
and
independent
contractors
to
augment
our
staffing needs when necessary. For fiscal 2023, the average monthly full-time
equivalent for contingent workers was
1,349. None
of our employees are covered by a collective bargaining
agreement. We consider
our relations with employees to be good.

Culture and Values
We
are
proud
to
be contributing corporate
citizens
where
we live
and
work and to
help create healthy,
prosperous
communities. Our
colleagues
help
us
continue
to
enhance our community
contributions,
which are driven
by
our longstanding culture that strives to promote an environment that upholds integrity and respect and provides opportunities for
each colleague to
realize full potential. These
commitments are encapsulated
in the
Cal-Maine Foods Code
of Ethics and
Business
Conduct
and in our
Human Rights Statement
.
Health and Safety
Our top priority is the
health and safety of our
employees, who continue to produce
high-quality,
affordable egg choices for
our
customers and contribute to
a stable food
supply. Our enterprise safety committee
comprises two corporate safety managers,
eight
area compliance managers
(three specifically for
worker health
and safety),
55 local site
compliance managers, feed
mill managers
and general managers.
The committee that
oversees health and safety regularly reviews
our written policies and
changes to OSHA
regulation standards and shares information as it relates to outcomes from incidents in order to improve future performance. The
11
committee’s
goals
include
working
to
help
ensure
that
our
engagements
with
our consumers,
customers,
and
regulators
evidence our strong commitment to our workers’ health and safety.
Our commitment to our colleagues’ health includes a strong
commitment to on-site worker safety,
including a focus on accident
prevention and life safety.
Our Safety and Health Program
is designed to promote best
practices that help prevent
and minimize
workplace accidents and illnesses. The scope of our Safety and
Health Program applies to all enterprise colleagues. Additionally,
to
help
protect
the health
and well-being
of
our
colleagues and
people
in our
value
chain,
we
require
that any
contractors
or
vendors
acknowledge
and
agree
to
comply
with
the
guidelines
governed
by
our
Safety
and
Health
Program.
At
each
of
our
locations, our general managers are expected to
uphold and implement our Safety and Health Program in alignment
with OSHA
requirements. We
believe that
this program,
which is reviewed
annually by
our senior management
team, contributes
to strong
safety outcomes. As part of our
Safety and Health Program, we conduct multi-lingual training that
covers topics such as slip-and-
fall avoidance, respiratory protection, prevention of
hazardous communication of chemicals, the
proper use of personal
protective
equipment, hearing
conservation, emergency
response, lockout
and tagout
of equipment
and forklift
safety,
among others.
We
have
also
installed dry
hydrogen
peroxide biodefense
systems
in
our
processing
facilities
to
help
protect
our
colleagues’
respiratory health. To help drive
our focus on
colleague safety, we developed safety
committees at each
of our sites
with employee
representation from each department.
We
review
the success
of our
safety programs
on a
monthly basis
to monitor
their effectiveness
and
the development
of any
trends that need to
be addressed. During fiscal
year 2023
our recordable incident rates
decreased by 29% compared to
fiscal 2022.
Diversity, Equity and Inclusion
Our
culture seeks
to
embrace the
diversity
and
inclusion
of
all
our
team
members.
This
culture is driven
by
our
board
and
executive management team. Our board comprises seven members, four of
whom are independent. Women comprise 29% of our
board and 14% of our
board members identify as a
racial or ethnic
minority. As
of June 3, 2023,
our total workforce comprised
29% women and 53%
of colleagues who
identify as racial or
ethnic minorities. Our Policy
against Harassment, Discrimination,
Unlawful
or
Unethical
Conduct
and
Retaliation;
Reporting
Procedure affirms
our
commitment
to
supporting
our
employees
regardless of race, color, religion, sex, national
origin or any other basis protected by applicable law.
Cal-Maine Foods strives
to ensure that
our colleagues are
treated equitably. We are an Equal
Opportunity Employer that prohibits,
by policy and practice,
any violation of applicable
federal, state, or local
law regarding employment.
Discrimination because of
race, color, religion,
sex, pregnancy, age,
national origin, citizenship status, veteran
status, physical or mental disability,
genetic
information, or any other basis protected by applicable law
is prohibited. We value diversity in our workplaces or in
work-related
situations. We maintain
strong protocols to help our colleagues perform
their jobs free from harassment and discrimination. Our
focus
on
equitable
treatment
extends
to
recruitment,
employment
applications,
hiring,
placement,
job
assignments,
career
development, training, remuneration,
benefits, discharge
and other matters
tied to terms and
conditions of employment.
We
are
committed
to
offering
our
colleagues
opportunities
commensurate
with
our
operational
needs,
their
experiences,
goals
and
contributions.
Recruitment, Development and Retention
We
believe
in compensating
our
colleagues
with
fair
and competitive wages, in
addition
to offering
competitive benefits. Approximately 76% of our employees
are paid at hourly rates, which are all paid at rates above
the federal
minimum
wage
requirement.
We
offer
our
full-time
eligible
employees
a
range
of
benefits,
including
company-paid
life
insurance. The Company provides a comprehensive self-insured health plan and pays approximately 84% of the costs of the plan
for
participating
employees
and
their
families
as
of
December
31,
2022. Recent
benchmarking
of
our health
plan
indicates comparable
benefits, at
lower
employee contributions, when compared
to an applicable
Agriculture
and
Food Manufacturing sector grouping, as well as peer group data.
In addition, we offer employees the opportunity to purchase an
extensive range of other group
plan benefits, such as dental, vision,
accident, critical illness, disability
and voluntary life.
After
one
year
of
employment, full-time employees
who
meet
eligibility
requirements may
elect
to participate
in
our
KSOP retirement plan,
which
offers
a
range
of
investment
alternatives
and
includes
many positive features,
such
as
automatic enrollment with scheduled
automatic contribution
increases and loan
provisions. Regardless of
the
employees’ elections
to contribute
to
the
KSOP,
the
Company contributes shares
of Company
stock or
cash
equivalent
to 3%
of participants’ eligible compensation for each pay period that hours
are worked.
We
provide
extensive
training
and
development related
to
safety,
regulatory
compliance,
and
task
training.
We
invest
in
developing our future leaders through our Management Intern, Management
Trainee and informal mentoring programs.
12
Sustainability
We understand that climate, and
the potential consequences of climate change, freshwater availability and preservation of global
biodiversity, in addition to
responsible management of
our flocks, are
vital to
the production of
high-quality eggs and
egg products
and to the success of our
Company. We have engaged in agricultural production for
more than 60
years. Our agricultural practices
continue to evolve as we continue to strive to meet the need for nutritious, affordable foods to feed a growing population even as
we exercise responsible
natural resource stewardship. We plan to publish our most recent sustainability report on or around early
August 2023, which
will be available
on our website.
Information contained
on our website is
not a part
of this report
on Form
10-K.
Our Corporate Information

We
maintain
a
website
at
www.calmainefoods.com
where
general
information
about
our
business
and
corporate
governance
We were founded in 1957 in Jackson, Mississippi.  We were incorporated in Delaware in 1969. Our principal executive officematters is located at 3320 W  Woodrow Wilson Avenue, Jackson, Mississippi 39209. The telephone number of our principal executive office is (601) 948-6813. We maintain a website at www.calmainefoods.com where general information about our business is
available. The
information contained
in our
website is
not a
part of
this document. report.
Our Annual
Reports on
Form 10-K, our
Quarterly Reports on
Form 10-Q, our Current Reports
on Form 8-K, Forms 3, 4 and 5 ownership reports,proxy
statements, and all amendments
to those reports filed
or
furnished pursuant
to Section
13(a) or
15(d) of
the Exchange
Act are
available, free
of charge,
through our
website as
soon as
reasonably
practicable
after they are filed
we
file
them
with,
or
furnish
them
to,
the
SEC.
In
addition,
the
SEC
maintains
a
website
at
www.sec.gov
that
contains
reports,
proxy
and
information
statements,
and
other
information
regarding
issuers
that
file
electronically with the SEC. Information concerning corporate governance mattersCal-Maine Foods, Inc. is also available on our website.

Our Common Stock is listed on The NASDAQ Global Select Market (“NASDAQ”) under the symbol “CALM.” On June 2, 2017, the last sale price of our Common Stock on NASDAQ was $38.55 per share.  Our fiscal year 2017 ended June 3, 2017, and the first three fiscal quarters of fiscal 2017 ended August 27, 2016, November 26, 2016, and February 25, 2017.  All references herein to a fiscal year means our fiscal year and all references to a year mean a calendar year.  Delaware corporation,
incorporated in 1969.

ITEM 1A.
RISK FACTORS

Our
business
and
results
of
operations
are
subject
to
numerous
risks
and
uncertainties,
many
of
which
are
beyond
our
control. The following is a description of the known factors that may materially affect
our business, financial condition or results
of operations. They
should be considered
carefully,
in addition
to the information
set forth
elsewhere in
this Annual
Report on
Form
10-K,
including
under
Part
II.
Item 7. “Management’s
Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations,”
in
making
any
investment
decisions
with
respect
to
our
securities. Additional
risks
or
uncertainties
that
are
not
currently known
to us, that we currently deem to be immaterial
or that we
are aware
of but
currently deem
to be
immaterial or
that could
apply to
any company
could
also materially adversely affect our business, financial condition or results
of operations.

INDUSTRY RISK FACTORS
Market prices
of wholesale
shell eggs
are volatile,
and decreases
in these
prices can
adversely impact
our results of operations.revenues
and

profits.
Our operating results are significantly
affected by wholesale shell egg
market prices, which fluctuate widely and
are outside our
control. As
a result,
our prior
performance
should not
be presumed
to be
an accurate
indication of
future performance.
Under

certain circumstances, small increases
performance. Small increases in production, or small
decreases in demand, can within
the industry might
have a large adverse
effect on shell egg prices. Low shell egg prices adversely effect affect
our revenues and profits.

Market prices for
wholesale shell eggs
have been volatile.volatile
and cyclical. Shell
egg prices have
risen in the
past during periods
of
high demand such as the initial outbreak of
the COVID-19 pandemic and periods when high protein
diets are popular. Shell egg
prices
have
also
risen
during
periods
of
constrained
supply,
such
as
the
latest
highly
pathogenic
avian
influenza
(“HPAI”)
outbreak
that was
first detected
in domestic
commercial flocks
in February
2022. During
times when
prices trended upward from calendar 2002 until late 2003 and early 2004 when they rose to then historical highs.  In the early fall of calendar 2004, the demand trend related to the increased popularity of are
high, protein diets faded dramatically and prices fell.  During the time
egg
industry
has
typically
geared
up
to
produce
more
eggs,
primarily
by
increasing
the
number
of increased demand, the egg industry geared up to produce more eggs, resulting
layers,
which
historically
has
ultimately resulted in an oversupply of eggs.  After calendar 2006, supplies were more closely balanced with demand and egg prices again reached record levels in 2007 and 2008.  Egg prices had subsequently retreated from those record price levels due to increases in industry supply before reaching new highs in 2014.  In 2015, egg prices rose again in large part dueeggs, leading to a decrease in supply caused by the avian influenza outbreak in the upper Midwestern U.S. from April to June 2015. While the AI outbreak significantly impacted the supply and prices of eggs, there were  no positive tests for AI at any of our locations.  The average Urner-Barry Thursday prices for the large market (i.e. generic shell eggs) in the southeastern region for the months of June through November 2015 was $2.32 per dozen, with a peak of $2.97 during August.  Subsequent to November 2015, shell egg prices declined. The Urner Barry price index hit a decade-low level in our fiscal 2016 fourth quarter. During our first quarter of fiscal 2017 it increased slightly, but remained at significantly lower levels than the corresponding period of last year.  During our fiscal 2017 second quarter, it returned to and dropped below the low levels seen during the fiscal 2016 fourth quarter. Earlylower prices.
As discussed
above in our fiscal 2017 third quarter we saw a significant increase but prices dropped again after Christmas. During our fiscal 2017 fourth quarter, it dropped yet again and approached the record low levels of the fiscal 2017 second quarter.  According to Nielsen data, retail customer demand for
, seasonal fluctuations
impact shell eggs has remained strong. The USDA reports that
egg export demand has improved since the beginning of fiscal 2017; however, it has still not fully recovered from levels prior to the AI outbreak. We have experienced reduced demand for egg products, as many of our commercial customers reformulated their products to use fewer eggs when prices spiked and have been slow to resume previous egg usage. Together, these factors have created an oversupply of eggs, with continued pressure on market prices. We expect the egg markets to remain under pressure and do not expect to see meaningful improvement until there is a better balance of supply and demand.Therefore,
comparisons

of
our
sales
and
operating
results
between
different
quarters
within
a
single
fiscal
year
are
not
necessarily
meaningful
Shell egg prices are also impacted by seasonal fluctuations. Retail sales of shell eggs are greatest during the fall and winter months and lowest in the summer months. Prices for shell eggs fluctuate in response to seasonal factors and a natural increase in shell egg production during the spring and early summer. Shell egg prices tend to increase with the start of the school year and are highest prior to holiday periods, particularly Thanksgiving, Christmas and Easter. Consequently, we generally experience lower sales and net income in our first and fourth fiscal quarters ending in August and May, respectively. As a result of these seasonal and quarterly fluctuations, comparisons of our sales and operating results between different quarters within a single fiscal year are not necessarily meaningful comparisons.

A decline in consumer demand for shell eggs can negatively impact our business.

We believe fast food restaurant consumption, high protein diet trends, industry advertising campaigns,the
increase in meals prepared at home due
to concerns and improved nutritional reputation of eggs related to better scientific understanding restrictions during the initial outbreak
of the role COVID-19
pandemic,
high-protein
diet
trends,
industry
advertising
campaigns
and
the
improved
nutritional
reputation
of cholesterol in diets
eggs
have
all
contributed
at one
time or
another
to increased
shell egg
demand. However, there can be no assurance
it is
possible that
the demand
for shell
eggs will not
decline in the future. Adverse publicity relating to health or safety
concerns and changes in the perception of the nutritional
value
of shell eggs, changes in consumer
views regarding consumption of animal-based products, as
well as movement away from high
protein diets, could
adversely affect
demand for shell
eggs, which would
have a material
adverse effect
on our future
results of
operations and financial condition.

13
Feed costs are volatile and increases in these costs can
adversely impact our results of operations.

Feed cost representscosts are the largest element of our shell
egg (farm) production cost, ranging from 58% 55%
to 69%63% of total farm production cost
in the last five fiscal years.
Although feed ingredients, primarily corn and soybean
meal, are available from a
number of sources, we do not
have little, if any, control over
the prices
of the
ingredients we
purchase, which
are affected
by weather, speculators,
various global
and U.S.
supply and
demand factors,
transportation
and storage
costs, speculators,
and
agricultural, energy
and trade
policies in
the U.S.
and
internationally.
More
recently,
the Russia-Ukraine
War
has had
a negative
impact on
the worldwide
supply of grain,
including corn,
putting upward
pressure on
prices. We
saw increasing
prices for
corn and
soybean meal
for fiscal
years 2022
and 2023
as a
result of
weather-
related shortfalls
in production
and yields, ongoing
supply chain disruptions
and the Russia-Ukraine
War
and its impact
on the
export markets.
Our costs for
corn and
soybean meal are
also affected
by local basis
prices. Factors that
can affect
basis levels
include transportation
and storage costs. We
saw basis levels
increase in our
areas of operation
during fiscal 2023
as a result of
higher transportation and storage costs, and agricultural and energy policiesresulting in higher farm production
costs during the U.S. and internationally.  For example, the severe drought in the summer of 2012 and resulting damage to the national corn and soybean crops resulted in high and volatile feed costs.  year.
Increases in feed
costs unaccompanied by increases
in the

selling price
of eggs can have
a material adverse effect
on the results
of our operations.operations and cash flow. Alternatively, low feed costs can encourage industry overproduction, possibly resulting in lower
egg prices. prices and lower revenue.

DueAgricultural risks, including outbreaks of avian
disease, could harm our business.
Our shell egg
production activities are
subject to a variety
of agricultural risks.
Unusual or extreme
weather conditions, disease
and pests can materially and adversely affect the cyclical naturequality and quantity of shell eggs
we produce and distribute. Outbreaks of avian
influenza among poultry occur
periodically worldwide and have occurred
sporadically in the U.S. Most recently,
an outbreak of
HPAI,
which was first detected
in February 2022,
has impacted the
industry.
Prior to 2022, there
was another significant
HPAI
outbreak in the U.S. impacting poultry during 2015. There have been no positive tests for HPAI
at any Cal-Maine Foods’ owned
or contracted facility as
of July 25,
2023. The Company maintains
controls and procedures designed
to reduce the
risk of exposing
our flocks to harmful
diseases; however, despite these efforts, outbreaks of avian
disease can and do
still occur and may
adversely
impact the
health of
our flocks.
An outbreak
of avian
disease could
have a
material adverse
impact on
our financial
results by
increasing
government
restrictions
on
the
sale
and
distribution
of
our
products
and
requiring
us
to
euthanize
the
affected
layers. Negative publicity from an outbreak within our
industry can negatively impact customer perception, even if
the outbreak
does
not
directly
impact
our flocks.
If
a
substantial portion
of
our
layers
or production
facilities are
affected
by
any
of these
factors in any given quarter or year, our business, financial condition, and results of operations could be materially and adversely
affected.
Shell
eggs
and
shell
egg
products
are
susceptible
to
microbial
contamination,
and
we
may
be
required
to,
or we
may
voluntarily, recall
contaminated products.
Shell eggs
and shell
egg products
are vulnerable
to contamination
by pathogens
such as
Salmonella. The
Company maintains
policies and procedures designed to comply with the complex rules and regulations governing egg production, such as The Final
Egg
Rule
issued
by
the
FDA
“Prevention
of
Salmonella
Enteritidis
in
Shell
Eggs
During
Production,
Storage,
and
Transportation,” and
the FDA’s
Food Safety Modernization Act. Shipment
of contaminated products, even
if inadvertent, could
result in a
violation of law and
lead to increased
risk of exposure
to product liability
claims, product recalls
and scrutiny by federal
and
state
regulatory
agencies.
We
have
little,
if
any,
control
over
proper
handling
once
the
product
has
been
shipped
or
delivered. In
addition,
products
purchased
from
other
producers
could
contain
contaminants
that
might
be
inadvertently
redistributed by us. As such, we might decide or be required
to recall a product if we, our customers
or regulators believe it poses
a potential
health risk.
Any product
recall could
result in
a loss
of consumer
confidence in
our products,
adversely affect
our
reputation
with existing
and potential
customers and
have a
material adverse
effect
on our
business, results
of operations
and
financial resultsfluctuatefrom yearcondition. We
currently maintain insurance
with respect to yearcertain of
these risks, including product
liability insurance,
business interruption insurance and between different quarters within a single fiscal year.general liability
insurance, but in many cases such insurance is expensive,
difficult to obtain

and no assurance can
be given that such insurance
can be maintained in
the future on acceptable
terms, or in sufficient
amounts
The shell egg industry has traditionally been subject to periods of highprotect us against losses due to any such events, or at all.
Our profitability followed
may be adversely
impacted by periods of significant loss. In the past, during periods of high profitability, shell egg producers tended to increase the number of layers
increases in production with a resulting increase in the supply of shell eggs, which generally caused a drop in shell egg prices until supply other
input costs such
as packaging materials
and demand returned to balance. As a result, our financial results from year to year vary significantly.  Additionally,delivery
expenses, including as a result of seasonal fluctuations,inflation.
In addition to feed ingredient costs, other significant input costs include costs of packaging materials and delivery expenses. Our
costs of packing materials increased
during fiscal 2023 and 2022
due to rising inflation and labor
costs, and during 2022 also as
a
result
of
supply
chain
constraints
initially
caused
by
the
pandemic,
and
these
costs
may
continue
to
increase.
We
also
14
experienced increases in delivery expenses during fiscal 2023 and 2022 due to increases in fuel and labor costs for both our financial results fluctuate fleet
and contract
trucking, and
these costs
may continue
to increase.
Increases in
these costs
are largely
outside of
our control
and
have an adverse effect on our profitability and cash flow.
BUSINESS AND OPERATIONAL
RISK FACTORS
Global
or
regional
health
crises including
pandemics
or
epidemics
could
have
an
adverse impact
on
our
business and
operations.
The
effects
of
global
or
regional
pandemics
or
epidemics
can
significantly between different quarters within
impact
our
operations.
Although
demand
for
our
products could
increase as
a single fiscal year.result
of restrictions
such as
travel bans
and restrictions,
quarantines, shelter-in-place
orders, and

business and government shutdowns,
which can prompt more
consumers to eat at home,
these restrictions could also significantly
increase our cost of doing business
due to labor shortages, supply-chain disruptions, increased costs and decreased availability of
packaging supplies, and increased
medical and other costs.
We purchaseexperienced these impacts as aportion
result of the shell eggs we sell from outside producersCOVID-19
pandemic,
primarily during our fiscal
years 2020 and our ability2021.
The pandemic recovery also
contributed to obtain such eggs at prices increasing inflation
and in quantities acceptable interest rates,
which persist and
may continue
to uspersist. The
impacts of health
crises are difficult
to predict and
depend on numerous
factors
including
the
severity,
length and
geographic
scope
of
the outbreak,
resurgences
of
the disease
and
variants,
availability
and
acceptance of vaccines, and
governmental, business and individuals’
responses.
A resurgence of
COVID-19 and/or variants, or
any future major public health crisis, would disrupt our
business and could fluctuate.

We produced approximately 84%  and 78% of the total number of shell eggs we sold in fiscal 2017 and fiscal 2016, respectively, and purchased the remainder from outside producers. As the wholesale price for shell eggs increases, our cost to acquire shell eggs from outside producers increases. There can be no assurance that we will be able to continue to acquire shell eggs from outside producers in sufficient quantities and satisfactory prices, and our inability to do so may have a material adverse effect on
our business and profitability.

financial results.
Our acquisition growth strategy subjects us to various risks.

As discussed in
, we plan to continue
to pursue a
growth strategy whichthat includes
selective acquisitions
of other
companies engaged
in the
production and
sale of
shell eggs. In fiscal year 2017, we completed the purchase of the substantially all of theeggs,
with a
priority on
those that
will facilitate
our ability
to
expand our cage-free shell egg production assets capabilities in key locations and markets. We may over-estimate or under-estimate the
demand
for
cage-free
eggs,
which
could
cause
our
acquisition
strategy
to
be
less-than-optimal
for
our
future
growth
and
profitability.
The
number
of Foodonics International Inc.existing
companies
with
cage-free
capacity
that
we
may
be
able
to
purchase
is
limited,
as
most
production of shell
eggs by other companies
in our markets currently
does not meet customer
demands or legal requirements
to
be designated
as cage-free.
Conversely,
if we
acquire cage-free
production capacity,
which is
more expensive
to purchase
and
operate, and customer
demands or legal
requirements for cage-free
eggs were to change,
the resulting lack
of Happy Hen Egg Farm, Inc. demand for
cage-
free eggs may result in higher costs and lower profitability.
Acquisitions require capital resources and can divert management’s attention from our existing business. Acquisitions also entail
an inherent risk that we
could become subject to contingent or
other liabilities, including liabilities arising from
events or conduct
prior to
our acquisition
of a
business that
were unknown
to us
at the
time of
acquisition. We
could incur
significantly greater
expenditures in integrating an acquired business than we anticipated at the
time of its purchase.
We cannot assure
you that we:
●
will identify suitable acquisition candidates;
●
can consummate acquisitions on acceptable terms;
●
can successfully integrate an acquired business into our operations; or
●
can successfully manage the operations of an acquired business.

No
assurance
can
be
given
that
companies
we
acquire
in
the
future
will
contribute
positively
to
our
results
of
operations
or
No assurance can be given that companies we acquire in the future will contribute positively to our results of operations or financial condition.
In addition,
federal antitrust
laws require
regulatory approval
of acquisitions
that exceed
certain threshold
levels of significance.significance, and we cannot guarantee that such approvals would

be obtained.
The consideration
we pay in
connection with any
acquisition also affects
our financial results.
If we pay
cash, we could
be required
to
use
a
portion
of
our
available
cash
or
credit
facility
to
consummate
the
acquisition.
To
the
extent
we
issue
shares
of
our
Common Stock, existing stockholders may
be diluted. In addition,
acquisitions may result in the incurrence of
additional debt. Our ability to
access

any additional
capital that
may be
needed for
an acquisition
may be
adversely impacted
by higher
interest rates
and economic
uncertainty.
Our largest customershavehistorically accounted for a significant portion of our net sales volume. Accordingly, our business may be
adversely affected by the loss of, or reduced purchases by,
one or more of our large customers.

Our customers, such as supermarkets, warehouse clubs
and food distributors, have continued to consolidate and consolidation
is
For the fiscal years 2017, 2016,expected to continue. These consolidations have
produced larger customers and 2015, twopotential customers Wal-Mart Stores with
increased buying power
who are more
capable of operating
with reduced inventories,
opposing price increases,
and Sam’s Clubs, on a combined basis, demanding lower
pricing, increased
15
promotional programs and specifically tailored products. Because of these trends,
our volume growth could slow or we
may need
to lower prices or increase promotional spending for our products, any of
which could adversely affect our financial results.
Our top
three customers
accounted for 28.9%
an aggregate of
50.1%, 28.9%, 45.9%
and 25.7%48.6% of our
net sales dollars
for fiscal 202
3, 2022,
and
2021, respectively.  For
Our largest
customer,
Walmart
Inc. (including
Sam's Club),
accounted for
34.2%, 29.5%
and 29.8%
of net
sales dollars
for fiscal years 2017, 2016,
2023, 2022,
and 2015,2021,
respectively. Although

we have
established long-term
relationships with
most of
our top ten customers accounted for 69.5%,  70.6%, and 67.9% of net sales dollars, respectively. Although we have established long-term relationships with most of our customers,
who continue
to purchase
from us
based on
our ability
to service
their needs,
they are
generally free
to acquire
shell eggs
from other
sources. If, for
any reason, one
or more
of our
large customers
were to
purchase significantly
less of
our
shell eggs
in the
future or
terminate their
purchases from
us, and
we were
not able
to sell
our shell eggs in the future or terminate their purchases from us, and we are not able to sell our shell
eggs to
new customers
at
comparable levels, it would have a material adverse effect
on our business, financial condition, and results of operations.

Our business is highly competitive.
The
production
and
sale
of
fresh
shell
eggs,
which
accounted
for
virtually
all
of
our
net
sales
in
recent
years,
is
intensely
competitive. We
compete with
a large
number of
competitors that
may prove
to be
more successful
than we
are in
producing,
marketing and
selling shell
eggs. We
cannot provide
assurance that
we will
be able
to compete
successfully with
any or
all of
these companies.
Increased competition could result in price reductions,
greater cyclicality, reduced
margins and loss of market
share, which would negatively affect our business, results of operations,
and financial condition.
We
are
dependent
on
our
management
team,
and
the
loss
of
any
key
member
of
this
team
may
adversely
affect
the
implementation of our business plan in a timely manner.
Our success
depends largely
upon the
continued service
of our
senior management
team. The
loss or interruption
of service
of
one or more
of our key
executive officers
could adversely
affect our
ability to manage
our operations effectively
and/or pursue
our growth strategy.
We
have not entered
into any employment
or non-compete
agreements with any
of our executive
officers.
Competition could cause us to lose talented employees, and unplanned turnover could deplete institutional
knowledge and result
in increased costs due to increased competition for employees.
Our
business
is
dependent
on
our
information
technology
systems
and
software,
and
failure
to
protect
against
or
effectively respond to
cyber-attacks, security
breaches, or other
incidents involving those systems,
could adversely affect
day-to-day operations and decision making processes and
have an adverse effect on our performance and reputation.
The efficient operation of our business depends on our
information technology systems, which we rely on to effectively manage
our business data, communications, logistics, accounting, regulatory
and other business processes. If we do not allocate and
effectively manage the resources necessary to build
and sustain an appropriate technology environment, our business,
reputation, or financial results could be negatively impacted. In
addition, our information technology systems may be
vulnerable to damage or interruption from circumstances beyond our control,
including systems failures, natural disasters,
terrorist attacks, viruses, ransomware, security breaches or cyber
incidents. Cyber-attacks are becoming more sophisticated and
are increasing in the number of attempts and frequency by groups and individuals
with a wide range of motives. We
have
experienced and expect to continue to experience attempted cyber-attacks
of our information technology systems or networks.
A security breach
of
sensitive
information
could
result
in
damage
to
our
reputation
and
our
relations
with
our
customers
or
employees. Any such damage or interruption could have a material adverse
effect on our business.
Technology
and business and regulatory requirements continue to change rapidly.
Failure to complyupdate or replace legacy systems to
address
these
changes
could
result
in
increased
costs,
including
remediation
costs,
system
downtime,
third
party
litigation,
regulatory actions or cyber security vulnerabilities which could have
a material adverse effect on our business.
Labor shortages or increases in labor costs could adversely
impact our business and results of operations.
Labor is a primary component of our farm production costs. Our success is dependent
upon recruiting, motivating, and retaining
staff to operate our farms. Approximately 76% of our employees are paid at hourly rates, often in entry-level positions. While all
our employees are paid at
rates above the federal minimum wage
requirements, any significant increase
in local, state or federal
minimum wage requirements could
increase our labor
costs. In addition,
any regulatory changes
requiring us to
provide additional
employee
benefits
or
mandating
increases
in
other
employee-related
costs,
such
as
unemployment
insurance
or
workers
compensation, would increase our
costs. A shortage
in the labor
pool, which may be
caused by competition from
other employers,
the remote
locations of
many of
our farms,
decreased
labor participation
rates or
changes in
government-provided
support or
immigration laws, particularly in times of lower unemployment,
could adversely affect our business and results of operations.
A
shortage of labor
available to
us could
cause our
farms to
operate with
reduced staff, which
could negatively impact
our production
capacity and efficiencies.
In fiscal 2021 and 2022, our labor costs increased primarily due to the pandemic
and its effects, which
16
caused us to
increase wages in
response to labor shortages.
In fiscal 2023,
labor wages continued to
rise due to
increasing inflation
and low unemployment.
Accordingly, any significant labor shortages or increases
in our labor costs
could have a material
adverse
effect on our results of operations.
We are controlled by the family of our late founder, Fred
R. Adams, Jr., and Adolphus B. Baker,
Chairman of our Board
of Directors,
controls the vote of 100% of our outstanding Class A Common Stock.
Fred R. Adams,
Jr., our
Founder and Chairman Emeritus
died on March 29,
2020. Mr.
Adams’ son-in-law,
Adolphus B. Baker,
Chairman
of
our
board
of
directors,
Mr.
Baker’s
spouse
and
her
three
sisters
(Mr.
Adams’
four
daughters)
(collectively,
the
“Family”)
beneficially
own,
directly
or
indirectly
through
related
entities,
100%
of
our
outstanding
Class
A
Common
Stock
(which has
10 votes
per share),
controlling approximately
52.1% of
our total
voting power.
Such persons
also have
additional
voting power
due to
beneficial ownership
of our
Common Stock
(which has
one vote
per share),
directly or
indirectly through
related entities, resulting in family voting control of approximately 53.8% of our total voting power.
Mr. Baker controls the vote
of 100% of our outstanding Class A Common Stock.
We understand that the Family
intends
to retain ownership
of a
sufficient amount of our
Common Stock and
our Class A
Common
Stock to assure continued ownership of more than 50% of the voting power of
our outstanding shares of capital stock. As a result
of
this ownership,
the
Family has
the
ability
to exert
substantial
influence
over
matters requiring
action
by our
stockholders,
including
amendments
to our
certificate
of incorporation
and by-laws,
the election
and removal
of directors,
and any
merger,
consolidation,
or
sale of
all or
substantially
all of
our
assets,
or
other
corporate
transactions.
Delaware
law
provides
that
the
holders of a majority of the voting power of shares entitled to vote must approve certain fundamental corporate transactions such
as a merger,
consolidation and sale of
all or substantially all
of a corporation’s
assets; accordingly,
such a transaction involving
us
and
requiring
stockholder
approval
cannot
be
effected
without
the
approval
of
the
Family.
Such
ownership
will
make
an
unsolicited acquisition of our Company more difficult and discourage
certain types of transactions involving a change of control
of our Company, including
transactions in which the holders of our Common Stock might otherwise receive a premium for their
shares over then current market prices.
The Family’s controlling
ownership of our capital stock may adversely
affect the market
price of our Common Stock.
The
price
of
our
Common
Stock
may
be
affected
by
the
availability
of
shares
for
sale
in
the
market,
and
you
may
experience significant dilution as a result of future issuances
of our securities, which could materially and adversely
affect
the market price of our Common Stock.
The sale or availability for sale of substantial amounts of our Common Stock could adversely impact its price.
The Family holds
approximately 1.4 million shares of Common Stock (the “Subject Shares”) that are subject to an Agreement Regarding Common
Stock
(the
“Agreement”)
filed
as
an
exhibit
to
this
report.
The
Subject
Shares
remain
subject
to
potential
sale
under
the
Agreement. The Agreement
generally provides that
if a holder
of Subject Shares
intends to sell any
of the Subject
Shares, such
party must give the
Company a right of first
refusal to purchase all or
any of such shares.
The price payable by
the Company to
purchase shares
pursuant to
the exercise
of the
right of
first refusal
will reflect
a 6%
discount to
the then-current
market price
based
on
the
20
business-day
volume-weighted
average
price.
If
the
Company
does
not exercise
its right
of
first
refusal
and
purchase the shares offered, such party will, subject to the approval of a special committee of independent
directors of the Board
of Directors, be
permitted to sell
the shares not
purchased by the
Company pursuant to
a Company registration
statement, Rule
144 under the Securities Act of 1933, or another manner of sale agreed to by the Company. Although
pursuant to the Agreement
the Company
will have a
right of first
refusal to purchase
all or any
of those shares,
the Company
may elect not
to exercise its
rights
of
first
refusal,
and
if so
such
shares
would
be
eligible for
sale pursuant
to
the registration
rights
in
the
Agreement
or
pursuant
to
Rule
144
under
the Securities
Act
of
1933.
Sales, or
the
availability
for
sale, of
a
large
number
of
shares of
our
Common Stock could result in a decline in the market price of our
Common Stock.
In addition,
our articles
of incorporation
authorize us
to issue
120,000,000 shares
of our
Common Stock.
As of
June 3,
2023,
there were
44,184,048 shares
of our
Common Stock
outstanding. Accordingly,
a substantial
number of
shares of
our Common
Stock
are
outstanding
and
are,
or
could
become,
available
for
sale
in
the
market.
In
addition,
we
may
be
obligated
to
issue
additional shares of our Common Stock in connection with applicable governmental regulations, including environmental regulations,employee benefit
plans (including equity incentive plans).
In the
future, we
may decide
to raise
capital through
offerings of
our Common
Stock, additional
securities convertible
into or
exchangeable for
Common Stock, or
rights to acquire
these securities or
our Common Stock.
The issuance of
additional shares
of our Common Stock or additional securities convertible into or exchangeable for our Common Stock could harm result in dilution of
existing stockholders’ equity interests in
us. Issuances of substantial amounts of
our Common Stock, or the perception
that such
issuances could
occur,
may adversely
affect prevailing
market prices
for our
Common Stock,
and we
cannot predict
the effect
this dilution may have on the price of our Common Stock.
17
LEGAL AND REGULATORY
RISK FACTORS
Pressure from animal rights groups regarding the treatment of animals may subject us to additional costs to conform our
practices
to
comply
with
developing
standards
or
subject
us
to
marketing
costs
to
defend
challenges
to
our
current
practices and protect
our image with
our customers. In
particular,
changes in customer
preferences and
new legislation
have accelerated an increase in demand for cage-free eggs, which increases uncertainty
in our business and increases our
costs.
We and many of our customers face pressure from animal rights groups, such as
People for the Ethical Treatment of Animals and
the Humane
Society of
the United States,
to require
companies that supply
food products
to operate
their business in
a manner
that
treats
animals
in
conformity
with
certain
standards
developed
or
approved
by
these
groups.
In
general,
we
may
incur
additional costs to conform our practices to address
these standards or to defend our existing
practices and protect our image with
our customers.
The standards promoted
by these groups
change over time,
but typically
require minimum
cage space
for hens,
among other requirements, and some
of these groups have led successful
legislative efforts to ban
any form of caged housing
in
various states.
As
discussed
in
,
ten
states
have
passed
minimum
space
and/or
cage-free
requirements
for
hens,
and
other
states are
considering
such requirements.
In
addition,
in recent
years,
many
large
restaurant
chains,
foodservice
companies
and
grocery
chains,
including
our
largest
customers,
announced
goals
to
transition
to
an
exclusively cage-free
egg supply
chain by specified
future dates.
A significant
number of
our customers
previously announced
goals to offer cage-free eggs exclusively on or before 2026, in most cases subject to available supply, affordability and consumer
demand,
among other contingencies.
Some of these customers have recently changed those goals to offer 70% cage-free eggs by
the end of 2030. While we
anticipate that our retail and foodservice customers will
continue to transition to selling cage-free eggs
given public
commitments,
there is
no assurance
that this
transition
will take
place or
take place
according to
the timeline
of
current cage-free
commitments. For
example, customers
may accelerate
their transition
to stocking
cage-free eggs,
which may
challenge our
ability to
meet the
cage-free
volume needs
of those
customers and
result in
a loss
of shell
egg
sales. Similarly,
customers who
commit to
stock greater
proportional quantities
of cage-free
eggs are
under no
obligation to
continue to
do so,
which may
result in an
oversupply of
cage-free eggs and
result in lower
specialty egg
prices, which could
reduce the return
on
our capital investment in cage-free production.
Changing our infrastructure and operating results, financial condition,procedures to conform to consumer preferences, customer demands and reputation.  Further,
new laws has
resulted and
will continue
to result
in additional
costs, including
capital and
operating cost
increases. The
USDA reported
that
the estimated
U.S. cage-free
flock was
121.6 million hens as
of June
30, 2023,
which is approximately
38.3% of
the total U.S.
table
egg
layer
hen
population.
According
to
the
USDA
Agricultural
Marketing
Service,
as of
May
2023
approximately
221
million hens,
or about
70.5% of
the U.S.
non-organic
laying flock
would have
to be
in cage-free
production by
2026 to
meet
projected demand
from the
retailers, foodservice
providers and
food
manufacturers that
have made
goals to
transition to
cage-
free eggs.
In response
to our
customers’ announced
goals and
increased legal
requirements for
cage-free eggs,
we have
increased capital
expenditures
to
increase
our
cage-free
production
capacity.
We
are
also
enhancing
our
focus
on
cage-free
capacity
when
considering
acquisition opportunities.
Our customers
typically do
not commit
to long-term
purchases of
specific quantities
or
type of eggs
with us, and
as a result,
we cannot predict
with any certainty
which types of
eggs they will
require us to
supply in
future
periods.
The
production
of
cage-free
eggs
is
more
costly
than
the
production
of
conventional
eggs,
and
these
higher
production costs contribute
to the prices
of cage-free eggs,
which historically have
typically been higher
than conventional egg
prices. Many consumers prefer to buy less expensive conventional shell eggs. These consumer preferences may in turn influence
our customers’ future needs for
cage-free and conventional eggs.
Due to these uncertainties,
we may over-estimate future demand
for cage-free
eggs, which
could increase
our costs
unnecessarily,
or we
may under-estimate
future demand
for cage-free
eggs,
which could
harm us
competitively.
If our
competitors obtain
non-cancelable
long-term contracts
to provide
cage-free eggs
to
our existing or potential customers,
then there may be decreased demand
for our cage-free eggs due
to these lost potential sales.
If we and our
competitors increase cage-free egg production
and there is no
commensurate increase in demand for
cage-free eggs,
this overproduction
could lead to
an oversupply of
cage-free eggs, reducing
the sales price
for specialty eggs
and our return
on
capital investments in cage-free production.
Failure
to
comply
with
applicable
governmental
regulations,
including
environmental
regulations,
could
harm
our
operating results,
financial condition,
and reputation.
Further,
we may
incur significant
costs to
comply with
any such regulations.

regulations.
We are subject to federal, state and local
regulations relating to grading, quality
control, labeling, sanitary control, waste
disposal,
and waste disposal. other
areas of
our business.
As a
fully-integrated
shell egg
producer,
our shell
egg facilities
are subject
to regulation
and
inspection by the USDA, OSHA, EPA
and FDA, as well as regulation by various state and local health and agricultural agencies, among others. All of
18
our shell egg production and
feed mill facilities are subject
to FDA, EPA and OSHA regulation and inspections. In addition, rules
are often proposed
that, if adopted as proposed, could increase our costs. For example, in April 2016 the USDA Agricultural Marketing Service proposed rules that, if adopted, would change requirements, and increase our costs to produce organic eggs. As of July 2017, the proposed rules have not become effective.

