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 30, 2009, (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.

Our operating results are directly tied to egg prices, which are highly volatile and subject to wide fluctuations, and are outside of our control. The shell egg industry has traditionally been subject to periods of high profitability followed by periods of significant loss. In the past, during periods of high profitability, shell egg producers have tended to increase the number of layers in production with a resulting increase in the supply of shell eggs, which generally has caused a drop in shell egg prices until supply and demand return to balance. As a result, our financial results from year 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 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.

For the quarter ended August 29, 2009 we produced approximately 81% of the total number of shell eggs sold by us, with approximately 9% 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 19% of the total number of shell eggs sold by us was purchased from outside producers.

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 60% 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 our feed ingredients, which are commodities, are subject to factors in which we have little or no control such as volatile price changes caused by weather, size of harvest, transportation and storage costs, demand and the agricultural and energy policies of the United States and foreign governments. Prospects for both the corn and soybean crops are very positive for the 2009 crop year. Prices have moved down recently for both corn and soybean meal, but remain high on a historical basis. 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. Feed costs, while much improved, will likely remain relatively high and could be volatile in the year ahead.

The purchase of Tampa Farms, LLC on November 28, 2008 described in note 2 of our May 30, 2009 audited financial statements is referred to below as the "Acquisition".

RESULTS OF OPERATIONS

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

                                                 Percentage of Net Sales
                                                     13 Weeks Ended
                                       August 29, 2009            August 30, 2008

   Net sales                                      100.0 %                    100.0 %
   Cost of sales                                   90.3                       80.3
   Gross profit                                     9.7                       19.7
   Selling, general & administrative               12.5                       11.0
   Operating income (loss)                         (2.8 )                      8.7
   Other expense                                   (0.8 )                     (0.3 )
   Income (loss) before taxes                      (3.6 )                      8.4
   Income tax expense (benefit)                    (1.1 )                      3.0
   Consolidated net income (loss)                  (2.5 )                      5.4
   Net (income) loss attributable to
   noncontrolling interest                          0.5                       (0.0 )
   Net income (loss) attributable to
   Cal-Maine Foods, Inc.                           (2.0 ) %                    5.4 %

NET SALES

Approximately 95% of our net sales consisted of shell egg sales and approximately 3% was for sales of egg products, with the 2% balance consisting of sales of incidental feed and feed ingredients. Net sales for the first quarter of fiscal 2010 were $187.7 million, a decrease of $19.2 million, or 9.3 %, as compared to net sales of $206.9 million for the first quarter of fiscal 2009. Total dozen eggs sold increased and egg selling prices decreased in the current fiscal 2010 quarter as compared to the same fiscal 2009 quarter. Dozens sold for the 2010 current quarter were 193.0 million dozen, an increase of 22.3 million dozen, or 13.1%, as compared to the first quarter of fiscal 2009. Our net average selling price per dozen for the fiscal 2010 first quarter was $.922, compared to $1.135 for the first quarter of fiscal 2009, a decrease of 18.8%. 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.

On a comparable basis, excluding the Acquisition, net sales for the first quarter of fiscal 2010 were $167.1 million, a decrease of $39.8 million, or 19.2%, as compared to net sales of $206.9 million for the first quarter of fiscal 2009. Dozens sold for the first quarter of fiscal 2010, excluding the Acquisition, were 172.8 million, an increase of 2.1 million, or 1.2% as compared to 170.7 million for the first quarter of fiscal 2009.

The table below represents an analysis of our non-specialty and specialty shell egg sales. Following the table is a discussion of the information presented in the table.

                                                                       13 weeks ended
(Amounts in thousands)                                      August 29, 2009       August 30, 2008
Total net sales                                            $         187,666     $         206,888

Non-specialty shell egg sales                              $         138,673     $         161,115
Specialty shell egg sales                                             40,196                33,433
Net shell egg sales                                        $         178,869     $         194,548

Net shell egg sales as a percent of total net sales                       95 %                  94 %

Non-specialty shell egg dozens sold                                  167,608               149,026
Specialty shell egg dozens sold                                       25,439                21,625
Total dozens sold                                                    193,047               170,651

Our non-specialty shell eggs include all shell egg sales not specifically identified as specialty shell egg sales. The non-specialty shell egg market is characterized 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. For the thirteen-week period ended August 29, 2009, non-specialty shell eggs represented approximately 77.5% of our shell egg dollar sales, as compared to 82.8% for the thirteen-week period ended August 30, 2008. For the thirteen-week period ended August 29, 2009, non-specialty shell eggs accounted for approximately 86.8% of the total shell egg dozen volume, as compared to 87.3% for the thirteen-week period ended August 30, 2008.

