1 SECURITIES EXCHANGE AND COMMISSION Washington, D.C. 20549 FORM 8-K/A No. 1 Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act of 1934 The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Form 8-K filed October 14, 1999 as set forth in the pages attached hereto: Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. Date: December 13, 1999 Cal-Maine Foods, Inc. /s/ Charles F. Collins ---------------------- Vice-President/Controller (Principal Accounting Officer) CAL-MAINE FOODS, INC. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 000-04892 64-0500378 - ------------------------- ----------------------- ----------------- (State or other (Commission file (IRS Employer jurisdiction of number) Identification incorporation) Number) 3320 Woodrow Wilson Avenue, Jackson, MS 39207 - --------------------------------------- ----- (Address of Principal executive offices) (Zip Code) Registrant's telephone number, including area code: (601) 948-6813 -------------- 1 2 The Current Report on Form 8-K of Cal-Maine Foods, Inc. (the "Company"), dated September 30, 1999, and filed on October 14, 1999, reported the acquisition by the Company on September 30, 1999, of substantially all of the assets and assumption of certain liabilities of Smith Farms, Inc. ("Smith Farms"). Items 7(a) and 7(b) of the report stated that the historical financial statements of Smith Farms required under Rule 3-05 of Regulation S-X, and the pro forma financial information required under Article 11 of Regulation S-X would be filed by amendment. The purpose of this amendment is to file such financial statements and information. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of the Businesses Acquired. (1) Audited combined balance sheet of Smith Farms, Inc. and Affiliates as of June 30, 1999 and the related statement of operations and statement of cash flows for the year ended June 30, 1999, including the notes thereto and the related report of Ed Bercot & Company. (b) Pro Forma Financial Information (1) Pro Forma Condensed Consolidated Balance Sheet (Unaudited) of Cal-Maine Foods, Inc. as of August 28, 1999. (2) Pro Forma Condensed Consolidated Statement of Operations (Unaudited) of Cal-Maine Foods, Inc. for the year ended May 29, 1999. (3) Pro Forma Condensed Consolidated Statement of Operations (Unaudited) of Cal-Maine Foods, Inc. for the three months ended August 28, 1999. (4) Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited) (c) Exhibits The following exhibit is filed herewith: Exhibit No. Document ----------- -------- 23 Consent of Ed Bercot & Company 2 3 Report of Independent Certified Public Accountant Board of Directors Smith Farms, Inc. and Affiliates Flatonia, Texas We have audited the accompanying combined balance sheet of Smith Farms, Inc. and Affiliates as of June 30, 1999 and the related combined statements of operations and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of Smith Farms, Inc. and Affiliates as of June 30, 1999 and the combined results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ Ed Bercot & Company Ed Bercot & Company Certified Public Accountants Harlingen, Texas July 23, 1999 3 4 SMITH FARMS, INC. AND AFFILIATES COMBINED BALANCE SHEET YEAR ENDED JUNE 30, 1999 ASSETS CURRENT ASSETS Cash $ 709,047 Accounts receivable 2,778,055 Inventories 5,621,066 Prepaid expenses 563,440 --------------- Total current assets 9,671,608 OTHER ASSETS Cash surrender value of life insurance 56,726 PROPERTY, PLANT AND EQUIPMENT - AT COST Building and improvements 6,344,756 Machinery and equipment 8,484,381 Capitalized leases 14,264,282 Cattle 485,308 Office furniture and equipment 249,300 Autos, trucks and trailers 2,029,833 --------------- 31,857,860 Less accumulated depreciation (11,929,277) --------------- 19,928,583 Land 2,957,138 Construction in progress 12,762 --------------- Total property, plant and equipment 22,898,483 --------------- $32,626,817 =============== The accompanying notes are an integral part of these financial statements. 