Our operations and facilities are subject to various federal, state and local environmental, health, and safety laws and regulations
governing,
among
other
things,
the
generation,
storage,
handling,
use,
transportation,
disposal,
and
remediation
of
hazardous
materials. Under these laws and
regulations, we are required to obtain permits
from governmental authorities, including, but
not
limited to pollution/wastewater discharge permits.permits and manure

and litter land applications.
If we
fail to
comply with an
applicable law laws
or regulation, regulations,
or fail
to obtain
necessary permits,
we could
be subject
to significant
fines and penalties or other sanctions, our reputation could be harmed, and our operating results and financial condition could be
materially
adversely
affected.
In
addition,
because
these
laws and
regulations
are
becoming
increasingly
more
stringent, there can be no assurance
it is
possible that we will not be required to incur significant costs for compliance
with such laws and regulations in the future.

Shell eggsClimate change and shell egg products are susceptible to microbial contamination, and we legal or regulatory responses
may be required to or voluntarily recall contaminated products.

Shell eggs and shell egg products are vulnerable to contamination by pathogens such as Salmonella.  Shipment of contaminated products, even if inadvertent, could result in a violation of law and lead to increased risk of exposure to product liability claims, product recalls and increased scrutiny by federal and state regulatory agencies.  In addition, products purchased from other producers could contain contaminants that might be inadvertently redistributed by us.  As such, we might decide or be required to recall a product if we or regulators believe it poses a potential health risk.  We do not maintain insurance to cover recall losses.  Any product recall could result in a loss of consumer confidence in our products, adversely affect our reputation with existing and potential customers and have a materialan adverse effectimpact on our business and results of operations and financial condition.
operations.

Extreme
weather
events,
such
as derechos,
wildfires,
drought,
tornadoes,
hurricanes,
storms,
floods
or
other
natural
disasters
Agricultural risks, including outbreaks of avian disease, could harm our business.

Our shell egg production activities are subject to a variety of agricultural risks. Unusual or extreme weather conditions, disease and pests can materially and adversely affect our operating
results and financial condition. In fact, derechos, fires, floods,
tornadoes and
hurricanes have affected our facilities or the quality facilities of other egg producers in the past. Increased global temperatures
and quantity more
frequent occurrences
of shell eggsextreme
weather events,
which may
be exacerbated
by climate
change, may
cause crop
and livestock
areas to
become unsuitable,
including due
to water
scarcity or
high or
unpredictable
temperatures,
which may
result in
much
greater stress on food systems and more pronounced food
insecurity globally. Lower
global crop production, including corn and
soybean meal,
which are
the primary
feed ingredients
that support
the health of
our animals,
may result
in significantly
higher
prices for these commodity inputs, impact our ability to source the commodities we produce and distribute.  The Company maintains controls and proceduresuse to reduce the risk of exposingfeed our flocks, and negatively impact
our ability
to harmful diseases.  Despitemaintain
or grow our efforts, outbreaks of avian disease can still occur
operations. Climate
change may
increasingly expose
workers and may
animals to
high heat
and
humidity stressors that adversely impact the health of our flocks.  An outbreak of avian disease could have a material adverse impact on our financial results by increasing government restrictions on the sale and distribution of our products.  Negative publicity from an outbreak within our industry canpoultry production. Increased
greenhouse gas emissions may also negatively impact customer perception, even if the outbreak does not directly air
quality, soil quality
and water quality,
which may hamper our ability to support our operations,
particularly in higher water- and
soil-stressed regions.
Increasing
frequency of
severe weather
events, whether
tied to
climate change
or any
other cause,
may negatively
impact our flocks.  If a substantial portion
ability to raise
poultry and
produce eggs profitably
or to
operate our transportation
and logistics
supply chains. Regulatory
controls
and
market
pricing may
continue
to drive
the costs
of fossil
-based
fuels higher,
which
could negatively
impact
our production facilities are affected by anyability
to
source commodities
necessary to
operate our
farms or
plants and
our current
fleet of these factors in any given quarter or year,
vehicles. These
changes may
cause us
to
change, significantly, our day-to-day
business financial condition, and results of operations could be materially and adversely affected.

From April through June 2015,  our industry experienced a significant avian influenza outbreak, primarily in the upper Midwestern U.S.  Based on several published industry estimates, we believe approximately 12% of the national flock of laying hens was affected.  The affected laying hens were either destroyed by the disease or euthanized.  The effect this outbreak had on our industry and our company is discussed throughout this report.  There have been no positive testsstrategy. Climate change and extreme weather events may also
impact demand for avian influenza at anyour products
given evolution of our locations. We have significantly increased the biosecurity consumer food preferences.
Even if we take
measures at all of our facilities; however we cannot be certain that our flocks will not be affected by AI or other diseases in the future. 

Our business is highly competitive.

The production and sale of fresh shell eggs, which accounted for virtually all of our net sales in recent years, is intensely competitive. We compete with a large number of competitors that may prove to be more successful than we are in marketing and selling shell eggs. We cannot provide assurance that we will be able to compete successfully with any or all of these companies. In addition, increased competition could result in price reductions, greater cyclicality, reduced margins and loss of market share, which would negatively affectposition our business results of operations, and financial condition.
in anticipation
 
Pressure from animal rights groups regarding the treatment of animals may subject us to additional costs to conform our practices to comply with developing standards or subject us to marketing costs to defend challenges to our current practices and protect our image with our customers.
such
 
changes, future
We
compliance
with legal
or regulatory
requirements may
require significant
management
time, oversight and many of our customers face pressure from animal rights groups, such as People for the Ethical Treatment of Animals ("PETA"),enterprise expense. We
may also incur significant expense tied to regulatory fines if laws and the Humane Society of the United States ("HSUS"), to require all companies that supply food products operate their business regulations are
interpreted and applied
in a manner that treats animals in conformity
is inconsistent with certain standards developed or approved by these animal rights groups. The standards typically require minimum cage space for hens, among other requirements, but some of these groups have made legislativeour
business practices. We
can make no
assurances that our efforts
to ban any form of caged housing in various states.  California’s Proposition 2 and Assembly Bill 1437 was effective January 1, 2015, and did increase the cost of production in that State and for producers who sell there.  During our fiscal 2016, many large restaurant chains, food service companies and grocery chains, including our largest customers, announced goals to transition to a cage-free egg supply chain by specified future dates.  Changing our procedures and infrastructure to conform to these types of laws or anticipated customer demand prepare
for these types of guidelines has resulted
adverse events
will be
in line
with future
market and will continue
regulatory expectations
and our
access to result in additional costs
capital to our internal production of shell eggs, including capital and operating cost increases from housing and husbandry practices and modification of existing or construction of new facilities, and the increased cost for us to purchase shell eggs from our outside suppliers. While some of the increased costs have been passed on to our customers, we cannot provide assurance that we can continue to pass on these costs, or additional costs we will incur, in the future. 

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

Our success depends largely upon the continued service of our senior management team. The loss or interruption of service of one or more of our key executive officers couldmay also be adversely affect our ability to manage our operations effectively and/or pursue our growth strategy. We have not entered into any employment or non-compete agreements with any of our executive officers nor do we carry any significant key-man life insurance coverage on any such persons.  

We are controlled bythe family of our founder, Fred R. Adams, Jr.

Fred R. Adams, Jr., our Founder and Chairman Emeritus, and his spouse own 27.8% of the outstanding shares of our Common Stock, which has one vote per share.  In addition, Mr. Adams and his spouse own 74.7% and his son-in-law, Adolphus B. Baker, our President, Chief Executive Officer and Chairman of the Board, and his spouse own 25.3% of the outstanding shares of our Class A Common Stock, which has ten votes per share. Mr. Baker and his spouse also own 1.4% of the outstanding shares of our Common Stock. A conservatorship has been established to manage Mr. Adams’ affairs, with his spouse and Mr. Baker as co-conservators, as a result of the impairment of Mr. Adams’ health related to his previously disclosed stroke.  Mr. Adams continues to consult actively and regularly with the Company

and it is expected that he will continue to do so for as long as he is able.  As a result of the conservatorship, as of July 1, 2017, Mr. Adams, his spouse, and Mr. Baker possessed 52.3%, and Messrs. Adams and Baker and their spouses collectively possessed 66.2%, of the total voting power represented by the outstanding shares of our Common Stock and Class A Common Stock. These stockholdings include shares of our Common Stock accumulated under our employee stock ownership plan for the respective accounts of Messrs. Adams and Baker and Mr. Baker’s spouse.

The Adams and Baker families intend to retain ownership of a sufficient amount of Common Stock and Class A Common Stock to assure continued ownership of over 50% of the voting power of our outstanding shares of capital stock. Such ownership will make an unsolicited acquisition of the Company more difficult and discourage certain types of transactions involving a change of control of our Company, including transactions in which the holders of Common Stock might otherwise receive a premium for their shares over then current market prices. In addition, certain provisions of our Certificate of Incorporation require that our Class A Common Stock be issued only to Fred R. Adams, Jr. and members of his immediate family, and if shares of our Class A Common Stock, by operation of law or otherwise, are deemed not to be owned by Mr. Adams or a member of his immediate family, the voting power of any such shares shall be automatically reduced to one vote per share. The Adams and Baker families’ controlling ownership of our capital stock may adversely affect the market price of our Common Stock.

Based on the Adams family’s beneficial ownership of our outstanding capital stock, we are a “controlled company,” as defined in Rule 5615(c)(1) of the NASDAQ’s listing standards. Accordingly, we are exempt from certain requirements of NASDAQ’s corporate governance listing standards, including the requirement to maintain a majority of independent directors on our board of directors and the requirements regarding the determination of compensation of executive officers and the nomination of directors by independent directors. 

impacted.
Current and future litigation could expose us to significant
liabilities and adversely affect our business reputation.

We and certain of our subsidiaries are involved in various legal proceedings.
Litigation is inherently unpredictable, and although
we
believe
we
have
meaningful
defenses
in
these
matters,
we
may
incur
liabilities
due
to
adverse
judgments
or
enter
into
settlements of claims that
could have a material
adverse effect on our
results of operations, cash
flow and financial condition.
For
a
discussion
of
our
ongoing
legal
proceedings
see
below
and
Part
II.
Item
8.
Notes
to
the
Consolidated Financial
Statements,
Such lawsuits are
expensive to
defend, divert
management’s
attention, and
may
result in
significant
adverse judgments
or settlements. Legal
proceedings
may expose
us to
negative publicity,
which could adversely affect our business reputation and customer preference
for our products and brands.

FINANCIAL AND ECONOMIC RISK FACTORS
Weak
or unstable
economic
conditions, including
continued
higher inflation
and rising
interest
rates,
could negatively
impact our business.
Weak
or unstable
economic conditions,
including continued
higher inflation
and rising
interest rates,
may adversely
affect our
business by:
●
Limiting our access to capital markets or increasing the cost of capital we may
need to grow our business;
●
Changing consumer spending and habits and demand for eggs, particularly
higher-priced eggs;
19
●
Restricting the supply of energy sources or increasing our cost to procure
energy; or
●
Reducing the availability of feed
ingredients, packaging material, and other raw
materials, or increasing the cost
of these
items.
Deterioration of economic conditions could also negatively
impact:
●
The financial condition of our suppliers, which may make it more
difficult for them to supply raw materials;
●
The financial condition of our customers, which may decrease demand for
eggs or increase our bad debt expense; or
●
The financial condition of our insurers, which could increase our cost to obtain insurance, and/or make it difficult for or
insurers to meet their obligations in the event we experience a loss due to an
insured peril.
According
to
the
U.S.
Bureau
of
Labor
Statistics,
from
May
2021
to
May
2022,
the
Consumer
Price Index for
All
Urban
Consumers (“CPI-U”) increased
8.5 percent, the largest
12-month increase since
the period ending December
1981. The CPI-U
increased 4.1% from May 2022 to May 2023. Inflationary costs have increased our input costs, and if
we are unable to pass these
costs through to the customer it could have an adverse effect on
our business.
We
hold
significant
cash balances
in deposit
accounts with
deposits in
excess of
the amounts
insured by
the Federal
Deposit
Insurance Corporation (“FDIC”). In
the event of
a bank failure
at an institution
where we maintain
deposits in excess
of the FDIC-
insured amount, we may lose such excess deposits.
The
loss
of
any
registered
trademark
or
other
intellectual
property
could
enable
other
companies
to
compete
more
effectively with us.
We
utilize intellectual
property in
our business. For
example, we
own the
trademarks
Farmhouse Eggs®
,
4Grain®, Sunups®
,
and
Sunny Meadow®
. We
produce and market
Egg-Land’s
Best®
and
Land O’ Lakes
® under license
agreements with EB. We
have invested a significant amount of
money in establishing and promoting
our trademarked brands. The loss or
expiration of any
intellectual property could
enable our competitors
to compete more
effectively with us
by allowing them
to make and
sell products
substantially
similar
to
those
we
offer.
This
could
negatively
impact
our
ability
to
produce
and
sell
those
products,
thereby
adversely affecting our operations.
Impairment in the carrying value
of goodwill or other assets
could negatively affect our results of
operations or net worth.

Goodwill
represents
the
excess
of
the
cost
of
business
acquisitions
over
the
fair
value
of
the
identifiable
net
assets
Goodwill represents the excess of the cost of business acquisitions over the fair value of the identifiable net assets acquired. Goodwill
is
reviewed
at
least
annually
for
impairment
by
assessing
qualitative
factors
to
determine
whether
the
existence of events or circumstances
leads to a determination that
it is more likely than not
that the fair value of
a reporting unit
is less
than its
carrying
amount. As of
June 3, 2017,
2023, we
had $35.5$44.0 million
of goodwill. While
we believe
the current
carrying
value of this goodwill is not impaired, any future goodwill impairment charges could materially adversely affect our results of operations in any
particular period orand our net worth.

The loss of any registered trademark or other intellectual property could enable other companies to compete more effectively with us.

We utilize intellectual property in our business.  For example, we own the trademarks Farmhouse®,  Sunups®,  Sunny Meadow® and 4Grain®.  We also produce and market Egg-Land’s Best® and Land O’ Lakes® under license agreements with EB.  We have invested a significant amount of money in establishing and promoting our trademarked brands.  The loss or expiration of any intellectual property could enable other companies to compete more effectively with us by allowing our competitors to make and sell products substantially similar to those we offer.  This could negatively impact our ability to produce and sell the associated products, thereby adversely affecting our operations.


Extreme weather, natural disasters or other eventsEvents beyond our control such as extreme
weather and natural disasters could negatively impact our business.

Fire,
bioterrorism, pandemic,
pandemics,
extreme
weather
or natural
disasters, including
droughts,
floods,
excessive
cold
or
heat, water
rights restrictions, hurricanes or other storms, could impair the health or growth of our flocks, decrease production or availability
of feed ingredients, or interfere
with our operations due to
power outages, fuel shortages, discharges from
overtopped or breached
wastewater treatment lagoons, damage to our production and processing facilities, labor shortages or disruption of transportation
channels, among other things. Any of these factors could have a material adverse
effect on our financial results.

Failure of our information technology systems or software, or a security breach of those systems, could adversely affect our day-to-day operations and decision making processes and have an adverse effect on our performance.

The efficient operation of our business depends on our information technology systems. We rely on our information technology systems to effectively manage our business data, communications, logistics, accounting and other business processes. If we do not allocate and effectively manage the resources necessary to build and sustain an appropriate technology environment, our business or financial results could be negatively impacted. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including systems failures, viruses, ransomware, security breaches or cyber incidents such as intentional cyber-attacks aimed at theft of sensitive data or inadvertent cyber-security compromises.

A security breach of such information could result in damage to our reputation and negatively impact our relations with our customers or employees. Any such damage or interruption could have a material adverse effect on our business.

We currently participate in several joint ventures and may participate in other joint ventures in the future. We could be adversely affected if any of our joint venture partners are unable or unwilling to fulfill their obligations or if we have disagreements with any of our joint venture partners that are not satisfactorily resolved.

We currently have investments in and commitments to several joint ventures and we may participate in other joint ventures in the future. Under existing joint venture agreements, we and our joint venture partners could be required to, among other things, provide guarantees of obligations or contribute additional capital and we may have little or no control over the amount or timing of these obligations. If our joint venture partners are unable or unwilling to fulfill their obligations or if we have any unresolved disagreements with our joint venture partners, we may be required to fulfill those obligations alone, expend additional resources to continue development of projects, or we may be required to write down our investments at amounts that could be significant.

ITEM 1B.
UNRESOLVED
STAFF COMMENTS

None.
None.
 
20
ITEM 2.
PROPERTIES

The table below provides summary information about
We operate farms, processing plants, hatcheries, feed mills, warehouses, offices and other properties located in Alabama, Arkansas, Florida, Georgia, Kansas, Kentucky, Louisiana, Mississippi, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Utah. As of June 3, 2017, the primary operational facilities included three breeding facilities, two hatcheries, six wholesale distribution centers, 22 feed mills, 44 shell egg production facilities, 26 pullet growing facilities, 42 processing and packing facilities, and one egg products facility.  We also own a significant interest in a company that owns an egg products facility, which is consolidated we use
in our financial statements. Mostbusiness as of our operations are conducted from properties we own.
June
 
3, 2023.
AsType
Quantity
(a)
Owned
Leased
Production Capacity
Location
Breeding Facilities
3
3
—
House up to 255,000 hens
GA, MS
Distribution Centers
6
6
—
NA
FL, GA, NC, TX
Feed Mills
25
24
1
Production capacity of June 3, 2017, we owned approximately 27,001 acres of land in various locations throughout our geographic market area. We have the ability to hatch 21.2 million pullet chicks annually, grow 25.2 million pullets annually, house 43.2 million laying hens, and control the production of 39.2 million layers, with the remainder controlled by contract growers. We own mills that can produce 746859 tons
of feed per hour
AL, AR, FL, GA, KS, KY,
LA,
MS, OH, OK, SC, TN, TX, UT
Hatcheries
2
1
1
Hatch up to 407,600 chicks per
week
FL, MS
Processing and processing facilities capable of processing 16,260 cases of
Packaging
43
43
—
Approximately 587,700 dozen
shell eggs per hour (with each case containing 30 dozen shell eggs).

AL, AR, FL, GA, KS, KY,
LA,
Over MS, OH, OK, SC, TX, UT
Pullet Facilities
29
29
—
Grow 27.1 million pullets
annually
AR, FL, GA, KS, KY,
MS, SC,
TX, UT
Shell Egg Production
42
42
—
House up to 46.6 million layers
AL, AR, FL, GA, KS, KY,
LA,
MS, OH, OK, SC, TX, UT
Egg Products Processing
Facilities
3
3
—
Production capacity of 43,140
lbs. per hour
GA, TX, MO
(a)
Does not include idled facilities.
We
also
have
ongoing
construction
projects
to
further
expand
the past five fiscal years,
Company’s
cage-free
egg
production
capabilities.
These
projects
include
expanding
our capital expenditures, excluding acquisitions of shell cage-free
egg production
at existing
farms or
converting
conventional
housing
with cage-free
production.
These
projects
will
phase
into
production
through
fiscal
2027.
For
additional
information,
see

Operations – Liquidity and Capital Resources
As
of
June
3,
2023,
we
owned
approximately
28.0
thousand
acres
of
land.
There
are
no
material
mortgages
or
liens
on
our
properties.
ITEM 3.
LEGAL PROCEEDINGS

Egg Antitrust Litigation

Since September 25, 2008,Refer to the Company has been named as one of several defendants in numerous antitrust cases involving the United States shell egg industry.  In some of these cases, the named plaintiffs allege that they purchased eggs or egg products directly from a defendant and have sued on behalf of themselves and a putative class of others who claim to be similarly situated.  In other cases, the named plaintiffs allege that they purchased shell eggs and egg products directly from one or more of the defendants but sue only for their own alleged damages and not on behalf of a putative class.  In the remaining cases, the named plaintiffs are individuals or companies who allege that they purchased shell eggs indirectly from one or more of the defendants - that is, they purchased from retailers that had previously purchased from defendants or other parties - and have sued on behalf of themselves and a putative class of others who claim to be similarly situated.

The Judicial Panel on Multidistrict Litigation consolidated all of the putative class actions (as well as certain other cases in which the Company was not a named defendant) for pretrial proceedings in the United States District Court for the Eastern District of Pennsylvania. The Pennsylvania court organized the putative class actions around two groups (direct purchasers and indirect purchasers) and named interim lead counsel for the named plaintiffs in each group.

The Direct Purchaser Putative Class Action. The direct purchaser putative class cases were consolidated into In re: Processed Egg Products Antitrust Litigation, No. 2:08-md-02002-GP, in the United States District Court for the Eastern District of Pennsylvania. As previously reported, in November 2014, the Court approved the Company’s settlement with the direct purchaser plaintiff class and entered final judgment dismissing with prejudice the class members’ claims against the Company.

The Indirect Purchaser Putative Class Action.  The indirect purchaser putative class cases were consolidated into In re: Processed Egg Products Antitrust Litigation, No. 2:08-md-02002-GP, in the United States District Court for the Eastern District of Pennsylvania.  On April 20-21, 2015, the Court held an evidentiary hearing on the indirect purchaser plaintiffs’ motion for class certification. On September 18, 2015, the Court denied the indirect purchaser plaintiffs’ motion for class certification of 21 separate classes seeking damages under the laws of 21 states, holding that the plaintiffs were not able to prove that their purported method for ascertaining class membership was reliable or administratively feasible, that common questions would predominate, or that their proposed class approach would be manageable in a single trial.  In addition to barring any right to pursue a class monetary remedy under state law, the Court also denied indirect purchaser plaintiffs’ request for certification of an injunctive-relief class under federal law. However, the court allowed the indirect purchaser plaintiffs to renew their motion for class certification seeking a federal injunction. The plaintiffs filed their renewed motion to certify an injunctive-relief class on October 23, 2015. The Company joined the other defendants in opposing that motion on November 20.  The plaintiffs filed their reply memorandum on December 11, 2015, and on March 7, 2017, the Court heard arguments on the renewed motion for injunctive class certification. On June 27, 2017, the Court denied plaintiffs’ renewed motion for injunctive class certification. The plaintiffs also filed a petition with the United States Court of Appeals for the Third Circuit, asking the court to hear an immediate appeal of the trial court’s denial of the motion to certify 21 state-law damages classes. On December 3, 2015, the Third Circuit entered an order staying its consideration of the plaintiffs’ request for an immediate appeal of the damages-class ruling pending the trial court’s resolution of the plaintiffs’ renewed motion to certify an injunctive-relief class. On July 11, 2017 the plaintiffs filed a petition with the Third Circuit asking the court to hear an appeal of the June 27 order denying plaintiffs’ renewed motion for injunctive class certification. On July 21, 2017, the Company joined other defendants in a response filed with the Third Circuit opposing the plaintiffs' petition.

The Non-Class Cases. Six of the cases in which plaintiffs do not seek to certify a class have been consolidated with the putative class actions into In re: Processed Egg Products Antitrust Litigation, No. 2:08-md-02002-GP, in the United States District Court for the Eastern District of Pennsylvania. The court granted with prejudice the defendants’ renewed

motion to dismiss the non-class plaintiffs’ claims for damages arising before September 24, 2004. On July 2, 2015, the Company filed and joined several motions for summary judgment that sought either dismissal of all of the claims in all of these cases or, in the alternative, dismissal of portions of these cases. On July 2, 2015, the non-class plaintiffs filed a motion for summary judgment seeking dismissaldescription of certain affirmative defenses based on statutory immunities from federal antitrust law. The Court heard oral argument on the motions for summary judgment on February 22 and 23, 2016. On September 6, 2016, the Court granted the defendants’ motion for summary judgmentlegal proceedings pending against the plaintiffs’ claims arising from their purchases of egg products, dismissing those claims with prejudice. On September 9, 2016, the Court granted in part the Company’s motion for summary judgment on liability, dismissing as a matter of law the plaintiffs’ allegations of a side agreement to cease construction of new facilities and ruling that the plaintiffs’ allegations against United Egg Producers (UEP) animal-welfare guidelines must be evaluated at trialus under the rule of reason. On September 12, 2016, the Court granted in part the Company’s motion for summary judgment on damages, ruling that plaintiffs cannot recover damages on purchases of eggs from non-defendants and cannot recover any relief on eggs and egg products produced or sold in Arizona after October 1, 2009, the date that Arizona mandated that all eggs sold or produced in that state must be produced in compliance with the 2008 version of the UEP animal-welfare guidelines. On September 13, 2016, the Court granted in part the plaintiffs’ motion for summary judgment asPart II. Item
8. Notes to the applicability of the Capper-Volstead defense, ruling that United States Egg Marketers (an industry cooperative ofConsolidated Financial
Statements,
, which the Companydiscussion is a member) may invoke the defense at trial but that UEP (another industry cooperative of which the Company is a member) cannot. The Capper-Volstead defense is a defense pursuant to the Capper-Volstead Act (the Co-operative Marketing Associations Act), enactedincorporated herein by Congress in 1922, which gives certain associations of farmers certain exemptions from antitrust laws. On October 4, 2016, certain direct action plaintiffs (Kraft Food Global, Inc., General Mills, Inc., Nestle USA, Inc., and The Kellogg Company) filed an appeal to the United States Court of Appeals for the Third Circuit from the District Court’s Order dated September 6, 2016, granting defendants’ motion for summary judgment and dismissing with prejudice all claims based on the purchase of egg products. These plaintiffs filed their opening brief on March 7, 2017. The defendants filed their response brief on April 20. These plaintiffs filed their reply brief on May 18. The court of appeals heard oral argument on July 11, 2017, but has not issued a ruling. On November 22, 2016, the non-class plaintiffs filed a motion asking the Court to hold a status conference and asking the court to set the non-class cases for trial in June of 2017. The parties in all of the remaining class and non-class cases submitted several different proposed trial schedules to the court, and a status conference was held on February 9, 2017. A trial date has not yet been set.

Allegations in Each Case. In all of the cases described above, the plaintiffs allege that the Company and certain other large domestic egg producers conspired to reduce the domestic supply of eggs in a concerted effort to raise the price of eggs to artificially high levels. In each case, plaintiffs allege that all defendants agreed to reduce the domestic supply of eggs by: (a) agreeing to limit production; (b) manipulating egg exports; and (c) implementing industry-wide animal welfare guidelines that reduced the number of hens and eggs.

The named plaintiffs in the remaining indirect purchaser putative class action seek treble damages under the statutes and common-law of various states and injunctive relief under the Sherman Act on behalf of themselves and all other putative class members in the United States. Although plaintiffs allege a class period starting in October, 2006 and running “through the present,” the Court denied the plaintiffs’ motion to certify classes seeking damages under the laws of 21 states and denied without prejudice the plaintiffs’ motion to certify an injunctive-relief class, although the plaintiffs have filed a renewed motion to certify an injunctive-relief class, as discussed above.

Five of the original six non-class cases remain pending against the Company. The principal plaintiffs in these cases are: The Kroger Co.; Publix Super Markets, Inc.; SUPERVALU, Inc.; Safeway, Inc.; Albertsons LLC; H.E. Butt Grocery Co.; The Great Atlantic & Pacific Tea Company, Inc.; Walgreen Co.; Hy-Vee, Inc.; and Giant Eagle, Inc. In four of these remaining non-class cases, the plaintiffs seek treble damages and injunctive relief under the Sherman Act.  In one of those four cases, the plaintiffs purchased only egg products, and as noted above, the Court dismissed with prejudice all claims arising from the purchase of egg products. On October 4, 2016, the four plaintiffs in that case (Kraft Food Global, Inc., General Mills, Inc., Nestle USA, Inc., and The Kellogg Company) appealed that decision to the United States Court of Appeals for the Third Circuit. In the fifth remaining non-class case, the plaintiff seeks treble damages and injunctive relief under the Sherman Act and the Ohio antitrust act (known as the Valentine Act).


The Pennsylvania court has entered a series of orders related to case management, discovery, class certification, summary judgment, and scheduling.  The Court has also denied all four motions that the plaintiffs filed to exclude testimony from certain expert witnesses retained by the defendants. The Pennsylvania court has not set a trial date for any of the Company’s remaining consolidated cases (non-class and indirect purchaser cases). As noted above, the court held a hearing on the parties’ proposed trial schedules but has not yet set a trial date.

The Company intends to continue to defend the remaining cases as vigorously as possible based on defenses which the Company believes are meritorious and provable.  While management believes that the likelihood of a material adverse outcome in the overall egg antitrust litigation has been significantly reduced as a result of the settlements and rulings described above, there is still a reasonable possibility of a material adverse outcome in the remaining egg antitrust litigation. At the present time, however, it is not possible to estimate the amount of monetary exposure, if any, to the Company because of these cases. Accordingly, adjustments, if any, which might result from the resolution of these remaining legal matters, have not been reflected in the financial statements.

State of Oklahoma Watershed Pollution Litigation
reference.
 
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. and affiliates, Cobb-Vantress, Inc., Cargill, Inc. and its affiliate, George’s, Inc. and its affiliate, Peterson Farms, Inc. and Simmons Foods, Inc. The State of Oklahoma claims that through the disposal of chicken litter the defendants have polluted the Illinois River Watershed. This watershed provides water to eastern Oklahoma. The complaint seeks injunctive relief and monetary damages, but the claim for monetary damages has been dismissed by the court. Cal-Maine Foods, Inc. discontinued operations in the watershed. Accordingly, we do not anticipate that Cal-Maine Foods, Inc. will be materially affected by the request for injunctive relief unless the court orders substantial affirmative remediation. Since the litigation began, Cal-Maine Foods, Inc. purchased 100% of the membership interests of Benton County Foods, LLC, which is an ongoing commercial shell egg operation within the Illinois River Watershed. Benton County Foods, LLC is not a defendant in the litigation.
The trial in the case began in September 2009 and concluded in February 2010. The case was tried to the court without a jury and the court has not yet issued its ruling. Management believes the risk of material loss related to this matter to be remote.

Florida Civil Investigative Demand

On November 4, 2008, the Company received an antitrust civil investigative demand from the Attorney General of the State of Florida. The demand seeks production of documents and responses to interrogatories relating to the production and sale of eggs and egg products. The Company is cooperating with this investigation and has, on three occasions, entered into an agreement with the State of Florida tolling the statute of limitations applicable to any supposed claims the State is investigating. No allegations of wrongdoing have been made against the Company in this matter.

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.
At this time, it is not possible for us to predict the ultimate outcome of the matters set forth above.

ITEM 4.
MINE SAFETY DISCLOSURES

Not applicable.


PART
II.

ITEM
5.
MARKET
FOR
REGISTRANT’S
COMMON
EQUITY,
RELATED
STOCKHOLDER
MATTERS
AND
ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES

We have two classes of
capital stock, Common Stock and Class A Common Stock. Our Common Stock is tradedtrades on the NASDAQ
Global Select Market under the symbol “CALM”. The closing price for our Common Stock on July 17, 2017 was $35.55 per share. The following table sets forth the high and low daily sales prices and dividends per share for each of the four quarters of fiscal 2016 and fiscal 2017.  
    Sales Price  
Fiscal Year Ended Fiscal Quarter High Low Dividends (1)
         
May 28, 2016 First Quarter $57.94
 $44.13
 $0.983
  Second Quarter 63.25
 50.27
 0.751
  Third Quarter 56.50
 44.94
 0.441
  Fourth Quarter 55.43
 44.65
 —
     
  
  
June 3, 2017 First Quarter $45.75
 $40.11
 $—
  Second Quarter 46.15
 36.50
 —
  Third Quarter 45.45
 37.95
 —
  Fourth Quarter 41.25
 36.35
 —
(1)Represents dividends paid with respect to such quarter, after the end of the quarter. See “Dividends” below.

There is no public
trading market for the Class A Common Stock.
All outstanding
Class A
shares are
owned by Fred R. Adams, Jr., our Founder and Chairman Emeritus, his son-in-law
a limited
liability company
of which
Adolphus Baker,
our Chairman,
is the
sole
managing member and their spouses.  For additional information about our capital stock, see Notewill be
voted at the direction of
Mr. Baker. At July 14, to the Notes to Consolidated Financial Statements in this report.2023, there were approximately 319 record
holders

Issuer Purchases of Equity Securities

There were no purchases of our Common Stock made by or on behalf of our company or any affiliated purchaser during our fiscal 2017 fourth quarter.


Stock Performance Graph

The following graph shows a comparison of cumulative total shareholder return, calculated on a dividend reinvested basis, for the Company, the NASDAQ Composite Total Return, and the NASDAQ 100 Total Return for the five years ended June 3, 2017. As the only publicly held company in the shell egg business, the Company uses the NASDAQ 100 Total Return index in lieu of a published industry index or peer group. The graph assumes $100 was invested on June 2, 2012 in the stock or index. Each date plotted indicates the last day of a fiscal quarter.

Stockholders

At July 17, 2017, there were approximately 333 record holders of our Common Stock and approximately 47,927 73,626
beneficial owners whose shares
were held by nominees
or broker dealers. For

additional information
about our
capital structure,
see
in Part
II. Item
8. Notes
to the
Consolidated Financial
Statements.
Dividends
 

Cal-Maine has a
variable dividend policy
adopted by its
Board of Directors.
Pursuant to the
policy,
Cal-Maine pays
a dividend
to shareholders of
its Common Stock and
Class A Common
Stock on a quarterly
basis for each quarter
for which the Company
reports net
income attributable
to Cal-Maine
Foods, Inc.
computed in
accordance with generally accepted accounting principles
GAAP in
an amount
equal to
one-third
calm-20230603_10Kp21i0
21
(1/3) of
such quarterly
income. Dividends
are paid
to shareholders
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 will pay dividends
to shareholders of record on
the 65th day after the
quarter end. Dividends are payable
on the 15th day following
the record date. Following a
quarter for which
the
Company
does
not
report
net
income
attributable
to
Cal-Maine
Foods,
Inc.,
the
Company
will
not
pay
a
dividend
for
a
subsequent profitable quarter until the Company is profitable on a
cumulative basis computed from the date of the
last quarter for
which
a
dividend
was
paid. Under
the
Company's
Credit
Facility,
dividends
are
restricted
to
the
amount
permitted
under
the
Company’s
current dividend was paid.  At June 3, 2017, cumulative losses that must be recovered prior to paying a dividend were $74.7 million. The Company’s loan agreements provide that unless otherwise approved by its lenders, the Company must limitpolicy,
and may not

dividends paid in any quarter to not exceed an amount equal to one-third of the previous quarter’s consolidated net income, which dividends are allowed to be paid if there are no events
a default exists
or will arise
after giving effect
to the dividend
or if
the sum of default.
cash and cash
equivalents of
the Company and
its subsidiaries plus
availability under
the Credit Facility
equals less

than $50 million.
Stock Performance Graph
The
Company
utilized
the
(i)
Russell
2000
Total
Return,
and
(ii)
S&P
Composite
1500
Food
Products
Industry
Index
to
benchmark the
Company’s
total shareholder
return. The
Company is a
member of
each of these
indexes and
believes the other
companies
included
in
these
indexes
provide
products
and
services
similar
to
Cal-Maine
Foods.
The
graph
presents
total
shareholder return and assumes $100 was invested on June 1, 2018
in the stock or index and dividends were reinvested.
June 1, 2018
May 31, 2019
May 29, 2020
May 28, 2021
May 27, 2022
June 3, 2023
Cal-Maine Foods, Inc.
$
100.00
$
80.69
$
97.12
$
76.16
$
105.31
$
114.38
Russell 2000 Total Return
100.00
90.16
87.06
143.27
120.53
118.75
S&P Composite 1500 Food
Products Industry Index
100.00
105.74
116.41
144.80
155.14
163.85
22
Issuer Purchases of Equity Securities
The following table is a summary of our fourth quarter 2023 share repurchases:
Issuer Purchases of Equity Securities
Total
Number of
Maximum Number
Shares Purchased
of Shares that
Total
Number
Average
as Part of Publicly
May Yet
Be
of Shares
Price Paid
Announced Plans
Purchased Under the
Period
Purchased (1)
per Share
Or Programs
Plans or Programs
2/26/23 to 3/25/23
—
$
—
—
—
3/26/23 to 4/22/23
10,551
48.62
—
—
4/23/23 to 6/03/23
—
—
—
—
10,551
$
48.62
—
—
(1)
As permitted under
our Amended and
Restated 2012
Omnibus Long-Term
Incentive Plan,
these shares were
withheld
by us to satisfy tax withholding
obligations for employees in connection with the vesting of restricted common stock.
Recent Sales of Unregistered Securities

No sales of securities without registration under the Securities Act of 1933
occurred during our fiscal year ended June 3, 2017.

2023.
Securities Authorized for Issuance under Equity Compensation Plans
Equity Compensation Plan Information
(a)
(b)
(c)
Number of
Equity Compensation Plan Information
(a)(b)(c)
Number of securities to be issued upon exercise of outstanding options, warrants and rightsWeighted average exercise price of outstanding options, warrants and rightsNumber of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
Equity compensation plans approved by shareholders—
$—
503,242
Equity compensation plans not approved by shareholders—
—
—
Total—
$—
503,242
securities to be
(a)There were no outstanding options, warrants or rights as of June 3, 2017.  There were 247,735 shares of restricted stock outstanding under our 2012 Omnibus Long-Term Incentive Plan as of June 3, 2017.
(b)There were no outstanding options, warrants or rights as of June 3, 2017.
(c)Shares available for future issuance as of June 3, 2017 under our 2012 Omnibus Long-Term Incentive Plan. 

issued upon exercise
of outstanding
options, warrants
and rights
Weighted average
exercise price of
outstanding
options, warrants
and rights
Number of securities
remaining available for future
issuance under equity
compensation plans (excluding
securities reflected in column
(a))
Equity compensation plans
approved by shareholders
—
$
—
294,140
Equity compensation plans not
approved by shareholders
—
—
—
Total
—
$
—
294,140
(a)
There were
no outstanding options,
warrants or
rights as of
June 3, 2023.
There were 941,593
shares of restricted
stock outstanding under our Amended and Restated 2012 Omnibus Long-Term
Incentive Plan as of June 3, 2023.
(b)
There were no outstanding options, warrants or rights as of June 3, 202
3.
(c)
Reflects shares
available for
future issuance
as of
June 3,
2023 under
our Amended
and Restated
2012 Omnibus
Long-Term Incentive
Plan.
For
additional
information,
see Note 11 to Notes to the Consolidated Financial Statements.


ITEM 6.  SELECTED FINANCIAL DATA
  Fiscal Years Ended
Statement of Operations Data (in thousands, except per share data) 
June 3,
2017 ^
 May 28, 2016 May 30, 2015 
May 31,
2014 *
 
June 1,
2013 †
  53 wks 52 wks 52 wks 52 wks 52 wks
Net sales  $1,074,513
 $1,908,650
 $1,576,128
 $1,440,907
 $1,288,104
Cost of sales  1,028,963
 1,260,576
 1,180,407
 1,138,143
 1,073,555
Gross profit  45,550
 648,074
 395,721
 302,764
 214,549
Selling, general and administrative  173,980
 177,760
 160,386
 156,712
 126,956
Loss (gain) on disposal of fixed assets 3,664
 (1,563) 568
 651
 1,496
Legal settlement expense —
 —
 —
 —
 28,000
Operating income (loss) (132,094) 471,877
 234,767
 145,401
 58,097
Other income (expense):         
  
Interest income (expense), net 2,785
 3,158
 (515) (2,656) (3,906)
Equity in income of affiliates  1,390
 5,016
 2,657
 3,512
 3,480
Patronage dividends 7,665
 6,930
 6,893
 6,139
 14,300
Other, net 5,960
 268
 2,747
 9,446
 3,597
Total other income 17,800
 15,372
 11,782
 16,441
 17,471
Income (loss) before income tax and noncontrolling interest  (114,294) 487,249
 246,549
 161,842
 75,568
Income tax expense (benefit) (39,867) 169,202
 84,268
 52,035
 24,807
Net income (loss) including noncontrolling interest (74,427) 318,047
 162,281
 109,807
 50,761
Less: Net income (loss) attributable to noncontrolling interest (149) 2,006
 1,027
 600
 338
Net income (loss) attributable to Cal-Maine Foods, Inc. $(74,278) $316,041
 $161,254
 $109,207
 $50,423
Net income (loss) per common share:         
  
Basic  $(1.54) $6.56
 $3.35
 $2.27
 $1.05
Diluted  $(1.54) $6.53
 $3.33
 $2.26
 $1.05
Cash dividends per common share $—
 $2.18
 $1.11
 $0.73
 $0.38
Weighted average shares outstanding:         
  
Basic  48,362
 48,195
 48,136
 48,095
 47,967
Diluted  48,362
 48,365
 48,437
 48,297
 48,088
Balance Sheet Data (in thousands)        
  
Working capital  $371,527
 $542,832
 $407,418
 $354,743
 $304,681
Total assets  1,033,094
 1,111,765
 928,653
 811,661
 745,627
Total debt (including current maturities)  10,939
 25,570
 50,860
 61,093
 65,020
Total stockholders’ equity  844,493
 917,361
 704,562
 594,745
 518,044
           
Operating Data:   
        
  
Total number of layers at period-end (thousands)  36,086
 33,922
 33,696
 32,372
 30,967
Total shell eggs sold (millions of dozens)  1,031.1
 1,053.6
 1,063.1
 1,013.7
 948.5

^Results for fiscal 2017 include the results of operations (subsequent to acquisition) of the commerical egg assets acquired from Foodonics International, Inc., which were consolidated with our operations as of October 16, 2016, and the commercial egg assets of Happy Hen Egg Farms, Inc., which were consolidated with our operations as of February 19, 2017.
*Results for fiscal 2014 include the results of operations (subsequent to acquisition) of our joint venture partner’s 50% interest in Delta Egg Farm, LLC, which was consolidated with our operations as of March 1, 2014.  Prior to March 1, 2014, our equity in earnings in Delta Egg Farm, LLC are included in Equity in income of affiliates.
†Results for fiscal 2013 include the results of operations (subsequent to acquisition) of the commercial egg assets acquired from Pilgrim’s Pride Corporation, which were consolidated with our operations as of August 10, 2012, and the commercial egg assets from Maxim Production Co., Inc., which were consolidated with our operations as of November 15, 2012. 




in
Part
II.
Item
8.
Notes
to
the
Consolidated
Financial
Statements.
ITEM 6.
RESERVED
23
ITEM
7.
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND RESULTS
OF OPERATIONS

RISK FACTORS; FORWARD-LOOKING
FORWARD
-LOOKING STATEMENTS

For
information
relating
to
important
risks
and
uncertainties
that
could
materially
adversely
affect
our
business,
securities,
For information financial
condition,
operating
results,
or
cash
flow,
reference
is
made
to
the
disclosure
set
forth
under
. In
addition, because
the following
discussion includes
numerous forward
-looking statements
relating to important risks and uncertainties that could materially adversely affect
our business,
securities, financial condition, or operating results and cash flow, reference is made to the disclosure set forth under
and
to
the
information
set
forth
in
the
section
of
Part
I
immediately
preceding
Item
1
above
under
the
caption “Risk Factors.” In addition, because the following discussion includes numerous forward-looking statements relating to us, our results of operations, financial condition and business, reference is made to the information set forth in the section of Part I immediately preceding Item 1 above under the caption “Forward-Looking Statements.
“
.”