We continue to increase our sales volume of specialty eggs, which include nutritionally enhanced, cage free and organic eggs. Specialty egg retail prices are less cyclical than standard shell egg prices and are generally higher due to consumer willingness to pay for the increased benefits from these products. For the thirteen-week period ended August 29, 2009, specialty shell eggs represented approximately 22.5% of our shell egg dollar sales, as compared to 17.2% for the thirteen-week period ended August 30, 2008. For the thirteen-week period ended August 29, 2009, specialty shell eggs accounted for approximately 13.2% of the total shell egg dozen volume, as compared to 12.7% for the thirteen-week period ended August 30, 2008.

Our egg product sales represent approximately 3% of our net sales. For the 13 weeks ended August 29, 2009, egg product sales were $6.0 million, a decrease of $4.2 million, or 41.2%, as compared to $10.2 million for the same 13 week period last year. Egg products are primarily sold into the institutional and food service sectors, and the sizeable decrease in egg products sales is attributable to the declines in these sectors.

COST OF SALES

The following table presents the key variables affecting our cost of sales.

                                                                   13 weeks ended
(Amounts in thousands)                                 August 29, 2009       August 30, 2008
Cost of Sales                                          $         169,449     $         166,241

Dozens produced                                                  156,143               133,642
Dozens purchased outside                                          36,904                37,009
Dozens sold                                                      193,047               170,651

Feed cost (price per dozen produced)                   $           0.357     $           0.458
Farm production cost (price per dozen produced)        $           0.599     $           0.669
Outside egg purchases (average price paid per dozen)   $           1.030     $           1.171

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 2010 was $169.4 million, an increase of $3.2 million, or 1.9%, as compared to cost of sales of $166.2 million for the first quarter of fiscal 2009. On a comparable basis, excluding the Acquisition, cost of sales for the first quarter of fiscal 2010 was $149.9 million, a decrease of $16.3 million, or 9.8%, as compared to cost of sales of $166.2 million for the first quarter of fiscal 2009.The decrease is due to decreases in feed costs and the cost of egg purchases from outside egg producers. Prices paid for outside egg purchases decreased in line with the decrease in egg selling prices. Feed cost per dozen for the fiscal 2010 first quarter was $.357, compared to $.458 per dozen for the comparable fiscal 2009 first quarter, a decrease of 22.1%. The decreases in feed costs and costs for outside egg purchases did not keep pace with the decrease in egg selling prices and resulted in a decrease in gross profit from 19.7% of net sales for the quarter ended August 30, 2008 to 9.7% of net sales for the current quarter ended August 29, 2009.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

                                                                                        13 weeks ended
                                                  Actual            Less: Acquisition             Net
(Amounts in thousands)                        August 29, 2009        August 29, 2009        August 29, 2009       August 30, 2008        Change
Stock compensation expense                   $           1,301     $                 -     $           1,301     $           3,404     $    (2,103 )
Specialty egg expense                                    4,266                      89                 4,177                 3,374             803
Payroll and overhead                                     5,256                     414                 4,842                 5,171            (329 )
Other expenses                                           5,746                   1,588                 4,158                 4,268            (110 )
Delivery expense                                         6,949                   1,290                 5,659                 6,449            (790 )
Total                                        $          23,518                   3,381     $          20,137     $          22,666     $    (2,529 )

