This report contains numerous forward-looking statements relating to our shell egg business, including estimated production data, expected operating schedules, expected capital costs and other operating data. Such forward-looking statements are identified by the use of words such as "believes," "intends," "expects," "hopes," "may," "should," "plan," "projected," "contemplates," "anticipates" or similar words. Actual production, operating schedules, results of operations and other projections and estimates could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include
(i) the risk factors set forth under Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 31, 2008, (ii) the risks and hazards inherent in the shell egg business (including disease, pests, and weather conditions), (iii) changes in the market prices of shell eggs and (iv) changes or obligations that could result from our future acquisition of new flocks or businesses. Readers are cautioned not to put undue reliance on forward-looking statements. We disclaim any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.

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 closest to May 31.

Our operations are fully integrated. At our facilities we hatch chicks, grow and maintain flocks of pullets (young female chickens, usually under 20 weeks of age), layers (mature female chickens) and breeders (male or 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 the largest producer and marketer of shell eggs in the United States. We market the majority of our shell eggs in 29 states, primarily in the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States. We market our shell eggs 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 manufacturers.

We currently produce approximately 78% of the total number of shell eggs sold by us, with approximately 5% of such total shell egg production being through the use of contract producers. Contract producers operate under agreements with us for the use of their facilities in the production of shell eggs by layers owned by us. We own the shell eggs produced under these arrangements. Approximately 22% of the total number of shell eggs sold by us is purchased from outside producers for resale, as needed.

Our operating income or loss is significantly affected by wholesale shell egg market prices, which can fluctuate widely and are outside of our control. Retail sales of shell eggs are generally greatest during the fall and winter months and lowest during the summer months. Prices for shell eggs fluctuate in response to seasonal factors and a natural increase in egg production during the spring and early summer.

Our cost of production is materially affected by feed costs, which currently average about 67% of our total farm egg production cost. Changes in market prices for corn and soybean meal, the primary ingredients of the feed we use, result in changes in our cost of goods sold. The cost of feed ingredients is affected by a number of supply and demand factors such as crop production and weather, and other factors, such as the level of grain exports and levels of use for renewable fuels, over which we have little or no control. Market prices for corn remain higher in part because of increasing demand from ethanol producers. Market prices for soybean meal remain higher as a result of competition for acres from other grain producers.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items from
our Condensed Consolidated Statements of Income expressed as a percentage of net
sales.

                                            Percentage of Net Sales
                                                 13 Weeks Ended
                                     August 30, 2008      September 1, 2007

Net sales                                       100.0 %                100.0 %
Cost of sales                                    80.3                   74.5
Gross profit                                     19.7                   25.5
Selling, general & administrative                11.0                   10.4
Operating income                                  8.7                   15.1
Other income (expense)                           (0.3 )                  0.1
Income before taxes                               8.4                   15.2
Income tax expense                                3.0                    5.2
Net income                                        5.4 %                 10.0 %

NET SALES

Approximately 94% of our net sales consist of shell egg sales and approximately 5% was for sales of egg products, with the 1% balance consisting of sales of incidental feed and feed ingredients sales to outside egg producers. Net sales for the first quarter of fiscal 2009 were $206.9 million, an increase of $28.3 million, or 15.8 %, as compared to net sales of $178.6 million for the first quarter of fiscal 2008. Total dozen eggs sold and egg selling prices increased in the current fiscal 2009 quarter as compared to the same fiscal 2008 quarter. Dozens sold for the 2009 current quarter were 170.7 million dozen, an increase of 6.8 million dozen, or 4.1%, as compared to the first quarter of fiscal 2008. Our net average selling price per dozen for the fiscal 2009 first quarter was $1.135, compared to $.983 for the first quarter of fiscal 2008, an increase of 15.5%. Our net average selling price is the blended price for all sizes and grades of shell eggs, including non-graded egg sales, breaking stock and undergrades.