COMPANY
OVERVIEW

Cal-Maine Foods, Inc. (“we,” “us,” “our,” or the “Company”) is primarily engaged in the production, grading, packaging, marketing and distribution of
fresh shell eggs. Our fiscal year end is the Saturday nearest to May 31 which was June 3, 2017 (53 weeks),  May 28, 2016 (52 weeks), and May 30, 2015 (52 weeks) for the most recent three fiscal years.

Our operations are fully integrated.  We hatch chicks, grow
fiscal
year
end
is
the
Saturday
closest
to
May 31.
The
fiscal
year
2023
and maintain flocks of pullets (female chickens, under 18
2022
included
53
weeks of age), layers (mature female chickens)
and breeders (male and female birds used to produce fertile eggs to be hatched for egg production flocks), manufacture feed, and produce, process and distribute shell eggs. We are
52
weeks,
respectively.
The Company,
which
is headquartered
in Ridgeland,
Mississippi, is
the largest
producer and marketer
distributor
of fresh
shell eggs in the United States
(“U.S”). In fiscal 2023, we sold approximately 1,147.4 million dozen shell
eggs, which we believe
represented
approximately
21% of
domestic shell
egg consumptio
n. Our
total flock
as of
June 3,
2023
of approximately
41.2
million layers and 10.8 million pullets and breeders is the largest in the
U.S. We market the majoritysell most of
our shell eggs to a diverse group of
customers, including
national and
regional grocery
store chains,
club stores,
companies servicing
independent supermarkets
in
the U.S., food
service distributors, and
egg product consumers
in states across
the southwestern, southeastern,
mid-western and
mid-Atlantic regions of the U.S.
The Company has one reportable
operating segment, which is the production,
grading, packaging, marketing and distribution
of
shell eggs. Many of our customers rely on us to provide most of their shell egg needs, including specialty and conventional eggs.
Specialty
eggs
represent
a
broad
range
of
products. We market
classify
cage-free,
organic,
brown,
free-range,
pasture-raised
and
nutritionally enhanced
as specialty eggs for
accounting and reporting
purposes. We
classify all other
shell eggs through as conventional
eggs.
While
we
report
separate
sales
information
for
these
types
of
eggs,
there
are
a
number
of
cost
factors
which
are
not
specifically
available
for
conventional
or
specialty
eggs due
to
the
nature
of egg
production.
We
manage
our extensive distribution network
operations
and
allocate resources to these
types of eggs on a diverse group of customers, including national and regional grocery store chains, club stores, foodservice distributors, and egg product consumers.consolidated
basis based on the demands

Our operating results are directly tied to egg prices, which are highly volatile and subject to wide fluctuations, and are outside of our control.customers. For example,further
description
of our business, refer to
HPAI
Since the annualfirst detection in
a U.S. commercial flock in
February 2022, outbreaks of highly
pathogenic avian influenza
(“HPAI”)
continued
to occur
in U.S.
poultry flocks
throughout calendar
year 2022
and, less
frequently,
in calendar
year 2023,
which is
more than twice the length of time
of the last HPAI outbreak in 2014-2015. HPAI affected more than 58 million birds in 47 states
and
resulted
in
the
depopulation
of
43.3
million
commercial
layer
hens
and
1.0
million
pullets
leading
to
higher
prices
for
conventional
shell eggs
beginning in
the fourth
quarter of
fiscal 2022
and continuing
through the
third quarter
of fiscal
2023.
Though the virus is still present, due to seasonal migratory patterns of wild birds (which serve as carriers for the disease) the rate
of outbreaks has substantially
decreased and the last
occurrence in a commercial
egg laying flock was in
December 2022.
The
USDA
attributes
this,
in
large
part,
to
improved
biosecurity
measures
by
the
commercial
poultry
industry.
The
industry
and
USDA have devoted
significant resources to
attempt to prevent
future outbreaks. With
the spring wild
bird migration complete
in the U.S., focus is on the fall migration season.
We
believe the
HPAI
outbreak will
continue to
impact the overall
supply of
eggs until the
layer hen
flock is
fully replenished.
The egg industry typically experiences lower sales during the
summer. The layer hen flock five-year average Urner-Barry Southeastern Regionalfrom 2020-2022 for
the month of June is 321.5 million hens. According to the USDA the U.S.
flock consisted of 317.4 million layers producing table
or
market
type
eggs as
of
July
1,
2023,
which
is 0.9%
below
the
five-year
average
and
reflects
efforts
by
U.S.
producers
to
repopulate their flocks. As the layer flock began to recover in the fourth quarter of fiscal 2023, prices for conventional shell eggs
decreased
from
previous
highs.
There
have
been
no
positive
tests
for
HPAI
at
any
Cal-Maine
Foods’
owned
or
contracted
production facility as of July
25, 2023. While no farm
is immune from HPAI,
we believe we have implemented
and continue to
maintain robust biosecurity programs across our locations. We
are also working closely with federal, state and local government
officials
and focused
industry groups
to mitigate
the risk
of this
and future
outbreaks and
effectively
manage our
response, if
needed.
24
Executive Overview of Results – Fiscal Years
Ended June 3, 2023, May 28, 2022 and May 29, 2021
Fiscal Years
Ended
June 3, 2023
May 28, 2022
May 29, 2021
Net sales (in thousands)
$
3,146,217
$
1,777,159
$
1,348,987
Gross profit (in thousands)
$
1,196,457
$
337,059
$
160,661
Net income attributable to Cal-Maine Foods, Inc.
$
758,024
$
132,650
$
2,060
Net income per share attributable to Cal-Maine Foods, Inc.
Basic
$
15.58
$
2.73
$
0.04
Diluted
$
15.52
$
2.72
$
0.04
Net average shell egg price
(a)
$
2.622
$
1.579
$
1.217
Average UB Southeast
Region - Shell Eggs - White Large Egg Market Price
$
3.115
$
1.712
$
1.155
Feed costs per dozen eggs, for our fiscal 2005-2017 ranged from a low of $0.72 during fiscal 2005 to a high of $2.97 during fiscal 2016.produced
$
0.676
$
0.571
$
0.446
(a) The net average
shell egg industry has traditionally been subject to periods of high profitability followed by periods of significant loss. Inselling price
is the past, during periods of high profitability, shell egg producers tended to increase the number of layers in production with a resulting increase in the supplyblended price
for all sizes and
grades of shell eggs, which generally caused a drop in
including non-graded
shell egg prices until supplysales, breaking stock and demand returned undergrades.
For fiscal
2022, net
sales increased
to balance.  As a result, our financial results from year$1.8
billion, gross
profit to year may vary significantly.   Shorter term, retail sales of shell eggs historically have been greatest during the fall and winter months and lowest during the summer months.  Our need for working capital generally is highest in the last and first fiscal quarters ending in May and August, respectively, when egg prices are normally at seasonal lows.   Prices for shell eggs fluctuate in response to seasonal factors and a natural increase in shell egg production in the spring and early summer.  Shell egg prices tend to increase with the start of the school year and are highest prior to holiday periods, particularly Thanksgiving, Christmas, and Easter.  Consequently, we generally experience lower sales
$337.1 million
and net income in our first and fourth fiscal quarters ending in August and May, respectively. Because of the seasonal and quarterly fluctuations, comparisons of our sales and operating results between different quarters within a single fiscal year are not necessarily meaningful comparisons.
 
to $132.7
From April through June 2015, our industry experienced
million from
fiscal
2021 net sales of
$1.3 billion, gross profit
of $160.7 million and
net income of $2.1
million. The increases resulted primarily
from
higher selling prices for
conventional eggs as well as an
increased volume of specialty
eggs sold, partially offset
by a significant avian influenza (“AI”) outbreak, primarilydecline in
the upper Midwestern U.S.  There
volume
of
conventional
eggs
sold.
Gross
profit
and
net
income
increases
were no positive tests for AI at any
partially
offset
by
increased
cost
of our locations. Based on several published industry estimates, we believe approximately 12% of the national flock of laying hens was affected.  During April through June 2015, the affected laying hens were either destroyed by the disease or euthanized. The USDA data showed the supply of laying hens decreased substantially. Since that time, it began to recover
feed
ingredients and eventually exceed pre-AI levels by late 2016. In February 2017, the USDA issued revised data that showed the sizeincreased processing
costs. Consumer demand maintained
a steady growth throughout our
first three quarters of the laying hen flock for calendar years 2015 and 2016 was meaningfully higher in both years than previously reported.

fiscal
2021
but
began
trending
down
during
our
fourth
quarter
of
fiscal
2021
as
consumers
started
to
resume
pre-pandemic

activities.
We
believe
the
decreased
demand
in
foodservice
seen
throughout
the
first
three
quarters
of
fiscal
2021
due
to
the
Egg prices increased significantly during the summer and fall of 2015. The average Urner-Barry Thursday prices for the large market (i.e. generic shell eggs) in the southeastern region for the months of June through November 2015 was $2.32 per dozen, with a peak of $2.97 in August.  Subsequent to November 2015, shell egg prices declined. The Urner Barry price index ("UB index") hit a decade-low level in our fiscal 2016 fourth quarter. During our first quarter of fiscal 2017 it increased slightly, but remained at significantly lower levels than the corresponding period of last year.  During our fiscal 2017 second quarter, the UB index returned to and dropped below the low levels seen during the fiscal 2016 fourth quarter. Early in our fiscal 2017 third quarter we saw a significant increase, but prices dropped after Christmas. During our fiscal 2017 fourth quarter, the UB index dropped again and approached the record low levels of the fiscal 2017 second quarter. 

According to Nielsen data, retail customer demand for shell eggs has remained strong. The USDA reports that egg export demand has improved since the beginning of fiscal 2017; however, it has still not fully recovered from levels priorpandemic contributed to the AI outbreak. Additionally, the industry experienced reduced demand for egg products, as many commercial customers reformulated their products to use fewer eggs when prices spiked and have been slow to resume previous egg usage. Together with the increased supplydepressed price of laying hens, these factors have created an oversupply of eggs, with continued pressure on market prices. Accordingly, our net average selling price per dozen shell
eggs for fiscal 20172021 in the retail market due to the extra
supply entering the
retail channel from the foodservice channel.
For
fiscal
2022,
we
believe
prices
for
conventional
eggs
were
positively
impacted
by
a
better
alignment
of
the
size
of
the
conventional
production
layer
hen
flock
and
customer
and
consumer
demand
through
the
first
three
fiscal
quarters
of
2022.
Conventional egg
prices further
increased in
the fourth
quarter of
fiscal 2022
primarily due
to decreased
supply caused
by the
HPAI
outbreak
compounded
with
good
customer
demand.
Throughout
fiscal
2022
the
hen
numbers
reported
by
the
USDA
remained below the five-year average.
For fiscal
2023, net
sales increased
to $3.1
billion, gross
profit to
$1.2 billion
and net
income to
$758.0 million.
The increases
primarily resulted
from significantly
higher average
egg selling
prices, primarily
due to
the reduction
in egg
supply caused
by
HPAI
and
higher
grain
and
other
input
costs,
as
some
of
our
egg
sales
prices
are
based
on
formulas
related
to
our
costs
of
production. Gross
profit and
net income
increases were
partially offset
by the
increased cost
of feed
ingredients and
increased
processing, packaging
and warehouse costs.
The impact of
HPAI
continued throughout
the first three
quarters of fiscal
2023 as
prices continued to increase. For the
first three quarters of fiscal
2023, the average UB southeastern large index
price was $1.007 138.8%
higher
than
the
average
price
of
the
first
three
quarters
in
fiscal
2022.
For
the
fourth
quarter
of
fiscal
2023
the
average
UB
southeastern large index price decreased 13.8% to $2.163
from the same period in the
prior year as the egg supply
improved from
the effects
of HPAI.
Conventional egg
selling prices
declined significantly
during the
latter part
of the
fourth quarter
of fiscal
2023.
Our dozens sold
increased by 5.9%
for fiscal 2023
compared to $1.735 fiscal
2022, primarily due
to an increase
in specialty egg
sales.
According to
Information Resources,
Inc. (“IRI”),
for the
52 weeks
ended June
4, 2023,
which approximately
aligns with
our
fiscal 2016. Recent USDA reports show the chick hatch has been trending down, suggesting there may be a moderation in the size of the laying hen flock as the year progresses.  We expect the2023, conventional egg markets to remain under pressure and we do not expect meaningful price improvement until there is a better balance of supply and demand.

We are one of the largest producers and marketers of value-added specialty shell eggsdozens sold in the U.S. For accounting purposes, we classify nutritionally enhanced, cage-free, organic at multi-retail outlets decreased 9.3%, while specialty egg dozens sold
increased 9.9%
versus the
prior-year comparable
period. Our
conventional eggs
dozens sold
increased 0.2%
and brown eggsspecialty
egg
dozens sold increased 18.6% as specialty shell eggs. They have been a significant and growing segmentcompared to fiscal 2022, with most of the marketincrease
due to an increase in recent years. During ourcage-free eggs sold.
Our feed costs
per dozen produced
increased to $0.676
in fiscal 2016 an increasing number of large restaurant chains, food service companies and grocery chains, including our largest customers, announced goals2023,
compared to transition to a cage-free egg supply chain by specified future dates. We are working with our customers to achieve smooth progress $0.571
in meeting their goals. Our focus for future expansion at our farms will be environments that are cage-free or with equipment that can easily be converted to cage-free, based on a timeline to meet our customer’s needs.fiscal 2022.

For fiscal 2017, we produced approximately 84%year
2023,
the average Chicago
Board of the total number of shell eggs sold by us, with approximately 8% of such shell egg production provided by contract producers. Contract producers utilize their facilities to produce shell eggs from layers owned by us. We own the shell eggs produced under these arrangements. For fiscal 2017, approximately 16% of the total number of shell eggs sold by us were purchased from outside producersTrade
(“CBOT”) daily market
price was $6.57
per bushel for resale.
corn and $450
per ton for
soybean

meal,
representing
increases
of
4.1%
and
14.7%,
respectively,
compared
to
the
daily
average
CBOT
prices
for
fiscal
2022.
Our cost Supplies
of production is materially affected by feed costs, which are highly volatile and subject to wide fluctuation.  For fiscal 2017, feed costs averaged about 58% of our total farm egg production cost.  Changes in market prices for corn and soybean meal remained tight
relative to demand in throughout fiscal 2023,
as evidenced by a low stock-to-
use ratio
for corn,
as a
result of
weather-related
shortfalls in
production
and yields,
ongoing supply
chain disruptions
and
the
Russia-Ukraine War
and its
impact on
the primaryexport
markets. Basis
levels for
corn and
soybean meal,
which impact
our costs for
25
these feed ingredients, ran significantly higher in the feed we use, result in changesfiscal 2023 in our costareas of goods sold.   Foroperation compared to our last fiveprior year fiscal years, average feed cost per dozen sold ranged fromyear as a low
result of $0.40 in fiscal 2017 to a high of $0.54 in fiscal 2013.  The cost of our primary feed ingredients, which are commodities, are subject to factors over which we have little or no control such as volatile price changes caused by weather, size of harvest,higher transportation and storage costs, demand and the agricultural and energy policies of the U.S. and foreign governments. Subsequentadding to our fiscal year end, grain prices have increased and we expect this volatility to continue in fiscal 2018. In spite of this volatility, we expect to have an adequate supply of our primary feed ingredients in fiscal 2018.expense.
RESULTS
 
During the second quarter of fiscal 2017, the Company acquired substantially all of the egg production assets and assumed certain liabilities of Foodonics International, Inc. and its related entities doing business as Dixie Egg Company (collectively, "Foodonics") for $68.6 million of cash and $3.0 million of deferred purchase price. The acquired assets include commercial egg production and processing facilities with capacity for 1.6 million laying hens, contract grower arrangements for an additional 1.5 million laying hens, and related feed production, and distribution facilities in Georgia, Alabama, and Florida. The Company acquired Foodonics' interest in American Egg Products, LLC ("AEP") and the Eggland's Best franchise with licensing rights for certain markets in Alabama, Florida, and Georgia as well as Puerto Rico, Bahamas and Cuba. The Company now owns 100% of AEP. The acquired operations of Foodonics are included in the accompanying financial statements as of October 16, 2016.

During the third quarter of fiscal 2017, the Company acquired substantially all of the egg production, processing and distribution assets of Happy Hen Egg Farms, Inc. and its affiliates (collectively, "Happy Hen") for $17.2 million. The assets include commercial egg production and processing facilities with current capacity for 350,000 laying hens and related distribution facilities located near Harwood and Wharton, Texas. The site is designed for capacity of up to 1.2 million laying hens. The operations of Happy Hen are included in the accompanying financial statements as of February 19, 2017. The Company closed this acquisition on March 3, 2017.

We effected a 2-for-1 stock split for shares of our common stock and Class A common stock in October 2014, and all per share amounts in this report have been adjusted as necessary to reflect the split.

RESULTS OF OPERATIONS

The following table sets forth, for the
fiscal years indicated, certain items from our consolidated statementsConsolidated
Statements of operationsIncome expressed
as a percentage of net sales.
  June 3, 2017 May 28, 2016 May 30, 2015
Net sales 100.0 % 100.0 % 100.0%
Cost of sales 95.8 % 66.0 % 74.9%
Gross profit 4.2 % 34.0 % 25.1%
Selling, general and administrative 16.2 % 9.3 % 10.2%
Loss (gain) on disposal of fixed assets 0.3 % (0.1)% —%
Operating income (loss) (12.3)% 24.8 % 14.9%
Other income 1.7 % 0.8 % 0.7%
Income (loss) before income taxes and noncontrolling interest (10.6)% 25.6 % 15.6%
Income tax expense (benefit) (3.7)% 8.9 % 5.3%
Net income (loss) including noncontrolling interest (6.9)% 16.7 % 10.3%
Less:  Net income (loss) attributable to noncontrolling interest — % 0.1 % 0.1%
Net income (loss) attributable to Cal-Maine Foods, Inc. (6.9)% 16.6 % 10.2%
Fiscal Year
Ended

Executive Overview of Results –June 3, 2017,  2023
May 28, 2016,2022
Net sales
100.0
%
100.0
%
Cost of sales
62.0
%
81.0
%
Gross profit
38.0
%
19.0
%
Selling, general and administrative
7.4
%
11.2
%
Gain on insurance recoveries
(0.1)
%
(0.3)
%
(Gain) loss on disposal of fixed assets
—
%
—
%
Operating income
30.7
%
8.1
%
Total other income
1.0
%
1.3
%
Income before income taxes
31.7
%
9.4
%
Income tax expense
7.7
%
1.9
%
Net income
24.0
%
7.5
%
Less:
Net loss attributable to noncontrolling interest
—
%
—
%
Net income attributable to Cal-Maine Foods, Inc.
24.0
%
7.5
%
26
Fiscal Year
Ended June 3, 2023 Compared to Fiscal Year
Ended May 30, 201528, 2022

NET SALES
Our operating results are significantly affected by wholesaleTotal net sales for fiscal
2023
were $3.1 billion compared to $1.8 billion for fiscal 2022.
Net shell egg sales represented 96.1% and 96.6% of total net
sales for the fiscal year 2023
and 2022, respectively. Shell egg sales
classified as “Other” represent sales of miscellaneous byproducts and resale products included with our shell
egg operations. The
table below presents an analysis of our conventional and specialty shell egg
sales (in thousands, except percentage data):
June 03, 2023
May 28, 2022
Total net sales
$
3,146,217
$
1,777,159
Conventional
$
2,051,961
67.9
%
$
1,061,995
61.8
%
Specialty
956,993
31.6
%
648,838
37.8
%
Egg sales, net
3,008,954
99.5
%
1,710,833
99.6
%
Other
14,993
0.5
%
6,322
0.4
%
Net shell egg sales
$
3,023,947
100.0
%
$
1,717,155
100.0
%
Dozens sold:
Conventional
749,076
65.3
%
747,914
69.0
%
Specialty
398,297
34.7
%
335,875
31.0
%
Total dozens sold
1,147,373
100.0
%
1,083,789
100.0
%
Net average selling price per dozen:
Conventional
$
2.739
$
1.420
Specialty
$
2.403
$
1.932
All shell eggs
$
2.622
$
1.579
Egg products sales:
Egg products net sales
$
122,270
$
60,004
Pounds sold
70,035
63,968
Net average selling price per pound
$
1.746
$
0.938
Shell egg net sales
-
For
fiscal
2023,
shell
egg
net
sales
increased
$1.3
billion,
primarily
due
to
higher
net
average
selling
prices
for
conventional eggs, and to a lesser extent specialty eggs.
-
For fiscal 202
3, conventional
egg sales increased
$990.0 million,
or 93.2%, compared
to fiscal 2022,
primarily due
to
the increase in
conventional egg
prices. Changes
in price resulted
in a $988.0
million increase and
changes
in volume
resulted in a $1.7 million increase in net sales.
-
Conventional egg prices increased in the first three quarters
of fiscal 2023 primarily due to decreased supply
caused by
the HPAI outbreak, discussed above. Conventional egg prices decreased
substantially in the fourth
quarter of fiscal 2023
compared to average
fiscal 2023 levels, due
to an increased supply
of conventional eggs
caused by the repopulating
of
layer
flocks
in
response
to
the
impact
of
HPAI
and
typical
seasonal
decreases
in
demand.
Conventional
egg
prices
exceeded
specialty
egg
prices
during
fiscal
2022
and
for
the
first
three
quarters
of
fiscal
2023,
which
is
atypical
historically. Conventional
egg prices generally respond more quickly to market conditions because we sell the majority
of
our
conventional
shell
eggs
based
on
formulas
that
adjust
periodically
and
take
into
account,
in
varying
ways,
independently quoted regional wholesale market prices and feed costs, which can fluctuate widely and are outside of our control.  The majority of ourfor shell
eggs are sold at prices related to the Urner Barry Spot Egg Market Quotations for the southeastern and southcentral regions of the country, or formulas related to our
costs of production which include the costproduction. The
majority of cornour specialty eggs are typically sold at prices and soybean meal.  The following table shows our net income (loss)terms negotiated
directly with customers and therefore do
not fluctuate as much as conventional pricing.
-
Specialty egg sales
increased $308.2 million, or
47.5%, net average shellfor fiscal
2023
compared to fiscal
2022, primarily due
to a 24.4%
increase in specialty egg selling price, feed cost per dozen produced,
prices and the average Urner Barry wholesale large shell egg prices a 18.6% increase
in the southeast region, for eachvolume of our three most recent fiscal years. 
specialty dozens sold. Changes
in price resulted
in a $187.6
million increase and
change in volume
resulted in a
$120.6 million increase
in net sales,
respectively.
Our
Fiscal Year ended June 3, 2017 May 28, 2016 May 30, 2015
Net income (loss) attributable to Cal-Maine Foods, Inc. - (in thousands) $(74,278) $316,041
 $161,254
Gross profit (in thousands) 45,550
 648,074
 395,721
Net average shell egg selling price (rounded) 1.01
 1.74
 1.43
Average Urner Barry Spot Egg Market Quotations1
 0.85
 1.79
 1.53
Feed cost per dozen produced 0.399
 0.414
 0.439
1-
AverageThursdayprice for the large market (i.e. generic shell eggs) in the southeastern region

The shell egg industry has traditionally been subject to periods of high profitability followed by periods of significant loss. The periods of high profitability have often reflected increased consumer demand relative to supply while the periods of significant loss have often reflected excess supply for the then prevailing consumer demand.  Historically,

demand for shell eggs increases in line with overall population growth. As reflected above, our operating results fluctuate with changes in the spot egg market quote and feed costs.   The net average shell egg selling price is the blended price for all sizes and grades of shell eggs, including non-graded shell
27
specialty egg sales breaking stockalso benefitted from our additional
cage-free production capacity.
Cage-free revenue for fiscal 2023
was 20.2% of total revenue, compared to 22.3% for fiscal 2022.
-
Net average selling
prices of specialty eggs
increased by agreements with
our customers in response
to rising feed and undergrades.  In fiscal 2015 and 2016, our net average net selling price increased, reflecting strong demand for shell eggs across our markets
other input costs as well as lower supply constraints resulting from the outbreak of avian influenza ("AI"), and feed costs decreased over the previous year.  In fiscal 2017, our net average selling price and dozens sold decreased over the previous year primarilyavailability due to oversupplyHPAI.
-
Demand for specialty
eggs increased during
the first three
quarters of eggs resulting fromfiscal
2023 as conventional
egg prices rose.
Our
sales volume benefited versus the repopulationprior-year period, through use of the national flock of laying hens to levels exceeding the pre-AI flock and a reduced demand for egg products.  In fiscal 2017, feed costs continued to decrease over prior years. Gross profit and
our higher cage-free production capacity.
Egg products net income for fiscal 2017 decreased significantly compared to the prior year, primarily due to decreased selling prices.sales

-
Fiscal Year Ended June 3, 2017Compared to Fiscal Year EndedMay 28, 2016

NET SALES

In fiscal 2017, approximately 98% of ourEgg products net sales consisted of shell eggs and approximately 2% was egg products.  Net sales for the fiscal year ended June 3, 2017 were $1,074.5 million, a decrease of $834.2increased $62.3 million or 43.7%103.8%, from net sales of $1,908.7 million for fiscal 2016.  In fiscal 2017 total dozens of eggs sold decreased and egg selling prices decreased as compared to fiscal 2016. In fiscal 2017 total dozens of shell eggs sold were 1,031.1 million, a decrease of 22.5 million dozen, or  2.1%, compared to 1,053.6 million sold in fiscal 2016 resulting in a decrease in net sales of $22.6 million for fiscal 2017 compared with the prior year. We believe the decrease was primarily due to an oversupply of eggs in fiscal 2017 contrasted with fiscal 2016 in which we experienced supply constraints resulting from the AI outbreak.  Our average86.1% selling price of shell eggs decreased from $1.735 per dozen for fiscal 2016 to $1.007 per dozen for fiscal 2017, a decrease of $0.728 per dozen, or 42.0%, primarily reflecting pressure on market prices induced by the oversupply of eggs compared with the prior year in which we experienced higher egg prices resulting from the AI outbreak.  The decrease in sales price in fiscal 2017 from fiscal 2016 resulted in a corresponding decrease in net sales of approximately $750.7 million.  The remainder of our decrease in net sales was the result of decreased sales of egg products which is discussed later in this section.  Our operating results are significantly affected by wholesale shell egg market prices, which are outside of our control. Small changes in production or demand levels can have a large effect on shell egg prices. 


The table below represents an analysis of our non-specialty and specialty, as well as co-pack specialty, shell egg sales.  Following the table is a discussion of the information presented in the table.  
 Fiscal Years Ended Quarters Ended
 (53 weeks) (52 weeks) (14 weeks) (13 Weeks)
 June 3, 2017 May 28, 2016 June 3, 2017 May 28, 2016
 (Amounts in thousands) (Amounts in thousands)
Total net sales$1,074,513
  
 $1,908,650
  
 $274,584
  
 $303,020
  
  
  
  
  
  
  
  
  
Non-specialty shell egg sales548,858
 52.3% 1,243,377
 67.7% 145,454
 54.3% 163,882
 55.6%
Specialty shell egg sales457,617
 43.6% 534,754
 29.1% 112,744
 42.0% 118,356
 40.2%
Co-pack specialty shell egg sales32,689
 3.1% 49,282
 2.7% 7,198
 2.7% 9,021
 3.1%
Other sales10,423
 1.0% 10,533
 0.5% 2,594
 1.0% 3,245
 1.1%
Net shell egg sales$1,049,587
 100.0% $1,837,946
 100.0% $267,990
 100.0% $294,504
 100.0%
Net shell egg sales as a percent of total net sales  98%   96%   98%   97%
Dozens sold: 
  
  
  
  
  
  
  
Non-specialty shell egg778,538
 75.5% 791,058
 75.1% 207,428
 76.0% 189,850
 75.0%
Specialty shell egg236,067
 22.9% 241,603
 22.9% 61,862
 22.7% 58,856
 23.3%
Co-pack specialty shell egg16,525
 1.6% 20,936
 2.0% 3,725
 1.3% 4,371
 1.7%
Total dozens sold1,031,130
 100.0% 1,053,597
 100.0% 273,015
 100.0% 253,077
 100.0%
  
  
  
  
  
  
  
  
Net average selling price per dozen:               
All shell eggs$1.007
  
 $1.735
  
 $0.973
  
 $1.152
  
Non-specialty shell eggs$0.705
   $1.572
   $0.701
   $0.863
  
Specialty shell eggs$1.939
   $2.213
   $1.823
   $2.011
  
Non-specialty shell eggs include all shell egg sales not specifically identified as specialty or co-pack specialty shell egg sales.   This market is characterized generally by an inelasticity of demand, and small increases in production or decreases in demand can have a large adverse effect on prices and vice-versa.  In fiscal 2017, non-specialty shell eggs represented approximately 52.3% of our shell egg revenue,increase compared to 67.7% for
fiscal 2016, reflecting the large decrease in2022, which had a $56.6 million positive impact on net average selling price for non-specialty eggs from $1.572 per dozen in fiscal 2016 to $0.705 per dozen in fiscal 2017.  Sales of non-specialty shell eggs accounted for approximately 75.5% and 75.1% of total shell egg volumes in fiscal 2017 and 2016, respectively.

For the fourteen-week period ended June 3, 2017, non-specialty shell eggs represented approximately 54.3% of our shell egg revenue, compared to 55.6% for the thirteen-week period ended May 28, 2016, reflecting the large decrease in net average selling price for non-specialty eggs during the current period compared to the same period of last year ($0.701 per dozen in the 2017 period compared to $0.863 per dozen in the 2016 period) partially offset by an increase in non-specialty dozens sold.   For the fourteen-week period ended June 3, 2017, non-specialty shell eggs accounted for approximately 76.0% of the total shell egg volume, compared to 75.0% for the thirteen-week period ended May

28, 2016. The volume increase for both non-specialty and specialty shell eggs for the fiscal 2017 fourth quarter reflected the extra week of production in the period.

Specialty eggs, which include nutritionally enhanced, cage-free, organic and brown eggs, continued to make up a significant portion of our total shell egg revenue and dozens sold in fiscal 2017.  For fiscal 2017, specialty eggs accounted for 43.6% of shell egg revenue, compared to 29.1% in fiscal 2016. Specialty eggs accounted for 22.9% of shell egg volume in both fiscal 2017 and fiscal 2016.  Additionally, for fiscal 2017, specialty eggs sold through co-pack arrangements accounted for 3.1% of shell egg revenue, compared to 2.7% in fiscal 2016, and 1.6% of shell egg volume in fiscal 2017 compared to 2.0% in fiscal 2016.  Our net average selling price for specialty eggs was $1.939 per dozen for fiscal 2017 compared to $2.213 per dozen for fiscal 2016. Specialty egg retail prices are less cyclical than non-specialty shell egg prices and are generally higher due to consumer willingness to pay for the perceived increased benefits from these products. This effect was particularly evident in recent quarters as non-specialty egg prices declined more than specialty egg prices. However, as non-specialty egg prices declined, we experienced some margin and volume pressures on specialty egg sales.

-
For the fourteen-week period ended June 3, 2017, specialty shell eggs and specialty shell eggs sold through co-pack arrangements represented approximately 42.0% and 2.7%, of our shell egg revenue, compared to 40.2% and 3.1%, respectively, for the thirteen-week period ended May 28, 2016.   As previously discussed, selling prices for non-specialty eggs were lower during the current fiscal 2017 fourth quarter resulting in a larger percentage of our shell egg sales being attributable to the less cyclical specialty shell eggs.  For the fourteen-week period ended June 3, 2017, specialty shell eggs and specialty shell eggs sold through co-pack arrangements accounted for approximately 22.7% and 1.3% of the total shell egg volume, compared to 23.3% and 1.7%, respectively, for the thirteen-week period ended May 28, 2016. Our net average selling price for specialty eggs was $1.823 per dozen for the fiscal 2017 fourth quarter compared to $2.011 per dozen for the fiscal 2016 fourth quarter.

As previously disclosed, the loss of a portion of a major customer's co-pack business in the fourth quarter of fiscal 2016 also had a negative impact on our fiscal 2017 dozens sold and revenue.

The shell egg sales classified as “Other sales” represent hard cooked eggs, hatching eggs, other egg products, hens, and manure, which are included with our shell egg operations.

Egg products are shell eggs that are broken and sold in liquid, frozen, or dried form.  Our egg products are sold through our wholly-owned subsidiary American Egg Products, LLC (“AEP”) and our consolidated subsidiary Texas Egg Products, LLC (“TEP”).  Fornet average selling
price increased in fiscal 2017 egg product sales were $24.9 million, a decrease2023, compared
to fiscal 2022 as the supply of $45.8 million, or 64.7%, comparedshell
eggs
used to $70.7 million for fiscal 2016.  Egg products volume for fiscal 2017 was 65.3 million pounds, an increase of 6.8 million pounds, or 11.6%, compared to 58.5 million pounds for fiscal 2016. In fiscal 2017, the selling price per pound was $0.382 compared to $1.213 for fiscal 2016, a decrease of 68.5%. The decrease in market prices forproduce egg products in the current fiscal year isdecreased due to reduced demand for egg products and extraordinarily high prices for the prior fiscal year which reflected the shortage of supply caused by AI.HPAI


outbreak that started in February 2022.
COST OF SALES

Cost of sales for fiscal 2023
were $1.9 billion compared to $1.4 billion for fiscal 2022.
Cost of
sales consists
of
costs directly
related
to producing,
processing
and
packing
shell eggs,
purchases
of
shell
eggs from
outside sources,
processing and packing shell eggs, purchases of shell eggs from outside producers, processing and
packing of
liquid and
frozen egg
products and
other non-egg
costs. Farm production
costs are
those
costs incurred
at the
egg production
facility,
including feed,
facility,
hen amortization
and other
related farm
production
costs.
The following table presents the key variables affecting our cost of sales:
sales (in thousands,
except cost per dozen data):
Fiscal Year
Ended
  Fiscal Year Ended Quarter Ended
  (53 weeks) (52 weeks)   (14 weeks) (13 weeks)  
(Amounts in thousands) June 3, 2017 May 28, 2016 Percent Change June 3, 2017 May 28, 2016 Percent Change
Cost of sales:  
  
  
  
  
  
Farm production $598,412
 $562,521
 6.4 % $159,482
 $135,187
 18.0 %
Processing and packaging 202,225
 184,586
 9.6 % 54,896
 45,089
 21.8 %
Outside egg purchases and other 207,495
 464,008
 (55.3)% 41,663
 75,311
 (44.7)%
Total shell eggs 1,008,132
 1,211,115
 (16.8)% 256,041
 255,587
 0.2 %
Egg products 19,766
 48,584
 (59.3)% 6,075
 6,473
 (6.1)%
Other 1,065
 877
 21.4 % 462
 280
 65.0 %
Total $1,028,963
 $1,260,576
 (18.4)% $262,578
 $262,340
 0.1 %
   
  
  
  
  
  
   
  
  
  
  
  
Farm production cost (per dozen produced)  
  
  
  
  
  
Feed $0.399
 $0.414
 (3.6)% $0.381
 $0.396
 (3.8)%
Other 0.294
 0.279
 5.4 % 0.298
 0.290
 2.8 %
Total $0.693
 $0.693
 — % $0.679
 $0.686
 (1.0)%
   
  
  
  
  
  
Outside egg purchases (average cost per dozen) $1.01
 $1.72
 (41.3)% $0.90
 $1.11
 (18.9)%
   
  
  
  
  
  
Dozen produced 870,252
 819,307
 6.2 % 237,006
 198,950
 19.1 %
Dozen sold 1,031,130
 1,053,597
 (2.1)% 273,015
 253,077
 7.9 %
June 03, 2023

May 28, 2022
% Change
Cost of salesSales:
Farm production
$
1,118,741
$
927,806
20.6
%
Processing, packaging, and warehouse
342,836
289,056
18.6
Egg purchases and other (including change in inventory)
379,777
172,034
120.8
Total shell eggs
1,841,354
1,388,896
32.6
Egg products
108,406
51,204
111.7
Total
$
1,949,760
$
1,440,100
35.4
%
Farm production costs (per dozen produced)
Feed
$
0.676
$
0.571
18.4
%
Other
$
0.396
$
0.352
12.5
%
Total
$
1.072
$
0.923
16.1
%
Outside egg purchases (average cost per dozen)
$
3.02
$
1.72
75.6
%
Dozens produced
1,058,540
1,022,327
3.5
%
Percent produced to sold
92.3%
94.3%
(2.1)
%
Farm Production
-
Feed costs
per dozen
produced increased
18.4% in
fiscal 2023
compared to
fiscal 2022,
primarily due
to higher
feed
ingredient prices. Basis levels for thecorn and soybean meal
ran significantly higher in our areas of operation
compared to
our prior fiscal year ended June 3, 2017due to higher transportation and storage costs, adding
to our expense.
-
For fiscal 2023, the average daily CBOT market price was $1,029.0 million, a decrease$6.57 per bushel for corn and $450 per ton of $231.6 million, or 18.4%soybean meal,
representing increases of 4.1% and 14.7%, respectively,
as compared to 1,260.6 millionthe average daily CBOT prices for fiscal 2016.  Comparing2022.
28
-
Other farm production
costs increased due
to higher
facility and
flock amortization.
Facility costs
increased due primarily
to increased labor costs. Labor costs increased 29.6%
due to increased use of contract labor and increased wages
raised
in response to labor shortages.
-
Flock amortization increased
primarily from higher
capitalized feed costs
as well as higher
amortization costs from
an
increase in our cage-free production.
Supplies of corn and soybean remained tight relative to demand throughout fiscal 20172023, as evidenced by a low stock-to-use
ratio
for
corn,
as
a
result
of
weather-related
shortfalls
in
production
and
yields,
ongoing
supply
chain
disruptions
and
the
Russia-
Ukraine
War
and
its
impact
on
the
export
markets.
For
fiscal
2024,
we
expect
continued
corn
and
soybean
upward
pricing
pressures and further market volatility to affect feed costs.
Processing, packaging, and warehouse
-
Cost of packaging materials increased 18.6% compared to
fiscal 2022
as costs increased due to rising
inflation and labor
costs.
-
Labor costs increased 13.6% due to wage increases instituted in response
to labor shortages and rising inflation.
-
Dozens processed increased 3.6% compared to fiscal 2016, 2022, which
resulted in an $11.2 million increase in costs.
Egg purchases and other (including change in inventory)
-
Costs in this category increased
120.8% compared to fiscal 2022
primarily due to the
increase in egg prices. The
average cost
price
of outside
egg
purchases
increased
75.6%
per
dozen purchasedcompared
to
fiscal
2022.
Additionally,
our
percentage
of
produced to
sold decreased
to 92.3%
in fiscal
2023 from
94.3% in
fiscal 2022
as we
increased our
volume of
outside shell
egg producers andpurchases in order to meet customer demand.
GROSS PROFIT
Gross profit,
as a percentage
of net sales,
was 38.0%
for fiscal 2023
,
compared to 19.0%
for fiscal 2022.
The increase resulted
primarily from higher selling prices for conventional eggs as well as the increased volume
of specialty eggs sold, partially offset
by the increased cost of feed ingredients decreased while dozens produced increased.  For the 2017 fiscal year we produced 84.4% of the eggs sold by us, as compared to 77.8% for the previous year. The increase is the result of our acquisitions and expansion projects completed at our existing facilties. Feed cost for fiscal 2017 was $0.399 per dozen, compared to 0.414 per dozen for the prior fiscal year, a decrease of 3.6%.  The decrease in feed cost per dozen resulted in a decrease in cost of sales of $13.1 million for fiscal 2017 compared with fiscal 2016. 