4 5 LIABILITIES AND OWNERS' EQUITY CURRENT LIABILITIES Accounts payable $ 3,131,484 Operating loans payable 791,575 Accrued expenses 652,514 Federal income taxes payable - Deferred income taxes 1,053,356 Current portion of long-term debt 1,804,464 --------------- Total current liabilities 7,433,393 LONG-TERM LIABILITIES Notes payable 1,774,931 Capital lease payable 8,001,030 --------------- 9,775,961 Less portion due within one year (1,804,464) --------------- 7,971,497 Deferred income taxes 863,548 --------------- Total long-term liabilities 8,835,045 --------------- Total liabilities 16,268,438 OWNERS' EQUITY Common stock - $10 per value, 6000 shares authorized and issued 62,890 Paid in capitol 199,332 Retained earnings 16,096,517 --------------- Total owners' equity 16,358,379 --------------- $32,626,817 =============== 5 6 SMITH FARMS, INC. AND AFFILIATES COMBINED STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 1999 NET SALES $53,976,985 OPERATING COSTS AND EXPENSES Cost of feed, packing and eggs purchased 28,126,023 Contract payments 2,594,377 Depletion of hens 4,182,589 Salaries and wages 6,726,106 Employee taxes, insurance and benefits 906,369 Promotions and inspections 620,435 Depreciation 1,578,880 Equipment lease expense 568,981 Repairs 924,818 Truck and auto expenses 1,198,096 Taxes 265,125 Insurance 313,960 Utilities 658,758 Telephone 136,459 Supplies 525,390 Professional and advisory fees 159,885 Other expenses 502,681 Bad debts 22,219 ---------------- Total operating costs and expenses 50,011,151 ---------------- Net income from operations 3,965,834 OTHER INCOME (EXPENSES) Interest expense (584,087) Other income 46,088 ---------------- Total other income (expenses) (537,999) ---------------- Income before provision for income taxes 3,427,835 Provision for income taxes 724,590 ---------------- NET INCOME $2,703,245 ================ PRO FORMA INCOME DATA Net income, as reported $2,703,245 Pro forma income tax adjustment (unaudited) 677,355 ---------------- Pro form net income (unaudited) $2,025,890 ================ The accompanying notes are an integral part of these financial statements. 6 7 SMITH FARMS, INC. AND AFFILIATES COMBINED STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 1999 Cash flows from operating activities: Net income $ 2,703,245 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation $ 1,578,880 Increase in cash surrender value of life insurance (2,559) Gain on sale of fixed assets (9,094) (Increase) decrease in accounts receivable (241,382) (Increase) decrease in inventories (590,480) (Increase) decrease in prepaid expenses (247,870) (Decrease) increase in accounts payable 240,079 (Decrease) increase in accrued expenses 71,954 (Decrease) increase in deferred income taxes 245,840 ---------------- Total adjustments 1,045,368 ---------------- Net cash provided by operating activities: 3,748,613 Cash flows from investing activities: Purchase of machinery, equipment and land (3,189,554) Proceeds from disposition of fixed assets 70,186 ---------------- Net cash (used) by investing activities (3,119,368) 7 8 Cash flows from financing activities: Proceeds from operating loans - net 741,575 Proceeds from issuance of long-term debt 544,401 Retirement of long-term debt (1,000,680) Principal reductions of capital leases (1,453,776) Contributions by owners 516,420 Distributions to owners (448,115) ---------------- Net cash (used) by financing activities (1,100,175) ---------------- Net increase (decrease) in cash an cash equivalents (470,930) Cash and cash equivalents at beginning of year 1,179,977 ---------------- Cash and cash equivalents at end of year $ 709,047 ================ SUPPLEMENTAL INFORMATION: Interest paid $ 722,288 Income taxes paid $ 477,997 Capital lease obligations entered into during year $ 6,175,180 The accompanying notes are an integral part of these financial statements. 8 9 SMITH FARMS, INC. AND AFFILIATES NOTES TO COMBINED FINANCIAL STATEMENTS JUNE 30, 1999 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF COMBINING FINANCIAL STATEMENTS The combined financial statements include the accounts of Smith Farms, Inc. and the following related partnerships: B & N Poultry, Harwood Poultry Farms, Ltd., Klesel Farms, Ltd., Searcy Farms, Ltd. and Berger/Novak Cattle, Ltd. The individuals that own the stock of Smith Farms, Inc. also own the partnerships. All significant intercompany transactions have been eliminated. NATURE OF OPERATIONS Smith Farms, Inc. and its affiliates (the Company) are headquartered in Flatonia, Texas. The Company operates hen laying and egg processing operations with facilities in central Texas and north-east Arkansas. The Company owns hen houses, processing equipment, feed mills and hens and also buys eggs from outside producers. The Company operates a fleet of trucks to deliver eggs. Customers include major grocery chains and grocery supply companies. The Company's market is north, east, central and south Texas. INVENTORIES Pullet inventories are valued at cost, including the cost of the birds, feed, medicine, labor and contract services. Hen inventories are based on the cost of the pullets less depletion of that cost over a period of approximately 75 weeks. Egg inventories are valued at lower of cost (first in, first out) or market. Cost is determined based upon weekly market prices less farm costs plus processing