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 2010 was $23.5 million, an increase of $800,000, or 3.5%, as compared to the expense of $22.7 million for the first quarter of fiscal 2009. Excluding the Acquisition, selling, general, and administrative expense for the first quarter of fiscal 2010 was $20.1 million, a decrease of $2.6 million, or 11.5%, as compared to the expense of $22.7 million for the first quarter of fiscal 2009. Stock based compensation plans expense decreased due to a decrease in the closing price of the stock. The calculation of the stock based compensation plans expense is dependent on the closing stock price of the Company's stock, which decreased from $39.49 at August 30, 2008 to $28.95 at August 29, 2009, which is a 26.7% decline in the Company's stock price. Specialty egg expenses represent advertising, commissions, and franchise fees as they are incurred with sales of our specialty eggs. The increase in specialty egg expense is attributable to the increase in the dozens of specialty eggs sold this year as compared to last fiscal year. Payroll and overhead decreased slightly as compared to the same period the prior year. Other expenses, which include expenses for insurance, supplies, repairs, professional fees, and other expenses, remained relatively unchanged from the same period the prior year. Delivery expense decreased, but overall it remained relatively level as compared to the same period the prior year. As a percent of net sales, selling, general and administrative expense increased from 11.0% for fiscal 2009 first quarter to 12.5% for fiscal 2010 first quarter.

OPERATING INCOME (LOSS)

As a result of the above, operating loss was $5.3 million for the first quarter of fiscal 2010, as compared to operating income of $18.0 million for the fiscal 2009 first quarter. As a percent of net sales, the first fiscal 2010 quarter had an operating loss of 2.8% of net sales, compared to operating income of 8.7% of net sales for the first quarter of fiscal 2009.

OTHER INCOME (EXPENSE)

Other expense consists of costs not directly charged to, or related to, operations such as interest expense and equity in income (loss) of affiliates for equity method investments. Upon adoption of FAS 160, we no longer include the net income or loss attributable to noncontrolling interests in other expense. Through retrospective application of this standard, we reclassified $28,000 of income out of other expense to the line item the line item titled net (income) loss attributable to noncontrolling interest. Other expense for the first quarter ended August 29, 2009 was $1.6 million, an increase of $1.0 million, as compared to $564,000 for the quarter ended August 30, 2008. For the first quarter of fiscal 2010, net interest expense increased $499,000. For the first quarter of fiscal 2010 other income decreased $495,000, as compared to the first quarter of fiscal 2009. This decrease is attributable to decreased equity in income of affiliates, which are also in the shell egg business. For the 13 weeks ended August 30, 2008, we capitalized $57,000 of interest expense in connection with our ongoing construction activities. As a percent of net sales, other expense increased from .3% for the fiscal 2009 first quarter to .8% for the fiscal 2010 first quarter.

INCOME TAXES

As a result of the above, we had a pre-tax loss of $6.9 million for the quarter ended August 29, 2009, as compared to pre-tax income of $17.4 million for the quarter ended August 30, 2008. For the fiscal 2009 first quarter, an income tax benefit of $2.0 million was recorded with an effective tax rate of 29.5%, as compared to income tax expense of $6.2 million with an effective tax rate of 35.8% for the fiscal 2009 first quarter.

Our effective rate differs from the federal statutory income tax rate of 35% due to 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, non-taxable Hillandale LLC income or loss and net income or loss attributable to noncontrolling interest.

NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

Noncontrolling interest represents the earnings of the Company's variable interest entities ("VIEs") under the consolidation provisions of FASB Interpretation No. 46, "Consolidation of Variable Interest Entities," ("FIN 46"). We also include in noncontrolling interest, the portion of earnings attributable to non-affiliated equity owners in consolidated subsidiaries where we do not own 100% of the equity interest. Net loss attributable to noncontrolling interest for the first quarter of fiscal 2010 was $1.0 million as compared to net income attributable to noncontrolling interest of $28,000 for the first quarter of fiscal 2009. Upon adoption of FAS 160, the Company no longer absorbs 100% of the losses attributable to noncontrolling interests. Under previous guidance, the Company absorbed those losses when the attribution of the losses to the noncontrolling interests would create a deficit balance in the noncontrolling interest account on the balance sheet. The adoption of FAS 160 allows for the attribution of losses to the noncontrolling interests even when doing so will create a deficit balance on the balance sheet.