Our shell egg sales which represent approximately 94% of our net sales, include the sale of specialty shell eggs. Specialty shell eggs include reduced cholesterol, cage free and organic eggs. In the 13 weeks ended August 30, 2008, specialty shell eggs represented approximately 17.3% of our shell egg dollar sales, as compared to 14.4% for the same 13 week period last year. For the 13 weeks ended August 30, 2008, specialty shell eggs represented 12.7% of the total dozen eggs sold, as compared to 9.8% for the same 13 week period last year.

Our egg product sales represent approximately 5% of our net sales. For the 13 weeks ended August 30, 2008, egg product sales were $10.2 million, an increase of $2.5 million, or 32.5%, as compared to $7.7 million for the same 13 week period last year.

COST OF SALES

Cost of sales consists of costs directly related to production and processing of shell eggs, including feed costs, and purchases of shell eggs from outside egg producers. Cost of sales for the first quarter of fiscal 2009 was $166.2 million, an increase of $33.2 million, or 25.0%, as compared to the cost of sales of $133.0 million for the first quarter of fiscal 2008. The increase is due to increases in feed costs and the cost of egg purchases from outside egg producers. Prices paid for outside egg purchases rose in line with the increase in egg selling prices. Feed cost per dozen for the fiscal 2009 first quarter was $.458, compared to $.285 per dozen for the comparable fiscal 2008 first quarter, an increase of 60.7%. The increase in egg selling prices did not keep pace with the increase in cost of sales and resulted in a decrease in gross profit from 25.5% of net sales for the quarter ended September 1, 2007 to 19.7% of net sales for the current quarter ended August 30, 2008.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses include costs of marketing, distribution, accounting and corporate overhead. Selling, general and administrative expense for the first quarter of fiscal 2009 was $22.7 million, an increase of $4.1 million as compared to the expense of $18.6 million for the first quarter of fiscal 2008. The increase is primarily attributable to increases in our payroll expenses, stock compensation plans expenses, advertising expenses, professional fees paid to outside consultants, fuel costs for egg delivery, costs paid for outside trucking, and franchise fees paid, which are assessed on our specialty egg sales. Payroll expense and stock compensation plans expense increased by $1.7 million. The calculation of the stock based compensation plans expense is dependent on the closing stock price of the Company's common stock, which increased from $19.79 at September 1, 2007 to $39.49 at August 30, 2008. The aggregate increase for advertising expense, professional fees paid to outside consultants, and franchise fees was $1.3 million. Net delivery costs increased due to increases in fuel costs, payroll expenses, and the increased cost of outside trucking. Fuel costs and outside trucking costs increased by $796,000. As a percent of net sales, selling, general and administrative expense increased from 10.4% for fiscal 2008 first quarter to 11.0% for fiscal 2009 first quarter.

OPERATING INCOME

As a result of the above, operating income was $18.0 million for the first quarter of fiscal 2009, as compared to operating income of $26.9 million for the fiscal 2008 first quarter. As a percent of net sales, the first fiscal 2009 quarter had an operating income of 8.7% of net sales, compared to operating income of 15.1% of net sales for the first quarter of fiscal 2008.

OTHER INCOME (EXPENSE)

Other income or expense consists of costs or income not directly charged to, or related to, operations such as interest expense and equity in income (loss) of affiliates. Other expense for the first quarter ended August 30, 2008 was $592,000, an increase of $883,000, as compared to other income of $291,000 for the quarter ended September 1, 2007. For the first quarter of fiscal 2009, net interest expense decreased $430,000. For the first quarter of fiscal 2009 other income decreased $1.1 million, as compared to the first quarter of fiscal 2008.
The decrease of other income is attributable to the increase in income / (loss) absorbed by non-controlling interests in consolidated entities and decreases from equity in the income of nonconsolidated affiliates. Included in net interest expense is non-cash interest expense, which increased by $22,000. The non-cash interest expense is imputed on our non-interest bearing obligation to acquire the remaining membership units of Hillandale, LLC over the remaining acquisition period, culminating with us having a 100% interest in Hillandale,
LLC. For the 13 weeks ended August 30, 2008, we capitalized $153,000 of interest expense in connection with our ongoing construction activities. As a percent of net sales, other income decreased from .1% for the fiscal 2008 first quarter to other expense of (.3%) for the fiscal 2009 first quarter.