For the fourteen weeks ended June 3, 2017, compared to the thirteen weeks ended May 28, 2016, cost of sales increased $238,000, or 0.1%, from $262.3 million in the fourth quarter of fiscal 2016, to $262.6 million in the current period. Feed cost per dozen for the fourth quarter of fiscal 2017 was $0.381, compared to $0.396 for the same quarter of fiscal 2016, a decrease of 3.8%.

Gross profit, as a percentage of net sales, was 4.2% for fiscal 2017, compared to 34.0% for fiscal 2016. The decline resulted primarily from lower selling prices.
processing, packaging
 

and warehouse costs.
SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES
Selling,
general,
and
administrative
(“SGA”)
expenses
include
costs
of
marketing,
distribution,
accounting,
and
corporate
  Fiscal Years Ended
  53 Weeks 52 Weeks    
(Amounts in thousands) June 3, 2017 May 28, 2016 Change Change
Specialty egg $56,522
 $61,294
 $(4,772) (7.8)%
Delivery expense 53,282
 49,629
 3,653
 7.4 %
Payroll and overhead 35,101
 39,149
 (4,048) (10.3)%
Stock compensation 3,427
 3,018
 409
 13.6 %
Other expenses 25,648
 24,670
 978
 4.0 %
Total $173,980
 $177,760
 $(3,780) (2.1)%

Selling, general and administrativeoverhead. SG&A expenses ("SG&A"), which include costs of marketing, distribution, accounting and corporate overhead, were  $174.0 increased
$33.6 million to $232.2
million in fiscal 2017, a decrease of $3.8 million, or 2.1%, compared to $177.8 million for fiscal 2016.  As a percent of net sales, selling, general and administrative expense increased from 9.3% in fiscal 2016 to 16.2% in fiscal 2017, due to the reduction of net sales in fiscal 2017.

The impact of the fiscal 2017 acquisitions was an $8.1 million increase in SG&A compared to fiscal 2016. The decrease in specialty egg expense for fiscal 2017 compared to fiscal 2016 is attributable to a 2.3% decrease in specialty shell egg dozens sold resulting in a decrease in advertising promotions and franchise expense.  Payroll and overhead decreased $4.0 million, or 10.3%, compared to the same period of last year primarily due to increased bonuses in the 2016 fiscal year and decreased bonuses in fiscal 2017, partially offset by fiscal 2017 having one more week than fiscal 2016.  As a percentage of net sales, payroll and overhead is 3.3% and 2.1% for fiscal 2017 and 2016, respectively. As a percentage of net sales, delivery expense is 5.0% and 2.6% for fiscal 2017 and 2016, respectively, increasing due to the reduced net sales in the current fiscal year as well as a 4.1% increase due to the impact of the acquisitions.  
  Quarters Ended
  14 Weeks 13 Weeks    
(Amounts in thousands) June 3, 2017 May 28, 2016 Change Change
Specialty egg $14,364
 $13,768
 $596
 4.3%
Delivery expense 13,712
 11,945
 1,767
 14.8%
Payroll and overhead 11,156
 9,450
 1,706
 18.1%
Stock compensation 947
 843
 104
 12.3%
Other expenses 7,816
 6,398
 1,418
 22.2%
Total $47,995
 $42,404
 $5,591
 13.2%

SG&A expense was $48.0 million for the fourteen weeks ended June 3, 2017, an increase of $5.6 million, or 13.2%, compared to $42.4 million for the thirteen weeks ended May 28, 2016. The increase in specialty egg expense for the fiscal 2017 fourth quarter is attributable to a 5.1% increase in specialty egg dozens sold due to the extra week in the current fiscal quarter resulting in an increase in advertising promotions and franchise expense. Payroll and overhead increased $1.7 million, or 18.1%, compared to the same period of last year due to the Foodonics and Happy Hen acquisitions as well as the extra week in the fiscal 2017 fourth quarter, partially offset by reduced bonus accruals in 2017. Delivery expense increased $1.8 million for the fourteen weeks ended June 3, 2017 compared to the corresponding thirteen week period ended May 28, 2016, primarily due to the Foodonics acquisition. Other expenses for the fourteen weeks ended June 3, 2017 are up $1.4 million, or 22.2%, compared to the corresponding thirteen week period ended May 28, 2016, primarily due to an extra week in the current period, an increase in legal and audit fees in the current period, and the impact of the acquisitions.


LOSS (GAIN) ON DISPOSAL OF FIXED ASSETS

In fiscal 2017, we recorded a $3.7 million loss due to the retirement of layer houses at certain locations. In fiscal 2016 we recorded a gain on disposal of fixed assets of $1.6 million primarily due to the sale of property in Albuquerque, New Mexico.

OPERATING INCOME (LOSS)

As a result of the above, our operating loss was $132.1 million for fiscal 2017, compared to operating income of $471.9 million for fiscal 2016.
2023.
 
OTHER INCOME (EXPENSE)

Total other income (expense) consists of income (expenses) not directly charged to, or related to, operations such as interest expense, interest income, patronage dividends, and equity in earnings of affiliates, among other items. Total other income for fiscal 2017 was $17.8 million compared to $15.4 million for fiscal 2016.  As a percent of net sales, total other income was 1.7% for fiscal 2017, compared to 0.8% for fiscal 2016.

The Company recorded interest income of $3.1 million in fiscal 2017, compared to $4.3 million for the same period of last year. We recorded interest expense of $1.4 million and $2.3 million, of which $1.1 million was capitalized in both fiscal 2017 and 2016.  Interest income from available for sale securities decreased due to lower average invested balances. The reduction of interest expense resulted from lower levels of outstanding debt.

Patronage dividends, which represent distributions from our membership in Eggland's Best, Inc., increased $735,000 from $6.9 millionin fiscal 2016 to $7.7 million in fiscal 2017.

Equity in income of affiliates for fiscal 2017 was $1.4 million compared to $5.0 million for fiscal 2016.  The decrease of $3.6 million is primarily due to losses at our Red River joint venture and decreased income from specialty egg sales in our other unconsolidated specialty egg joint ventures.

Other, net for fiscal 2017 was $6.0 million of income compared to $269,000 for fiscal 2016. The increase of $5.7 million is primarily due to our receipt in the fourth quarter of fiscal 2017 of payment of claims related to the Deepwater Horizon Economic and Property Damages Settlement Program. Our recovery, net of applicable fees, was $5.5 million.

INCOME TAXES

For the fiscal year ended June 3, 2017, our pre-tax loss was $114.3 million, compared to pre-tax income of $487.2 million for fiscal 2016. Income tax benefit of $39.9 million was recorded for fiscal 2017 with an effective income tax rate of 34.9%, compared to income tax expense of $169.2 million for fiscal 2016 with an effective income tax rate of 34.8%.

For the fourteen weeks ended June 3, 2017, our pretax loss was $33.2 million and our income tax benefit was $8.5 million with an effective income tax rate of 25.9%. The low effective rate is due to the Company’s decision to carry back fiscal 2017 net operating losses to recover a portion of taxes paid in fiscal 2015. The net operating loss carryback resulted in a $4.1 million decrease in the income tax benefit, as the carryback reduced fiscal 2015 taxable income and as a result reduced the benefit of domestic manufacturers deductions, a portion of which were therefore reversed in the fourth quarter of fiscal 2017.

Items causing our effective rate to differ from the federal statutory income tax rate of 35% are state income taxes and certain items included in income or loss for financial reporting purposes that are not included in taxable income or loss for income tax purposes, including tax exempt interest income, the domestic manufacturers deduction, and net income or loss attributable to noncontrolling interest.


NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST

Net loss attributable to noncontrolling interest for fiscal 2017 was $149,000 compared to net income of $2.0 million for fiscal 2016.

NET INCOME (LOSS) ATTRIBUTABLE TO CAL-MAINE FOODS, INC.

As a result of the above, net loss for fiscal 2017 was $74.3 million, or $1.54 per basic and diluted share, compared to net income of $316.0 million, or $6.56 per basic share and $6.53 per diluted share for fiscal 2016. 

Fiscal Year Ended May 28, 2016Compared to Fiscal Year EndedMay 30, 2015

NET SALES

In fiscal 2016, approximately 96% of our net sales consisted of shell eggs and approximately 4% was egg products.  Net sales for the fiscal year ended May 28, 2016 were $1,908.7 million, an increase of $332.6 million, or 21.1%, from net sales of $1,576.1 million for fiscal 2015.  In fiscal 2016 total dozens of eggs sold decreased and egg selling prices increased as compared to fiscal 2015. In fiscal 2016 total dozens of shell eggs sold were 1,053.6 million, a decrease of 9.5 million dozen, or  0.9%, compared to 1,063.1 million sold in fiscal 2015 resulting in a decrease in net sales of $13.6 million for fiscal 2016 compared with the prior year which we believe was primarily due to supply constraints and higher prices resulting from the AI outbreak.  Our average selling price of shell eggs increased from $1.429 per dozen for fiscal 2015 to $1.735 per dozen for fiscal 2016, an increase of $0.306 per dozen, or 21.4%, primarily reflecting higher egg prices resulting from the AI outbreak and a higher percentage of specialty egg sales.  The increase in sales price in fiscal 2016 over 2015 resulted in a corresponding increase in net sales of $325.1 million.  The remainder of our increase in sales over the prior fiscal year not related to shell egg volume or prices was the result of increased sales from egg products which is discussed later in this section.  Our operating results are significantly affected by wholesale shell egg market prices, which are outside of our control. Small changes in production or demand levels can have a large effect on shell egg prices. 


The table below represents an analysis of our non-specialty and specialty, as well as co-pack specialty, shell egg sales.  Following the table is a discussion of the information presented in the table.  
 Fiscal Years Ended Quarters Ended
 (52 weeks) (13 weeks)
 May 28, 2016 May 30, 2015 May 28, 2016 May 30, 2015
 (Amounts in thousands) (Amounts in thousands)
Total net sales$1,908,650
  
 $1,576,128
  
 $303,020
  
 $403,011
  
  
  
  
  
  
  
  
  
Non-specialty shell egg sales1,243,377
 67.7% 1,059,070
 69.2% 163,882
 55.6% 268,625
 68.5%
Specialty shell egg sales534,754
 29.1% 416,127
 27.2% 118,356
 40.2% 110,696
 28.2%
Co-pack specialty shell egg sales49,282
 2.7% 43,282
 2.8% 9,021
 3.1% 10,278
 2.6%
Other sales10,533
 0.6% 11,769
 0.8% 3,245
 1.1% 2,710
 0.7%
Net shell egg sales$1,837,946
 100.0% $1,530,248
 100.0% $294,504
 100.0% $392,309
 100.0%
Net shell egg sales as a percent of total net sales  96%   97%   97%   97%
Dozens sold: 
  
  
  
  
  
  
  
Non- specialty shell egg791,058
 75.1% 830,770
 78.1% 189,850
 75% 204,138
 77.1%
Specialty shell egg241,603
 22.9% 210,606
 19.8% 58,856
 23.3% 55,699
 21%
Co-pack specialty shell egg20,936
 2% 21,710
 2.1% 4,371
 1.7% 5,046
 1.9%
Total dozens sold1,053,597
 100% 1,063,086
 100% 253,077
 100% 264,883
 100%
  
  
  
  
  
  
  
  
Net average selling price per dozen$1.74
  
 $1.43
  
 $1.15
  
 $1.47
  
Non-specialty shell eggs include all shell egg sales not specifically identified as specialty or co-pack specialty shell egg sales.   This market is characterized generally by an inelasticity of demand, and small increases in production or decreases in demand can have a large adverse effect on prices and vice-versa.  In fiscal 2016, non-specialty shell eggs represented approximately 67.7% of our shell egg revenue, compared to 69.2% for fiscal 2015.   Sales of non-specialty shell eggs accounted for approximately 75.1% and 78.1% of total shell egg volumes in fiscal 2016 and 2015, respectively.

For the thirteen-week period ended May 28, 2016, non-specialty shell eggs represented approximately 55.6% of our shell egg revenue, compared to 68.5% for the thirteen-week period ended May 30, 2015, reflecting the large decrease in net average selling price for non-specialty eggs during the fiscal 2016 fourth quarter compared to the same period of the prior year.   For the thirteen-week period ended May 28, 2016, non-specialty shell eggs accounted for approximately 75.0% of the total shell egg volume, compared to 77.1% for the comparable period of 2015.


Specialty eggs, which include nutritionally enhanced, cage-free, organic and brown eggs, continued to make up a larger portion of our total shell egg revenue and dozens in fiscal 2016.  For fiscal 2016, specialty eggs accounted for 29.1% of shell egg revenue, compared to 27.2% in fiscal 2015, and 22.9% of shell egg volume in fiscal 2016, compared to 19.8% in fiscal 2015.  Additionally, for fiscal 2016, specialty eggs sold through co-pack arrangements accounted for 2.7% of shell egg revenue, compared to 2.8% in fiscal 2015, and 2.0% of shell egg volume in fiscal 2016 and 2015.  Specialty egg retail prices are less cyclical than non-specialty shell egg prices and are generally higher due to consumer willingness to pay for the perceived increased benefits from these products. This effect was particularly evident in our fourth fiscal quarter of 2016, as non-specialty egg prices declined more than specialty egg prices. However, as non-specialty egg prices have declined, we are experiencing some margin and volume pressures on specialty egg sales.

For the thirteen-week period ended May 28, 2016, specialty shell eggs and specialty shell eggs sold through co-pack arrangements represented approximately 40.2% and 3.1%, of our shell egg revenue, compared to 28.2% and 2.6%, respectively, for the comparable period of fiscal 2015.   As previously discussed, selling prices for non-specialty eggs decreased during the fiscal 2016 fourth quarter resulting in a larger percentage of our shell egg sales being attributable to the less cyclical specialty shell eggs.  For the thirteen-week period ended May 28, 2016, specialty shell eggs and specialty shell eggs sold through co-pack arrangements accounted for approximately 23.3% and 1.7% of the total shell egg volume, compared to 21.0% and 1.9%, respectively, for the comparable period of fiscal 2015.

As discussed above, while egg prices increased substantially after the AI outbreak during the early part of our fiscal 2016, egg prices declined to a decade-low level during our fiscal 2016 fourth quarter, and were 21.7 percent lower than our average selling price in our fiscal 2015 fourth quarter.  In addition, our sales for the fourth quarter of fiscal 2016 reflect lower volumes primarily related to the loss of a portion of a major customer’s co-pack business.

The shell egg sales classified as “Other sales” represent hard cooked eggs, hatching eggs, other egg products, hens, and manure, which are included with our shell egg operations.

Egg products are shell eggs that are broken and sold in liquid, frozen, or dried form.  Our egg products are sold through our consolidated subsidiaries American Egg Products, LLC (“AEP”) and Texas Egg Products, LLC (“TEP”).  For fiscal 2016 egg product sales were $70.7 million, an increase of $25.3 million, or 55.7%, compared to $45.4 million for fiscal 2015.  Egg products volume for fiscal 2016 was 58.5 million pounds, an increase of 7.5 million pounds, or 14.7%, compared to 51.0 million pounds for fiscal 2015.  The increases in our sales volume and market prices for egg products in the current fiscal year were due to a shortage of supply from the AI affected locations of other producers, as the AI outbreak had a disproportionately large impact on suppliers of egg products.  In fiscal 2016, the selling price per pound was $1.213 compared to $0.891 for fiscal 2015, an increase of 36.1%.


COST OF SALES

Cost of sales consists of costs directly related to producing, processing and packing shell eggs, purchases of shell eggs from outside producers, processing and packing of liquid and frozen egg products and other non-egg costs.  Farm production costs are those costs incurred at the egg production facility, including feed, facility, hen amortization, and other related farm production costs.    The following table presents the key variables affecting
an analysis of
our cost of sales:SGA expenses (in thousands):
Fiscal Year
Ended
  Fiscal Year Ended Quarter Ended
(Amounts in thousands) May 28, 2016 May 30, 2015 Percent Change May 28, 2016 May 30, 2015 Percent Change
Cost of sales:  
  
  
  
  
  
Farm production $562,521
 $558,580
 0.7 % $135,187
 $138,580
 (2.4)%
Processing and packaging 184,586
 173,181
 6.6 % 45,089
 45,056
 0.1 %
Outside egg purchases and other 464,008
 413,863
 12.1 % 75,311
 101,029
 (25.5)%
Total shell eggs 1,211,115
 1,145,624
 5.7 % 255,587
 284,665
 (10.2)%
Egg products 48,584
 33,886
 43.4 % 6,473
 8,640
 (25.1)%
Other 877
 897
 (2.2)% 280
 311
 (10)%
Total $1,260,576
 $1,180,407
 6.8 % $262,340
 $293,616
 (10.7)%
   
  
  
  
  
  
   
  
  
  
  
  
Farm production cost (per dozen produced)  
  
  
  
  
  
Feed $0.414
 $0.439
 (5.7)% $0.396
 $0.406
 (2.5)%
Other 0.279
 0.266
 4.9 % 0.29
 0.272
 6.6 %
Total $0.693
 $0.705
 (1.7)% $0.686
 $0.678
 1.2 %
   
  
  
  
  
  
Outside egg purchases (average cost per dozen) $1.72
 $1.41
 22 % $1.11
 $1.43
 (22.4)%
   
  
  
  
  
  
Dozen produced 819,307
 798,842
 2.6 % 198,950
 201,763
 (1.4)%
Dozen sold 1,053,597
 1,063,086
 (0.9)% 253,077
 264,883
 (4.5)%
June 03, 2023

Cost of sales for the fiscal year ended May 28, 2016 was $1,260.6 million, an2022
$ Change
% Change
Specialty egg expense
$
57,758
$
59,830
$
(2,072)
(3.5)
%
Delivery expense
77,548
62,677
14,871
23.7
%
Payroll, taxes and benefits
57,830
43,954
13,876
31.6
%
Stock compensation expense
4,205
4,063
142
3.5
%
Other expenses
34,866
28,107
6,759
24.0
%
Total
$
232,207
$
198,631
$
33,576
16.9
%
Specialty egg expense
-
Specialty egg
expense, which
includes franchise
fees, advertising
and promotion
costs generally
tracks with
specialty
egg
volumes,
which
were
up
18.6%
for
fiscal
2023
compared
to
fiscal
2022.
However,
our
specialty
egg
expense
decreased 3.5%,
primarily due
to a
significant reduction
in advertising
costs. The
higher prices
for conventional
eggs
and
the
comparatively
lower prices
for
specialty eggs
diminished
the need
to promote
specialty eggs
in fiscal
2023.
However, we anticipate that the need to promote specialty eggs will increase
in fiscal 2024 as the market recovers from
the effects of $80.2 million, or 6.8%, compared to $1,180.4 million for fiscal 2015.  Comparing fiscal 2016 to fiscal 2015, dozens produced and average cost per dozen purchased from outside shell egg producers increased while cost of feed ingredients decreased. During our fiscal 2016 we produced 77.8% of the eggs sold by us, as compared to 75.1% for fiscal 2015. Feed cost for fiscal 2016 was $0.414 per dozen, compared to $0.439 per dozen for the prior fiscal year, a decrease of 5.7%.  The decrease in feed cost per dozen resulted in a decrease in cost of sales of $20.6 million for fiscal 2016 compared with 2015. HPAI.

For the thirteen weeks ended May 28, 2016, compared to the same period of 2015, cost of sales decreased from $293.6 million in the fourth quarter of fiscal 2015, to $262.3 million in the fourth quarter of fiscal 2016.  This decrease of $31.3 million, or 10.7%, was primarily the result of decreased cost of outside egg purchases from $1.43 per dozen in the fourth quarter of fiscal 2015 to $1.11 in the comparable period of fiscal 2016.  Feed cost per dozen for the fourth quarter of fiscal 2016 was $0.396, compared to $0.406 for the same quarter of fiscal 2015, a decrease of 2.5%.

Gross profit increased from 25.1% of net sales for fiscal 2015, to 34.0% of net sales for fiscal 2016.  The improvement is the result of lower feed costs and increased egg selling prices.
 

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES29
Delivery expense
  Fiscal Years Ended
  52 Weeks
(Amounts in thousands) May 28, 2016 May 30, 2015 Change Change
Stock compensation expense $3,018
 $2,955
 $63
 2.1%
Specialty egg expense 61,294
 53,966
 7,328
 13.6%
Payroll and overhead 39,149
 31,965
 7,184
 22.5%
Other expenses 24,670
 24,501
 169
 0.7%
Delivery expense 49,629
 46,999
 2,630
 5.6%
Total $177,760
 $160,386
 $17,374
 10.8%
-

The increased
delivery expense
is primarily
due to
the increase
in fuel
and labor
costs for
both our
fleet and
contract
SG&A, which include costs of marketing, distribution, accountingtrucking. Compared to fiscal
2022, contract trucking and corporate overhead, were  $177.8 million in fiscal 2016, an increase of $17.4 million, or 10.8%, compared to $160.4
labor expenses increased
approximately $10.2 million for
fiscal 2015. 
2023.
Payroll, taxes and benefits expense
-
The
increase
in
payroll,
taxes
and
benefits
expense
is
primarily
due
to
an
increase
in
the
accrual
for
anticipated
performance-based bonuses.
Other expenses
-
The increase in specialty egg expense for fiscal 2016 compared to fiscal 2015other
expenses is attributable to a 14.7% increase in specialty shell egg dozens sold resulting in an increase in advertising promotions and franchise expense.  Payroll and overhead increased $7.2 million, or 22.5%, compared to the same period of prior year primarily due to
increased bonus accruals in the 2016 fiscal year.  As a percentagelegal expenses of net sales, payroll and overhead is 2.1%  2.0% for fiscal 2016 and 2015, respectively. As a percentage of net sales, delivery expense is 2.6% and 3.0% for fiscal 2016 and 2015, respectively.  As a percent of net sales, selling, general and administrative expense decreased from 10.2% in fiscal 2015 to 9.3% in fiscal 2016.
approximately $3.6 million
as well as inflationary
  Quarters Ended
  13 Weeks
(Amounts in thousands) May 28, 2016 May 30, 2015 Change Change
Stock compensation expense $843
 $1,290
 $(447) (34.7)%
Specialty egg expense 13,768
 14,217
 (449) (3.2)%
Payroll and overhead 9,450
 8,920
 530
 5.9 %
Other expenses 6,398
 6,679
 (281) (4.2)%
Delivery expense 11,945
 11,738
 207
 1.8 %
Total $42,404
 $42,844
 $(440) (1)%

SG&A expense was $42.4 million for the thirteen-week period ended May 28, 2016, a decrease of $440,000, or 1.0%, compared to $42.8 million for the thirteen-week period ended May 30, 2015. 

LOSS (GAIN) ON DISPOSAL OF FIXED ASSETS

In fiscal 2016 we recorded a gain on the disposal of fixed assets of $1.6 million due to the sale of property in Albuquerque, New Mexico, compared with a loss on the disposal of fixed assets of $568,000 in fiscal 2015.

pressure increasing costs.
OPERATING
INCOME

(LOSS)
As a result of the above, our operating income was $470.3$967.7 million for fiscal 2016, 2023
,
compared to $235.3$143.5 million for fiscal 2015.  Operating income as a percent of net sales was 24.7% and 14.9% for fiscal 2016 and 2015, respectively. 

2022.
OTHER INCOME (EXPENSE)

Total
other
income
(expense)
consists
of
items
not
directly
charged
to,
or
related
to,
operations
such
as
interest
income
and
Totalexpense, equity in income or loss of unconsolidated entities, and patronage dividends,
among other income (expense) consists of income (expenses) not directly charged to, or related to, operations such as interest expense,items.
The Company recorded interest income patronage dividends, and equityof $18.6 million in earnings of affiliates, among other items. Total other income for fiscal 2016 was $15.4 million 2023,
compared to $11.8 million for$988 thousand in fiscal 2015.  As a percent of net sales, total other income was 0.8% for fiscal 2016, compared 2022, primarily due
to 0.7% for fiscal 2015.significantly
higher cash
and cash
equivalents and
investment securities
available-for-sale balances
and yields.
We
recorded

Net interest income for fiscal 2016 was $3.2 million compared to net interest expense of $515,000 for$583 thousand and $403 thousand
in fiscal 2015.  Interest income from available for sale securities increased due2023 and 2022, respectively, primarily related to higher average invested balances and higher rates of return. The reduction of interest expense resulted from the Company reducing outstanding debt.commitment fees

on our Credit Facility described below.
Equity in income of affiliatesfrom unconsolidated entities for fiscal 20162023 was $5.0 million$746
thousand compared to $2.7$1.9 million for fiscal 2015.  2022.
Other, net
for fiscal 2023
was income of
$1.9 million compared
to $9.8 million for
fiscal 2022.
The increasemajority of $2.3
the decrease is
due
to
our
acquisition
in
fiscal
2022
of
the
remaining
50% membership
interest
in
Red
River
Valley
Egg
Farm,
LLC
(“Red
River”) as we recognized a $4.5 million is primarilygain in fiscal 2022 due to the remeasurement of our interestequity investment.
We also received
$1.4 million in fiscal 2022 related
to our review and adjustment
of our various marketing agreements. Additionally, the Southwest Specialty Egg, LLC joint venture as well as increased income from specialty egg sales and patronage dividendsCompany
recorded a $2 million impairment of an investment in our otheran unconsolidated specialty egg joint ventures.entity

in fiscal 2023.
INCOME TAXES

For
the
fiscal
year
ended
June
3,
2023,
our
pre-tax
income
was
$998.6
million,
compared
to
$166.0
million
for
fiscal
2022.
For the fiscal year ended May 28, 2016, our pre-tax income was $487.2 million, compared to $246.5 million for fiscal 2015. Income tax expense of $169.2$241.8 million
was recorded for fiscal 20162023 with an effective income
tax rate of 34.8%, compared to $84.324.2%.
For fiscal 2022, income
tax expense was $33.6 million for fiscal 2015 with an effective tax rate
of 20.2%. Included in fiscal 2022 income tax expense is the discrete tax
benefit of
$8.3 million
discussed in
of Part
II. Item
8. Notes
to Consolidated
Financial Statements
in this
Annual Report.
Excluding the discrete
tax benefit,
income tax expense
was $41.9
million with an
adjusted effective
tax rate of 34.3%.

25.2%.
At June 3, 2023, the Company had
an income tax receivable of $67.0 million compared to
$42.1 million at May 28, 2022. During
fiscal 2022,
the Company
filed federal
carryback tax
returns for
fiscal 2020
and 2021
taxable net
operating losses
to recover
a
portion of
taxes paid
in fiscal 2015
and fiscal
2016. Subsequent
to fiscal
2023, we
received $31.8
million of
the $34.9
million
fiscal 2021 refund and believe we will receive the remaining amount of the fiscal 2020 and 2021 refunds, totaling
$11.7 million,
during our second fiscal quarter of 2024.
An additional $23.5 million income tax receivable was recorded as of June 3, 2023 for
fiscal 2023 federal overpayments in excess of federal tax liability.
Items causing
our effective
tax rate
to differ
from the
federal statutory
income tax
rate of 35%
21% are
state income
taxes, certain
federal tax
credits and
certain items included
in income or
loss for financial
reporting purposes that
are not included
in taxable
income or
loss for income
tax purposes, including
tax exempt interest
income, the domestic manufacturers deduction, certain
nondeductible expenses,
and net income
or loss attributable to noncontrolling interest.

30
NET LOSS ATTRIBUTABLE
TO NONCONTROLLING INTEREST
Net loss attributable
to noncontrolling
interest was $1.3
million for fiscal
2023
compared to a
$209 thousand
net loss for
fiscal
2022.
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

Net income attributable to noncontrolling interest for fiscal 2016 was $2.0 million compared to $1.0 million for fiscal 2015.

NET INCOME ATTRIBUTABLE TO CAL-MAINE FOODS, INC.

As a result of the above, net income attributable to Cal-Maine Foods, Inc. for fiscal 2016
2023 was $316.0$758.0 million, or $6.56$15.58 per basic share
and $6.53$15.52 per diluted share, compared to $161.3$132.7 million, or $3.35$2.73 per basic share
and $3.33$2.72 per diluted share for fiscal 2015.  2022.
Fiscal Year
 
Ended May 28, 2022 Compared to Fiscal Year
Ended May 29, 2021
CAPITAL RESOURCESThe discussion
of our
results of
operations for
the fiscal
year ended
May 28,
2022 compared
to the
fiscal year
ended May
29,
2021 can be found in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations in
the Company’s fiscal 2022
Annual Report on Form 10-K.
LIQUIDITY AND LIQUIDITYCAPITAL
RESOURCES

Working
Capital and Current Ratio
Our working capital at
June 3, 20172023 was $371.5
$942.2 million, compared to $542.8$476.8 million at
May 28, 2016. 2022.
The calculation of working
capital is defined as current assets less current liabilities. Our current ratio was 6.746.16 at June 3, 20172023 compared to 7.503.58 at May 28, 2016.
2022.
The current
ratio is
calculated
by dividing
current assets
by current
liabilities. OurThe
increase
in our
working
capital and
current ratio
is primarily due
to the increase
in total current
assets, which increased
by $463.4 million
to $1.1 billion
at June 3,
2023,
due
to significant
increases in
cash and
cash equivalents
and
investment
securities available
-for-sale.
Due to
seasonal
factors described in
, we generally expect
our need for working
capital generally isto be highest in
the last
fourth and first fiscal quarters ending in MayMay/June and August, respectively, when eggAugust/September,
respectively.
Cash Flows from Operating Activities
Net cash provided
by operating activities
was $863.0
million for fiscal
year 2023
compared with $126.2
million for fiscal
year
2022.
The increase in cash flow from operations
resulted primarily from higher selling prices are normallyfor conventional eggs
as well as the
increased volume of specialty eggs
sold, partially offset by the increased
cost of feed ingredients and processing,
packaging and
warehouse costs.
Cash Flows from Investing Activities
We
continue
to
invest
in
our
facilities,
with
$136.6
million
used
to
purchase
property,
plant
and
equipment
for
fiscal
2023,
compared to $72.4
million in fiscal 2022.
These investments were primarily
made to expand our
cage-free production capacity.
We
have for many years
invested substantial amounts
to expand our cage-free
production capacity and
expect to continue to
do
so.
Purchases
of
investments
were
$530.8
million
in
fiscal
2023,
compared
to
$98.2
million
in
fiscal
2022.
The
increase
in
purchases of
investment securities
is primarily
due to
the utilization
of increased
liquidity resulting
from increased
cash flows
provided by operating
activities noted above.
Sales and maturities
of investment securities
were $291.8
million for fiscal
2023,
compared to $92.7 million
for fiscal 2022. During fiscal
2022, we also acquired the
remaining 50% membership interest
in Red
River for $44.8 million, net of cash acquired.
Cash Flows from Financing Activities
We paid dividends
totaling $252.3 million and $6.1 million in fiscal 2023
and 2022, respectively.
As of
June 3,
2023, cash
increased
$233.7 million
since May
28, 2022,
compared to
an increase
of $1.7
million during
fiscal
2022.
Credit Facility
We had no
long-term debt outstanding at seasonal lows.the end of fiscal 2023
and 2022. 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”), in
an initial
aggregate principal
amount of
up to
$250 million.
As of June 3, 2023, no amounts were borrowed under
the Credit Facility. We
have $3.7 $4.3
million in outstanding standby letters of
credit, which are collateralized with cash.  Our long-term debt and capital leases at June 3, 2017, including current maturities, amountedwere issued under our Credit Facility for the
benefit of certain insurance companies. In May 2023,
we entered into
31
an amendment to $10.9 million, compared
the Credit Agreement
to $25.6 million at May 28, 2016.  See Note 9 inreplace the
London Interbank Offered
Rate interest rate
benchmark. Refer
to Part II.
Item 8. Notes to Consolidatedthe Financial Statements,
for further information regarding our long-term debt instruments.debt.

Material Cash Requirements
NetMaterial cash used in
requirements for
operating activities was $49.3 million
primarily consist
of feed
ingredients, processing,
packaging and
warehouse
costs, employee related
costs, and other
general operating expenses,
which we expect
to be paid
from our cash
from operations
and cash and
investment securities on
hand for fiscal year 2017 compared with netat
least the next
12 months. While
volatile egg prices
and feed ingredient
costs,
among
other
things,
make
long-term
predictions
difficult,
we
have
substantial
liquid
assets
and
availability
under
our
Credit
Facility to fund future operating requirements.
Our material cash provided by operating activities of $381.8 millionrequirements for fiscal year 2016.  Decreased gross profit margins resulting from lower egg prices contributed greatly to our decrease in cash flow from operations.capital expenditures consist primarily

For fiscal 2017, approximately $251.7 million was provided from the sale of short-term investments, $29.8 million was used to purchase short-term investments and net payments of $6.6 million were received from notes receivable and investments in affiliates.   We used $85.8 million to acquire assets from Foodonics and Happy Hen. We invested $19.9 million in the Red River Valley Egg Farm LLC joint venture.  For additional information see Note 3 to Notes to Consolidated Financial Statements.  Approximately $66.7 million was used to purchase property, plant and equipment.  Refer to the table of material construction projects presented below for additional information on purchases of property, plant and equipment.  Approximately $16.5 million was used for principal payments on long-term debt.  The net result of these and other activities was a decrease in cash of $11.5 million from May 28, 2016.

For the fiscal year ended May 28, 2016, $381.8 million in net cash was provided by operating activities. This compares to $195.3 million of net cash provided by operating activities for the fiscal year ended May 30, 2015.  Improved gross profit margins contributed greatly to our positive cash flow from operations in fiscal 2016 compared to fiscal 2015.  As discussed above, our gross profit margins increased in fiscal 2016 primarily as a result of an increase in egg prices and a decrease in feed costs compared to fiscal 2015. 

For fiscal 2016, approximately $292.5 million was provided from the sale of short-term investments, $403.2 million was used to purchase short-term investments and net payments of $5.4 million were received from notes receivable and investments in affiliates.   We invested $34.0 million in the Red River Valley Egg Farm LLC joint venture.  Approximately $76.1 million was used to purchase property, plant and equipment.  Approximately $120.9 million was used to pay dividends on common stock and $25.3 million was used for principal payments on long-term debt.  The net result of these and other activities was an increase in cash of $20.4 million from May 30, 2015.

Certain property, plant, and equipment is pledged as collateral on our notes payable and senior secured notes.  Unless otherwise approved by our lenders, we are required by provisions of our loan agreementsprojects to (1) maintain minimum levels of working capital (current ratio of not less than 1.25increase our cage-free production
capacity. We
continue to 1) and net worth (minimum of $90.0 million tangible net worth, plus 45% of cumulative net income since the fiscal year ended May 28, 2005); (2) limit dividends paid in any given quarter to not exceed an amount equal to one third of the previous quarter’s consolidated net income (allowed if no events of default); (3) maintain minimum total funded debt to total capitalization (debt to total tangible capitalization ratio not to exceed 55%); and (4) maintain various cash-flow coverage ratios (1.25 to 1), among other restrictions. At June 3, 2017, we were in compliance with the financial covenant requirements of all loan agreements. Under certain of the loan agreements, the lenders have the option to require the prepayment of any outstanding borrowings in the event we undergo a change in control, as defined in the applicable loan agreement. Our debt agreements require Fred R. Adams, Jr., our Founder and Chairman Emeritus, or his family, to maintain ownership of Company shares representing not less than 50% of the outstanding voting power of the Company. 

In recent years we have made significant investments in new and remodeled facilities to meetmonitor the increasing demand for cage-free organiceggs and other specialty eggs, including throughto engage
with our previously discussed Red River joint venture. We have contributed $53.9 millioncustomers in efforts to the joint venture to fund our share of construction, startup costs, and operating losses. We estimate that we will make additional contributions of approximately $8 million to fund our share of remaining construction costs. Additionally, thehelp
them achieve their announced timelines for cage-free egg sales. The following
table representspresents material construction projects
approved as of July 20, 2017June 3, 2023 (in thousands):

Project(s) Type
Projected
Completion
Projected Cost
Spent as of
June 3, 2023
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses
Fiscal 2024
$
54,702
$
18,900
$
35,802
Cage-Free Layer & Pullet Houses
Fiscal 2025
40,099
27,152
12,947
Cage-Free Layer & Pullet Houses
Fiscal 2026
38,883
19,218
19,665
Cage-Free Layer & Pullet Houses
Fiscal 2027
56,923
20,472
36,451
$
190,607
$
85,742
$
104,865
The
following
table
summarizes
by
fiscal
year
the
future
estimated
cash
payments,
in
thousands,
to
be
made
under
existing
contractual obligations
as of
June 3, 2023.
Further information
on debt
obligations is
contained in
in
Project Location Projected Completion Projected Cost Spent as of
June 3, 2017		 Remaining Projected Cost
Refurbish Cage-Free Layer Houses Shady Dale, GA July 2017 $5,264
 $4,898
 $366
Cage-Free Layer Houses Lake City, FL July 2017 8,785
 8,415
 370
Convertible/Cage-Free Layer Houses Green Forest, AR September 2017 8,991
 8,583
 408
Cage-Free Layer Houses South Texas September 2017 4,104
 3,404
 700
Layer Complex Improvements Bethune, SC September 2017 1,758
 1,605
 153
Convertible/Cage-Free Layer House with Pullets South Texas September 2017 12,350
 11,350
 1,000
Convertible/Cage-Free Layer Houses with Pullets Guthrie, KY January 2018 13,252
 9,841
 3,411
           
      $54,504
 $48,096
 $6,408

Looking forward to the next fiscal year, we believe current cash balances, investments, borrowing capacity, and cash flows from operations will be sufficient to fund our current and projected capital needs.

CONTRACTUAL OBLIGATIONS         

The following table summarizes by fiscal year the future estimated cash payments, in thousands, to be made under existing contractual obligations. Further information on debt obligations is contained in Note 9, and on lease obligations in Note 8, in thePart II. Item 8. Notes to the Consolidated Financial Statements. As of June 3, 2023,
we had no outstanding long-term debt.
Payments due by period
  Total 2018 2019 2020 2021 2022 Thereafter
Long-Term Debt & Capital Leases (Principal) $10,939
 $4,826
 $3,533
 $1,696
 $205
 $215
 $464
Long-Term Debt & Capital Leases (Interest) 901
 506
 247
 70
 34
 25
 19
Operating Leases 1,182
 502
 208
 162
 160
 150
 —
Total $13,022
 $5,834
 $3,988
 $1,928
 $399
 $390
 $483
Total

Less than
1 year
1-3
years
3-5
years
More than
5 years
Lease obligations
$
1,714
$
796
$
914
$
4
$
—
Purchase obligations:
Feed ingredients and fuel
(a)
123,321
123,321
—
—
—
Construction contracts and other equipment
105,414
61,108
44,306
—
—
Total
$
230,449
$
185,225
$
45,220
$
4
$
—
(a)
Actual purchase obligations may change based on the contractual terms and
agreements
We believe our
current cash balances, investments, cash flows from operations, and
Credit Facility will be sufficient to fund our
capital needs for at least the next 12 months and to fund our capital commitments
currently in place thereafter.
IMPACT OF
RECENTLY
ISSUED ACCOUNTING STANDARDS
For information on changes in accounting
principles and new accounting principles,
see “Impact of Recently Issued“
New Accounting Standards”Pronouncements
and
Policies
” in Part II. Item 8. Notes to Consolidated Financial Statements,

- Summary of Significant Accounting Policies
CRITICAL ACCOUNTING POLICIES

ESTIMATES
The preparation of financial statements in accordance with U.S. generally accepted accounting standardsGAAP requires management to make estimates
and assumptions
that affect the
reported amounts of
assets and liabilities
at the date
of the financial
statements and the
reported amounts of
revenues
and expenses during the reporting period. Actual results could
differ from these estimates. Critical accounting estimates are
those

estimates made in
accordance with GAAP
that involve a
significant level of estimation
uncertainty and have had
or are reasonably
Management suggests our Summary likely to have a material impact
on the financial condition or results
of Significant Accounting Policies, as described in Note 1 of the notes to consolidated financial statements, be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations. We believe theoperations. Our critical accounting policies that most impact our consolidated financial statementsestimates are described
below.