costs. Feed and supplies inventories are valued at cost (first in, first out). Inventories consisted of the following: Hens $4,476,137 Eggs 411,529 Feed 430,896 Cartons and supplies 302,504 --------------- $5,621,066 =============== 9 10 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) HEDGING OF FEED SUPPLIES To help manage the risk of increases in the cost of feed, the Company will purchase futures contracts to provide price protection of future feed purchases. These purchases are treated as anticipatory hedges. No gain or loss is recognized until the hedges are closed and feed is purchased. Any gains or losses are treated as a decrease or increase in the cost of feed. At June 30, 1999, the Company had open futures positions involving various feed ingredients. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Major improvements are capitalized, whereas expenditures for maintenance and repairs are charged to expense. As properties are retired or otherwise disposed of, the property and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses resulting are charged to income. It is the policy of the Company to provide depreciation based on the estimated useful life of the individual units of property and equipment. The depreciation methods and the estimated useful lives used as the basis for the application of those methods are as follows: Estimated Description Method Useful Life - ------------------------------------------------------------- Hen houses Straight-line 15 - 20 Other buildings Straight-line 20 - 40 Machinery and equipment Accelerated 5 - 8 Office furniture and equipment Accelerated 5 - 8 Vehicles Accelerated 5 - 8 SALES Sales are reported net of any rebates or allowances allowed to customers. CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows, cash and cash equivalents includes cash on hand, demand deposits and interest-bearing deposits with maturities of three months or less. 10 11 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) USE OF ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. NOTE B - FAIR VALUE OF FINANCIAL INSTRUMENTS The Company has several financial instruments, none of which are held for trading purposes. The carrying value of cash, accounts receivable and accounts payable approximates fair value because of the short maturity of those instruments. The carrying values of debt approximate fair value based on a review of rates and terms currently available to the Company. NOTE C - CAPITALIZED LEASES At June 30, 1999 the Company was leasing layer houses, processing and other equipment under various capital leases. The leases have been capitalized at amounts equal to the present value of the lease payments. A corresponding entry is also made to record the related capital lease obligations. The capitalized leases are depreciated using the same useful lives listed in Note A. Depreciation expense related to the capitalized leases is included in the Company's total depreciation expense. NOTE D - LONG-TERM DEBT Long-term debt at June 30, 1999 consisted of the following: Note payable to utility cooperative to finance purchase of a generator, due in monthly payments of $7,140 plus interest at 7.45% through 2003. Note is secured by the equipment. $ 357,001 Capital leases payable to Farm Credit Leasing Services, Inc. due in monthly payments of approximately $263,885 including principal and interest at approximately 8.5%. 8,001,030 Notes payable to Norwest Bank to finance the purchase of several tracts of land, due in monthly payments of $5,009 plus interest at 8% through 2002. The notes are secured by deeds of trust covering the land purchased. 426,428 11 12 NOTE D - LONG-TERM DEBT - CONTINUED Notes payable to Smith Holding Company, Inc. to finance purchase of equipment and land, due in monthly payments of $27,319 including principal and interest at 8%. The notes are unsecured. 718,012 Note payable to individuals to finance purchase of land, due in annual payments of $10,000 plus interest at 7% through April, 2007. Remaining balance is due April, 2008. Loan secured by deed of trust on 240 acres. 190,000 Note payable to Norwest Bank to finance construction of pullet houses, due in 36 monthly principal installments of $36,111 plus interest at 8% through October 1999. Loan secured by pullet houses, equipment and land. 83,490 ---------------- $9,775,961 ================ Principal maturities are as follows for the years ending June 30: 2000 $1,804,465 2001 1,903,889 2002 2,014,023 2003 2,300,533 2004 1,361,969 Thereafter 391,082 -------------- $9,775,961 ============== Several of the notes are guaranteed by the stockholders. NOTE E - LEASES The Company leases various trucks, trailers and refrigeration units from Farm Credit Leasing Services, Inc. under noncancellable operating leases expiring at various dates through 2002. Lease expense for 1999 was $567,181. 