INCOME TAXES

As a result of the above, we had pre-tax income of $17.4 million for the quarter ended August 30, 2008, as compared to pre-tax income of $27.2 million for the quarter ended September 1, 2007. For the fiscal 2009 first quarter, an income tax expense of $6.2 million was recorded with an effective tax rate of 35.9%, as compared to income tax expense of $9.3 million with an effective tax rate of 34.0% for the fiscal 2008 first quarter.

NET INCOME

As a result of the above, net income for the first quarter ended August 30, 2008 was $11.1 million, or $.47 per basic and diluted share, as compared to net income of $18.0 million, or $.76 per basic and diluted share for the quarter ended September 1, 2007. As a percent of net sales, net income was 5.4% for the quarter ended August 30, 2008, compared to net income of 10.0% for the quarter ended September 1, 2007.

CAPITAL RESOURCES AND LIQUIDITY

Our working capital at August 30, 2008 was $118.9 million compared to $121.6 million at May 31, 2008. Our current ratio was 2.15 at August 30, 2008 as compared with 2.18 at May 31, 2008. 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. Seasonal borrowing needs frequently are higher during these quarters than during other fiscal quarters. We have a $40 million line of credit with three banks, $2.7 million of which was utilized as a standby letter of credit at August 30, 2008. Our long-term debt at August 30, 2008, including current maturities, amounted to $114.9 million, as compared to $97.2 million at May 31, 2008.

For the thirteen weeks ended August 30, 2008, $20.9 million in net cash was provided by operating activities. This compares to net cash provided by operations of $29.7 million for the thirteen weeks ended September 1, 2007. In the first 2009 fiscal quarter, approximately $1.0 million was used for the purchase of short-term investments, $4.5 million was provided from the sale of short-term investments, and net $2.7 million was used for notes receivable and investments. Approximately $152,000 was provided from disposal of property, plant and equipment, $5.9 million was used for purchases of property, plant and equipment and $11.6 million was used for additional acquisition of the Hillandale business. We used $29.8 million for the acquisition of most of the assets of Zephyr Egg Company, Zephyr Feed Company, Inc, and Scarlett Farms to form Zephyr Egg, LLC. Approximately $12.2 million was used for payment of dividends on common stock and $2.3 million was used for principal payments on long-term debt. Approximately $427,000 was received from the issuance of common stock from the treasury, and approximately $20.0 million was received from additional long-term borrowings. The net result of these activities was a decrease in cash of approximately $19.4 million since May 31, 2008.

Substantially all trade receivables and inventories collateralize our revolving line of credit and most of our property, plant and equipment collateralize our long-term debt under our loan agreements with our lenders. Unless otherwise approved by our lenders, we are required by provisions of these 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 adjusted for earnings); (2) limit capital expenditures less exclusions (not to exceed $60.0 million for any period of four consecutive fiscal quarters), lease obligations and additional long-term borrowings (total funded debt to total capitalization not to exceed 55%); and (3) maintain various cash-flow coverage ratios (1.25 to
1), among other restrictions. At August 30, 2008, we were in compliance with the provisions 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.

Under the terms of our Agreement with Hillandale and the Hillandale shareholders, a new Florida limited liability company named Hillandale, LLC was formed. In fiscal 2006, we purchased 51% of the Units of Membership in Hillandale, LLC for cash of approximately $27.0 million, with the remaining Units to be acquired in essentially equal annual installments over a four-year period. The purchase price of the Units is equal to their book value as calculated in accordance with the terms of the Agreement. In fiscal 2007, we purchased, pursuant to the Agreement, an additional 13% of the Units of Membership for $6.1 million from our cash balances. In fiscal 2008, we purchased an additional 12% of the Units of Membership for $6.8 million from our cash balances. During fiscal 2008, an additional payment of $5.7 million was paid on the purchase obligation. In fiscal 2009, we purchased an additional 12% of the Units of Membership for $11.6 million from our cash balances. We have recorded the obligation to acquire the remaining 12% at its estimated present value of $11.0 million at August 30, 2008. The actual remaining purchase price may be higher or lower when the acquisitions are completed. Future funding is expected to be provided by our cash balances and borrowings.