INVESTMENTS IN SECURITIES AVAILABLE-FOR-SALE
32

BUSINESS COMBINATION
S
Our investment securities are accounted for in accordance with ASC 320, “Investments-Debt and Equity Securities” (“ASC 320”).  The Company considers applies the acquisition
method of accounting, which
requires that once control is obtained,
all investment securitiesthe assets acquired
and liabilities assumed,
including amounts
attributable to noncontrolling
interests, are recorded
at their respective
fair values at
the
date
of acquisition.
The
excess
of
the
purchase
price
over
fair
values
of
identifiable
assets
and
liabilities
is
recorded
as
goodwill.
We
typically
use the
income method
approach for which there is
intangible assets
acquired
in a determinable
business combination.
Significant
judgment
exists in valuing certain
intangible assets. and the
most significant assumptions requiring
judgment involve estimating the
amount
and timing of
future cash flows,
growth rates,
discount rates selected
to measure
the risks inherent
in the future
cash flows and
the asset’s expected useful lives.
The
fair
values
of
identifiable
assets
and
liabilities
are
determined
internally
and
requires
estimates
and
the
use
of
various
valuation techniques. When a
market value is not
readily available, our internal
valuation methodology considers the
remaining
estimated life
of the
assets acquired
and no restrictions onsignificant
judgment is
required
as management
determines the Company's ability
fair market
value for
those assets.
Due
to sell within
inherent
industry
uncertainties
including
volatile
egg
prices
and
feed
costs,
unanticipated
market
changes,
events,
or
circumstances may occur that could affect the next 12 months as available-for-sale,estimates and carries them at fair value, with unrealized gains and losses reported as a separate component of stockholders' equity. Realized gains and losses are includedassumptions
used, which could result in other income. The cost basis for realized gains and losses on available-for-sale securities is determined on the specific identification method.subsequent impairments.

ALLOWANCE FOR DOUBTFUL ACCOUNTS    

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


INVENTORIES
 

Inventories of eggs, feed,
supplies and livestock flocks
are valued principally
at the lower
of cost (first-in,
first-out method) or market.
net realizable
value. If
market
prices
for
eggs and
feed
grains
move
substantially
lower,
we
record
adjustments
to write-down
write
down
the
carrying
values of eggs
and feed inventories
to fair market
value. The cost
associated with flock inventories,
consisting principally of chick
purchases, feed, labor, contractor payments and
overhead costs, are accumulated during the growing period of approximately 22
weeks. Capitalized flock costs are then amortized over the flock’s productive
life, generally one to two years. Judgment exists in
determining
the flock’s
productive life
including
factors such
as laying
rate and
egg size,
molt cycles,
and customer
demand.
Furthermore, other factors such as
hen type or weather conditions could affect
the productive life. These factors could
make our
estimates of productive life differ from actual results. Flock mortality is charged to cost of sales as incurred. High mortality from
disease or extreme temperatures would will
result in abnormal write-downs to
flock inventories. Management continually monitors each
flock and attempts to take appropriate actions to minimize the risk of mortality
loss.

LONG-LIVED ASSETS

Depreciable long-lived assets are primarily comprised of buildings and improvements and machinery and equipment.  Depreciation is provided by the straight-line method over the estimated useful lives, which are 15 to 25 years for buildings and improvements and 3 to 12 years for machinery and equipment.  An increase or decrease in the estimated useful lives would result in changes to depreciation expense.  When property 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. We continually reevaluate the carrying value of our long-lived assets, for events or changes in circumstances which indicate the carrying value may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition.  If the sum of the expected future cash flows (undiscounted and without interest charges) are less than the carrying amount of the asset, an impairment loss is recognized to reduce the carrying value of the long-lived asset to the estimated fair value of the asset.

INTANGIBLE ASSETS

Included in other intangible assets are separable intangible assets acquired in business acquisitions, which include franchise fees, non-compete agreements and customer relationship intangibles. They are amortized over their estimated useful lives of 3 to 25 years.   The gross cost and accumulated amortization of intangible assets are removed when the recorded amounts are fully amortized and the asset is no longer in use.  

INVESTMENT IN AFFILIATES

We have invested in other companies engaged in the production, processing and distribution of shell eggs and egg products.  These investments are recorded using the cost or equity method, and are not consolidated in our financial statements.  Changes in the ownership percentages of these investments might alter the accounting methods currently used. Our investment in these companies amounted to $65.7 million at June 3, 2017. The combined total assets and total liabilities of these companies were approximately $299.9 million and $37.1 million, respectively, at June 3, 2017.

GOODWILL

As
a
result
of
acquiring
businesses,
the
Company
has
$44.0
million
of
goodwill
on
June
3,
2023.
Goodwill
is
evaluated
for
At June 3, 2017, impairment
annually
by
first
performing
a
qualitative
assessment
to
determine
whether
a
quantitative
goodwill represented 3.4% of total assets and 4.2% of stockholders’ equity.  Goodwill relates to the following:
test
is

Fiscal Year Description Amount
1999 Acquisition of Hudson Brothers, Inc. $3,147
2006 Acquisition of Hillandale Farms, LLC 869
2007 Acquisition of Green Forest Foods, LLC 179
2008 Revised Hillandale incremental purchase price 9,257
2009 Revised Hillandale incremental purchase price 2,527
2009 Acquisition of Zephyr Egg, LLC 1,876
2009 Acquisition of Tampa Farms, LLC 4,600
2010 Revised Hillandale incremental purchase price (338)
2013 Acquisition of Maxim Production Co., Inc. 2,300
2014 Purchase of joint venture partner’s 50% in Delta Egg 4,779
2017 Acquisition of Foodonics International, Inc. 3,389
2017 Acquisition of Happy Hen Egg Farms, Inc. 2,940
  Total Goodwill $35,525

Goodwill is evaluated for impairment annually 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.

The
Company
has
determined
that
all
of
our
locations
share
similar
economic
characteristics
and
support
each
other
in
the
production of eggs and customer support. Therefore, we aggregate all our locations as a single reporting unit for testing goodwill
for
impairment.
When
the
Company
acquires
a
new
location,
we
determine
whether
it
should
be
integrated
into
our
single
reporting unit or
treated as a
separate reporting unit. Historically, we
have concluded that
acquired operations should be
integrated
into our single reporting unit due to the operational changes, redistribution of customers, and significant changes in management
that occur when we acquire businesses, which result in the acquired operations sharing
similar economic characteristics with the
rest of our locations. Once goodwill associated with acquired operations becomes part of goodwill of our single reporting unit, it
no longer represents the particular
acquired operations that gave rise to the
goodwill. We
may conclude that a business acquired
in the future should be treated as a separate reporting unit, in which case it would be tested separately
for goodwill impairment.
At June 3, 2023, goodwill represented 2.3% of total assets and 2.7% of stockholders’
equity.
Judgment exists in management’s evaluation
of the qualitative factors which include macroeconomic conditions, the current egg
industry environment, cost inputs such as
feed ingredients and overall financial performance. Furthermore, judgment
exists in the
evaluation
of the
threshold of
whether it
is more
likely than
not that
the fair
value of
a reporting
unit is
less than
its carrying
amount. Uncertainty exists due to uncontrollable events that could occur
that could negatively affect our operating conditions.
During the fourth quarter of
2023, we elected to change the
date of our annual impairment assessment
from year-end to
the first
day of the fourth quarter.
The change was made to
more closely align the impairment
assessment date with our annual
planning
33
and forecasting
process. The change
in impairment
assessment date
did not
have any
impact on
goodwill or
the impairment
of
goodwill.
The change
has been
applied prospectively
and will
not have
an impact
on a
retrospective basis.
During our
annual
impairment
test
in
fiscal
2023,
we
determined
that
goodwill
passed
the
qualitative
assessment
and
therefore
no
quantitative
analysis of goodwill impairment was necessary.
REVENUE RECOGNITION AND DELIVERY COSTS

The Company recognizes revenue only when allRevenue recognition is completed upon satisfaction of the following criteria have been met:performance obligation to the customer, which typically occurs within

days of the Company and customer
agreeing upon the order.
See
in Part II. Item 8. Notes to the
Consolidated Financial Statements for further discussion of an arrangement exists;
Delivery has occurred;
The fee for the arrangement is determinable; and
Collectability is reasonably assured.

policy.
The Company believes
the above criteria areperformance obligation
is met upon delivery
and acceptance of
the product by
our customers. Costs
to deliver
product to
customers are
included in selling,
general and
administrative expenses
in the
accompanying Consolidated
Statements
of Operations and totaled $53.3 million, $49.6 million, and $47.0 million
Income. Sales
revenue
reported
in fiscal years 2017, 2016, and 2015, respectively.  Sales revenue reported in
the
accompanying
Consolidated
Statements
of Operations
Income
is
reduced
to
reflect
estimated returns
and allowances. The
Company records
an estimated
sales allowance
for returns
and discounts
at the
time of
sale using historical trends based on actual sales returns and sales.

SALES INCENTIVES PROVIDED TO CUSTOMERS

The Company periodically provides
incentive offers to its
customers to encourage purchases.
Such offers include current
discount
offers (e.g., percentage discounts off current purchases),
inducement offers (e.g., offers for future discounts
subject to a minimum
current purchase), and other similar offers. Current discount offers, when accepted by customers, are treated as a reduction to the
sales price
of the
related transaction,
while inducement
offers, when
accepted by
customers, are
treated as
a reduction
to sales
price based on estimated future redemption rates.
Redemption rates are estimated using the Company’s
historical experience for
similar inducement offers. Current discount and inducement offers
are presented as a net amount in ‘‘Net
sales.’’

As the
estimates noted
above are
based on
historical information,
we do
not believe
that there
will be
a material
change in
the
STOCK BASED COMPENSATIONestimates and assumptions used
to recognize revenue. However,
if actual results varied significantly
from our estimates it could

expose us to material gains or losses.
We account LOSS CONTINGENCIES
The Company evaluates
whether a loss contingency
exists, and if the
assessment of a contingency
indicates it is probable
that a
material loss has
been incurred and
the amount of
the loss can
be reasonably estimated,
the estimated loss
would be accrued
in
the Company’s financial statements.
The Company expenses the costs of litigation as they are incurred.
There
were
no
loss
contingency
reserves
for share-based compensation in accordance with ASC 718, “Compensation-Stock Compensation” (“ASC 718”).  ASC 718 requires all share-based payments
the
past
three
fiscal
years.
Our
evaluation
of
whether
loss
contingencies
exist
primarily relates to
litigation matters. The
outcome of litigation
is uncertain due
to, employees, including grantsamong other
things, uncertainties regarding
the facts will be established
during the proceedings, uncertainties
regarding how the law will
be applied to the facts
established,
and uncertainties
regarding the
calculation of employee stock options, restricted stock and performance-based shares to
any potential
damages or
the costs
of any
potential injunctive
relief. If
the facts
discovered or the Company’s
assumptions change, future reserves for
loss contingencies may be recognized in the statementrequired.
Results of operations based on their fair values. ASC

718 requires the benefits of tax deductions in excess of recognized compensation cost tomay be reported asmaterially affected by losses or a financing cash flow.  See Note 11: Stock Compensation Plans in the Notes to the Consolidated Financial Statements for more information.loss contingency reserve

resulting from adverse legal proceedings.
INCOME TAXES

We
We determine our
effective tax
rate by estimating
our permanent differences
resulting from differing
treatment of items
for tax
and accounting purposes. Judgment and uncertainty exist with management’s application of tax regulations
and evaluation of the
more-likely-than-not recognition and measurement thresholds. We
are periodically audited by taxing authorities. Any audit adjustments affecting permanent differencesAn adverse tax
settlement could have ana negative impact on our effective tax rate.rate
and our results of operations.

34
ITEM 7A.
QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISKS

COMMODITY PRICE RISK

Our primary exposure to market risk arises from changes
in the prices of conventional eggs, corn and soybean meal,
which are commodities subject to significant price
fluctuations due to market conditions that are largely
beyond our control. FWe We
are focused on growing our
specialty shell egg business because
the selling
prices
of
specialty
shell
eggs are
generally
not
as
volatile
as conventional
shell
egg
prices. Our
exposure
to
market
risk
also
includes changes in
the prices of specialty shell eggscorn
and soybean meal,
which are generally commodities
subject to significant
price fluctuations due
to
market conditions
that are
largely beyond
our control.
To
ensure continued
availability of
feed ingredients,
we may
enter into
contracts for future
purchases of corn
and soybean meal,
and as part of
these contracts, we
may lock-in
the basis portion
of our
grain purchases several months in
advance and commit to purchase
organic ingredients to help
assure supply.
Ordinarily, we
do
not as volatile as non-specialty shell egg prices.  enter
long-term contracts
beyond a
year to
purchase corn
and soybean
meal or
hedge against
increases in
the price
of corn
and soybean meal.
The following table
outlines the impact
of price changes
for corn and
soybean meal on
feed costs per dozen
as feed ingredient pricing varies:
Change in price per bushel of corn
$
(0.84)
$
(0.56)
$
(0.28)
$
0.00
$
0.28
$
0.56
$
0.84
Change
in price
per ton
soybean
meal
$
(76.50)
0.616
0.626
0.636
0.646
0.656
0.666
0.676
$
(51.00)
0.626
0.636
0.646
0.656
0.666
0.676
0.686
$
(25.50)
0.636
0.646
0.656
0.666
0.676
0.686
0.696
$
0.00
0.646
0.656
0.666
0.676
(a)
0.686
0.696
0.706
$
25.50
0.656
0.666
0.676
0.686
0.696
0.706
0.716
$
51.00
0.666
0.676
0.686
0.696
0.706
0.716
0.726
$
76.50
0.676
0.686
0.696
0.706
0.716
0.726
0.736
(a)
Based on 2023
actual costs, table flexes feed cost inputs to show $0.01 impacts to per dozen:dozen egg feed production
Feed ingredient Approximate change in  feed ingredient cost Approximate impact on feed costs per dozen Approximate dollar impact on farm production cost for the 2017 fiscal year
Corn $ 0.25 change in the average market price per bushel $0.01
 $8,702,520
Soybean Meal $ 25.00 change in the average market price per ton $0.01
 $8,702,520

We generally do not enter into long-term contracts to purchase corn and soybean meal or hedge against increases in the price of corn and soybean meal.

costs.
INTEREST RATE
RISK

We
have
a
$250 million
Credit
Facility,
borrowings
under
which
would
bear
interest
at
variable
rates.
No
amounts
were
The fair value of our debt is sensitive to changes in the general level of U.S. interest rates.  We maintain all of our debt as fixed rate in nature to mitigate the impact of fluctuations in interest rates.outstanding under that facility during fiscal 2023 or fiscal 2022. Under our current policies, we do not use interest rate derivative
instruments to manage our exposure to interest rate changes.  A 1% adverse move (decrease) in interest rates would adversely affect
FIXED INCOME SECURITIES RISK
At June 3,
2023,
the net fair value effective maturity
of our debt by $144,000cash equivalents
and investment securities
available for sale
was 4.8 months, and
the composite credit rating of
the holdings are AA- /
Aa3 / AA- (S&P
/ Moody’s / Fitch). Generally speaking, rising
interest rates,
as have
been
experienced
in recent
periods,
decrease
the value
of fixed
income
securities
portfolios.
As of
June 3,
2023,
the
estimated fair value
of our
fixed income securities
portfolio was approximately
$355 million
and reflected
unrealized losses
of
approximately
$2.4
million.
For
additional
information
see
under
the
heading
“Investment
Securities”
and
in
Part
II.
Item
8.
Notes
to
the
Consolidated
Financial
Statements.
CONCENTRATION
OF CREDIT RISK
Our financial instruments exposed to concentrations of credit risk consist primarily of trade receivables. Concentrations of credit
risk with
respect to
receivables are
limited due
to our
large number
of customers
and their
dispersion across
geographic areas,
except that
at June 3,
2023 and
May 28,
2022, 30.1%
and 27.9%,
respectively,
of our net
accounts receivable
balance was due
from
Walmart
Inc.
(including
Sam’s
Club).
No
other
single
customer
or
customer
group
represented
10%
or
greater
of
net
accounts receivable at June 3, 2017. 2023 and May 28, 2022.

We are not a party to any other material market risk sensitive instruments requiring disclosure.


35
ITEM 8.
FINANCIAL
STATEMENTS
AND SUPPLEMENTARY
DATA

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
Cal-Maine Foods, Inc. and Subsidiaries
Jackson,Ridgeland, Mississippi

Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Cal-Maine Foods, Inc. and Subsidiaries as of June 3, 2017
2023 and
May 28, 2016, and 2022,
the related consolidated
statements of operations,
income, comprehensive
income, (loss), stockholders’
equity,
and cash
flows for each
of the three
years in the three-year
period ended June
3, 2017.  Our audits also included 2023, and
the related consolidated financial statement
notes and schedule
listed in the
Index
at Item
Items
15(a)(1)
and
15(a)(2)
(collectively
referred
to
as
the
“consolidated
financial
statements”).
In
our
opinion,
the
consolidated
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
Cal-Maine
Foods,
Inc.
and
Subsidiaries as of
June 3, 2023
and May
28, 2022, and
the results of
their operations
and their cash
flows for each
of the three
years
in
the
period
ended
June
3,
2023,
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
We
also have
audited, in
accordance with
the standards
of the
Public Company
Accounting Oversight
Board (United
States) (“PCAOB”),
the Cal-Maine
Foods,
Inc.
and Subsidiaries’
internal
control over
financial
reporting
as of
June 3,
2023,
based
on
the
criteria
established
in
2013
Internal
Control
–
Integrated
Framework
issued
by
the
Committee
of
Sponsoring
Organizations of the Treadway
Commission and our report dated July 25, 2023 expressed an unqualified
opinion.
Basis for Opinion
These
consolidated
financial
statements
are
the
responsibility
of
the
entities’
management.
Our
responsibility
is
to
express an
opinion on
these consolidated
financial statements
based on
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
the
U.S.
federal
securities
laws and
the
applicable
rules
and
regulations
of the
Securities and
Exchange
Commission
and
the
PCAOB.
We
conducted
our audits
in accordance
with the
standards of
the PCAOB.
Those
standards require
that we
plan and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
consolidated
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement of the
consolidated financial statements, are
whether due to error
or fraud, and performing
procedures that respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
consolidated financial
statements. Our
audits also
included evaluating
the responsibility accounting
principles used
and significant
estimates
made
by management,
as well
as evaluating
the overall
presentation
of the entity’s management.  Our responsibility is to express an opinion on these
consolidated financial statements based on
statements. We
believe
our audits. 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe our audits provide a reasonable basis for our opinion.

Critical Audit Matter
In The
critical
audit
matter
communicated
below
is
a
matter
arising
from
the
current
period
audit
of
the
consolidated
financial
statements
that
were
communicated
or
required
to
be
communicated
to
the
Audit
Committee
and
that:
(1)
relate
to
accounts
or disclosures
that are
material
to the
consolidated
financial
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 referred to above present fairly, in all material respects, the financial position of Cal-Maine Foods, Inc. and Subsidiaries as of June 3, 2017 and May 28, 2016, and the results of their operations and their cash flows for each of the years in the three-year period ended June 3, 2017, in conformity with accounting principles generally accepted in the United States of America.  In addition, in our opinion, the related financial statement schedule, when considered in relation to the basic
consolidated financial statements, taken as a whole, presents fairlyand 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 all material respects the information set forth therein.Consolidated
Financial Statements

Critical Audit Matter Description
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cal-Maine Foods, Inc. and Subsidiaries internal control over financial reporting as of June 3, 2017, based on criteria establishedrecord liabilities for legal proceedings and claims in2013 Internal Control – Integrated Frameworkissued by those instances where they
can reasonably estimate the Committee of Sponsoring Organizationsamount of the Treadway Commission,loss and our report dated July 21, 2017, expressed an unqualified opinion.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
36
in
excess
of
established
accruals
if
estimable,
or
states
that
such
an
estimate
cannot
be
made.
Cal-Maine
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
Cal-Maine Foods,
Inc. and
Subsidiaries believe
there is
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
management’s
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
and evaluating
audit evidence
in connection
with forming
our
overall
opinion
on
the
consolidated
financial
statements.
These
procedures
included
testing
the
effectiveness
of
the
controls
relating to the
Cal-Maine Foods, Inc.
and Subsidiaries’ evaluation
of the
liability related
to legal
proceedings and claims,
including
controls over determining the likelihood
of a loss
and whether the amount
of loss can be
reasonably estimated, as well
as financial
statement disclosures over the legal proceedings and claims.
These procedures also included obtaining and evaluating
the letters
of audit inquiry with external
legal counsel, evaluating the reasonableness of
Cal-Maine Foods, Inc. and Subsidiaries’ assessment
regarding
whether
an
unfavorable
outcome
is
reasonably
possible
or
probable,
and
reasonably
estimable,
evaluating
the
sufficiency
of Cal-Maine
Foods, Inc.
and Subsidiaries’
disclosures
related
to legal
proceedings and
claims and
evaluating
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
July 21, 201725, 2023


37
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except for par value amounts)
  June 3,
2017		 May 28,
2016
Assets    
Current assets:  
  
Cash and cash equivalents $17,564
 $29,046
Investment securities available-for-sale 138,462
 360,499
Receivables:  
  
Trade receivables, less allowance for doubtful accounts of  $386 in 2017 and  $727 in 2016 61,261
 62,012
Income tax receivable 52,691
 11,830
Other 3,248
 5,436
  117,200
 79,278
Inventories 160,692
 154,799
Prepaid expenses and other current assets 2,288
 2,661
Total current assets 436,206
 626,283
Other assets:  
  
Other investments 69,296
 53,975
Goodwill 35,525
 29,196
Other intangible assets 29,149
 4,958
Other long-lived assets 4,734
 5,079
  138,704
 93,208
Property, plant and equipment, less accumulated depreciation 458,184
 392,274
Total assets $1,033,094
 $1,111,765
Liabilities and stockholders' equity  
  
Current liabilities:  
  
Trade accounts payable $30,629
 $36,262
Accrued wages and benefits 15,809
 23,198
Accrued expenses and other liabilities 13,415
 7,671
Current maturities of long-term debt 4,826
 16,320
Total current liabilities 64,679
 83,451
Long-term debt, less current maturities 6,113
 9,250
Other noncurrent liabilities 7,527
 6,321
Deferred income taxes 110,282
 95,382
Total liabilities 188,601
 194,404
Commitments and contingencies – See Notes 8, 9, and  13 

 

Stockholders' equity:  
  
 Common stock, $.01 par value  
  
   120,000 shares authorized and 70,261 shares issued in 2017 and 2016  
  
   43,777 and 43,737 shares outstanding in 2017 and 2016, respectively  703
 703
 Class A convertible common stock, $.01 par value  
  
    4,800 shares authorized, issued and outstanding in 2017 and 2016, respectively 48
 48
Paid-in capital 49,932
 46,404
Retained earnings 816,046
 890,440
Accumulated other comprehensive loss, net of tax (128) (48)
 Common stock in treasury, at cost – 26,484 and 26,524 shares in 2017 and 2016, respectively (23,914) (22,272)
Total Cal-Maine Foods, Inc. stockholders' equity 842,687
 915,275
Noncontrolling interest in consolidated entities 1,806
 2,086
Total stockholders’ equity 844,493
 917,361
Total liabilities and stockholders' equity $1,033,094
 $1,111,765
June 3, 2023
May 28, 2022
Assets
Current assets:
Cash and cash equivalents
$
292,824
$
59,084
Investment securities available-for-sale
355,090
115,429
Receivables:
Trade receivables, net
110,980
169,109
Income tax receivable
66,966
42,147
Other
9,267
8,148
Total receivables,
net
187,213
219,404
Inventories, net
284,418
263,316
Prepaid expenses and other current assets
5,380
4,286
Total current
assets
1,124,925
661,519
Property, plant &
equipment, net
744,540
677,796
Investments in unconsolidated entities
14,449
15,530
Goodwill
44,006
44,006
Intangible assets, net
15,897
18,131
Other long-term assets
10,708
10,507
Total assets
$
1,954,525
$
1,427,489
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable
$
82,590
$
82,049
Dividends payable
37,130
36,656
Accrued wages and benefits
38,733
26,059
Income tax payable
8,288
25,687
Accrued expenses and other liabilities
15,990
14,223
Total current
liabilities
182,731
184,674
Other noncurrent liabilities
9,999
10,274
Deferred income taxes
152,212
128,196
Total liabilities
344,942
323,144
Commitments and contingencies - see
Note 16
—
—
Stockholders’ equity:
Common stock ($
0.01
par value):
Common stock – authorized
120,000
shares, issued
70,261
shares
703
703
Class A convertible common stock – authorized and issued
4,800
shares
48
48
Paid-in capital
72,112
67,989
Retained earnings
1,571,112
1,065,854
Accumulated other comprehensive loss, net of tax
(2,886)
(1,596)
Common stock in treasury,
at cost –
26,077
and
26,121
shares in 2023 and 2022,
respectively
(30,008)
(28,447)
Total Cal-Maine Foods,
Inc. stockholders’ equity
1,611,081
1,104,551
Noncontrolling interest in consolidated equity
(1,498)
(206)
Total stockholders’
equity
1,609,583
1,104,345
Total liabilities and stockholders’
equity
$
1,954,525
$
1,427,489
See accompanying notes.Notes to Consolidated Financial Statements.

38
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of OperationsIncome
(in thousands, except per share amounts)
Fiscal years ended
  Fiscal years ended
  June 3,
2017		 May 28,
2016		 May 30,
2015
Net sales $1,074,513
 $1,908,650
 $1,576,128
Cost of sales 1,028,963
 1,260,576
 1,180,407
Gross profit 45,550
 648,074
 395,721
Selling, general and administrative 173,980
 177,760
 160,386
(Gain) loss on disposal of fixed assets 3,664
 (1,563) 568
Operating income (loss) (132,094) 471,877
 234,767
   
  
  
Other income (expense):  
  
  
Interest expense (318) (1,156) (2,313)
Interest income 3,103
 4,314
 1,798
Patronage dividends 7,665
 6,930
 6,893
Equity in income of affiliates 1,390
 5,016
 2,657
Other, net 5,960
 268
 2,747
Total other income 17,800
 15,372
 11,782
Income (loss) before income taxes and noncontrolling interest (114,294) 487,249
 246,549
Income tax expense (benefit) (39,867) 169,202
 84,268
Net income (loss) including noncontrolling interest (74,427) 318,047
 162,281
Less:  Net income (loss) attributable to noncontrolling interest (149) 2,006
 1,027
Net income (loss) attributable to Cal-Maine Foods, Inc. $(74,278) $316,041
 $161,254
   
  
  
Net income (loss) per share:  
  
  
Basic $(1.54) $6.56
 $3.35
Diluted $(1.54) $6.53
 $3.33
Weighted average shares outstanding:  
  
  
Basic 48,362
 48,195
 48,136
Diluted 48,362
 48,365
 48,437
June 3, 2023
May 28, 2022
May 29, 2021
53 weeks
52 weeks
52 weeks
Net sales
$
3,146,217
$
1,777,159
$
1,348,987
Cost of sales
1,949,760
1,440,100
1,188,326
Gross profit
1,196,457
337,059
160,661
Selling, general and administrative
232,207
198,631
183,943
Gain on insurance recoveries
(3,345)
(5,492)
—
(Gain) loss on disposal of fixed assets
(131)
383
2,982
Operating income (loss)
967,726
143,537
(26,264)
Other income (expense):
Interest expense
(583)
(403)
(213)
Interest income
18,553
988
2,828
Patronage dividends
10,239
10,130
9,004
Equity in income of unconsolidated entities
746
1,943
622
Other, net
1,869
9,820
4,074
Total other income
30,824
22,478
16,315
Income (loss) before income taxes
998,550
166,015
(9,949)
Income tax expense (benefit)
241,818
33,574
(12,009)
Net income
756,732
132,441
2,060
Less:
Net loss attributable to noncontrolling interest
(1,292)
(209)
—
Net income attributable to Cal-Maine Foods, Inc.
$
758,024
$
132,650
$
2,060
Net income per share attributable to Cal-Maine Foods, Inc.:
Basic
$
15.58
$
2.73
$
0.04
Diluted
$
15.52
$
2.72
$
0.04
Weighted average
shares outstanding:
Basic
48,648
48,581
48,522
Diluted
48,834
48,734
48,656
See accompanying notes.Notes to Consolidated Financial Statements.


39
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of
Comprehensive Income (Loss)
(in thousands)
Fiscal years ended
  Fiscal years ended
  June 3,
2017		 May 28,
2016		 May 30,
2015
Net income (loss), including noncontrolling interests $(74,427) $318,047
 $162,281
Other comprehensive income, before tax:  
  
  
Unrealized holding gain (loss) on available-for-sale securities, net of reclassification adjustments 177
 (25) (143)
Increase in accumulated postretirement benefits obligation, net of reclassification adjustments (334) (118) (741)
Other comprehensive loss, before tax (157) (143) (884)
Income tax benefit related to items of other comprehensive income (loss) (77) (73) (345)
Other comprehensive loss, net of  tax (80) (70) (539)
Comprehensive income (loss) (74,507) 317,977
 161,742
Less: comprehensive income (loss) attributable to the noncontrolling interest (149) 2,006
 1,027
Comprehensive income (loss) attributable to Cal-Maine Foods, Inc. $(74,358) $315,971
 $160,715
June 3, 2023

May 28, 2022
May 29, 2021
Net income
$
756,732
$
132,441
$
2,060
Other comprehensive loss, before tax:
Unrealized holding loss available-for-sale securities, net of reclassification
adjustments
(1,714)
(1,398)
(736)
Increase in accumulated post-retirement benefits obligation, net of
reclassification adjustments
(27)
(9)
(137)
Other comprehensive loss, before tax
(1,741)
(1,407)
(873)
Income tax benefit related to items of other comprehensive loss
(451)
(369)
(236)
Other comprehensive loss, net of tax
(1,290)
(1,038)
(637)
Comprehensive income
755,442
131,403
1,423
Less: comprehensive loss attributable to the noncontrolling interest
(1,292)
(209)
—
Comprehensive income attributable to Cal-Maine Foods, Inc.
$
756,734
$
131,612
$
1,423
See accompanying notes.Notes to Consolidated Financial Statements.


40
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Stockholders'Stockholders’ Equity
(in thousands)
Accum.
 Common Stock          
     Class A Class A Treasury Treasury Paid In Retained Accum. Other Noncontrolling  
 Shares Amount Shares Amount Shares Amount Capital Earnings Comp. Income (Loss) Interest Total
Balance at May 31, 201435,130
 $351
 2,400
 $24
 13,350
 $(20,453) $40,476
 $572,874
 $561
 $912
 $594,745
Dividends 
  
  
  
  
  
  
 (53,784)  
  
 (53,784)
2-for-1 stock split effected in the form of a dividend35,131
 352
 2,400
 24
 13,340
 (133) 132
 (375)  
  
 —
Issuance of restricted stock from treasury, net of forfeitures 
  
  
  
 (91) 70
 (70)  
  
  
 —
Purchase of company stock - shares withheld to satisfy withholding obligation in connection with the vesting of restricted stock 
  
  
  
  
 (2) 2
  
  
  
 —
Proceeds from stock option exercise 
  
  
  
 (36) 36
 101
  
  
  
 137
Restricted stock compensation expense 
  
  
  
  
  
 2,268
  
  
  
 2,268
Tax benefit on nonqualifying disposition of incentive stock options 
  
  
  
  
  
 395
  
  
  
 395
Distribution to noncontrolling interest partners 
  
  
  
  
  
  
  
  
 (941) (941)
Net income for fiscal 2015 
  
  
  
  
  
  
 $161,254
  
 $1,027
 162,281
Other comprehensive loss, net of tax 
  
  
  
  
  
  
  
 (539)  
 (539)
Balance at May 30, 201570,261
 $703
 4,800
 $48
 26,563
 $(20,482) $43,304
 $679,969
 $22
 $998
 $704,562
Dividends 
  
  
  
  
  
  
 (105,570)  
  
 (105,570)
Issuance of restricted stock from treasury, net of forfeitures 
  
  
  
 (76) 58
 (58)  
  
  
 —
Purchase of company stock - shares withheld to satisfy withholding obligation in connection with the vesting of restricted stock 
  
  
  
 37
 (1,848)  
  
  
  
 (1,848)
Restricted stock compensation expense 
  
  
  
  
  
 3,071
  
  
  
 3,071
Tax benefit on nonqualifying disposition of incentive stock options 
  
  
  
  
  
 87
  
  
  
 87
Distribution to noncontrolling interest partners 
  
  
  
  
  
  
  
  
 (918) (918)
Net income for fiscal 2016 
  
  
  
  
  
  
 316,041
  
 2,006
 318,047
Other comprehensive loss, net of tax 
  
  
  
  
  
  
  
 (70)  
 (70)
Balance at May 28, 201670,261
 $703
 4,800
 $48
 26,524
 $(22,272) $46,404
 $890,440
 $(48) $2,086
 $917,361
Issuance of restricted stock from treasury, net of forfeitures        (80) 73
 (73)       —
Purchase of company stock - shares withheld to satisfy withholding obligation in connection with the vesting of restricted stock        40
 (1,715)         (1,715)
Restricted stock compensation expense            3,427
       3,427
Cumulative adjustment to restricted stock compensation from the adoption of ASU 2016-09            174
 (174)     —
Reclass of equity portion of American Egg Products in connection with Foodonics' acquisition              58
   (58) —
Distribution to noncontrolling interest partners                  (73) (73)
Net loss for fiscal 2017              (74,278)   (149) (74,427)
Other comprehensive loss, net of tax                (80)   (80)
Balance at June 3, 201770,261
 $703
 4,800
 $48
 26,484
 $(23,914) $49,932
 $816,046
 $(128) $1,806
 $844,493
Other
Common Stock
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 31, 2020
70,261
$
703
4,800
$
48
26,287
$
(26,674)
$
60,372
$
975,569
$
79
$
—
1,010,097
Stock compensation plan transactions
—
—
—
—
(85)
(759)
3,667
—
—
—
2,908
Dividends ($
0.034
per share)
Common
—
—
—
—
—
—
—
(1,489)
—
—
(1,489)
Class A common
—
—
—
—
—
—
—
(163)
—
—
(163)
Contributions
—
—
—
—
—
—
5
—
—
—
5
Net income
—
—
—
—
—
—
—
2,060
—
—
2,060
Other comprehensive loss, net of tax
—
—
—
—
—
—
—
—
(637)
—
(637)
Balance at May 29, 2021
70,261
703
4,800
—
48
26,202
(27,433)
64,044
975,977
(558)
—
1,012,781
Stock compensation plan transactions
—
—
—
—
(81)
(1,014)
3,945
—
—
2,931
Dividends ($
0.874
per share)
Common
—
—
—
—
—
—
—
(38,578)
—
—
(38,578)
Class A common
—
—
—
—
—
—
—
(4,195)
—
—
(4,195)
Contributions
—
—
—
—
—
—
—
—
—
3
3
Net income (loss)
—
—
—
—
—
—
—
132,650
—
(209)
132,441
Other comprehensive loss, net of tax
—
—
—
—
—
—
—
—
(1,038)
(1,038)
Balance at May 28, 2022
70,261
703
4,800
48
26,121
(28,447)
67,989
1,065,854
(1,596)
(206)
1,104,345
Stock compensation plan transactions
—
—
—
—
(44)
(1,561)
4,123
—
—
—
2,562
Dividends ($
5.161
per share)
Common
—
—
—
—
—
—
—
(227,993)
—
—
(227,993)
Class A common
—
—
—
—
—
—
—
(24,773)
—
—
(24,773)
Net income (loss)
—
—
—
—
—
—
—
758,024
—
(1,292)
756,732
Other comprehensive loss, net of tax
—
—
—
—
—
—
—
—
(1,290)
—
(1,290)
Balance at June 3, 2023
70,261
$
703
4,800
$
48
26,077
$
(30,008)
$
72,112
$
1,571,112
$
(2,886)
$
(1,498)
$
1,609,583
See accompanying notes.Notes to Consolidated Financial Statements.

41
Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
໿Fiscal year ended
June 3, 2023
May 28, 2022
May 29, 2021
Cash flows from operating activities:
Net income
$
756,732
$
132,441
$
2,060
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
72,234
68,395
59,477
Deferred income taxes
24,467
5,676
22,351
Equity in income of affiliates
(746)
(1,943)
(622)
Gain on insurance recoveries
(3,345)
(5,492)
—
Net proceeds from insurance settlement - business interruption
3,345
—
—
(Gain) loss on disposal of property,
plant and equipment
(131)
383
2,982
Stock compensation expense, net of amounts paid
4,205
4,063
3,778
Unrealized (gain) loss on investments
17
(745)
1,810
(Gain) loss on sales of investments
60
(2,208)
(22)
Purchases of equity securities
(85)
(356)
(334)
Sales of equity securities
  Fiscal year ended
  June 3,
2017		 May 28,
2016		 May 30,
2015
Cash flows from operating activities      
Net income (loss) including noncontrolling interests $(74,427) $318,047
 $162,281
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:  
  
  
Depreciation and amortization 49,113
 44,592
 40,708
Deferred income taxes 14,833
 19,392
 5,108
Equity in income of affiliates (1,390) (5,016) (2,657)
(Gain) loss on disposal of property, plant and equipment 3,664
 (1,563) 568
Stock compensation expense, net of amounts paid 3,427
 3,071
 2,268
Recovery of note receivable —
 (798) (584)
Loss on fair value adjustment of contingent consideration —
 —
 256
Other (209) —
 —
Change in operating assets and liabilities, net of effects from acquisitions:  
  
  
(Increase) decrease in receivables and other assets (37,222) 21,160
 (18,961)
(Increase) decrease in inventories 2,386
 (8,539) (143)
Increase (decrease) in accounts payable, accrued expenses and other liabilities (9,491) (8,508) 6,486
Net cash provided by (used in) operating activities (49,316) 381,838
 195,330
   
  
  
Cash flows from investing activities  
  
  
Purchases of investments (29,849) (403,204) (202,506)
Sales of investments 251,690
 292,452
 146,779
Acquisition of businesses, net of cash acquired (85,822) —
 —
Investment in Southwest Specialty Egg LLC —
 —
 (8,160)
Investment in Red River Valley Egg Farm LLC (19,900) (33,959) —
Payments received on notes receivable and from investments in affiliates 6,586
 5,427
 2,019
Purchases of property, plant and equipment (66,657) (76,125) (82,263)
Net proceeds from disposal of property, plant and equipment 84
 2,860
 2,499
Net cash provided by (used in) investing activities 56,132
 (212,549) (141,632)
   
  
  
Cash flows from financing activities  
  
  
Principal payments on long-term debt (16,510) (25,290) (10,233)
Distributions to noncontrolling interest partners (73) (918) (940)
(Purchase of) proceeds from common stock by treasury (including tax benefit on nonqualifying disposition of incentive stock options) (1,715) (1,760) 531
Payments of dividends —
 (120,942) (48,910)
Net cash used in financing activities (18,298) (148,910) (59,552)
Increase (decrease) in cash and cash equivalents (11,482) 20,379
 (5,854)
Cash and cash equivalents at beginning of year 29,046
 8,667
 14,521
Cash and cash equivalents at end of year $17,564
 $29,046
 $8,667
   
  
  
Supplemental cash flow information:  
  
  
Cash paid during the year for:  
  
  
Income taxes paid (refunds received), net $(15,233) $166,840
 $75,533
Interest (net of amount capitalized) 317
 1,067
 2,313
1,739
4,939
55
Amortization (accretion) of investments
(4,380)
977
890
Impairment of investment in affiliate
2,000
—
—
Gain on change in fair value of investment in affiliates
—
(4,545)
—
Other
35
(109)
(231)
Change in operating assets and liabilities, net of effects from acquisitions:
Increase (decrease) in receivables and other assets
30,816
(93,897)
(33,487)
Increase in inventories
(21,102)
(36,152)
(31,159)
Increase (decrease) in accounts payable, accrued expenses and other
liabilities
(2,851)
54,782
(1,412)
Net cash provided by operating activities
863,010
126,209
26,136
Cash flows from investing activities:
Purchases of investments
(530,781)
(98,243)
(88,283)
Sales of investments
291,832
92,703
129,108
Acquisition of business, net of cash acquired
—
(44,823)
—
Investment in unconsolidated entities
(1,673)
(3,000)
—
Distributions from unconsolidated entities
1,500
400
6,663
Purchases of property,
plant and equipment
(136,569)
(72,399)
(95,069)
Net proceeds from insurance settlement - property,
plant and equipment
—
7,655
—
Net proceeds from disposal of property,
plant and equipment
580
686
3,390
Net cash used in investing activities
(375,111)
(117,021)
(44,191)
Cash flows from financing activities:
Principal payments on finance lease
(224)
(215)
(205)
Purchase of common stock by treasury
(1,643)
(1,127)
(871)
Payments of dividends
(252,292)
(6,117)
(1,652)
Contributions
—
3
5
Net cash used in financing activities
(254,159)
(7,456)
(2,723)
Increase (decrease) in cash and cash equivalents
233,740
1,732
(20,778)
Cash and cash equivalents at beginning of year
59,084
57,352
78,130
Cash and cash equivalents at end of year
$
292,824
$
59,084
$
57,352
Supplemental information:
Cash paid for operating leases
$
648
$
805
$
929
Income taxes paid
$
258,247
$
1,747
$
995
Interest paid
$
561
$
379
$
508
See accompanying notes.Notes to Consolidated Financial Statements.