12 13 NOTE E - LEASES (CONTINUED) At June 30, 1999, future minimum lease payments under such leases were as follows: Year ending June 30, - ---------------- 2000 $ 200,122 2001 177,742 2002 43,595 2003 - 2004 - -------------- $ 421,459 ============== The leases are guaranteed by the stockholders. NOTE F - LINE OF CREDIT Smith Farms, Inc. has a $5,000,000 line of credit with Norwest Bank Texas which is secured by hen and egg inventories and accounts receivable and is guaranteed by the Company's stockholders. The line of credit was never used during the 1999 year. NOTE G - PROVISION FOR INCOME TAXES Smith Farms, Inc. files a consolidated Federal income tax return with its parent company, Smith Holding Company, Inc. The preceding three fiscal years are subject to audit by the Internal Revenue Service. The Company is contingently liable for any tax assessment. The Federal income tax expense differs from the expected Federal income tax expense for the period, computed by applying the statutory U. S. Federal Corporate tax rate of 34% to income before Federal income taxes, as follows: Computed tax expense at 34% $ 711,497 Expenses not deductible 13,093 ---------------- $ 724,590 ================ 13 14 NOTE G - PROVISION FOR INCOME TAXES - CONTINUED Income tax expense consists of the following: Current $ 478,750 Deferred 245,840 ---------------- $ 724,590 ================ Significant components of the Company's deferred tax liabilities are as follows: Current deferred tax liabilities: Inventories $1,053,356 Long-term deferred tax liabilities: Property, plant and equipment 863,548 ---------------- Total deferred tax liabilities $1,916,904 ================ NOTE H - PRO FORMA INCOME TAXES The following unaudited pro forma information reflects income tax expense as if the Company including the Affiliates had been subject to federal and state income taxes: Current: Federal $1,322,774 State 79,171 ---------------- Pro forma income taxes 1,401,945 Income taxes as reported (724,590) ---------------- Pro forma income tax adjustment $ 677,355 ================ NOTE I - EMPLOYEE SAVINGS PLAN The Company has established an employee thrift plan or 401(K) plan for its employees. The Company currently matches 25% of employee contribution up to 5% of employee's compensation. For the year ended June 30, 1999, the Company contributed $28,545 to the plan. NOTE J - MAJOR CUSTOMERS AND CREDIT RISKS For the year ended June 30, 1999, three customers each generated sales in excess of 10% of the Company's sales. Sales to these three customers totaled approximately 70% of total revenues. 14 15 NOTE J - MAJOR CUSTOMERS AND CREDIT RISKS (CONTINUED) The Company is principally engaged in the production and sale of eggs to large supermarket chains in Texas. Sales are made on credit with payment generally due within thirty days or less. The Company's ability to collect amounts due from customers may be affected by economic fluctuations in the grocery industry. The Company carries credit risk insurance on major accounts. At June 30, 1999 the Company had $600,000 on deposit at banks in excess of FDIC insurance coverage. NOTE K - COMPENSATED ABSENCES Employees of the Company are entitled to paid vacation depending on length of service. Accrued absences at June 30, 1999 were $117,380. NOTE L - SUBSEQUENT EVENTS Subsequent to June 30, 1999, the Company entered into significant capital leases with Farm Credit Leasing, Inc. in connection with a major capital improvements program. When finished, the program will include two additional processing plants and multiple layer and pullet houses. The total cost of the program is estimated to be approximately $25 million and the total construction period will be more than two years. Subsequent to June 30, 1999, the Company sold substantially all of its egg production and processing assets to Cal-Maine Foods, Inc. 15 16 CAL-MAINE FOODS, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The accompanying unaudited pro forma condensed consolidated balance sheet as of August 28, 1999 and the related unaudited pro forma condensed consolidated statements of operations for the three months ended August 28, 1999 and year ended May 29, 1999 of Cal-Maine Foods, Inc. ("Cal-Maine") give effect to the September 30, 1999 purchase of substantially all of the assets and assumption of certain liabilities of Smith Farms, Inc. and certain related companies ("Smith Farms") effective September 18, 1999. The pro forma condensed consolidated balance sheet combines the