Cal-Maine Foods, Inc. Annual Report 2018

FY2018 Annual Report · Cal-Maine Foods, Inc.

Loading PDF…

CAL-MAINE FOODS, INC

2018 ANNUAL REPORT

CAL-MAINE FOODS, INC.

Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packing and sale of
fresh shell eggs, including conventional, cage-free, organic and nutritionally enhanced eggs.
The Company, headquartered in Jackson, Mississippi, is the largest producer and distributor
of fresh shell eggs in the United States with fiscal 2018 sales of approximately 1.038 billion
dozen shell eggs, representing approximately 20 percent of domestic shell egg consumption
in the United States.

The common shares of Cal-Maine Foods, Inc. are traded on the Nasdaq Global Market under
the symbol CALM.

CAL-MAINE FOODS LOCATIONS

Alabama
Robertsdale

Arkansas
Green Forest
Searcy
Siloam Springs

Florida
Bushnell
Callahan
Dade City
Dover
Indiantown
Jacksonville
Kathleen
Kenansville
Lacoochee

Lake City
Lake Wales
Mascotte
Miami
Okeechobee
Quincy
Trilby
Wellborn
Zephyrhills

Georgia
Blackshear
Hoboken
Moniac
Patterson
Shady Dale
St. George

Kansas
Chase

Kentucky
Bremen
Guthrie

Louisiana
Hammond
Pine Grove

Mississippi
Edwards
Jackson
(Corporate Offices)
Mendenhall

North Carolina
Louisburg

Ohio
Rossburg
Union City

Oklahoma
Watts

South Carolina
Bethune

Tennessee
Clarksville

Texas
Bogata
Boling
Farwell
Flatonia
Harwood
Klesel
Linn
Luling
Pittsburg
Sandy Fork
Waelder
Wharton

Utah
Delta

CAL-MAINE FOODS, INC

TO OUR SHAREHOLDERS

We are pleased to report an outstanding year for Cal-Maine Foods in fiscal 2018.

For the year, we sold 1.038 billion dozen shell eggs, surpassing the previous year’s level and marking the fifth
consecutive year of achieving over one billion dozen shell eggs sold. Our total revenues for the year reached
$1,502.9 million, a 39.9 percent increase over $1,074.5 million for fiscal 2017, as we benefitted from more
favorable market conditions than a year ago. We should note that fiscal 2018 included 52 weeks compared
with 53 weeks for fiscal 2017.

Our results for fiscal 2018 reflect strong consumer demand trends throughout the year, supported by
more featured grocery store promotions for shell eggs, as well as good food service demand. Export
demand for shell eggs also returned to near historical levels by the end of our fiscal year. Together, these
factors supported higher market prices, as the average customer selling price was up 38.7 percent in
fiscal 2018 compared with fiscal 2017. We continued to execute our growth strategy in this favorable
market environment, resulting in a significant improvement in profitability compared with the prior year.
Importantly, our financial performance allowed us to resume our quarterly cash dividend payment to our
shareholders in the fourth quarter.

The favorable demand trends for shell eggs were supported by more moderate production during fiscal
2018, resulting in an improved balance of supply and demand. However, the laying hen flock size has
continued to move up. In addition, according to recent USDA reports, the chick hatch rate has been higher
for the last nine months and has increased by approximately nine percent since the beginning of calendar
2018. Given these trends, the projected increase in the U.S. laying hen flock and potential excess shell egg
supply could create additional pricing pressure.

Throughout fiscal 2018, we continued to position Cal-Maine Foods to take full advantage of the current
and expected growth opportunities for specialty eggs. For the year, specialty eggs, excluding co-pack
sales, accounted for 23.5 percent of our sales volumes compared with 22.9 percent last year. Specialty egg
revenue was 32.0 percent of total shell egg revenue, compared with 43.6 percent for fiscal 2017, reflecting
significantly higher market prices for non-specialty eggs in fiscal 2018. We have worked hard to provide a
favorable product mix that reflects changing consumer demand trends. As the egg industry moves forward
in anticipation of the expected increase in demand for cage-free eggs, we are working closely with our
customers to ensure their needs are met through this transition. We have already completed a number of
capital improvement projects, and we intend to make additional investments in our operations and adjust
our cage-free production capacity in line with expected demand. In addition to cage-free eggs, Cal-Maine
Foods offers healthy and affordable options for consumers including conventional, nutritionally enhanced
and organic eggs.