42
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
June 3, 2017

1.Note 1 - Summary of Significant Accounting Policies

Nature of Operations
Principles of ConsolidationCal-Maine
Foods,
Inc.
(“we,”
“us,”
“our,”
or
the
“Company”)
is
primarily
engaged
in
the
production,
grading,
packaging,

The consolidated financial statements include the accounts of Cal-Maine Foods, Inc. and its subsidiaries (“we,” “us,” “our,” or the “Company”).  All significant intercompany transactions and accounts have been eliminated in consolidation.

Business

The Company is principally engaged in the production, processingmarketing and distribution
of shell eggs. The Company’s operations are significantly affected by the market price fluctuation of its principal product,fresh shell eggs,
including conventional, cage-free,
organic, brown, free
-range, pasture-raised and the costs of its principal feed ingredients, corn, soybean meal, and other grains.

nutritionally-enhanced
eggs.
The
Company,
which
is
headquartered
in
Ridgeland,
Mississippi,
is
the
largest
producer
and
The Company distributor
of
fresh
shell
eggs
in
the
United
States
and
sells
the
majority
of
its
shell
eggs to a diverse group of customers, including national and local grocery store chains, club stores, foodservice distributors, and egg product consumers.  The Company’s sales are primarily
in
states
across
the
southwestern,
southeastern, southwestern, mid-western and mid-Atlantic regions of the United States. Credit is extended based upon an evaluation
Principles of each customer’sConsolidation
The consolidated financial conditionstatements include
the accounts of all wholly-owned
subsidiaries and credit historyof majority-owned subsidiaries
over which we exercise control. All significant intercompany transactions and generally collateral is not required. Credit losses
accounts have consistently been within management’s expectations. Two customers, Wal-Mart and Sam’s Club, on a combined basis, accounted for 28.9%,  28.9% and 25.7% of the Company’s net saleseliminated in fiscal years 2017,  2016, and 2015, respectively.consolidation.

Fiscal Year

The Company’s fiscal year-end
is on the Saturday nearestclosest to May 31, which was 31. The fiscal year ended
June 3, 2017 (53 weeks)2023
, included
53
weeks and
the fiscal years ended May 28, 2016 (52 weeks),2022 and May 30, 2015 (52 weeks) for the most recent three fiscal years.29, 2021 included

52
weeks.
Use of Estimates

The preparation of the consolidated financial statements in conformity
with U.S. generally accepted accounting principles (“GAAP”)
in the United States of America requires management to make
estimates and assumptions that affect the amounts
reported in the
consolidated financial statements and accompanying notes. Actual results could
differ from those estimates.

Cash Equivalents

The
Company
considers
all
highly
liquid
investments
with
a
maturity
of
three
months
or
less
when
purchased
to
be
cash
equivalents.
We
maintain
bank
accounts
that
are
insured
by
the
Federal
Deposit
Insurance
Corporation
up
to
$250,000. The
Company considers all highly liquid investments
routinely
maintains
cash
balances
with a maturity
certain
financial
institutions
in
excess
of three months or less when purchased to be cash equivalents. We maintain bank accounts that are
federally
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.  At June 3, 2017 and routinely throughout these years, the Company maintained cash balances with certain financial institutions in excess of federally insured
amounts.
The
Company has not experienced any lossesloss in such accounts. The Company manages this risk through maintaining cash deposits and
other highly liquid investments in high quality financial institutions.

We
We primarily utilize a
cash management system
with a series of
separate accounts consisting
of lockbox accounts
for receiving
cash, concentration
accounts where to which
funds are moved, to,
and zero-balance disbursement
accounts for funding payroll and
accounts payable.
Checks issued,
but not
presented to
the banks
for payment,
may result
in negative
book cash
balances,
which are
included in
accounts payable. At June 3, 2017, and May 28, 2016, checks outstanding in excess of related book cash balances totaled $2.0 million and zero, respectively.


Investment Securities

Our investment securities are accounted for in accordance with ASC 320, “Investments-Debt and Equity Securities” (“ASC 320”).  The Company considers all of
has determined
that its investment
debt securities for which there is a determinable fair market value and there
are no restrictions on the Company's ability to sell within the next 12 months as available-for-sale. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported as a separate component of stockholders' equity.available-for-sale
investments. We had unrealized gains, net of tax, of $473,000 and $363,000 at June 3, 2017 and May 28, 2016, respectively, which are included in the line item “Accumulated other comprehensive income (loss), net of tax” on our Consolidated Balance Sheet. Realized gains and losses are included in other income. The cost basis for realized gains and losses on available-for-sale securities is determined on the specific identification method.
classify these

At June 3, 2017 and May 28, 2016, we had $138.5 million and $360.5 million, respectively, of current investment securities available-for-sale consisting of commercial paper, U.S. government obligations, government agency bonds, taxable municipal bonds, tax-exempt municipal bonds, zero coupon municipal bonds and corporate bonds with maturities of three months or longer when purchased. We classified these securities as
current
because the amounts invested are available for current operations. At June 3, 2017Available
-for-sale securities are carried at fair value, based on
quoted market prices as of the balance sheet date, with unrealized gains and May 28, 2016 we had $2.5 millionlosses recorded in other comprehensive income. The
amortized cost of debt securities is adjusted for amortization
of premiums and $1.9 million, respectively,accretion of investments 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.
Investments
in
mutual
funds which
are
recorded
at
fair
value
and
are
classified
as
“Other
long-term
assets”
in
the
Company’s
Consolidated Balance Sheets. Unrealized gains and losses for equity securities are considered long term and are a part of “Other Investments”recorded in other income (expenses) as Other,
net in the Company’s Consolidated Balance Sheet.
 

Investment in Affiliates

Statements of Income.
The equity method of accountingcost
basis for
realized gains
and losses
on available-for-sale
securities is used when
determined by
the Company has a 20% to 50% interestspecific
identification method.
Gains and losses are recognized in other entities or whenincome (expenses) as Other,
net in the Company exercises significant influence over the entity. Under the equity method, original investments Company’s Consolidated
Statements of Income.
Interest and dividends on securities classified as available-for-sale
are recorded at cost and adjusted by the Company’s share of undistributed earnings or losses of these entities. Nonmarketable investments in which the Company has less than a 20% interest and in which it does not have the ability to exercise significant influence over the investee are initially recorded at cost, and periodically reviewed for impairment.income.

43
Trade Receivables and Allowance for Doubtful Accounts

Trade receivables are comprised primarily of amounts owed to the Company from customers,stated at their carrying values, which amounted to $61.3 million atinclude a reserve for credit
losses. At June 3, 20172023 and $62.0 million at May 28, 2016.  They are presented net of an allowance2022,
reserves for doubtful accounts of $386,000 at June 3, 2017credit losses were $
579
thousand and $727,000 at May 28, 2016. $
775
thousand, respectively.
The Company extends credit to customers
based upon
on an
evaluation
of each customer’s
customer's financial
condition
and credit
history. Although
Collateral is
generally
not required.
The Company
minimizes exposure to
counter party credit
risk through credit risks associated withanalysis
and approvals, credit
limits, and monitoring
procedures.
In determining our customers
reserve for
credit losses, receivables
are considered minimal, we routinely review our accounts receivable balances and make provisions for probable doubtful accounts. In circumstances where management is aware of a specific customer’s inability to meet its financial obligations to us (e.g., bankruptcy filings), a reserve is recorded to reduce the receivable to the amount assigned an
expected to be collected. For all other customers, we recognize reserves for bad debtloss based
on the length of time the receivables are past due, generally 100% historical loss
information adjusted
as
needed
for amounts more than 60 days past due. Collateral is generally not required. Credit losses have consistently been within management’s expectations.
economic
and
other
forward-looking
factors.
At both
June
3, 2017
2023
and
May
28, 2016 two customers
2022,
one
customer
accounted
for
approximately 27%
30.1
% and 29%
27.9
% of the Company’s trade accounts receivable,
respectively.

Inventories

Inventories of eggs, feed,
supplies and livestock flocks
are valued principally
at the lower
of cost (first-in,
first-out method) or market.
net realizable

value.
The
cost
associated
with
flocks,
consisting
principally
of chick purchases,
chicks,
feed,
labor,
contractor
payments
and
overhead
costs,
are
accumulated during a growing period
of approximately
22
weeks. Flock costs are amortized
to cost of sales over
the productive
lives of the flocks, generally
one
to
two years.years
. Flock mortality is charged to cost of sales as incurred.

The
Company
does
not
disclose
the
gross
cost
and
accumulated
amortization
with
respect
to
its
flock
inventories
since
this
The Company does not disclose the gross cost and accumulated amortization with respect to its flock inventories since this information is not utilized by management in the operation of the Company.


Property,
Plant and Equipment

Property,
Property, plant and equipment
are stated at
cost. Depreciation is
provided by the
straight-line method over
the estimated useful
lives, which
are
15
to
25
years for
buildings and
improvements
and
3
to
12
years for
machinery and
equipment. Repairs
and
maintenance are expensed as incurred.
Expenditures that increase the
value or productive capacity of
assets are capitalized. When
property,
plant, and
equipment are
retired, sold,
or otherwise
disposed of,
the asset’s
carrying amount
and related
accumulated
depreciation are removed from the accounts and any gain or loss is included in operations. The Company capitalizes interest cost
incurred on funds used to construct property, plant, and equipment
as part of the asset to which it relates and is amortized amortizes such cost
over the asset’s
estimated useful life. When
certain events or changes
in operating conditions occur,
asset lives may be adjusted

and an impairment assessment may be performed on the recoverability
of the carrying amounts.
Impairment
Investments in Unconsolidated Entities
The equity method
of Long-Lived Assetsaccounting 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 of
these entities. Equity
investments without readily
determinable fair values,
when
the
Company
does
not
have
the
ability
to
exercise
significant
influence
over
the
investee,
are
recorded
at
cost,
less
impairment, plus or minus observable price changes.
The Company reviews the carrying valueis a member of long-lived Eggland’s Best, Inc.
and ProEgg, Inc., which are cooperatives.
These investments are recorded at
cost, plus or minus any allocated equities and retains.
Goodwill
Goodwill
represents
the
excess
of
the
purchase
price
over
the
fair
value
of
the
identifiable
net
assets other than goodwill,
acquired.
Goodwill
is
evaluated for impairment wheneverannually by first performing a qualitative assessment to determine whether a quantitative goodwill test
is necessary.
After assessing the totality
of events andor circumstances, indicate the carrying value of an asset may
if we determine it is
more likely than not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where expected future cash flows (undiscounted and without interest charges) are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds
that the fair value
of assets. a reporting
unit is less
than its carrying
amount, then we
perform additional
quantitative tests to
determine the
magnitude of
any impairment. During the
fourth quarter of 2023,
we elected to change
the date of
our annual impairment assessment
from year-
end to the
first day of
the fourth quarter.
The factors considered by managementchange
was made to
more closely
align the impairment
assessment date
with our
annual planning and forecasting process.
The change in performing thisimpairment assessment include current operating results, trends date
did not have any impact on goodwill
or the
impairment of goodwill. The change has been applied prospectively
and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors.would not have an impact on a retrospective basis.

44
Intangible Assets

Included in other intangible assets are separable intangible assets acquired in business acquisitions, which include franchise
fees,
non-compete agreements
and customer
relationship intangibles, andintangibles.
They are
amortized over
their estimated useful
lives of 3
5
to 25
15
years. The
gross
cost
and
accumulated
amortization
of
intangible
assets
are
removed
when
the
recorded
amounts have been
are
fully
amortized and
the asset is
no longer
in use or
the contract
has expired.  Included
When certain
events or changes
in other long-lived assets are loan acquisition costs, which are amortized overoperating
conditions
occur, asset lives may
be adjusted and an
impairment assessment may be
performed on the life recoverability
of the related loan.carrying amounts.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired. Goodwill is evaluated for impairment annually 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.

Accrued Self Insurance

We use a combination of insurance
and self-insurance mechanisms to provide coverage for the potential liabilities for health and
welfare,
workers’
compensation,
auto
liability
and
general
liability
risks.
Liabilities
associated
with
our
risks
retained
are
estimated, in part, by considering claims experience, demographic factors,
severity factors and other actuarial assumptions.

Dividend Payable

We
accrue dividends at
the end of
each quarter according
to the Company’s
dividend policy adopted
by its Board
of Directors.
DividendsThe Company

Cal-Maine pays a dividend
to shareholders
of its Common
Stock and
Class A Common
Stock on
a quarterly basis
for each
quarter for which the Company reports net income attributable to Cal-Maine
Foods, Inc. computed in accordance with generally accepted accounting principlesGAAP in
an amount
equal to
one-third (1/3)(
1/3
) of
such quarterly
income. Dividends
are paid
to shareholders
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 will paypays dividends to
shareholders of
record on
the 65th
day after
the quarter
end. Dividends
are payable
on the
15th day
following the
record date.
Following a quarter for which the Company does not report net income
attributable to Cal-Maine Foods, Inc., the Company will
not pay a dividend
for a subsequent profitable
quarter until the Company
is profitable on a cumulative
basis computed from the
date of the lastmost recent quarter for which a dividend was paid.  Dividends payable, which would represent accrued unpaid dividends applicable to the Company's fourth quarter, were zero at June 3, 2017 and May 28, 2016. At June 3, 2017, cumulative losses that must be recovered prior to paying a dividend were $74.7 million.

Treasury Stock

Treasury
Treasury stock purchases
are accounted
for under
the cost
method whereby
the entire
cost of
the acquired
stock is
recorded as
treasury
stock. The
grant
of
restricted
stock
through
the
Company’s
share-based
compensation
plans
is
funded
through
the
issuance of
treasury stock. Gains
and losses
on the
subsequent reissuance
of shares
in accordance
with the
Company’s share-based
share-
based compensation plans are credited or charged to paid-in
capital in excess of par value using the average-cost method.

Revenue Recognition and Delivery Costs

The Company recognizes revenue only when allRevenue recognition is completed upon satisfaction of the following criteria have been met:performance obligation to the customer, which typically occurs within

days of
the Company
and customer
agreeing upon
the order.
See
for further
discussion of an arrangement exists;
the
Delivery has occurred;
The fee for the arrangement is determinable; and
Collectability is reasonably assured.

policy.
The Company believes
the above criteria areperformance obligation
is met upon delivery
and acceptance of
the product by
our customers. Costs
to deliver
product to
customers are
included in selling,
general and
administrative expenses
in the
accompanying Consolidated
Statements
of Operations and totaled $53.3 million, $49.6 million, and $47.0 million
Income.
Sales
revenue
reported
in fiscal years 2017,  2016, and 2015, respectively.  Sales revenue reported in
the
accompanying consolidated statements
Consolidated
Statements
of income
Income
is
reduced
to
reflect
estimated returns
and allowances.
The Company
records an
estimated sales
allowance for
returns and
discounts at
the time
of
sale using historical trends based on actual sales returns and sales.

Sales Incentives provided to Customers

The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include current discount offers (e.g., percentage discounts off current purchases), inducement offers (e.g., offers for future discounts subject to a minimum current purchase), and other similar offers. Current discount offers, when accepted by customers, are treated as a reduction to the sales price of the related transaction, while inducement offers, when accepted by customers, are treated as a reduction to sales price based on estimated future redemption rates. Redemption rates are estimated using the Company’s historical experience for similar inducement offers. Current discount and inducement offers are presented as a net amount in ‘‘Net sales.’’

Advertising Costs

The Company expensed advertising
costs as incurred of $12.1 $
3.4
million, $10.3 $
12.6
million, and $9.3 $
11.7
million in fiscal 2017,  2016, 2023, 2022,
and 2015, respectively.  

2021, respectively.

Income Taxes

Income
taxes
are
accounted
for
using
the
liability
method.
Deferred
income
taxes
reflect
the
net
tax
effects
of
temporary
Income taxes are provided using differences
between
the liability method. Deferred income taxes reflect
carrying
amounts
of
assets
and
liabilities
for
financial
reporting
purposes
and
the net tax effects of temporary differences between the carrying
amounts of assets and liabilities
used
for financial reporting 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
applicable
45
interest on the portion of the tax benefit not recognized. The Company shall initially and subsequently measuremeasures the largest amount
of
tax benefit
that is
greater than
50% likely of being
to be
realized upon
settlement with
a taxing
authority that
has full
knowledge of
all
relevant
information. The
Company
records
interest
and
penalties on
uncertain
tax
positions
as
a
component
of
income
tax
expense. Based
upon management’s
assessment, there
are no uncertain
tax positions expected
to have a
material impact on
the
Company’s consolidated
financial statements.

Stock Based Compensation

The
Company
recognizes
all
share-based
payments
to
employees
and
directors,
including
grants
of
employee
stock
options,
We account for share-based compensation in accordance with ASC 718, “Compensation-Stock Compensation” (“ASC 718”).  ASC 718 requires all share-based payments to employees, including grants of employee stock options, restricted stock and performance-based shares, to be recognized in the statement Consolidated Statements
of operationsIncome based on their fair values. ASC 718 requires theThe benefits
of
tax
deductions
in
excess
of
recognized
compensation
cost to be
are
reported
as
a
financing
cash
flow. See
for more information.

Net Income (Loss) per Common Share
Business Combinations

The Company applies the acquisition
method of accounting, which
requires that once control is obtained,
all the assets acquired
Basic netand 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
internal
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 per share is based on the weighted average common and Class A shares outstanding. Diluted net income per share includes any dilutive effects of stock options outstanding and unvested restricted shares.
method approach for
intangible assets acquired in
a business combination. Significant
estimates in

valuing certain intangible assets include, but
are not limited to,
Basic net income per share was calculated by dividing net income by the weighted-average number of common and Class A shares outstanding during the period.  Diluted net income per share was calculated by dividing net income by the weighted-average number of common shares outstanding during the period plus the dilutive effects of stock options and unvested restricted shares.  Due to the net loss in the year ended June 3, 2017, restricted shares in
the amount and timing of
future cash flows, growth rates,
discount
rates and useful
lives. The excess
of 131,292 were excluded from the calculationpurchase
price over fair
values of diluted earnings per share because their inclusion would have been antidilutive.  The computations of basic net income per shareidentifiable
assets and diluted net income per share areliabilities
is recorded as follows (in thousands):
goodwill.
  June 3, 2017 May 28, 2016 May 30, 2015
Net income (loss) attributable to Cal-Maine Foods, Inc. $(74,278) $316,041
 $161,254
   
  
  
Basic weighted-average common shares (including Class A) 48,362
 48,195
 48,136
   
  
  
Effect of dilutive securities:  
  
  
Common stock options and restricted stock —
 170
 301
Dilutive potential common shares 48,362
 48,365
 48,437
   
  
  
Net income (loss) per common share:  
  
  
Basic $(1.54) $6.56
 $3.35
   
  
  
Diluted $(1.54) $6.53
 $3.33


Loss Contingencies

Certain conditions may exist as of the date the financial statements are issued that may result in a loss to the Company but which
will only be
resolved when one
or more future
events occur or
fail to occur.
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 that
may result
in 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
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.

Impact of Recently Issued
New Accounting StandardsPronouncements and Policies

No new accounting pronouncement issued or effective
In May 2014,during the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09). The standard provides companies with a single model for use in accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goodsfiscal year had or services transfers to the customer in an amount that reflects the consideration that is expected to be received for those goods or services.  In August 2015, FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 until annual reporting periods beginning after December 15, 2017. Early adoption is not permitted. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. To date the Company’s assessments efforts include evaluation of certain revenue contracts with customers and the method of retrospective application, either full or modified.  We currently expect to utilize the full retrospective transition on date of adoption.  Based on the findings to date, the Company does notexpectASU 2014-09to have a material impacton the results of operations or financial position; however, the Company’s assessment is not complete.  The Company plans to complete its review and method of adoption in fiscal 2018. 

In February 2016, the FASB issued ASU 2016-02, Leases.  The purpose of the standard is to improve transparency and comparability related to the accounting and reporting of leasing arrangements.  The guidance will require balance sheet recognition for assets and liabilities associated with rights and obligations created by leases with terms greater than twelve months.  ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods.  Early adoption is permitted.  Based on the findings to date, the Company does notexpectASU 2016-02to have a material impacton the results of operations or financial position; however, the Company’s assessment is not complete. 

In March 2016, the FASB issued ASU 2016-09,Improvements to Employee Share-Based Compensation Accounting. ASU2016-09 requires recording excess tax benefits on the statement of operations as opposed to additional paid-in-capital, and treated as an operating activity on the statement of cash flows. ASU 2016-09 also allows companies to make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. ASU 2016-09is effective for annual reporting periods beginning after December 15, 2017 with early adoption permitted.  The Company adopted ASU 2016-09 during the third quarter of fiscal 2017 and it did not have a material impact on the consolidated financial statement presentation.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes step 2 from the goodwill impairment test. As a result, an entity should perform its annual, or interim, goodwill impairment

test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units' fair value. The guidance is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, our fiscal 2021. Early adoption is permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017, and the prospective transition method should be applied. We do not expect the adoption of this guidance to have a material impact on
our consolidated financial statements.

Consolidated Financial Statements.
Reclassification

Certain prior period amounts have been reclassified to conform with current presentation. Such reclassifications had no impact on previously reported net income or shareholders' equity.

2.
46
Note 2 – Acquisition

Foodonics Acquisition

On October 16, 2016,Effective on May 30, 2021, the Company acquired substantially allthe remaining
50
% membership interest in Red River Valley
Egg Farm, LLC
(“Red River”),
including certain
liabilities. As
a result
of the
acquisition, Red
River became
a wholly
owned subsidiary
of the
Company. Red River owns and
operates a specialty
shell egg production
complex with approximately
1.7
million cage-free laying
hens,
cage-free
pullet capacity,
feed
mill, processing
plant, related
offices
and outbuildings
and
related
equipment located
on
approximately
400
acres near Bogata, Texas.
The
following
table
summarizes
the
consideration
paid
for
Red
River
and
the
amounts
of
the
assets
acquired
and
liabilities
assumed recognized at the acquisition date:
Cash consideration paid
$
48,500
Fair value of the egg production assets and assumed certain liabilities of Foodonics International, Inc. and its related entities doing business as Dixie Egg Company (collectively, "Foodonics") for $68.6 million of cash and $3.0 million of deferred purchase price. The acquired assets include commercial egg production and processing facilities with capacity for 1.6 million laying hens, contract grower arrangements for an additional 1.5 million laying hens, and related feed production, milling and distribution facilities in Georgia, Alabama, and Florida. The Company also acquired Foodonics'Company's equity interest in American Egg Products, LLC ("AEP") andRed River held before the Eggland's Best franchise with licensing rights for certain markets in Alabama, Florida, and Georgia as well as Puerto Rico, Bahamas and Cuba. The Company now owns 100%business combination
48,500
$
97,000
Recognized amounts of AEP. The acquired operations of Foodonics are included in the accompanying financial statements as of October 16, 2016.

The following table presents the final fair values of theidentifiable assets acquired and liabilities assumed
Cash
$
3,677
Accounts receivable, net
1,980
Inventory
8,789
Property, plant and equipment
85,002
Liabilities assumed
(2,448)
Deferred income taxes
(8,481)
Total identifiable
net assets
88,519
Goodwill
8,481
$
97,000
Cash and accounts receivable acquired along with liabilities
assumed were valued at their carrying
value which approximates fair
value due to the short maturity of these instruments.
Inventory consisted
primarily of
flock, feed
ingredients, packaging,
and egg
inventory.
Flock inventory
was valued at
carrying
value as management
believes that their
carrying value best
approximates their
fair value. Feed
ingredients, packaging
and egg
inventory were all valued based on market prices as of May 30, 2021.
Property,
plant and
equipment were
valued utilizing
the cost
approach which
is based
on replacement
or reproduction
costs of
the assets and subtracting any depreciation resulting from physical deterioration
and/or functional or economic obsolescence.
The Company recognized a gain of $
4.5
million as a result of remeasuring to fair value its
50
% equity interest in Red River held
before
the
business
combination.
The
gain
was
recorded
in
other
income
and
expense
under
the
heading
“Other,
net”
in
the
Company’s Condensed Consolidated Statements of Income. The acquisition
of Red River resulted
in a discrete tax
benefit of $
8.3
million,
which
includes
a
$
7.3
million
decrease
in
deferred
income
tax
expense
related
to
the
outside-basis
of
our
equity
investment in Red River, with a corresponding non-recurring,
non-cash $
955,000
reduction to income taxes expense on the non-
taxable remeasurement gain associated with the acquisition. As part of the acquisition accounting, the Company also
recorded an
$
8.5
million
deferred
tax
liability
for
the
difference
in
the
inside-basis
of
the
acquired
assets
and
liabilities
assumed.
The
recognition of deferred
tax liabilities resulted in
the recognition of goodwill.
None of the goodwill
recognized is expected
to be
deductible for income tax purposes.
47
Note 3 - Investment Securities
The following presents the Company’s
investment securities as of June 3, 2023 and May 28, 2022 (in thousands):
Inventory $7,669
Property, plant and equipment 38,590
Intangible assets 24,000
Liabilities assumed (2,034)
Total identifiable net assets 68,225
Goodwill 3,389
Purchase price 71,614
Deferred purchase price (3,000)
Cash consideration paid $68,614
June 3, 2023

Amortized
Happy Hen AcquisitionCost

Unrealized
On February Gains
Unrealized
Losses
Estimated Fair
Value
Municipal bonds
$
16,571
$
—
$
275
$
16,296
Commercial paper
56,486
—
77
56,409
Corporate bonds
139,979
—
1,402
138,577
Certificates of deposits
675
—
—
675
US government and agency obligations
101,240
—
471
100,769
Asset backed securities
13,459
—
151
13,308
Treasury bills
29,069
—
13
29,056
Total current
investment securities
$
357,479
$
—
$
2,389
$
355,090
Mutual funds
$
2,172
$
—
$
91
$
2,081
Total noncurrent
investment securities
$
2,172
$
—
$
91
$
2,081
May 28, 2022
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated Fair
Value
Municipal bonds
$
10,136
$
—
$
32
$
10,104
Commercial paper
14,940
—
72
14,868
Corporate bonds
74,167
—
483
73,684
Certificates of deposits
1,263
—
18
1,245
US government and agency obligations
2,205
4
—
2,209
Asset backed securities
13,456
—
137
13,319
Total current
investment securities
$
116,167
$
4
$
742
$
115,429
Mutual funds
$
3,826
$
—
$
74
$
3,752
Total noncurrent
investment securities
$
3,826
$
—
$
74
$
3,752
Available-for-sale
Proceeds
from
the
sales and
maturities
of
available-for-sale
securities
were
$
291.8
million,
$
92.7
million,
and $
129.1
million
during fiscal 2023, 2022,
and 2021, respectively.
Gross realized gains for
fiscal 2023, 2022, and
2021 were $
51
thousand, $
181
thousand,
and
$
456
thousand,
respectively.
Gross
realized
losses
for
fiscal
2023,
2022,
and
2021
were
$
87
thousand,
$
76
thousand, and $
19 2017,
thousand, respectively. There
was
no
allowance for credit losses at June 3, 2023 and May 28, 2022.
Actual maturities may differ from contractual maturities because some
borrowers have the Company acquired substantially allright to
call or prepay obligations with
or
without
call
or
prepayment
penalties.
Contractual
maturities
of
investment
securities
at
June
3,
2023
are
as
follows
(in
thousands):
Estimated Fair Value
Within one year
$
269,830
1-5 years
85,260
Total
$
355,090
Noncurrent
Proceeds from sales and maturities of the egg production, processingnoncurrent investment securities were $
1.7
million, $
4.9
million, and distribution assets of Happy Hen Egg Farms, Inc.$
54
thousand, during
fiscal 2023,
2022 and its affiliates (collectively, "Happy Hen"). The assets include commercial egg production
2021, respectively.
Gross realized gains
on those sales
and processing facilities with current capacitymaturities
during fiscal
2023,
2022 and 2021
were $
6
thousand, $
2.2
million and
$
611
thousand, respectively.
Gross realized
losses during
fiscal 2023
were $
66
thousand.
There were
no
realized losses for 350,000 laying hensfiscal 2022 and related distribution facilities located near Harwood and Wharton, Texas. The site is designed for capacity of up to 1.2 million laying hens. The operations of Happy Hen are included in the accompanying financial statements as of February 19, 2017. 2021.
48
Note 4 - Fair Value
Measures
The Company closed this acquisition
is required
to categorize
both financial
and nonfinancial
assets and
liabilities based
on March 3, 2017.the
following fair
value

hierarchy. The
fair value
of an
asset is
the price
at which
the asset
could be
sold in
an orderly
transaction between
unrelated,
The following table presents knowledgeable, and willing
parties able to engage in
the final fair values of the assets acquired (in thousands):transaction. A liability’s


Inventory $609
Property, plant and equipment 11,259
Intangible assets 2,400
Total identifiable net assets 14,268
Goodwill 2,940
Cash consideration paid $17,208

These fair value measurements were primarily based on significant inputsis defined
as the amount that would
be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be
paid to settle
the liability with the creditor.
●
Level 1
- Quoted prices in active markets for identical assets or liabilities
●
Level 2
- Inputs
other than
quoted
prices included
in Level
1 that
are observable
for the
asset or
liability,
either
directly or indirectly,
including:
o
Quoted prices for similar assets or liabilities in active markets
o
Quoted prices for identical or similar assets in non-active markets
o
Inputs other than quoted prices that are not observable in the markets.  The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was utilized for certain property, plant and equipment.  The cost to replace given assets reflects the estimated reproduction or replacement cost of the asset less an allowance or liability
o
Inputs derived principally
from or corroborated by other observable market data
●
Level 3
- Unobservable inputs
for loss in value due to depreciation.  Thethe asset
or liability supported
by little or
no market approach, which indicates value for a subject asset based on available market pricing for comparable assets, was utilized for inventory activity
and the Eggland's Best franchise of Foodonics. The cost of the Eggland's Best franchise will be amortized over a period of 15 years. Customer relationships and trademarks will be amortized over a period of 8 years. Non-compete agreements will be amortized over a period of 10 years. Goodwill on business combination recognizes the difference inare significant
to the fair value of the assets acquiredor liabilities
The disclosure of fair value of certain financial assets and liabilities assumed, netrecorded
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 the acquisition price. Goodwill associated with the acquisition is tax deductible over 15 years.these instruments.

Pro-forma information, which is usually presented for information purposes onlyAssets and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisition been completed as of an earlier time, was not material to the Company's Consolidated Financial Statements.
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
3.  Investment in Affiliates

The Company has several in non-consolidated affiliatesliabilities that are accounted for using the equity method of accounting. Asrequired to be measured at fair value on a recurring
basis as of June 3, 2017, the Company owns 50% of each of Red River Valley Egg Farm, LLC, Specialty Eggs, LLC, Southwest Specialty, LLC, and Dallas Reinsurance, Co., LTD.  Investment in affiliates are included in “Other Investments” in the accompanying Consolidated Balance Sheets and totaled $62.8 million and $47.5 million at June 3, 2017 and at May 28, 2016, respectively. 

Equity in income of affiliates of $1.4 million, $5.0 million, and $2.7 million from these entities has been included in the Consolidated Statements of Operations for fiscal 2017,  2016, and 2015, respectively.

The condensed consolidated financial information for the Company's unconsolidated joint ventures was as follows:
  For the fiscal year ended
  June 3, 2017 May 28, 2016 May 30, 2015
Net sales 86,072
 91,320
 61,632
Net income 2,804
 10,090
 5,323
Total assets 131,871
 100,700
 30,739
Total liabilities 6,543
 5,697
 4,659
Total equity 125,328
 95,003
 26,080

The Company is also a member of Eggland’s Best, Inc. (“EB”), which is a cooperative.  At June 3, 20172023 and May 28, 2016, “Other Investments” as shown on the Company’s Consolidated Balance Sheet includes the cost of the Company’s investment in EB plus any qualified written allocations.  The Company cannot exert significant influence over EB’s operating and financial activities; therefore, the Company accounts for this investment using the cost method.   The carrying value of this investment at 2022 (in thousands):
June 3, 20172023
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
—
$
16,296
$
—
$
16,296
Commercial paper
—
56,409
—
56,409
Corporate bonds
—
138,577
—
138,577
Certificates of deposits
—
675
—
675
US government and agency obligations
—
100,769
—
100,769
Asset backed securities
—
13,308
—
13,308
Treasury bills
—
29,056
—
29,056
Mutual funds
2,081
—
—
2,081
Total assets measured at fair
value
$
2,081
$
355,090
$
—
$
357,171
May 28, 2016 was $2.9 million2022
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
—
$
10,104
$
—
$
10,104
Commercial paper
—
14,868
—
14,868
Corporate bonds
—
73,684
—
73,684
Certificates of deposits
—
1,245
—
1,245
US government and $3.5 million, respectively.agency obligations

—
The Company regularly transacts business with its cost and equity method affiliates. The following relates to the Company’s transactions with these unconsolidated affiliates (in thousands):  2,209
໿—
2,209
Asset backed securities
—
13,319
—
13,319
Mutual funds
3,752
—
—
3,752
Total assets measured at fair
value
$
3,752
$
115,429
$
—
$
119,181
Investment securities – available-for-sale
classified as Level
2 consist of
securities with maturities of
three months or longer
when
purchased. We
classified these
securities as
current, because
amounts invested
are available
for current
operations. Observable
inputs for these securities are yields, credit risks, default rates, and volatility.
  For the fiscal year ended
  June 3, 2017 May 28, 2016 May 30, 2015
Sales to affiliates $59,073
 $61,094
 $46,989
Purchases from affiliates 73,713
 79,419
 62,659
Dividends from affiliates 6,581
 4,550
 1,250
49
  June 3, 2017 May 28, 2016
Accounts receivable from affiliates $4,643
 $3,483
Accounts payable to affiliates 3,617
 1,464

4.Note 5 - Inventories

Inventories consisted of the following (in thousands):
໿
June 3, 2023
May 28, 2022
Flocks, net of amortization
$
164,540
$
144,051
Eggs and egg products
28,318
26,936
Feed and supplies
91,560
92,329
$
284,418
$
263,316
  June 3, 2017 May 28, 2016
Flocks, net of accumulated amortization $98,059 $94,312
Eggs 14,911 11,519
Feed and supplies 47,722 48,968
  $160,692 $154,799

We grow and maintain
flocks of layers (mature female chickens), pullets (female chickens under 18 weeks of age), and breeders (male
(male and female
chickens used to
produce fertile eggs
to hatch for
egg production flocks).
Our total flock
at June 3, 2017,
2023 and
May 28, 2022,
consisted of approximately 9.5
10.8
million and
11.5
million pullets and
breeders and 36.1
41.2
million layers.and

42.2
million
layers, respectively.
The Company expensed amortization and mortality associated with the
flocks to cost of sales as follows (in thousands):
໿
໿
June 3, 2023
May 28, 2022
May 29, 2021
Amortization
$
186,973
$
160,107
$
133,448
Mortality
10,455
8,011
6,769
Total flock costs charged
to cost of sales
$
197,428
$
168,118
$
140,217
  June 3, 2017 May 28, 2016 May 30, 2015
Amortization $118,859
 $106,459
 $108,570
Mortality 5,213
 3,665
 3,803
Total flock costs charge to cost of sales $124,072
 $110,124
 $112,373
໿
Note 6 - Property,
Plant and Equipment

໿
5.  GoodwillProperty, plant and Other Intangible Assetsequipment

Goodwill and other intangibles consisted of the following (in thousands):
໿
June 3, 2023
May 28, 2022
Land and improvements
$
117,279
$
109,833
Buildings and improvements
552,669
517,859
Machinery and equipment
715,205
655,925
Construction-in-progress
98,605
71,967
1,483,758
1,355,584
Less: accumulated depreciation
739,218
677,788
$
744,540
$
677,796
    Other Intangibles
    Franchise Customer Non-compete Right of use Water   Total other
  Goodwill rights relationships agreements intangible rights Trademark intangibles
Balance May 30, 2015 $29,196
 $870
 $5,773
 $48
 $149
 $720
 $—
 $7,560
Additions —
 —
 —
 —
 —
 —
 —
 —
Amortization —
 (473) (2,088) (20) (21) —
 —
 (2,602)
Balance May 28, 2016 29,196
 397
 3,685
 28
 128
 720
 —
 4,958
Additions 6,329
 24,000
 1,900
 100
 —
 —
 400
 26,400
Amortization —
 (1,183) (925) (24) (62) —
 (15) (2,209)
Balance June 3, 2017 $35,525
 $23,214
 $4,660
 $104
 $66
 $720
 $385
 $29,149


For the Other Intangibles listed above, the gross carrying amounts and accumulated amortization are as follows (in thousands):
໿
໿
  June 3, 2017 May 28, 2016
  Gross carrying Accumulated Gross carrying Accumulated
  amount amortization amount amortization
Other intangible assets:        
Franchise rights $29,284
 $(6,070) $5,284
 $(4,887)
Customer relationships 19,544
 (14,884) 17,644
 (13,959)
Non-compete agreements 200
 (96) 100
 (72)
Right of use intangible 191
 (125) 191
 (63)
Water rights * 720
 —
 720
 —
Trademark 400
 (15) —
 —
Total $50,339
 $(21,190) $23,939
 $(18,981)
*Water rights are an indefinite life intangible asset.

No significant residual value is estimated for these intangible assets. Aggregate amortization expense for the fiscal years ended 2017, 2016, and 2015 totaled $2.2 million, $2.6 million, and $2.9 million, respectively. The following table represents the total estimated amortization of intangible assets for the five succeeding years (in thousands):
໿
For fiscal period Estimated amortization expense
2018 $2,818
2019 2,790
2020 2,765
2021 2,228
2022 1,864
Thereafter 15,964
Total $28,429

໿
໿
໿
6. Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):
  June 3,
2017		 May 28,
2016
Land and improvements $87,276
 $80,775
Buildings and improvements 342,933
 291,888
Machinery and equipment 460,218
 399,804
Construction-in-progress 36,752
 50,178
  927,179
 822,645
Less: accumulated depreciation 468,995
 430,371
  $458,184
 $392,274

Depreciation expense was $48.8
$
69.4
million, $41.4 $
65.8
million and $37.3 $
56.5
million in the fiscal
years 2017,  2016 ended June 3,
2023, May 28, 2022,
and 2015,May 29, 2021, respectively.

The Company
maintains insurance
for both
property damage
and business
interruption relating
to catastrophic
events, such
as
fires. Insurance recoveries
received for
property damage
and business
interruption in
excess of
the net
book value

value of damaged
assets,
clean-up
and
demolition
costs,
and
post-event
costs are recognized as income
recorded
within
“Gain
on
insurance
recoveries”
in
the period
received or committed when all contingencies associated with the recoveries are resolved. Gains on insurance recoveries related to business interruption are recorded within “Cost of sales” and any gains or lossesLosses related to property damage are
recorded within “Other income (expense)“(Gains) loss
on disposal of fixed assets”.”
Insurance recoveries related relating
to direct, recoverable costs for
business
interruption are classified recorded
as operating cash flows and recoveries related to property damage are classified as investing cash flowsa reduction in cost of
sales on the statement Consolidated Statements
of cash flows.Income. Insurance
claims incurred or
finalized
during
the fiscal
years ended 2017, 2016,
June 3,
2023,
May 28,
2022,
and
May
29,
2021 did
not have
a material
effect
on
the
Company’s consolidated
financial statements.
Note 7 - Investment in Unconsolidated Entities
As of
June 3,
2023
and
May 28,
2022,
the Company
owned
50
% in
Specialty
Eggs,
LLC (“Specialty
Eggs”)
and
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 2015are discussed below.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
InCounty, Nevada (including
Las Vegas).
As of May
29, 2021, the second quarter
Company owned
50
% in Red
River which was
acquired at the
beginning of
fiscal 2015, acontract producer owned pulletcomplexin Floridawas damaged by fire.2022 (see
). The fire destroyedtwocontract producer owned pullet houses that containedCompany accounted for Red River using the Company’s flocks.  In the third quarterequity method of fiscal 2015, theCompany’sShady Dale, Georgia complex was damaged by a fire.  The fire destroyedtwopullet houses.  These claims were resolved
accounting in fiscal 2016 and did not have a material impact on the Company’s results of operations.2021.
 