unaudited August 28, 1999 condensed consolidated balance sheet of Cal-Maine with the unaudited condensed combined balance sheet of Smith Farms. The pro forma condensed consolidated statement of operations for the three months ended August 28, 1999 combine the unaudited results of operations of Cal-Maine for the three months ended August 28, 1999 with the unaudited results of operations of Smith Farms for the three months ended September 30, 1999. The pro forma condensed consolidated statement of operations for the year ended May 29, 1999 combine the audited results of operations of Cal-Maine for the year ended May 29, 1999 with the audited results of operations of Smith Farms for the year ended June 30, 1999. The pro forma condensed consolidated financial statements are based on the historical financial statements of Cal-Maine and Smith Farms, giving effect to the assumptions and adjustments in the accompanying notes to the pro forma condensed consolidated financial statements. The pro forma condensed consolidated financial statements have been prepared by Cal-Maine's management and include such adjustments to reflect the pro forma financial results as if the acquisition described above had occurred as of August 28, 1999 for the pro forma condensed consolidated balance sheet and as of May 31, 1998 for the pro forma condensed consolidated statements of operations. These pro forma condensed consolidated financial statements may not be indicative of the results that actually would have occurred if the purchase had been in effect on the dates indicated or which may be obtained in the future. The pro forma condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes of Cal-Maine included in its annual report on Form 10-K for the year ended May 29, 1999 and the historical financial statements and notes thereto of Smith Farms included elsewhere in this Form 8-K/A No. 1. 16 17 CAL-MAINE FOODS, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) AUGUST 28, 1999 (in thousands) Cal-Maine Pro Forma (2) Pro Forma Historical Adjustments Consolidated -------------------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 28,192 $ (28,192) (3) $ - Receivables 15,781 2,689 18,470 Inventories 37,281 7,571 44,852 Prepaid expenses and other 4,213 228 4,441 -------------------------- ------------- Total current assets 85,467 (17,704) 67,763 Property and equipment, net 111,735 37,313 149,048 Other assets 14,085 - 14,085 -------------------------- ------------- Total assets $ 211,287 $ 19,609 $ 230,896 ========================== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Note payable to bank $ - $ 8,013 (3) $ 8,013 Accounts payable and accrued expenses 24,324 71 24,395 Current maturities of long-term debt and capital lease liability 4,517 2,150 6,667 Deferred income taxes 10,294 - 10,294 -------------------------- ------------- Total current liabilities 39,135 10,234 49,369 Long-term debt and capital lease liability, less current maturities 85,799 9,375 95,174 Deferred expenses 1,489 - 1,489 Deferred income taxes 10,285 - 10,285 -------------------------- ------------- 136,708 19,609 156,317 Stockholders' equity 74,579 - 74,579 -------------------------- ------------- Total liabilities and stockholders' equity $ 211,287 $ 19,609 $ 230,896 ========================== ============= See accompanying notes to pro forma condensed consolidated financial statements (unaudited). 17 18 CAL-MAINE FOODS, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) YEAR ENDED MAY 29, 1999 (in thousands, except per share amounts) Smith Cal-Maine Farms Pro Forma Pro Forma Historical Historical Adjustments Consolidated ------------------------------------ ------------- Net sales $287,954 $53,977 $ - $341,931 Cost of sales 242,022 46,559 2,050 (4) 290,631 ------------------------------------ ------------- Gross profit 45,932 7,418 (2,050) 51,300 Selling, general and administrative expenses 36,406 3,452 - 39,858 ------------------------------------ ------------- Operating income 9,526 3,966 (2,050) 11,442 Interest expense (5,195) (584) 194 (5) (5,585) Interest income 2,202 - (2,062) (6) 140 Other income 1,454 46 - 1,500 ------------------------------------ ------------- Income before income taxes 7,987 3,428 (3,918) 7,497 Income tax expense (benefit) 2,907 725 (903) (7) 2,729 ------------------------------------ ------------- Net income $ 5,080 $ 2,703 $ (3,015) $4,768 ==================================== ============= Net income per share: Basic $ 0.39 $ 0.37 ============= ============= Diluted $ 0.39 $ 0.36 ============= ============= Weighted average shares outstanding: Basic 12,999 12,999 ============= ============= Diluted 13,114 13,114 ============= ============= See accompanying notes to pro forma condensed consolidated financial statements (unaudited). 