We are also closely monitoring industry developments surrounding a proposed referendum that will be
on the ballot for voters in California later this calendar year. This referendum mandates, over a period of
time, that all egg production in California be cage-free with specific space requirements for laying hens. In

addition, the proposed referendum will require that all eggs and egg products sold in the state of California
be produced by cage-free hens by a certain future date. This referendum, if adopted, would affect sourcing
and production of eggs in California, which could create uncertainty surrounding supply and pricing in
other areas of the country.

Our operations performed well throughout fiscal 2018, as our managers across all Cal-Maine Foods locations
maintained a consistent focus on efficient and responsible management. We are especially proud of the
extraordinary efforts of our employees in our Florida, Georgia and Texas locations, who were affected by
devastating hurricane activity early in our second quarter. While we experienced some disruptions to our
operations, we are fortunate that our employees made it through safely, and we did not sustain any material
loss of egg production.

For the year, our feed costs were modestly lower than the prior year, but began to move higher in the fourth
quarter due to the increased cost of feed ingredients, primarily soybean meal, and a slightly lower feed
conversion rate. Our overall farm production costs per dozen for fiscal 2018 were slightly higher than a year
ago. Looking ahead, the current corn and soybean crops are ahead of schedule, and favorable growing
conditions should support lower prices for feed ingredients. However, the current geopolitical risks associated
with the recently imposed and additional proposed tariffs are creating more price volatility and uncertainty.

We are proud of our accomplishments for fiscal 2018, as we continued to execute our growth strategy with
favorable results. We will remain focused on this same strategy in the year ahead: manage our operations
efficiently and responsibly, provide a favorable product mix, including cage-free and other specialty eggs,
and look for acquisition or other growth opportunities that enhance our operations. Above all, we will strive
to meet the needs of our valued customers and provide excellent service. We have a strong balance sheet,
including a new five-year, $100 million revolving credit facility, that provides additional financial flexibility to
support our growth strategy.

Cal-Maine Foods is fortunate to have a dedicated team of managers and employees throughout our
operations who work hard every day to serve the needs of our customers. And, we are also grateful for the
support and outstanding leadership of our executive management team and board of directors. Together,
we look forward to the opportunities ahead for Cal-Maine Foods in fiscal 2019.

Thank you for your support of Cal-Maine Foods.

Sincerely,

Dolph Baker
Chairman of the Board
and Chief Executive Officer

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

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

For The Fiscal Year Ended JUNE 2, 2018

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

Commission file number: 000-04892

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

Delaware
(State or other Jurisdiction of Incorporation or Organization)

64-0500378
(I.R.S. Employer Identification No.)

3320 W Woodrow Wilson Ave, Jackson, Mississippi 39209-3409
(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12 (b) of the Act:

Title of each Class:
Common Stock, $0.01 par value per share

Name of exchange on which registered:
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

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

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

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

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.

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
Non-accelerated filer
(Do not check if a smaller reporting company)

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 is a shell company (as defined in Rule 12b-2 of the Act). Yes

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 December 2, 2017, which was the date of the last business day of the registrant’s most recently completed second fiscal quarter,
was $1,521,533,525.

As of July 20, 2018, 43,830,521 shares of the registrant’s Common Stock, $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 2018 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.

TABLE OF CONTENTS

Item

Part I

FORWARD-LOOKING STATEMENTS
1.
1A.
1B.
2.
3.
4.

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Part II

5.
6.

7.
7A.
8.

9.
9A.
9B.

10.
11.

12.
13.
14.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information

Part III

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Part IV

15.

Exhibits, Financial Statement Schedules

Signatures

Page
Number

3
3
9
15
15
16
18

18
21

22
42
43

74
74
77

77
77

77
77
78

PART I.