7.  Leases

Future minimum payments under non-cancelable operating leases that have initial or remaining non-cancelable terms
50
Equity method investments are included
in excess of one year“Investments in unconsolidated entities”
in the accompanying Consolidated Balance
Sheets and totaled $
9.7
million and $
10.5
million at June 3, 20172023 and May 28, 2022, respectively.
Equity
in
income
of
unconsolidated
entities
of
$
746
thousand,
$
1.9
million,
and
$
622
thousand
from
these
entities
has
been
included in the Consolidated Statements of Income for fiscal 2023
,
2022, and 2021, respectively.
The condensed consolidated
financial information for
the Company’s unconsolidated joint
ventures was as
follows (in thousands):
For the fiscal year ended
June 3, 2023
May 28, 2022
May 29, 2021
Net sales
$
222,602
$
145,281
$
119,853
Net income
1,492
3,942
1,596
Total assets
27,784
42,971
106,592
Total liabilities
9,854
21,892
5,850
Total equity
17,930
21,079
100,742
The following relates to the Company’s
transactions with these unconsolidated affiliates (in thousands):
For the fiscal year ended
June 3, 2023
May 28, 2022
May 29, 2021
Sales to unconsolidated entities
$
136,351
$
94,311
$
56,765
Purchases from unconsolidated entities
75,024
60,016
76,059
Distributions from unconsolidated entities
1,500
400
6,663
June 3, 2023
May 28, 2022
Accounts receivable from unconsolidated entities
$
4,719
$
10,815
Accounts payable to unconsolidated entities
3,187
4,678
Note 8 - Goodwill and Other Intangible Assets
Goodwill and other intangibles consisted of the following (in thousands):
Other Intangibles
Franchise
Customer
Non-compete
Right of
Water
Total
Goodwill
rights
relationships
agreements
Use
rights
Trademark
intangibles
Balance May 29, 2021
$
35,525
$
16,699
$
1,688
$
1,019
$
29
$
720
$
186
$
55,866
Additions
8,481
—
—
—
10
—
—
8,491
Amortization
—
(1,628)
(362)
(159)
(21)
—
(50)
(2,220)
Balance May 28, 2022
44,006
15,071
1,326
860
18
720
136
62,137
Amortization
—
(1,657)
(356)
(152)
(18)
—
(51)
(2,234)
Balance June 3, 2023
$
44,006
$
13,414
$
970
$
708
$
—
$
720
$
85
$
59,903
51
For the Other Intangibles listed above, the gross carrying amounts and
accumulated amortization are as follows (in thousands):
2018 $502
2019 208
2020 162
2021 160
2022 150
Total minimum lease payments $1,182
June 3, 2023

May 28, 2022
Substantially allGross carrying
Accumulated
Gross carrying
Accumulated
amount
amortization
amount
amortization
Other intangible assets:
Franchise rights
$
29,284
$
(15,870)
$
29,284
$
(14,213)
Customer relationships
9,644
(8,674)
9,644
(8,318)
Non-compete agreements
1,450
(742)
1,450
(590)
Right of the leases require the Company to pay taxes, maintenance, insurance use intangible
239
(239)
239
(221)
Water rights *
720
—
720
—
Trademark
400
(315)
400
(264)
Total
$
41,737
$
(25,840)
$
41,737
$
(23,606)
*
Water rights are
an indefinite life intangible asset.
No significant residual value is estimated for these
intangible assets. Aggregate amortization expense for fiscal years 2023, 2022,
and certain other operating expenses applicable to the leased assets.  Vehicle rent expense2021 totaled $475,000,  $190,000 and $101,000 in fiscal 2017,  2016 and 2015, respectively. Rent expense excluding vehicle rent was $3.5 $
2.2
million, $3.9 $
2.2
million, and $3.0 $
2.5
million, in fiscal 2017,  2016 and 2015, respectively, primarilyrespectively.
The following table presents the total estimated amortization of intangible
assets for the lease of certain operating facilities and equipment.  

8.  Credit Facilities and Long-Term Debt

Long-term debt consisted of the following (in thousands except interest rate and installment data):
  June 3,
2017		 May 28,
2016
Note payable at 6.20%, due in monthly principal installments of $250,000, plus interest, maturing in fiscal 2020 $7,500
 $10,500
Note payable at 6.35%, due in monthly principal installments of $100,000, plus interest, paid off in fiscal 2017 —
 9,100
Note payable at 5.40%, due in monthly principal installments of $125,000, plus interest, maturing in fiscal 2019 1,750
 3,250
Note payable at 6.40%, due in monthly principal installments of $35,000, plus interest, paid off in fiscal 2017 —
 2,720
Capital lease obligations 1,689
 —
Total debt 10,939
 25,570
Less: current maturities 4,826
 16,320
Long-term debt, less current maturities $6,113
 $9,250

໿

The aggregate annual fiscal year maturities of long-term debt at June 3, 2017 are as followsfive succeeding years (in thousands):
2018 $4,826
2019 3,533
2020 1,696
2021 205
2022 215
Thereafter 464
  $10,939
For fiscal year

Estimated amortization expense
Certain property, plant, and equipment is pledged as collateral on our notes payable and senior secured notes. Unless otherwise approved by our lenders, we are required by provisions of our loan agreements to (1) maintain minimum levels of working capital (ratio of not less than 1.25 to 1) and net worth (minimum of $90.0 million tangible net worth, plus 45% of cumulative net income); (2) limit dividends paid in any given quarter to not exceed an amount equal to one third of the previous quarter’s consolidated net income (allowed if no events of default), (3) maintain minimum total funded debt to total capitalization (debt to total tangible capitalization not to exceed 55%); and (4) maintain various current and cash-flow coverage ratios (1.25 to 1), among other restrictions. At June 3, 2017, we were in compliance with the financial covenant requirements of all loan agreements. Under certain of the loan agreements, the lenders have the option to require the prepayment of any outstanding borrowings in the event we undergo a change in control, as defined in the applicable loan agreement. Our debt agreements require Fred R. Adams, Jr., the Company’s Founder and Chairman Emeritus, or his family, to maintain ownership of Company shares representing not less than 50% of the outstanding voting power of the Company.  We are in compliance with those covenants at June 3, 2017.2024

$
Interest, net of amount capitalized,of $317,000, $1.1 million, and $2.3 million was paid during fiscal2017,  2016and2015, respectively.  Interest of $1.1 million,  $1.1 millionand $1.2 millionwas capitalized for construction of certain facilities during fiscal2017,  2016and2015, respectively.2,170

2025
2,035
9.2026
1,831
2027
1,828
2028
1,758
Thereafter
5,555
Total
$
15,177
Note 9 - Employee Benefit Plans

The Company maintains a medical plan that is qualified under Section
401(a) of the Internal Revenue Code and is not subject to
tax under present income tax laws. The plan is funded by contributions from the Company and its employees. Under its plan, the
Company
self-insures
its
portion
of
medical
claims
for
substantially
all
full-time
employees. The
Company
uses
stop-loss
insurance
to
limit
its
portion
of
medical
claims
to $225,000
$
275,000
per
occurrence. The
Company's
expenses
including
accruals
for
incurred but not
reported claims were approximately $14.0
$
21.9
million, $11.8 $
24.6
million, and $9.6 $
21.7
million in fiscal years 2017,  2016
2023, 2022,
and 2015,2021, respectively.
The liability recorded
for incurred but
not reported claims
was $900,000$
2.9
million and $
2.8
million as of
June
3, 2017
2023
and $770,000 as of
May 28, 2016.
2022,
respectively
and
are classified
within
“Accrued
expenses
and
other
liabilities”
in
the
Company’s

Consolidated Balance Sheets.
The Company
has a KSOP
plan that
covers substantially
all employees (“
(the Plan”“Plan”). The
Company makes cash
contributions to
the
Plan at a rate of 3%
3
% of participants'participants eligible compensation, plus an additional amount determined at the discretion of the Board of
Directors. Contributions
can be
made
in cash
or
the Company's common stock, Company’s
Common
Stock,
and vest
immediately. The Company's
Company’s
cash
contributions to the Plan were $3.2 $
4.3
million, $2.9 $
3.9
million, and $2.8 $
3.8
million in fiscal years 2017,  20162023, 2022 and 2015,2021, respectively. The
Company did not
no
t make direct contributions of the Company’s common stock
Common Stock in fiscal years 2017,  2016,2023, 2022, or 2015.2021. Dividends on
the Company’s common stockCommon Stock are paid to the Plan in cash. The Plan acquires the Company’s common stock,Common Stock, which is listed on
the NASDAQ, by
using the dividends
and the Company’s
cash contribution to
purchase shares in
the public markets.
The Plan sold common stock
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 the Internal Revenue Service regulations.
The Company does not match participant contributions.

Deferred Compensation Plans
The
Company
has
deferred
compensation
agreements
with
certain
officers
for
payments
to
be
made
over
specified
periods
beginning when the officers
reach age
65
or over as specified in the
agreements. Amounts accrued for the
agreements are based
upon
deferred
compensation
earned
over
the
estimated
remaining
service
period
of
each officer.
Payments
made
under
these
agreements
were
$
170
thousand in
fiscal
years
2023,
2022
and
2021. The
liability
recorded
related
to
these
agreements
was
52
$
1.0
million
and
$
1.1
million
at
June
3,
2023
and
May
28,
2022,
respectively
and
are
classified
within
“Other
noncurrent
liabilities” in the estimated remaining service periodCompany’s Consolidated
Balance Sheets.
The
Company
sponsors
an
unfunded,
non-qualified
deferred
compensation
plan,
which
was
amended
and
restated
effective
December 1, 2021 (the “Amended DC Plan”) to expand eligibility for participation from named officers only to a select group of each officer.  Payments made
management or highly
compensated employees of
the Company,
expand the investment options
available and add the
ability of
participants
to
make
elective
deferrals.
Participants
may
be
awarded
long-term
incentive
contributions
(“Awards”)
under
the
Amended DC Plan.
Awards
vest on December 31
st
of the fifth year
after such contribution is
credited to the
Amended DC Plan
or, if earlier, the participant’s attainment of age
60
with
5
years of service. Awards issued under the planAmended DC
Plan were $110,000,  $102,000,$
388
thousand, $
340
thousand, and $97,000$
279
thousand in fiscal
2023, 2022,
and 2021, respectively.
Payments made
under the
Amended
DC Plan were $
410
thousand, $
480
thousand and $
55
thousand in fiscal years 2017,  2016,2023,
2022 and 2015,2021, respectively. The liability recorded related to these agreements
for the Amended DC Plan was $1.6 $
4.6
million, $
4.5
million and $
4.1
million at June 3, 2017 and2023, May 28, 2016. 2022 and 2021, respectively

In December 2006,and is classified within “Other noncurrent liabilities” in the Company adopted an additional deferred compensation plan to provide deferred compensation to named officers of the Company.  The awards issued under this plan were $290,000, $284,000, and $241,000 in fiscal 2017,  2016 and 2015, respectively.  Payments made under the plan were $147,000 and $128,000 in fiscal 2017 and 2016, respectively.  The liability recorded related to these agreements was $2.5 million and $1.9 million at June 3, 2017 and May 28, 2016, respectively.Company’s

Consolidated Balance Sheets.
Deferred compensation expense for
both plans totaled $616,000, $347,000$
346
thousand, $
258
thousand and $470,000$
1.6
million in fiscal 2017,  2016 2023, 2022,
and 2015,
2021,
respectively.

Other Postretirement Medical Plan

Employee Benefits
The Company
maintains an
unfunded postretirement
medical plan to
provide limited
health benefits to
certain qualified
retired
employees
and officers.
Retired non-officers
and
spouses are
eligible for
coverage
until attainment
of Medicare
eligibility,
at
which time coverage
ceases. Retired officers
and spouses
are eligible for coverage until attainment of Medicare eligibility, at which time coverage ceases.  Retired officers and spouses are eligible for
lifetime benefits under
the plan. Officers, and their spouses,
who retired
prior to May 1, 2012 and their spouses must participate in Medicare
Plans A and B. Officers, and their spouses, who retire on or after May 1, 2012
and their spouses must participate in Medicare Plans A, B, and D.
 

The plan is accounted for
in accordance with ASC
715, “CompensationCompensation – Retirement Benefits”Benefits (“ASC
715”), whereby an employer
recognizes the funded status of a defined benefit postretirement plan as
an asset or liability, and recognizes changes in the funded
status in the year the change occurs through comprehensive income. Additionally,
this expense is recognized on an accrual basis
over the employees’ approximate period of employment. The liability associated with the plan was $2.3 $
2.7
million and $1.8 $
3.4
million as of
at
June
3, 2017
2023
and
May
28, 2016,
2022,
respectively. The
remaining
disclosures
associated
with
ASC
715
are
immaterial
to
the
Company’s financial statements.

Effective
March 1,
2023,
the Company
adopted
a non-qualified
supplemental
executive retirement
plan
(“SERP”) and
a split
dollar life insurance plan (“Split Dollar Plan”) designed
to provide deferred compensation and a pre-retirement
death benefit for
10.  Stock Compensation Plansa
select
group
of
management
or
highly
compensated
employees
of
the
Company.
Provided
the
vesting
conditions
are
met,

On October 5, 2012, shareholders approved the Cal-Maine Foods, Inc. 2012 Omnibus Long-Term Incentive Plan (“2012 Plan”). The purpose of the 2012 Plan is to assist us and our subsidiaries in attracting and retaining selected individuals who, serving as our employees, outside directors and consultants, are expected to contribute to our success and to achieve long-term objectives which will benefit our shareholders through the additional incentives inherentparticipants in the awards under SERP are eligible to receive an aggregate retirement benefit of $
500,000
, which is paid in annual installments
of $
50,000
for
10 years
. A participant
becomes vested in
the 2012 Plan. The maximum number retirement benefit
over
five years
of sharesplan participation
at
20
% per
year. If a participant becomes disabled, attains the retirement age of common stock that are available for awards under the 2012 Plan is 1,000,000 shares issuable from the Company’s treasury stock.  Awards may be granted under the 2012 Plan to any employee, any non-employee member of the Company’s Board of Directors, and any consultant who is a natural person and provides services to us65, or one of our subsidiaries (except for incentive stock options which may be granted only to our employees).

In January 2017, the Company granted 86,215  restricted shares from treasury.  The restricted shares vest three years from the grant date, or upon death or disability,experiences a change in control, vesting
will be
accelerated to
100
%. If
a participant
dies while
employed, he
or retirement (subjectshe
will not
receive any
benefits under
the SERP,
but
their beneficiaries
will instead be
entitled to certain requirements). the
life insurance benefit
provided under
the Split Dollar
Plan, which
is $500,000.
The restricted shares contain no other service or performance conditions.  Restricted stockliability recorded
for these plans was
$
63
thousand at June 3,
2023 and is awarded classified
within “Other noncurrent
liabilities” in
the Company’s Consolidated Balance
Sheets.
Note 10 - Credit Facility
For
fiscal
years
2023,
2022
and
2021,
interest
expense
was
$
583
thousand,
$
403
thousand,
and
$
213
thousand,
respectively,
primarily related to commitment fees on the Credit Facility described below.
On May
26, 2023,
we entered
into the
First Amendment
(the “Amendment”)
to the
Amended and
Restated Credit
Agreement,
dated November 15, 2021 (as amended, the “Credit Agreement”).
The Amendment replaced the London Interbank Offered Rate
interest rate benchmark
with the secured overnight
financing rate as administered
by the Federal Reserve
Bank of New York
or
a successor
administrator
of the
secured overnight
financing
rate (“SOFR”).
The Credit
Agreement
has 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
$
250
million, which
includes a
$
15
million sublimit
for the
issuance of
standby letters
of
credit and a $
15
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 name ofCredit
Facility in the recipient and except for
aggregate up to
$
200
million by adding one or more
incremental senior secured term loans or increasing one
or more times the right of disposal, constitutes issued and outstanding shares ofrevolving commitments
under the Company’s common stock for all corporate purposes duringRevolver.
No
amounts were borrowed
under 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 over the vesting period.facility
 

Our unrecognized compensation expense as a result of non-vested shares was $5.9 million as of June
3, 2017 and $5.6 million as of 2023 or
May 28, 2016.  2022
or during fiscal
2023 or
53
fiscal 2022.
The unrecognized compensation expense will be amortized to stock compensation expense over a periodCompany
had $
4.3
million of 2.1 years.
outstanding standby
letters of
credit issued
under the
Credit Facility
at June
3,

2023.
The Company recognized stock compensation expense of $3.4 million, $1.7 million, and $2.3 million for equity awards
interest
rate
in fiscal 2017, 2016, and 2015, respectively.
connection
with
loans
made
under
the
Credit
Facility
is
based
on,
at
the
Company’s
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,
A summary of our equity award activity and related information for our restricted stock is as follows:
    Weighted
  Number Average
  of Grant Date
  Shares Fair Value
Outstanding, May 30, 2015 335,140
 $27.24
Granted 78,560
 49.39
Vested (122,140) 20.76
Forfeited (2,660) 31.29
Outstanding, May 28, 2016 288,900
 $35.97
Granted 86,215
 43.00
Vested (121,148) 26.90
Forfeited (6,232) 39.66
Outstanding, June 3, 2017 247,735
 $42.76

On July 28, 2005, the Company’s Board of Directors approved the Cal-Maine Foods, Inc. Stock Appreciation Rights Plan (the "Rights Plan"). The Rights Plan covers 2,000,000 shares of Common Stock of the Company. Stock Appreciation Rights ("SARs") were granted to employees or non-employee members of the Board of Directors. Upon exercise of a SAR, the holder received cashper annum rate equal to the difference betweensum of
(i) Term
SOFR as defined in the fair market valueCredit 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 single share of Common Stock at the time of exercise and the strike price which is fluctuating rate per annum
equal to the fair market valuehighest of (a) the federal funds rate
plus
0.50
% per annum, (b)
the prime rate of
interest established by the
Administrative Agent, and
(c) the Adjusted Term
SOFR for a
one
-month tenor plus
1.00
%. The
“Applicable Margin”
means
0.00
% to
0.75
% per
annum for
Base Rate
Loans and
1.00
% to
1.75
% per
annum for
SOFR Loans, in
each case depending upon
the Total Funded Debt to
Capitalization Ratio for the
Company at the quarterly
pricing
date. The
Company will
pay a
commitment
fee on
the unused
portion
of the
Credit 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
all the
current
and
future wholly
-owned
direct
and
indirect
domestic
subsidiaries
of
the
Company (the
“Guarantors”), and
is secured
by a
first-priority perfected
security interest
in substantially
all of
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
for the
Credit
Facility
contains
customary
covenants,
including
restrictions
on
the incurrence
of
liens,
incurrence of
additional debt,
sales of
assets and
other fundamental
corporate changes
and investments.
The Credit
Agreement
requires maintenance of two financial covenants: (i) a single sharemaximum Total Funded Debt to Capitalization Ratio tested
quarterly of Common Stock on no
greater than
50
%; and (ii) a requirement to maintain Minimum
Tangible Net
Worth at
all times of $
700
Million plus
50
% of net
income
(if
net
income
is
positive)
less
permitted
restricted
payments
for
each
fiscal
quarter
after
November
27,
2021.
Additionally,
the date Credit Agreement
requires that Fred
R. Adams Jr.’s
spouse, natural children,
sons-in-law or grandchildren,
or
any trust,
guardianship, conservatorship
or custodianship
for the primary
benefit of any
of the grant. The SARs had a ten year term and vested over five years. The last remaining SARs were exercised during fiscal 2016 which effectively terminated this plan.

A summary of our liability award activity and related information is as follows:
      Weighted  
    Weighted Average  
  Number Average Remaining Aggregate
  Of Strike Price Contractual Intrinsic
  Rights Per Right Life (in Years) Value
Outstanding, May 30, 2015 26,900
 $3.40
  
  
Granted —
 —
  
  
Exercised (26,900) 3.40
  
  
Forfeited —
 —
  
  
Outstanding, May 28, 2016 —
 $—
 —
 $—

Total payments for liability awards exercised totaled zero,  $1.4 million, and $373,000 for fiscal 2017, 2016 and 2015, respectively.
foregoing,
 
or any family
໿
limited
໿partnership, similar limited liability
company or other entity
that
໿100

11.  Income Taxes

Income tax expense (benefit) consisted% of the following:voting control
 
of such entity is held
by any of the
  Fiscal year ended
  June 3,
2017		 May 28,
2016		 May 30,
2015
Current:      
Federal $(48,030) $132,250
 $70,900
State (6,670) 17,560
 8,260
  (54,700) 149,810
 79,160
Deferred:  
  
  
Federal 13,076
 17,096
 4,503
State 1,757
 2,296
 605
  14,833
 19,392
 5,108
  $(39,867) $169,202
 $84,268
foregoing, shall maintain
at least

50
Significant components% of the Company’s deferred tax liabilities Company's
voting stock. Failure
to satisfy any of
these covenants will constitute
a
default under the terms of
the Credit Agreement. Further,
under the terms of the Credit
Agreement, payment of dividends under
the
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 assets were as follows:cash
equivalents of
the
Company and its subsidiaries plus availability under the Credit Facility equals at least $
50
  June 3,
2017		 May 28,
2016
Deferred tax liabilities:  
  
Property, plant and equipment $68,830
 $60,998
Inventories 38,270
 39,068
Investment in affiliates 8,563
 1,438
Other comprehensive income 290
 223
Other 4,656
 4,343
Total deferred tax liabilities 120,609
 106,070
   
  
Deferred tax assets:  
  
Accrued expenses 4,308
 3,374
Other 6,019
 7,314
Total deferred tax assets 10,327
 10,688
Net deferred tax liabilities $110,282
 $95,382

million.
The differences between income tax expense (benefit) atCredit
Agreement also
includes customary
events of
default and
customary remedies
upon the Company’s effective income tax rate
occurrence of
an event
of
default, including acceleration
of the amounts due
under the Credit Facility
and income tax expense at foreclosure of
the statutory federal income tax rate were as follows:collateral securing
the Credit
໿Facility.
  Fiscal year end
  June 3,
2017		 May 28,
2016		 May 30,
2015
       
Statutory federal income tax (benefit) $(39,950) $169,835
 $85,933
State income tax (benefit) (3,193) 12,906
 5,762
Domestic manufacturers deduction 4,095
 (13,332) (7,308)
Tax exempt interest income (206) (233) (184)
Other, net (613) 26
 65
  $(39,867) $169,202
 $84,268

We had no significant unrecognized tax benefits atAt June 3, 2017 or at May 28, 2016. Accordingly,2023, we do not have any accrued interest or penalties related to uncertain tax positions. However, if interest or penalties were to be incurred related to uncertain tax positions, such amounts would be recognized in income tax expense.

We are under a limited scope audit by the IRS for the fiscal years 2013 through 2015.   We are subject to income tax in many jurisdictions within the U.S., and certain jurisdictions are under audit by state and local tax authorities. The resolutions of these audits are not expected to be material to our consolidated financial statements. Tax periods for all years after fiscal year 2013 remain open to examination by the federal and state taxing jurisdictions to which we are subject.

12. Contingencies
Financial Instruments
The Company maintains standby letters of credit (“LOC”) with a bank totaling $3.7 million at June 3, 2017.  These LOCs are collateralized with cash. The cash that collateralizes the LOCs is included in the line item “Other assets” in the consolidated balance sheets.  The outstanding LOCs are for the benefit of certain insurance companies. None of the LOCs are recorded as a liability on the Consolidated Balance Sheets.
Litigation
The Company is a defendant in certain legal actions, and intends to vigorously defend its position in these actions. The Company assesses the likelihood of material adverse judgments or outcomes to the extent losses are reasonably estimable.  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 reasonably estimated, the estimated liability is accrued in the Company’s financial statements.  If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Egg Antitrust Litigation

Since September 25, 2008, the Company has been named as one of several defendants in numerous antitrust cases involving the United States shell egg industry.  In some of these cases, the named plaintiffs allege that they purchased eggs or egg products directly from a defendant and have sued on behalf of themselves and a putative class of others who claim to be similarly situated.  In other cases, the named plaintiffs allege that they purchased shell eggs and egg products directly from one or more of the defendants but sue only for their own alleged damages and not on behalf of a putative class.  In the remaining cases, the named plaintiffs are individuals or companies who allege that they purchased shell eggs indirectly from one or more of the defendants - that is, they purchased from retailers that had previously purchased from defendants or other parties - and have sued on behalf of themselves and a putative class of others who claim to be similarly situated.

The Judicial Panel on Multidistrict Litigation consolidated all of the putative class actions (as well as certain other cases in which the Company was not a named defendant) for pretrial proceedings in the United States District Court for the Eastern District of Pennsylvania. The Pennsylvania court organized the putative class actions around two groups (direct purchasers and indirect purchasers) and named interim lead counsel for the named plaintiffs in each group.

The Direct Purchaser Putative Class Action. The direct purchaser putative class cases were consolidated into In re: Processed Egg Products Antitrust Litigation, No. 2:08-md-02002-GP, in the United States District Court for the Eastern District of Pennsylvania. As previously reported, in November 2014, the Court approved the Company’s settlement with the direct purchaser plaintiff class and entered final judgment dismissing with prejudice the class members’ claims against the Company.

The Indirect Purchaser Putative Class Action.  The indirect purchaser putative class cases were consolidated into In re: Processed Egg Products Antitrust Litigation, No. 2:08-md-02002-GP, in the United States District Court for the Eastern District of Pennsylvania.  On April 20-21, 2015, the Court held an evidentiary hearing on the indirect purchaser

plaintiffs’ motion for class certification. On September 18, 2015, the Court denied the indirect purchaser plaintiffs’ motion for class certification of 21 separate classes seeking damages under the laws of 21 states, holding that the plaintiffs were not able to prove that their purported method for ascertaining class membership was reliable or administratively feasible, that common questions would predominate, or that their proposed class approach would be manageable in a single trial.  In addition to barring any right to pursue a class monetary remedy under state law, the Court also denied indirect purchaser plaintiffs’ request for certification of an injunctive-relief class under federal law. However, the court allowed the indirect purchaser plaintiffs to renew their motion for class certification seeking a federal injunction. The plaintiffs filed their renewed motion to certify an injunctive-relief class on October 23, 2015. The Company joined the other defendants in opposing that motion on November 20.  The plaintiffs filed their reply memorandum on December 11, 2015, and on March 7, 2017, the Court heard arguments on the renewed motion for injunctive class certification. On June 27, 2017, the Court denied plaintiffs’ renewed motion for injunctive class certification. The plaintiffs also filed a petition with the United States Court of Appeals for the Third Circuit, asking the court to hear an immediate appeal of the trial court’s denial of the motion to certify 21 state-law damages classes. On December 3, 2015, the Third Circuit entered an order staying its consideration of the plaintiffs’ request for an immediate appeal of the damages-class ruling pending the trial court’s resolution of the plaintiffs’ renewed motion to certify an injunctive-relief class. On July 11, 2017 the plaintiffs filed a petition with the Third Circuit asking the court to hear an appeal of the June 27 order denying plaintiffs’ renewed motion for injunctive class certification. On July 21, 2017, the Company joined other defendants in a response filed with the Third Circuit opposing the plaintiffs' petition.

The Non-Class Cases. Six of the cases in which plaintiffs do not seek to certify a class have been consolidated with the putative class actions into In re: Processed Egg Products Antitrust Litigation, No. 2:08-md-02002-GP, in the United States District Court for the Eastern District of Pennsylvania. The court granted with prejudice the defendants’ renewed motion to dismiss the non-class plaintiffs’ claims for damages arising before September 24, 2004. On July 2, 2015, the Company filed and joined several motions for summary judgment that sought either dismissal of all of the claims in all of these cases or, in the alternative, dismissal of portions of these cases. On July 2, 2015, the non-class plaintiffs filed a motion for summary judgment seeking dismissal of certain affirmative defenses based on statutory immunities from federal antitrust law. The Court heard oral argument on the motions for summary judgment on February 22 and 23, 2016. On September 6, 2016, the Court granted the defendants’ motion for summary judgment against the plaintiffs’ claims arising from their purchases of egg products, dismissing those claims with prejudice. On September 9, 2016, the Court granted in part the Company’s motion for summary judgment on liability, dismissing as a matter of law the plaintiffs’ allegations of a side agreement to cease construction of new facilities and ruling that the plaintiffs’ allegations against United Egg Producers (UEP) animal-welfare guidelines must be evaluated at trial under the rule of reason. On September 12, 2016, the Court granted in part the Company’s motion for summary judgment on damages, ruling that plaintiffs cannot recover damages on purchases of eggs from non-defendants and cannot recover any relief on eggs and egg products produced or sold in Arizona after October 1, 2009, the date that Arizona mandated that all eggs sold or produced in that state must be produced in compliance with the 2008 versioncovenant requirements of the UEP animal-welfare guidelines. On September 13, 2016, the Court granted in part the plaintiffs’ motion for summary judgment as to the applicability of the Capper-Volstead defense, ruling that United States Egg Marketers (an industry cooperative of which the Company is a member) may invoke the defense at trial but that UEP (another industry cooperative of which the Company is a member) cannot. The Capper-Volstead defense is a defense pursuant to the Capper-Volstead Act (the Co-operative Marketing Associations Act), enacted by Congress in 1922, which gives certain associations of farmers certain exemptions from antitrust laws. On October 4, 2016, certain direct action plaintiffs (Kraft Food Global, Inc., General Mills, Inc., Nestle USA, Inc., and The Kellogg Company) filed an appeal to the United States Court of Appeals for the Third Circuit from the District Court’s Order dated September 6, 2016, granting defendants’ motion for summary judgment and dismissing with prejudice all claims based on the purchase of egg products. These plaintiffs filed their opening brief on March 7, 2017. The defendants filed their response brief on April 20. These plaintiffs filed their reply brief on May 18. The court of appeals heard oral argument on July
Credit Facility.
Note 11 2017, but has not issued a ruling. On November 22, 2016, the non-class plaintiffs filed a motion asking the Court to hold a status conference and asking the court to set the non-class cases for trial in June of 2017. The parties in all of the remaining class and non-class cases submitted several different proposed trial schedules to the court, and a status conference was held on February 9, 2017. A trial date has not yet been set.


Allegations in Each Case. In all of the cases described above, the plaintiffs allege that the Company and certain other large domestic egg producers conspired to reduce the domestic supply of eggs in a concerted effort to raise the price of eggs to artificially high levels. In each case, plaintiffs allege that all defendants agreed to reduce the domestic supply of eggs by: (a) agreeing to limit production; (b) manipulating egg exports; and (c) implementing industry-wide animal welfare guidelines that reduced the number of hens and eggs.

The named plaintiffs in the remaining indirect purchaser putative class action seek treble damages under the statutes and common-law of various states and injunctive relief under the Sherman Act on behalf of themselves and all other putative class members in the United States. Although plaintiffs allege a class period starting in October, 2006 and running “through the present,” the Court denied the plaintiffs’ motion to certify classes seeking damages under the laws of 21 states and denied without prejudice the plaintiffs’ motion to certify an injunctive-relief class, although the plaintiffs have filed a renewed motion to certify an injunctive-relief class, as discussed above.

Five of the original six non-class cases remain pending against the Company. The principal plaintiffs in these cases are: The Kroger Co.; Publix Super Markets, Inc.; SUPERVALU, Inc.; Safeway, Inc.; Albertsons LLC; H.E. Butt Grocery Co.; The Great Atlantic & Pacific Tea Company, Inc.; Walgreen Co.; Hy-Vee, Inc.; and Giant Eagle, Inc. In four of these remaining non-class cases, the plaintiffs seek treble damages and injunctive relief under the Sherman Act.  In one of those four cases, the plaintiffs purchased only egg products, and as noted above, the Court dismissed with prejudice all claims arising from the purchase of egg products. On October 4, 2016, the four plaintiffs in that case (Kraft Food Global, Inc., General Mills, Inc., Nestle USA, Inc., and The Kellogg Company) appealed that decision to the United States Court of Appeals for the Third Circuit. In the fifth remaining non-class case, the plaintiff seeks treble damages and injunctive relief under the Sherman Act and the Ohio antitrust act (known as the Valentine Act).

The Pennsylvania court has entered a series of orders related to case management, discovery, class certification, summary judgment, and scheduling.  The Court has also denied all four motions that the plaintiffs filed to exclude testimony from certain expert witnesses retained by the defendants. The Pennsylvania court has not set a trial date for any of the Company’s remaining consolidated cases (non-class and indirect purchaser cases). As noted above, the court held a hearing on the parties’ proposed trial schedules but has not yet set a trial date.

The Company intends to continue to defend the remaining cases as vigorously as possible based on defenses which the Company believes are meritorious and provable.  While management believes that the likelihood of a material adverse outcome in the overall egg antitrust litigation has been significantly reduced as a result of the settlements and rulings described above, there is still a reasonable possibility of a material adverse outcome in the remaining egg antitrust litigation. At the present time, however, it is not possible to estimate the amount of monetary exposure, if any, to the Company because of these cases. Accordingly, adjustments, if any, which might result from the resolution of these remaining legal matters, have not been reflected in the financial statements.

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. and affiliates, Cobb-Vantress, Inc., Cargill, Inc. and its affiliate, George’s, Inc. and its affiliate, Peterson Farms, Inc. and Simmons Foods, Inc. The State of Oklahoma claims that through the disposal of chicken litter the defendants have polluted the Illinois River Watershed. This watershed provides water to eastern Oklahoma. The complaint seeks injunctive relief and monetary damages, but the claim for monetary damages has been dismissed by the court. Cal-Maine Foods, Inc. discontinued operations in the watershed. Accordingly, we do not anticipate that Cal-Maine Foods, Inc. will be materially affected by the request for injunctive relief unless the court orders substantial affirmative remediation. Since the litigation began, Cal-Maine Foods, Inc. purchased 100% of the membership interests of Benton County Foods, LLC, which is an ongoing commercial shell egg operation within the Illinois River Watershed. Benton County Foods, LLC is not a defendant in the litigation.
The trial in the case began in September 2009 and concluded in February 2010. The case was tried to the court without a jury and the court has not yet issued its ruling. Management believes the risk of material loss related to this matter to be remote.

Florida Civil Investigative Demand

On November 4, 2008, the Company received an antitrust civil investigative demand from the Attorney General of the State of Florida. The demand seeks production of documents and responses to interrogatories relating to the production and sale of eggs and egg products. The Company is cooperating with this investigation and has, on three occasions, entered into an agreement with the State of Florida tolling the statute of limitations applicable to any supposed claims the State is investigating. No allegations of wrongdoing have been made against the Company in this matter.

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.
At this time, it is not possible for us to predict the ultimate outcome of the matters set forth above.

13.   Description of Rights and Privileges of Capital Stock—Capital Structure Consists of CommonStock and Class A CommonStock

- Equity
The Company has
two
classes of capital stock: Common Stock and Class
A Common Stock. HoldersExcept as otherwise required by
law
or the Company's Second Restated Certificate of Incorporation
(“Restated Charter”), holders of shares of the Company’s
capital
stock vote as
a single class on
all matters submitted
to a vote of
the stockholders, with
each share of
Common Stock entitled to
one
vote and
each share
of Class A
Common Stock
entitled to
ten
votes. Holders
of capital
stock have
the right
of cumulative
voting in
the election of
directors. The Common
Stock and Class
A Common
Stock have equal
liquidation rights
and the same
dividend rights. In the
case of
any stock dividend payable
in stock,
holders of Common
Stock are entitled
to receive the
same percentage
dividend (payable only in shares of Common Stock) as the holders of Class A Common Stock receive (payable only
in shares of
Class A Common
Stock). Upon liquidation,
dissolution, or winding-up
of the Company, the
holders of Common
Stock are entitled
to share ratably
with the holders
of Class A
Common Stock in
all assets available
for distribution after payment
in full of
creditors.
The holders
of Common
Stock and
Class A
Common
Stock are
not entitled
to preemptive
or subscription
rights. No
class of
capital stock
may only be issued to Fred R. Adams, Jr.,
combined or
subdivided unless
the Company’s Founder and Chairman Emeritus, and membersother
classes of his immediate family, as defined
capital stock
are combined
or subdivided
in the Company's articles of incorporation. In the event any share of Class A Common Stock, by operation of law or otherwise is, or shall be deemed to be owned by any person other than Mr. Adams or a member of his immediate family, the voting power of such stock will be reduced from ten votes per share to one vote per share. Also, shares of Class A Common Stock shall be automatically converted into Common Stock on a share per share basis in the event the beneficial or record ownership of any such share of Class A Common Stock is transferred to any person other than Mr. Adams or a member of his immediate family. Each share of Class A Common Stock is convertible, at the option of its holder, into one share of Common Stock at any time. The holders of Common Stock and Class A Common Stock are not entitled to preemptive or subscription rights. In any merger, consolidation or business combination, the consideration to be received per share by holders of Common Stock must be identical to that received by holders of Class A Common Stock, except that if any such transaction in which shares of Capital Stock are distributed, such shares may differ as to voting rights to the extent that voting rights now differ among the classes of capital stock. No class of capital stock may be combined or subdivided unless the other classes of capital stock are combined or subdivided in the
same
proportion. No dividend may be declared and paid on Class A Common
Stock unless the dividend is payable only to the holders
of Class A Common Stock and a dividend is declared and paid to Common Stock
concurrently.

Each share
of Class A
Common Stock
is convertible,
at the option
of its
holder,
into
On July 25, 2014, the Boardone
share of Directors approved an amendment
Common Stock
at any
time.
The Company’s
Restated Charter
identifies family
members of
Mr.
Adams (“Immediate
Family Members”)
and arrangements
54
and entities that are permitted to the Company’s Amended
receive and Restated Certificate of Incorporation to authorize an additional 60,000,000hold shares of common stockClass
A Common Stock, with
ten
votes per share, without such shares
converting into shares of Common
Stock, with one vote per share (“Permitted
Transferees”). The Permitted
Transferees include
arrangements and entities such as revocable trusts and limited liability companies that could hold Class A Common Stock
for the
benefit of Immediate Family Members. Each Permitted
Transferee must have a relationship,
specifically defined in the Restated
Charter, with
another Permitted Transferee
or an additional 2,400,000 Immediate Family
Member.
A share of Class A
Common Stock transferred
to
a person other
than a
Permitted Transferee would automatically
convert into Common
Stock with
one vote per
share. Additionally,
the
Restated
Charter
includes
a
sunset
provision
pursuant
to
which
all
of
the
outstanding
Class
A
Common
Stock
will
automatically
convert
to
Common
Stock
if:
(a)
less
than
4,300,000
shares
of
Class
A
Common
Stock,
in
the
aggregate,
are
beneficially owned by Immediate Family
Members and/or Permitted Transferees,
or (b) if less than
4,600,000
shares of Class A common stock.  The primary purpose of
Common Stock
and Common Stock,
in the amendment was to provide a sufficient number of authorized shares in order to effect a 2-for-1 stock split of the Company’s common stock and Class A common stock.  The amendment was approved aggregate,
are beneficially owned
by the Company’s stockholders at the Company’s annual meeting on October 3, 2014 and the Board of Directors approved the 2-for-1 stock split on the same day.  The new shares were distributed on October 31, 2014 to shareholders of record at the close of business on October 17, 2014.Immediate Family
 

Members and/or Permitted

Transferees.
Unless otherwise noted, all prior period share and
Note 12 - Net Income per Common Share
Basic net income
per share information contained in this report was adjusted to reflect the effect of the stock split.

14.  Fair Value Measures

The Company is required to categorize both financial and nonfinancial assets and liabilities based on the following fair value hierarchy.  The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated, knowledgeable, and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle the liability with the creditor.

Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
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.
attributable
 
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.
Cal-Maine Foods, Inc.
 
Long-term debt: The carrying value of the Company’s long-term debt is at its stated value. We have not elected to carry our long-term debt at fair value. Fair values for debt are based on quoted market prices or published forward interest rate curves, which are level 2 inputs. Estimated fair values are management’s estimates, which is a level 3 input; however, when there is no readily available market data, the estimated fair values may not represent the amounts that could be realized in a current transaction, and the fair values could change significantly. The fair value of the Company’s debt is sensitive to changes in the general level of U.S. interest rates.  The Company maintains all of its debt as fixed rate in nature to mitigate the impact of fluctuations in interest rates.  Under its current policies, the Company does not use interest rate derivative instruments to manage its exposure to interest rate changes.  A one percent (1%) adverse move (i.e. decrease) in interest rates would adversely affect the net fair value of the Company’s debt by $144,000 at June 3, 2017.  The fair value and carrying value of the Company’s long-term debt were as follows (in thousands):
໿
  June 3, 2017 May 28, 2016
  Carrying Value Fair Value Carrying Value Fair Value
5.40 – 6.40% Notes payable $9,250
 $9,295
 $25,570
 $25,824
Long-term leases 1,689
 1,520
 —
 —
  $10,939
 $10,815
 $25,570
 $25,824
Assets and Liabilities Measured at Fair Value on a Recurring Basis

In accordance with the fair value hierarchy described above, the following table shows the fair value of our financial assets and liabilities that are required to be measured at fair value on a recurring basis as of June 3, 2017 and May 28, 2016 (in thousands):
໿

  June 3, 2017
  Quoted Prices      
  in Active Significant    
  Markets for Other Significant  
  Identical Observable Unobservable  
  Instruments Inputs Inputs Total
  (Level 1) (Level 2) (Level 3) Balance
Assets  
  
  
  
US government and agency obligations $—
 $20,216
 $—
 $20,216
Municipal bonds —
 36,873
 —
 36,873
Corporate bonds —
 75,790
 —
 75,790
Asset backed securities —
 5,583
 —
 5,583
Mutual funds 2,459
 —
 —
 2,459
Total assets measured at fair value $2,459
 $138,462
 $—
 $140,921

  May 28, 2016
  Quoted Prices      
  in Active Significant    
  Markets for Other Significant  
  Identical Observable Unobservable  
  Instruments Inputs Inputs Total
  (Level 1) (Level 2) (Level 3) Balance
Assets  
  
  
  
US government and agency obligations $—
 $18,814
 $—
 $18,814
Municipal bonds —
 79,643
 —
 79,643
Corporate bonds —
 240,537
 —
 240,537
Foreign government obligations —
 2,046
 —
 2,046
Asset backed securities —
 15,893
 —
 15,893
Mutual funds 5,503
 —
 —
 5,503
Total assets measured at fair value $5,503
 $356,933
 $—
 $362,436

Our investment securities – available-for-sale classified as level 2 consist of U.S. government and agency obligations, taxable and tax exempt municipal bonds, zero coupon municipal bonds, asset-backed securities, foreign government obligations, and corporate bonds with maturities of three months or longer when purchased. We classified these securities as current, because amounts invested are available for current operations. Observable inputs for these securities are yields, credit risks, default rates, and volatility.