Capital expenditure requirements are expected to be for the normal repair and replacement of our facilities. In addition, we are constructing a new integrated layer production complex in the city of Farwell in west Texas to replace our Albuquerque, New Mexico complex, which has ceased egg production. The expected cost is approximately $30.0 million. Completion of this facility is estimated to be in January 2010. As of August 30, 2008 capital expenditures related to construction of this complex were $17.3 million. The remaining future capital expenditures will be funded by cash flows from operations, existing lines of credit and additional long-term borrowings.

Delta Egg Farm, LLC, an unconsolidated affiliate, is constructing an organic egg production and distribution facility near our Chase, Kansas location. The cost of construction is estimated to be approximately $13.0 million. In connection with this project, we are a pro rata guarantor, with the other Delta Egg Farm, LLC owners, of additional debt undertaken to fund construction of this facility. We are currently a guarantor of approximately $7.4 million of long-term debt of Delta Egg Farm, LLC.

We currently have a $1.6 million deferred tax liability due to a subsidiary's change from a cash basis to an accrual basis taxpayer on May 29, 1988. The Taxpayer Relief Act of 1997 provides that this liability is payable ratably over the 20 years beginning in fiscal 1999. However, such taxes will be due in their entirety in the first fiscal year in which there is a change in ownership control so that we no longer qualify as a family farming corporation. We are currently making annual payments of approximately $150,000 related to this liability. However, while these current payments reduce cash balances, payment of the $1.6 million deferred tax liability would not impact our consolidated statement of income or stockholders' equity, as these taxes have been accrued and are reflected on our consolidated balance sheet.

Looking forward, we believe that our current cash balances, borrowing capacity, utilization of our revolving line of credit, and cash flows from operations are sufficient to fund our current and projected capital needs.

Impact of Recently Issued Accounting Standards. Please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report Form 10-K for the year ended May 31, 2008 for a discussion of the impact of recently issued accounting standards. There were no accounting standards issued during the quarter ended August 30, 2008 that we expect will have a material impact on our consolidated financial statements.

Effective June 1, 2008, we adopted FASB Statement No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement. In February 2008, FASB issued FASB Staff Position No. 157-2, "Effective Date of FASB Statement No. 157" which provides a one-year deferral of the effective date of FAS 157 for non-financial assets and non-financial liabilities except those that are recognized or disclosed in the financial statements at fair value at least annually.

The adoption of FAS 157 for our financial assets and financial liabilities did not have a material impact on our financial statements. We are currently evaluating the effect that the implementation of this standard for nonfinancial assets and nonfinancial liabilities will have on our financial statements upon full adoption in 2009. FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Valuation techniques used to measure fair value under FAS 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. FAS 157 classifies the inputs used to measure fair value into the following hierarchy:

• Level 1 - Quoted prices in active markets for identical assets or liabilities.

• Level 2 - Quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

• Level 3 - Unobservable inputs for the asset or liability.

Our financial assets and financial liabilities consisted of cash and cash equivalents, and current investment securities available-for-sale at August 30, 2008 which we consider to be classified as Level 1 and our long-term investment securities available-for-sale which we consider to be classified as Level 2.

In February 2007, the FASB issued FASB Statement No. 159, "Establishing the Fair Value Option for Financial Assets and Liabilities" ("FAS 159"), to permit all entities to choose to elect to measure eligible financial instruments at fair value. We adopted FAS 159 effective June 1, 2008. Upon adoption, we did not elect the fair value option for any items within the scope of FAS 159 and, therefore, the adoption of FAS 159 did not have an impact on our financial statements.

Critical Accounting Policies. We suggest that our Summary of Significant Accounting Policies, as described in Note 1 of the Notes to Consolidated Financial Statements included in Cal-Maine Foods, Inc. and Subsidiaries annual report on Form10-K for the fiscal year ended May 31, 2008, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations. There have been no changes to critical accounting policies identified in our Annual Report on Form 10-K for the year ended May 31, 2008.