18 19 CAL-MAINE FOODS, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED AUGUST 28, 1999 (in thousands, except per share amounts) Cal-Maine Smith Farms Pro Forma Pro Forma Historical Historical Adjustments Consolidated ----------------------------------------- ------------- Net sales $ 59,055 $ 11,337 $ - $ 70,392 Cost of sales 57,322 10,953 611 (4) 68,886 ----------------------------------------- ------------- Gross profit 1,733 384 (611) 1,506 Selling, general and administrative expenses 9,096 1,293 - 10,389 ----------------------------------------- ------------- Operating loss (7,363) (909) (611) (8,883) Interest expense (1,407) (74) (93) (5) (1,574) Interest income 376 - (376) (6) - Other income (loss) (111) 57 - (54) ----------------------------------------- ------------- Loss before income taxes (8,505) (926) (1,080) (10,511) Income tax expense (benefit) (3,141) - (741) (7) (3,882) ----------------------------------------- ------------- Net loss $ (5,364) $ (926) $ (339) $ (6,629) ========================================= ============= Net income per share: Basic $ (0.43) $ (0.53) ============= ============= Diluted $ (0.43) $ (0.53) ============= ============= Weighted average shares outstanding: Basic 12,450 12,450 ============= ============= Diluted 12,450 12,450 ============= ============= See accompanying notes to pro forma condensed consolidated financial statements (unaudited). 19 20 CAL-MAINE FOODS, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands) 1. On September 30, 1999, Cal-Maine Foods, Inc. ("Cal-Maine") purchased substantially all of the assets and assumed certain liabilities of Smith Farms, Inc. and certain related companies ("Smith Farms") effective as of September 18, 1999 for $36,205 in a transaction accounted for as a purchase. The assets purchased represent Smith Farms' egg production and processing operations in Texas and Arkansas, including approximately 3.9 million laying hens and growing pullets, two feed mills, three egg production complexes and feed and egg delivery equipment. 2. The pro forma adjustments to the Condensed Consolidated Balance Sheet as of August 28, 1999 include the following purchase accounting adjustments to reflect Smith Farms' assets and liabilities at their estimated fair values as of September 18, 1999: Accounts receivable $2,689 Inventories 7,571 Prepaid expenses and other 228 Property and equipment 37,313 Accrued expenses (71) Long-term debt (11,525) --------------- $36,205 =============== The pro forma adjustments reflected in the pro forma Condensed Consolidated Statements of Operations for the fiscal year ended May 29, 1999 and the three months ended August 28, 1999, as described in notes 4, 5, 6 and 7 reflect the effects of the transaction as if it had been consummated May 31, 1998. 3. The pro forma adjustments to cash and cash equivalents and note payable to bank as of August 28, 1999 assumes that Smith Farms' purchase price of $36,205 was funded from cash and cash equivalents and advances under Cal-Maine's existing line of credit. 20 21 CAL-MAINE FOODS, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) (Unaudited) (in thousands) 4. The pro forma adjustments to cost of sales includes increased depreciation expense of $2,050 for the year ended May 29, 1999 and $611 for the three months ended August 28, 1999 from the write-up of property, plant and equipment to its estimated fair value and to reflect consistency with Cal-Maine's estimated useful lives of the property, plant and equipment acquired. 5. The pro forma adjustments to interest expense includes a $194 decrease for the year ended May 29, 1999 and a $26 decrease for the three months ended August 28, 1999 to exclude interest expense on long-term debt not assumed by Cal-Maine. The pro forma adjustment to interest expense for the three months ended August 28, 1999 includes a $119 increase to record the interest expense incurred on the pro forma note payable to bank. For the year ended May 29, 1999, there was sufficient cash and cash equivalents to fund the purchase price of Smith Farms; therefore, a pro forma adjustment to interest expense is not necessary. 6. The pro forma adjustment of $2,062 for the year ended May 29, 1999 and $376 for the three months ended August 28, 1999 to interest income reflects the reduction of Cal-Maine's cash and cash equivalents for the purchase price of Smith Farms. 7. The pro forma adjustment of $903 for the year ended May 29, 1999 and $741 for the three months ended August 28, 1999 reflects pro forma income taxes at Cal-Maine's effective tax rate. 21