The Company applies fair value accounting guidance to measure non-financial assets and liabilities associated with business acquisitions. These assets and liabilities are measured at fair value for the initial purchase price allocation and are subject to recurring revaluations. The fair value of non-financial assets acquired is determined internally.  Our internal valuation methodology for non-financial assets takes into account the remaining estimated life of the assets acquired and what management believes is the market value for those assets. 

15.  InvestmentSecurities

Investment securities consisted of the following (in thousands):
໿
  June 3, 2017
    Gains in Losses in  
    Accumulated Accumulated Estimated
  Amortized Other Other Fair
  Cost Comprehensive Comprehensive Value
    Income Income  
US government and agency obligations $20,259
 $—
 43
 $20,216
Municipal bonds 36,839
 34
 —
 36,873
Corporate bonds 75,769
 21
 —
 75,790
Asset backed securities 5,583
 —
 —
 5,583
Mutual funds —
 —
 —
 —
Total current investment securities $138,450
 $55
 $43
 $138,462
   
  
  
  
Mutual funds 1,706
 753
 —
 2,459
Total noncurrent investment securities $1,706
 $753
 —
 $2,459
໿
  May 28, 2016
    Gains in Losses in  
    Accumulated Accumulated Estimated
  Amortized Other Other Fair
  Cost Comprehensive Comprehensive Value
    Income Income  
US government and agency obligations $18,809
 $5
 —
 $18,814
Municipal bonds 79,481
 162
 —
 79,643
Corporate bonds 240,593
 —
 56
 240,537
Foreign government obligations 2,044
 2
 —
 2,046
Asset backed securities 15,908
 —
 15
 15,893
Mutual funds 3,565
 1
 —
 3,566
Total current investment securities $360,400
 $170
 $71
 $360,499
   
  
  
  
Mutual funds 1,448
 489
 —
 1,937
Total noncurrent investment securities $1,448
 $489
 —
 $1,937

Proceeds from the sales of available-for-sale securities were $251.7 million, $292.5 million, and $146.8 million during fiscal 2017, 2016, and 2015, respectively. Gross realized gains on those sales during fiscal2017,  2016,and 2015 were $231,000, $131,000, and $82,000, respectively. Gross realized losses on those sales during fiscal2017,  2016,  and2014were $7,000, $110,000, and $7,000, respectively. For purposes of determining gross realized gains and losses, the cost of securities sold is based on the specific identification method.
weighted average Common
Stock and Class A

Common Stock
outstanding. Diluted
net income
per share
attributable to
Cal-Maine Foods,
Inc. is
based on
weighted-average
Unrealized holding gains and (losses), netcommon shares outstanding during the relevant period adjusted for the dilutive
effect of taxes, for fiscal 2017, 2016, and 2015 were as follows (in thousands):
share-based awards.

  June 3, 2017
 May 28, 2016
 May 30, 2015
Current Investments (54) 22
 (146)
Noncurrent Investments 164
 (31) 59
Total unrealized holding gains (losses) 110
 (9) (87)
The following table provides a reconciliation of the
numerators and denominators used to determine basic and diluted
net income


Actual maturities may differ from contractual maturities because some borrowers have the rightper common share attributable to call or prepay obligations with or without call or prepayment penalties.  Contractual maturities of investment securities at June 3, 2017, are as follows (in thousands):Cal-Maine Foods, Inc. (amounts in
  Estimated Fair Value
Within one year        $82,331
1-3 years 56,131
  $138,462
໿

16.   Quarterly Financial Data:  (unaudited, amount in thousands, except per share data):
June 3, 2023
May 28, 2022
May 29, 2021
Numerator
Net income
$
756,732
$
132,441
$
2,060
Less: Net loss attributable to noncontrolling interest
(1,292)
(209)
—
Net income attributable to Cal-Maine Foods, Inc.
$
758,024
$
132,650
$
2,060
Denominator
Weighted-average
common shares outstanding, basic
48,648
48,581
48,522
Effect of dilutive securities of restricted shares
186
153
134
Weighted-average
common shares outstanding, diluted
48,834
48,734
48,656
Net income per common share attributable to Cal-Maine Foods, Inc.
Basic
$
15.58
$
2.73
$
0.04
Diluted
$
15.52
$
2.72
$
0.04
  Fiscal Year 2017
  First Second Third Fourth
  Quarter Quarter Quarter Quarter
Net sales $239,845
 $253,544
 $306,540
 $274,584
Gross profit (9,569) 3,948
 39,165
 12,006
Net income (loss) attributable to Cal-Maine Foods, Inc. (30,936) (23,010) 4,139
 (24,471)
Net income (loss) per share:  
  
  
  
Basic $(0.64) $(0.48) $0.09
 $(0.51)
Diluted $(0.64) $(0.48) $0.09
 $(0.51)

Note 13 - Revenue Recognition
DuringSatisfaction of Performance Obligation
The vast majority of the Company's fourth quarterCompany’s
revenue is derived from agreements with customers based on the customer
placing an order
for products. Pricing
for the most part
is determined when
the Company and
the customer agree
upon the specific
order, which
establishes the contract for that order.
Revenues are
recognized in
an amount
that reflects
the net
consideration we
expect to
receive in
exchange for
the goods.
Our
shell eggs
are sold at
prices related to
independently quoted wholesale
market prices or
formulas related to
our costs of
production.
The
Company’s
sales predominantly
contain
a
single
performance
obligation.
We
recognize
revenue
upon
satisfaction of
the
performance obligation
with the customer
which typically occurs
within days of
the Company
and the customer
agreeing upon
the order.
Costs
to
deliver
product
to
customers
are
included
in
selling,
general
and
administrative
expenses
in
the
accompanying
Consolidated Statements
of Income
and totaled
$
77.5
million, $
62.7
million, and
$
52.7
million in
fiscal 2017,years
2023, 2022,
and
2021,
respectively.
55
Returns and Refunds
Some of our contracts include a guaranteed sale clause, pursuant to which we decided
credit the customer’s account for product that the
customer is unable to carry backsell before expiration. The Company records an allowance
for expected customer returns using historical
return data and comparing to current period sales and accounts receivable
.
The allowance is recorded as a reduction of sales in
the same period the revenue is recognized.
Sales Incentives Provided to Customers
The Company periodically provides
incentive offers to its
customers to encourage purchases.
Such offers include current
discount
offers (e.g., percentage discounts off current purchases), inducement
offers (e.g., offers for future discounts
subject to a minimum
current purchase), and other similar offers. Current discount offers, when accepted by customers, are treated as a reduction to the
sales price
of the
related transaction,
while inducement
offers, when
accepted by
customers, are
treated as
a reduction
to sales
price based on estimated future redemption rates.
Redemption rates are estimated using the Company’s
historical experience for
similar inducement offers. Current discount and inducement offers
are presented as a net amount in ‘‘Net
sales.’’
Disaggregation of Revenue
The following table provides revenue disaggregated by product category
(in thousands):
14 Weeks Ended
13 Weeks Ended
53 Weeks Ended
52 Weeks Ended
June 3, 2023
May 28, 2022
June 3, 2023
May 28, 2022
Conventional shell egg sales
$
395,433
$
378,190
$
2,051,961
$
1,061,995
Specialty shell egg sales
256,190
186,518
956,993
648,838
Egg products
33,996
26,488
122,270
60,004
Other
3,061
1,768
14,993
6,322
$
688,680
$
592,964
$
3,146,217
$
1,777,159
Contract Costs
The Company can incur costs to
obtain or fulfill a contract with
a customer. If
the amortization period of these costs
is less than
one year, they are expensed as incurred. When the amortization period is greater than one year, a contract asset is recognized and
is amortized over the contract life
as a reduction in net
sales. As of June 3,
2023 and May 28, 2022, the
balance for contract assets
is immaterial.
Contract Balances
The Company
receives payment
from
customers based
on specified
terms that
are generally
less than
30 days
from
delivery.
There
are rarely contract assets or liabilities related to performance under the contract.
Concentration of Credit Risks
Our largest customer, Walmart
Inc. (including Sam's Club) accounted for
34.2
%,
29.5
% and
29.8
% of net sales dollars for fiscal 2017
2023, 2022, and 2021, respectively.
H-E-B, LP accounted for
10.1
% of net sales dollars for fiscal
2021.
Note 14 - Stock Compensation Plans
On
October
2,
2020,
shareholders
approved
the
Amended
and
Restated
Cal-Maine
Foods,
Inc.
2012
Omnibus
Long-Term
Incentive
Plan (the
“LTIP
Plan”). The
purpose of
the LTIP
Plan is
to assist
us and
our subsidiaries
in attracting
and retaining
selected individuals who are expected to contribute to our long-term success. The maximum number of
shares of Common Stock
available
for
awards
under
the
LTIP
Plan
is
2,000,000
of
which
941,593
shares
remain
available
for
issuance,
and
may
be
authorized
but
unissued
shares
or
treasury
shares.
Awards
may
be
granted
under
the
LTIP
Plan
to
any
employee,
any
non-
employee member of the Company’s
Board of Directors, and any consultant
who is a natural person and
provides services to us
or one of our subsidiaries (except for incentive stock options, which may be granted
only to our employees).
The only outstanding awards under
the LTIP Plan are restricted stock awards.
The restricted stock vests
three years from the
grant
date, or upon death or
disability, change
in control, or retirement (subject
to certain requirements). The
restricted stock contains
no other service
or performance conditions.
Restricted stock is awarded
in the name of
the recipient and,
except for the right
of
56
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
$
4.2
million,
$
4.1
million,
and
$
3.8
million
in
fiscal
2023,
2022,
and
2021,
respectively.
Our unrecognized
compensation expense
as a
result of
non-vested shares
was $
7.2
million at
June 3,
2023 and
$
7.0
million at
May 28,
2022. The unrecognized
compensation expense
will be
amortized to
stock compensation
expense over
a period
of
2.1
years.
A summary of our equity award activity and related information for our
restricted stock is as follows:
Number of
Shares
Weighted Average
Grant
Date Fair Value
Outstanding, May 29, 2021
302,147
$
39.37
Granted
113,142
41.13
Vested
(92,918)
42.45
Forfeited
(4,527)
38.01
Outstanding, May 28, 2022
317,844
$
39.12
Granted
84,969
54.10
Vested
(98,684)
38.25
Forfeited
(9,989)
39.69
Outstanding, June 3, 2023
294,140
$
43.72
Note 15 - Income Taxes
Income tax expense (benefit) consisted of the following:
Fiscal year ended
June 3, 2023
May 28, 2022
May 29, 2021
Current:
Federal
$
180,521
$
24,228
$
(35,090)
State
36,830
3,670
730
217,351
27,898
(34,360)
Deferred:
Federal
19,952
2,716
21,658
State
4,515
2,960
693
24,467
5,676
22,351
$
241,818
$
33,574
$
(12,009)
57
Significant components of the Company’s
deferred tax liabilities and assets were as follows:
June 3, 2023
May 28, 2022
Deferred tax liabilities:
Property, plant and equipment
$
109,590
$
100,250
Inventories
44,986
31,987
Investment in affiliates
1,133
65
Other
5,702
5,713
Total deferred
tax liabilities
161,411
138,015
Deferred tax assets:
Accrued expenses
3,838
4,041
State operating losses to recoverloss carryforwards
78
470
Other comprehensive income
1,317
866
Other
3,966
4,442
Total deferred
tax assets
9,199
9,819
Net deferred tax liabilities
$
152,212
$
128,196
The differences between income tax expense (benefit) 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
June 3, 2023
May 28, 2022
May 29, 2021
Statutory federal income tax
$
209,418
$
34,907
$
(2,087)
State income taxes, paid in fiscal 2015, which affects the comparability between quarters. Thenet
32,662
5,237
1,124
Domestic manufacturers deduction
—
—
3,566
Enacted net operating loss carryback provision
—
—
(16,014)
Tax exempt
interest income
—
(9)
(50)
Reversal of outside basis in equity investment Red River
—
(7,310)
—
Non-taxable remeasurement gain Red River
—
(955)
—
Other, net
(262)
1,704
1,452
$
241,818
$
33,574
$
(12,009)
As of
June 3,
2023,
we 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
beginning
with
fiscal
year
2020
remain
open
to
examination by federal and state taxing jurisdictions to which we are
subject.
58
Note 16 - Commitments and Contingencies
State of Texas
v. Cal-Maine Foods, Inc. d/b/a Wharton;
and Wharton County Foods, LLC
On April 23, 2020, the Company and its subsidiary Wharton County Foods, LLC (“WCF”) were named as defendants in State of
Texas
v.
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 May 10, 2023, the Company
filed its brief on the merits,
and the State of Texas
filed its brief on June 29, 2023.
The Company filed its reply brief on July
14,
2023. Management believes the risk of material loss related to this matter to be remote.
Bell et al. v. Cal-Maine Foods et al.
On April 30, 2020, the Company was named as one of several defendants in Bell et al. v. Cal-Maine Foods et al., Case No. 1:20-
cv-461, in the Western
District of Texas, Austin
Division. The defendants include numerous grocery
stores, retailers, producers,
and farms.
Plaintiffs assert
that defendants
violated the
DTPA
by allegedly
demanding exorbitant
or excessive
prices for
eggs
during the COVID-19 state of
emergency. Plaintiffs request certification of a class of all consumers who
purchased eggs in Texas
sold,
distributed,
produced,
or handled
by any
of the
defendants
during
the COVID-19
state of
emergency.
Plaintiffs
seek
to
enjoin the Company
and other defendants from
selling eggs at a
price more than
10% greater than
the price of eggs
prior to the
declaration
of
the
state
of
emergency
and
damages
in
the
amount
of
$
10,000
per
violation,
or
$
250,000
for
each
violation
impacting anyone over 65 years old. On December
1, 2020, the Company and certain other defendants
filed a motion to dismiss
the plaintiffs’ amended class action complaint. The plaintiffs subsequently filed a motion to strike, and the motion to dismiss and
related proceedings were referred to a United States magistrate judge. On July 14, 2021, the magistrate judge issued a report and
recommendation to
the court that
the defendants’ motion
to dismiss be
granted and the
case be dismissed
without prejudice for
lack of subject matter jurisdiction. On September 20, 2021, the court dismissed the case without prejudice. On July 13, 2022, the
court denied the plaintiffs’ motion to set aside or amend
the judgment to amend their complaint.
On March 15, 2022,
plaintiffs filed a
second suit against the
Company and several
defendants in Bell et
al. v.
Cal-Maine Foods
et al., Case No. 1:22-cv-246, in the Western District of Texas, Austin Division alleging
the same assertions as laid out in the first
complaint. On August 12,
2022, the Company and
other defendants in
the case filed
a motion to
dismiss the plaintiffs’ class
action
complaint. On January 9, 2023, the court entered an order and final judgement
granting the Company’s motion
to dismiss.
On February
8, 2023,
the plaintiffs
appealed
the lower
court’s
judgement
to the
United States
Court of
Appeals for
the Fifth
Circuit, Case No.
23-50112.
The parties filed
their respective appellate
briefs, but the
court has not
ruled on these
submissions.
Management believes the risk of material loss related to both matters to be remote.
Kraft Foods Global, Inc. et al. v.
United Egg Producers, Inc. et al.
As previously
reported, on
September 25,
2008, the
Company
was named
as one
of several
defendants
in numerous
antitrust
cases involving
the United
States shell
egg
industry.
The Company
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.
59
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 allege that the Company and other 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
are attacking certain
features
of the United
Egg Producers animal-welfare
guidelines and program
used by the
Company and many
other egg producers.
The
Egg Products
Plaintiffs seek
to enjoin
the Company
and other
defendants from
engaging in
antitrust violations
and seek
treble
money damages.
On May
2, 2022,
the court
set trial
for October
24, 2022,
but on
September 20,
2022, the
court cancelled
the
trial date due to COVID-19
protocols and converted the trial date
to a status hearing to reschedule
the jury trial. Trial
is now set
for October 16, 2023.
In addition,
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
the Company’s 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 Company intends to
continue to defend the remaining
case with the Egg Products
Plaintiffs as vigorously as
possible based
on
defenses
which
the
Company
believes
are
meritorious
and
provable.
Adjustments,
if
any,
which
might
result
from
the
resolution of
this remaining
matter with
the Egg
Products Plaintiffs
have not
been reflected
in the
financial statements.
While
management believes that there is
still a reasonable possibility of a
material adverse outcome from the
case with the Egg
Products
Plaintiffs, 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:
two earlier trials
based on substantially
the same
facts and
legal arguments
resulted in findings of
no conspiracy and/or damages;
this trial will be before
a $4.1 million decrease different judge
and jury in a different
court than
prior related cases; there are significant factual issues to
be resolved; and there are requests for damages
other than compensatory
damages (i.e., injunction and treble money damages).
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 income tax benefit, aswatershed
in or around
2005. Since the carryback reduced prior year taxable income and as a result reducedlitigation
began, Cal-Maine Foods,
Inc. purchased
100
%
of the benefitmembership
interests of prior year domestic manufacturers deductions, a portion of
Benton County Foods,
LLC, which were therefore reversedis
an ongoing commercial
shell egg operation
within the Illinois
River
Watershed.
Benton
County
Foods,
LLC
is
not
a
defendant
in
the
litigation.
We
also
have
a
number
of
small
contract
producers that operate in the fourth quarterarea.
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 fiscal 2017.
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
producers
vicariously liable for the actions of
their contract producers. The court directed the
parties to confer in attempt to
reach agreement
on appropriate remedies. On June 12, 2023, the court ordered the
parties to mediate before the Tenth Circuit Chief Judge Deanell
Reece Tacha
and instructed the parties
to file a joint
status report fourteen days
following mediation. The
mediation has not yet
been set but is expected to be in the September to October time frame this fall. While management believes
there is a reasonable
possibility of a material loss from the 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
13 years ago based
on
environmental
conditions
that
existed
at
the
time,
the
lack
of
guidance
from
the
court
as
to
what
might
be
considered
appropriate remedies, the ongoing negotiations with the State on appropriate remedies and upcoming mediation,
and uncertainty
regarding
what
our
proportionate
share
of
any
remedy
would
be,
although
we
believe
that
our
share
compared
to
the
other
defendants is small.
Other Matters
In addition to
the above, the Company
is involved in
various other claims
and litigation incidental
to its business. Although
the
outcome of these matters cannot be determined with certainty, management, upon the advice of counsel,
is of the opinion that the
final outcome should not have a material effect on the Company’s
consolidated results of operations or financial position.
  Fiscal Year 2016
  First Second Third Fourth
  Quarter Quarter Quarter Quarter
Net sales $609,895
 $545,975
 $449,760
 $303,020
Gross profit 263,071
 211,597
 132,726
 40,680
Net income (loss) attributable to Cal-Maine Foods, Inc. 143,023
 109,230
 64,164
 (376)
Net income (loss) per share:  
  
  
  
Basic $2.97
 $2.27
 $1.33
 $(0.01)
Diluted $2.95
 $2.26
 $1.33
 $(0.01)
໿



60
SCHEDULE II - VALUATION
AND QUALIFYING ACCOUNTS
Fiscal Years
endedJune 3, 2017,2023, May 28, 2016,2022, andMay 30, 201529, 2021
(in thousands)
໿thousands)
Description
Balance at
  Balance at Charged to   Balance at
  Beginning of Cost  and Write-off End of
Description Period Expense of Accounts Period
   
  
  
  
Year ended June 3, 2017  
  
  
  
Allowance for doubtful accounts $727
 $(176) $165
 $386
   
  
  
  
Year ended May 28, 2016  
  
  
  
Allowance for doubtful accounts $513
 $225
 $11
 $727
   
  
  
  
Year ended May 30, 2015  
  
  
  
Allowance for doubtful accounts $430
 $432
 $349
 $513
Beginning of Period
໿Charged to Cost

and Expense

Write-off
of Accounts
Balance at
End of Period
Year
ended June 3, 2023
Allowance for doubtful accounts
$
775
$
(148)
$
48
$
579
Year
ended May 28, 2022
Allowance for doubtful accounts
$
795
$
30
$
50
$
775
Year
ended May 29, 2021
Allowance for doubtful accounts
$
743
$
135
$
83
$
795
61
ITEM
9.
CHANGES
IN
AND
DISAGREEMENTS
WITH
ACCOUNTANTS
ON
ACCOUNTING
AND
FINANCIAL
DISCLOSURE
None.
ITEM 9.  CHANGES IN9A.
CONTROLS AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.  CONTROLS ANDPROCEDURES

Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance that information
required to be disclosed by
us in
the reports
we file
or submit
under the
Securities Exchange
Act of
1934, as
amended (the “Exchange
“Exchange Act”)
is recorded,
processed, summarized
and reported,
within the time
periods specified in
the Securities and
Exchange Commission’s
rules and
forms. Disclosure
controls
and
procedures
include,
without
limitation,
controls
and
procedures
designed
to
ensure
that
information
required
to
be
disclosed
by
us
in
the
reports
that
we
file
or
submit
under
the
Exchange
Act
is
accumulated
and
communicated to management,
including our principal
executive and principal
financial officers, or
persons performing similar
functions, as appropriate
to allow
timely decisions regarding
required disclosure. Based
on an
evaluation of
our disclosure controls
and procedures conducted by our
Chief Executive Officer and Chief
Financial Officer, together with other financial officers, such
officers concluded that our disclosure controls and procedures
were effective as of June 3, 2017 2023
at the reasonable assurance level.

Internal Control Over Financial Reporting

(a)
(a)Management’s Report Management’s Report
on Internal Control Over Financial Reporting

The following
sets forth,
in accordance
with Section
404(a) of
the Sarbanes-Oxley
Act of
2002 and
Item 308
of the
Securities
and Exchange Commission’s Regulation
S-K, the report of management on our internal control over financial reporting.

1.
1.Our management is responsible for establishing and maintaining adequate internal control over financial reporting. “Internal control over financial reporting” is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, together with other financial officers, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting.
“Internal control over financial reporting”
is a process designed
by, or under the supervision of, our
Chief Executive
Officer and Chief
Financial Officer,
together with other financial
officers, and effected
by our Board of
Directors,
management
and other
personnel, to
provide reasonable
assurance
regarding the
reliability of
financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting
principles and includes those policies and procedures that:
●
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of our assets;
●
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements
in
accordance
with
generally
accepted
accounting
principles,
and
that
our
receipts
and
expenditures are being made only in accordance with
authorizations of our management and directors; and
●
Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial
statements.

2.
2.
Our management, in accordance with Rule 13a-15(c) under the Exchange Act and with the participation of Our
management,
in
accordance
with
Rule
13a-15(c)
under the
Exchange
Act
and
with the
participation
of
our Chief Executive Officer and Chief Financial Officer, together with other financial officers, evaluated the effectiveness of our internal control over financial reporting as of June 3, 2017.  The framework on which management’s evaluation of our internal control over financial reporting is based is the “Internal Control – Integrated Framework”published in 2013 by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission.


Chief
3.Management has determined that our internal control over financial reporting as of June 3, 2017 is effective. It is noted that internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives, but rather reasonable assurance of achieving such objectives.
4.The attestation report of FROST, PLLC on our internal control over financial reporting, which includes that firm’s opinion on Executive
Officer
and
Chief
Financial
Officer,
together
with
other
financial
officers,
evaluated
the effectiveness of our internal control over financial reporting, is set forth below.

(b)
AttestationReport of the Registrant’s Public Accounting Firm


effectiveness
of
our
internal
control
over
financial
reporting
as
of
June
3,
2023. The
framework
on
which
management’s
evaluation
of
our
internal
control
over
financial
reporting
is
based
is
the
“Internal
Control
–
Integrated
Framework”
published
in
2013
by
the
Committee
of
Sponsoring
Organizations
(“COSO”)
of
the
Treadway Commission.
3.
Management has
determined that
our internal
control over
financial reporting
as of June
3, 2023
is effective.
It is
noted
that
internal
control
over
financial
reporting
cannot
provide
absolute
assurance
of
achieving
financial
reporting objectives, but rather reasonable assurance of achieving
such objectives.
4.
The attestation report of FROST,
PLLC on our internal control over financial reporting,
which includes that firm’s
opinion on the effectiveness of our internal control over financial
reporting, is set forth below.
(b)
Attestation Report of the Registrant’s
Public Accounting Firm
62
Report of Independent Registered Public Accounting Firm
on Internal Control Over Financial Reporting

Board of Directors and Stockholders
Cal-Maine Foods, Inc. and Subsidiaries
Jackson,Ridgeland, Mississippi

Opinion on Internal Control Over Financial Reporting
We
have audited
Cal-Maine Foods,
Inc. and
Subsidiaries’ internal
control over
financial reporting
as of June
3, 2023,
based
on
criteria
established
in
2013
Internal
Control
–
Integrated
Framework
issued
by
the
Committee
of
Sponsoring
Organizations of
the Treadway
Commission (“COSO”).
In our
opinion, Cal-Maine
Foods, Inc. and
Subsidiaries maintained,
in
all material
respects,
effective
internal
control
over
financial
reporting
as June
3, 2023,
based
on
criteria
established
in
2013
Internal Control – Integrated Framework issued by the COSO.
We
also have
audited, in
accordance with
the standards
of the
Public Company
Accounting Oversight
Board (United
States) (“PCAOB”), the consolidated
balance sheets and the
related consolidated statements of
income, comprehensive income,
stockholders’ equity,
and cash flows of Cal-Maine Foods,
Inc. and Subsidiaries and our
report dated July 25, 2023 expressed
an
unqualified opinion.
Basis for Opinion
Cal-Maine
Foods,
Inc.
and
Subsidiaries’
management
is
responsible
for
maintaining
effective
internal
control
over
financial
reporting,
and
for
their
assessment
of
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
the
accompanying Management’s
Report on Internal
Control Over Financial
Reporting in Item 9A.
Our responsibility is
to express
an opinion on the entities’ internal control over financial reporting as of June 3, 2017, based
on criteria established in 2013Internal Control – Integrated Framework issued byour audit. We are a public accounting firm registered
with the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  PCAOB and
are required to be
independent with respect to
Cal-Maine Foods, Inc.
and Subsidiaries’ management is responsible for maintaining effective internal control over financial reportingSubsidiaries in accordance
with
the
U.S.
federal
securities
laws and for its assessment
the
applicable
rules
and
regulations
of the effectiveness of internal control over financial reporting, included in
Securities and
Exchange
Commission
and
the accompanying Management’s Report on Internal Control Over Financial Reporting in Item 9A.  Our responsibility is to express an opinion on the entity’s internal control over financial reporting based on our audit.

PCAOB.
We
conducted
our
audit in
accordance
with
the
standards
of
the Public Company Accounting Oversight Board (United States).
PCOAB. Those
standards
require
that
we
plan
and
perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained
in
all material
respects.
Our audit
of internal
control over
financial
reporting
included
obtaining
an understanding
of internal
control
over
financial
reporting,
assessing the
risk
that
a
material
weakness
exists,
and
testing
and
evaluating
the design
and
operating effectiveness
of internal control based
on the assessed risk.
Our audit also included
performing such other procedures
as we considered necessary in the circumstances. We
believe our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting
An entity’sentities’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
consolidated financial statements for external purposes in accordance with
accounting principles
generally accepted
in the
United States
of America.
An entity’s entities’
internal control
over financial
reporting
includes those
policies and
procedures that
(1) pertain
to the
maintenance
of records
that, in
reasonable detail,
accurately and
fairly reflect the
transactions and dispositions of
the assets of the entity;
entities; (2) provide reasonable
assurance that transactions are
recorded
as
necessary
to
permit
preparation
of
consolidated
financial
statements
in
accordance
with
accounting
principles
generally
accepted
in the
United States
of consolidated financial statements in accordance with generally accepted accounting principles, America,
and
that receipts
and
expenditures
of the entity
entities are
being
made only
in
accordance
with
authorizations
of
management
and
directors
of
the
entities;
and
(3)
provide
reasonable
assurance
regarding
prevention or
timely detection
of management and directors unauthorized
acquisition, use,
or disposition
of the entity; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity’s
entities’ assets
that could
have a
material
effect on the consolidated financial statements.

Because of
its inherent
limitations, internal
control over
financial reporting
may not
prevent or
detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

/s/
In our opinion, Cal-Maine Foods, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of June 3, 2017, based on criteria established in2013Internal Control-Integrated Frameworkissued by the COSO. 

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows of Cal-Maine Foods, Inc. and Subsidiaries, and our report dated July 21, 2017, expressed an unqualified opinion.

/s/Frost, PLLC

Little Rock, Arkansas
July 21, 201725, 2023

(c)
63
(c)
Changes in Internal Control Over Financial Reporting

In
connection
with
its
evaluation
of
the
effectiveness,
as
of
June
3, 2017,
2023,
of
our
internal
control
over
financial
reporting,
management determined that there was no change
in our internal control over financial reporting that
occurred during the fourth
quarter
ended June
3, 2017, 2023,
that has
materially
affected,
or is
reasonably
likely to
materially
affect,
our
internal
control over
financial reporting.

ITEM 9B.
OTHER INFORMATION
Not applicable.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS
Not applicable.

PART
III.

ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

Except as set forth below, the information concerning directors, executive officers and corporate governance required by Item 10
is
incorporated
by
reference
from
our
definitive
proxy
statement
which
is
to
be
filed
pursuant
to
Regulation
14A
under
the
Securities Exchange Act of 1934 in connection with our 2023 Annual
Meeting of Shareholders.
We have adopted a Code of Ethics and
Business Conduct that applies to
our directors, officers and employees, including the chief
executive
officer
and principal
financial and
accounting
officers of
the Company.
We
will provide
a copy
of the
code free
of
charge to any person that requests a copy by writing to:
Cal-Maine Foods, Inc.
P.O.
Box 2960
Jackson, Mississippi 39207
Attn.:
Investor Relations
Requests can be made by phone at (601) 948-6813.
A copy is also
available at our
website www.calmainefoods.com
under the heading
“Investors – Corporate
Governance – Code
of Ethics.” We
intend to disclose
any amendments
to, or waivers
from, the
Code of Conduct
and Ethics for
Directors, Officers
and
Employees
on our
website promptly
following
the date
of any
such amendment
or waiver.
Information
contained
on our
website is not a part of this report.
ITEM 11.
EXECUTIVE COMPENSATION
The information concerning executive
compensation required by Item 11
is incorporated by reference from our
definitive proxy
statement which is to
be filed pursuant to Regulation
14A under the Securities
Exchange Act of 1934 in
connection with our 2023
Annual Meeting of Shareholders.
ITEM
12.
SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICIAL
OWNERS
AND MANAGEMENT
AND
RELATED STOCKHOLDER
MATTERS
The information
concerning security
ownership of
certain beneficial
owners and
management and
related stockholder
matters
required by Item 12 is incorporated
by reference from our definitive proxy
statement which is to be filed pursuant
to Regulation
14A under the Securities Exchange Act of 1934 in connection with our 2017 2023
Annual Meeting of Shareholders.

We have adopted a Code of Conduct and Ethics for Directors, Officers and Employees, including the chief executive and principal financial and accounting officers of the Company. We will provide a copy of the code free of charge to any person that requests a copy by writing to:

Cal-Maine Foods, Inc.
P.O. Box 2960
Jackson, Mississippi 39207
Attn.:  Investor Relations

Requests can be made by phone at (601) 948-6813

A copy is also available at our website www.calmainefoods.com.  We intend to disclose any amendments to, or waivers from, the Code of Conduct and Ethics for Directors, Officers and Employees on our website promptly following the date of any such amendment or waiver.  Information contained on our website is not a part of this report.

ITEM 11.  EXECUTIVE COMPENSATION13.
CERTAIN

RELATIONSHIPS
AND RELATED TRANSACTI
ONS, AND DIRECTOR INDEPENDENCE
The
information
concerning executive compensation
certain
relationships
and
related
transactions,
and
director
independence
required
by
Item
13
is
incorporated by reference from
our definitive proxy
statement which is
to be filed
pursuant to Regulation
14A under the
Securities
Exchange Act of 1934 in connection with our 20172023 Annual Meeting of Shareholders.

64
ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS14.
PRINCIPAL ACCOUNTING
FEES AND MANAGEMENT AND RELATED STOCKHOLDER  MATTERS

SERVICES
The information
concerning security ownership of certain beneficial owners principal
accounting fees
and management and related stockholder matters services
required by
Item 14
is incorporated
by reference
from our
definitive
proxy
statement
which
is
to
be
filed
pursuant
to
Regulation
14A
under
the
Securities
Exchange
Act
of
1934
in
connection with our 20172023 Annual Meeting of Shareholders.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE

The information concerning certain relationships and related transactions, and director independence is incorporated by reference from our definitive proxy statement which is to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with our 2017 Annual Meeting of Shareholders.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The information concerning principal accounting fees and services is incorporated by reference from our definitive proxy statement which is to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with our 2017 Annual Meeting of Shareholders.

PART
IV.
ITEM 15. EXHIBITS,EXHIBIT AND FINANCIAL STATEMENT
SCHEDULES

(a)(1)
Financial Statements

The following consolidated financial statements and notes thereto of Cal-Maine Foods, Inc. and subsidiaries are included in Item
8 and are filed herewith:
(PCAOB

)
(a)(2)
Financial Statement Schedule
All other schedules are omitted either because they
are not applicable or required, or
because the required information is included
in the financial statements or notes thereto.

(a)(3)
Exhibits Required by Item 601 of Regulation S-K

See Part (b) of this Item 15.

(b)Exhibits Required by Item 601 of Regulation S-K


65
(b)
Exhibits Required by Item 601 of Regulation S-K
The following exhibits are filed herewith or incorporated by reference:
Exhibit
Exhibit NumberExhibit
3.1
Composite Certificate of Incorporation of the Registrant (incorporated by reference Number
3.2
4.1**
10.1
10.2
10.3*
10.4
10.5**
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
21**
3.2
Composite Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 in the Registrant’s Form 10-Q for the quarter ended March 2, 2013, filed April 5, 2013).
10.1*
Wage Continuation Plan, dated as of April 15, 1988, between Joe Wyatt and the Registrant (incorporated by reference to Exhibit 10.8 in the Registrant’s Form S-1 Registration Statement No. 333-14809, filed October 25, 1996).
10.2*
Deferred Compensation Plan, dated December 28, 2006 (incorporated by reference to Exhibit 10.15 in the Registrant’s Form 8-K, filed January 4, 2007).
10.3
Loan Agreement, dated as of November 12, 2009, between the Registrant and Metropolitan Life Insurance Company (incorporated by reference to Exhibit 10.3(e) in the Registrant’s Form 8-K, filed November 17, 2009).
10.4*
Cal-Maine Foods, Inc. KSOP, as amended and restated, effective April 1, 2012 (incorporated by reference to Exhibit 4.4 in the Registrant’s Form S-8, filed March 30, 2012).
10.5*
Cal-Maine Foods, Inc. KSOP Trust, as amended and restated, effective April 1, 2012 (incorporated by reference to Exhibit 4.5 in the Registrant’s Form S-8, filed March 30, 2012).
10.6*
2012 Omnibus Long-Term Incentive Plan (incorporated by reference to Appendix B to the Registrant’s Proxy Statement for the Annual Meeting held October 5, 2012, filed September 6, 2012).
10.7*
Form of Restricted Stock Agreement for 2012 Omnibus Long-Term Incentive Plan (incorporated by reference to Exhibit 10.13 in the Registrant’s Form 10-K  for the year ended May 31, 2014, filed July 28, 2014).
21**
23.1**
Consent of FROST, PLLC
31.1**
Rule 13a-14(a) Certification of Chief Executive Officer
31.2** 
Rule 13a-14(a) Certification of Chief Financial Officer
32***
Section 1350 Certifications of the Chief Executive Officer and the Chief Financial Officer
99.1
Press release dated July 24, 2017 announcing interim and annual financial information (incorporated by reference to Exhibit 99.1 in the Company’s Form 8-K, filed July 24, 2017).
101.INS***+XBRL Instance Document Exhibit
101.SCH***+XBRL Taxonomy Extension Schema Document Exhibit
101.CAL***+XBRL Taxonomy Extension Calculation Linkbase Document Exhibit
101.DEF***+XBRL Taxonomy Extension Definition Linkbase Document Exhibit
101.LAB***+XBRL Taxonomy Extension Label Linkbase Document Exhibit
101.PRE***+XBRL Taxonomy Extension Presentation Linkbase Document

*Management contract or compensatory plan or arrangement
**Filed herewith as an Exhibit
***Furnished herewith as an Exhibit
†Submitted electronically with this Annual Report on Form 10-K

The Company has not filed instruments with respect to long-term debt where the total amount of securities authorized thereunder does not exceed ten percent of the total assetsRegistrant
23.1**
31.1**
31.2**
32***
101.SCH***+
Inline XBRL Taxonomy
Extension Schema Document
101.CAL***+
Inline XBRL Taxonomy
Extension Calculation Linkbase Document
101.DEF***+
Inline XBRL Taxonomy
Extension Definition Linkbase Document
101.LAB***+
Inline XBRL Taxonomy
Extension Label Linkbase Document
101.PRE***+
Inline XBRL Taxonomy
Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained
in Exhibit 101)
*
Management contract or compensatory plan or arrangement
**
Filed herewith as an Exhibit
***
Furnished herewith as an Exhibit
†
Submitted electronically with this Annual Report on a consolidated basis.  The Company agrees to furnish to the Securities and Exchange Commission, upon request, copies of any such instrument.Form 10-K

(c)
(c)Financial Statement Schedules Required by Regulation S-X

The financial statement schedule required by Regulation S-X is filed at page 73.60. All other schedules for which provision is made
in the
applicable accounting regulations
of the
Securities and
Exchange Commission are
not required
under the
related instructions
or are inapplicable and therefore have been omitted.

66
ITEM 16. FORM 10-K SUMMARY
Not applicable
67
SIGNATURES

Pursuant to
the requirements of
Section 13 or
15(d) of the
Securities Exchange
Act of 1934,
the registrant has
duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized,
in Jackson,Ridgeland, Mississippi.

CAL-MAINE FOODS, INC.

/s/ Sherman L. Miller
Sherman L. Miller
/s/ Adolphus B. Baker
Adolphus B. Baker
President and Chief Executive Officer and Chairman of the Board
Date:July 21, 2017

Date:
July 25, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Title
SignatureTitleDate
/s/  Adolphus B. BakerPresident, Chief ExecutiveJuly 21, 2017
Adolphus B. BakerOfficer and Chairman of the Board
(Principal Executive Officer)
/s/  Timothy A. DawsonVice President, Chief FinancialJuly 21, 2017
Timothy A. DawsonOfficer and Director
(Principal Financial Officer)
/s/  Michael D. CastleberryVice President, ControllerJuly 21, 2017
Michael D. Castleberry(Principal Accounting Officer)
/s/  Sherman MillerVice President, Chief OperatingJuly 21, 2017
Sherman MillerOfficer and Director
/s/  Letitia C. HughesDirectorJuly 21, 2017
Letitia C. Hughes
/s/  James E. PooleDirectorJuly 21, 2017
James E. Poole
/s/  Steve W. SandersDirectorJuly 21, 2017
Steve W. Sanders



79
/s/
Sherman L. Miller
President, Chief Executive Officer
July 25, 2023
Sherman L. Miller
and Director
(Principal Executive Officer)
/s/
Max P.
Bowman
Vice President, Treasurer,
Secretary,
July 25, 2023
Max P.
Bowman
Chief Financial Officer and Director
(Principal Financial Officer)
/s/ Matthew S. Glover
Vice President, Accounting
July 25, 2023
Matthew S. Glover
(Principal Accounting Officer)
/s/
Adolphus B. Baker
Chairman of the Board and Director
July 25, 2023
Adolphus B. Baker
/s/
Letitia C. Hughes
Director
July 25, 2023
Letitia C. Hughes
/s/
James E. Poole
Director
July 25, 2023
James E. Poole
/s/
Steve W. Sanders
Director
July 25, 2023
Steve W. Sanders
/s/
Camille S. Young
Director
July 25, 2023
Camille S. Young