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

As a result of the above, net loss attributable to the Company for the first quarter ended August 29, 2009 was $3.8 million, or $.16 per basic and diluted share, as compared to net income attributable to the Company of $11.1 million, or $.47 per basic and diluted share for the quarter ended August 30, 2008. As a percent of net sales, net loss attributable to the Company was 2.0% for the quarter ended August 29, 2009, compared to net income attributable to the Company of 5.4% for the quarter ended August 30, 2008.

CAPITAL RESOURCES AND LIQUIDITY

Our working capital at August 29, 2009 was $149.5 million compared to $138.0 million at May 30, 2009. Our current ratio was 2.22 at August 29, 2009 as compared with 2.33 at May 30, 2009. 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, $3.9 million of which was utilized for standby letters of credit at August 29, 2009. Our long-term debt at August 29, 2009, including current maturities, amounted to $126.9 million, as compared to $129.8 million at May 30, 2009.

For the thirteen weeks ended August 29, 2009, $5.4 million in net cash was used in operating activities. This compares to net cash provided by operations of $20.9 million for the thirteen weeks ended August 30, 2008. In the first 2009 fiscal quarter, approximately $9.1 million was provided from the sale of short-term investments, and net $510,000 was used for notes receivable. Approximately $809,000 was provided from disposal of property, plant and equipment, $4.6 million was used for purchases of property, plant and equipment, $8.2 million was used for acquisition of the remaining equity interest in the Hillandale business, and $508,000 was used to acquire the remaining equity interest in Benton County Foods, LLC. Approximately $3.4 million was used for payment of dividends on common stock and $2.9 million was used for principal payments on long-term debt. Approximately $262,000 was received from the issuance of common stock from the treasury. The net result of these activities was a decrease in cash of approximately $15.3 million since May 30, 2009.

Substantially all trade receivables, auction rate securities and inventories collateralize our lines of credit and property, plant and equipment collateralize 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), capital expenditures not to exceed $60,000,000 in any twelve month period, lease obligations and additional long-term borrowings (total funded debt to total capitalization not to exceed 55%); and (3) maintain various current and cash-flow coverage ratios (1.25 to
1), among other restrictions. At August 29, 2009, 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. Our debt agreements also require the Chief Executive Officer of the Company, or his family, to maintain ownership of not less than 50% of the outstanding voting stock of the Company.

Capital expenditure requirements are expected to be for the normal repair and replacement of our facilities. We are constructing a new integrated layer production complex in Farwell, TX to replace our Albuquerque, New Mexico complex, which ceased egg production in fiscal 2007. The facility was expected to cost approximately $32.0 million. and was estimated to be complete in January 2010. As of August 29, 2009 capital expenditures related to construction of this complex totaled $31.7 million. .

On July 9, 2009 the Farwell complex was damaged by a fire. The 700 acre facility includes a processing plant, feed mill, two pullet houses, and nine layer houses. The fire completely destroyed four of the nine layer houses, with additional loss of laying hens at a fifth house due to smoke inhalation. There were no personal injuries and minimal physical damage was sustained to the rest of the complex. The Farwell complex was designed to house up to 1.5 million laying hens and accounted for approximately three to four percent of the Company's weekly production at the time of the fire. This facility, as well as all of the Company's other facilities, are fully insured for their replacement value, including the estimated loss of production. It is too early to estimate the total amount of gain or loss that will ultimately be recognized due to this fire. Based on preliminary estimates, the Company has determined that the net book value of plant, and equipment lost due to this casualty is approximately $7.2 million. The Company believes that this will have minimal financial impact on our operations and does not expect any long-term disruption to our customers. Debris removal has been completed and construction to rebuild the destroyed houses has begun. Due to this casualty, estimated completion time for the Farwell facility will likely be delayed to January 2011. Future capital expenditures will be funded by cash flows from operations, existing lines of credit and insurance recoveries.

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 $15.3 million. In connection with this project, we are a pro rata guarantor, with the other Delta Egg Farm, LLC owners, of the additional debt that was undertaken to fund construction of this facility. We are currently a guarantor of approximately $6.7 million of long-term debt of Delta Egg Farm, LLC.

On August 8, 2008, UBS agreed to a settlement in principle with the Securities . . .