FORWARD-LOOKING STATEMENTS

This report contains numerous forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) relating
to our shell egg business, including estimated production data, expected operating schedules, expected capital costs
and other operating data, including anticipated results of operations and financial condition. Such forward-looking
statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,”
“plans,” “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 forward-looking statements are based on management’s current intent, belief, expectations, estimates
and projections regarding our company and our industry. These statements are not guarantees of future performance
and involve risks, uncertainties, assumptions and other factors that are difficult to predict and might 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 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”) (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 recall), (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 (vi) 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 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
publicly update these forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 1. BUSINESS

Our Business

Cal-Maine Foods, Inc. (“we,” “us,” “our,” or the “Company”) is the largest producer and marketer of shell eggs in the
United States. In fiscal 2018, we sold approximately 1,037.7 million dozen shell eggs, which we believe represented
approximately 20% of domestic shell egg consumption. Our total flock of approximately 36.3 million layers and 9.6
million pullets and breeders is the largest in the U.S. Layers are mature female chickens, pullets are female chickens
usually under 18 weeks of age, and breeders are male and female chickens used to produce fertile eggs to be hatched
for egg production flocks.

The Company has one operating segment, which is the production, grading, packaging, marketing and distribution of
shell eggs. The majority of our customers rely on us to provide most of their shell egg needs, including specialty and
non-specialty eggs. Specialty eggs represent a broad range of products. We classify nutritionally enhanced, cage free,
organic and brown eggs as specialty products for accounting and reporting purposes. We classify all other shell eggs
as non-specialty products. While we report separate sales information for these egg types, there are many cost factors
which are not specifically available for non-specialty 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.

We sell most of our shell eggs in 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 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.

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 2018, specialty shell eggs and co-pack specialty shell eggs represented 32.0% and 1.8% of our shell egg sales
dollars, respectively, and accounted for approximately 23.5% and 1.3%, respectively, of our total shell egg volumes.
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.
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 20 acquisitions ranging in size from 350,000
layers to 7.5 million layers. Despite a market characterized by increasing consolidation, the shell egg production
industry remains highly fragmented. At December 31, 2017, 55 producers, owning at least one million layers, owned
approximately 98% of total industry layers. The ten largest producers owned approximately 53% of total industry
layers. We believe industry consolidation will continue and we plan to capitalize on opportunities as they arise.

Industry Background

Based on historical consumption trends, we believe general demand for shell eggs increases in line with overall
population growth, averaging 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. In 2016, consumption rebounded
increasing 7% over 2015 and 3% over the pre-shortage level of 2014. According to U.S. Department of Agriculture
(“USDA”), annual per capita U.S. consumption since 2000 varied between 249 and 276 eggs. In calendar year 2017,
per capita U.S. consumption was estimated to be 276 eggs, or approximately five eggs per person per week. Per capita
consumption is determined by dividing the total supply of eggs by the entire population in the U.S. (i.e. all eggs supplied
domestically by the egg industry are consumed).

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 2018 and 2017, approximately 3% and 2% of our net sales was egg
products, respectively.

Prices for Shell Eggs

Shell egg prices are a critical component of profitability for the Company and the industry as a whole. While there
are many pricing mechanisms, we believe the majority of shell eggs sold in the U.S. in the retail and foodservice
channels are sold at prices related to the Urner Barry wholesale quotation for shell eggs. We sell the majority of our
non-specialty shell eggs at prices related to Urner Barry Spot Egg Market Quotations or formulas related to our costs
of production which include the cost of corn and soybean meal. For fiscal 2018, wholesale large shell egg prices in
the southeast region, as quoted by Urner Barry, averaged $1.49 compared with $0.85 for fiscal 2017 and $1.79 for
fiscal 2016, evidencing their volatility. For additional information regarding shell egg prices, see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of this report.

Feed Costs for Shell Egg Production

Feed is a primary cost component in the production of shell eggs and represents over half of industry farm level
production costs. Most shell egg producers, including us, are vertically integrated, manufacturing the majority of the
feed they require for their operations. Although feed ingredients, primarily 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 2018 was 1.3% lower than fiscal 2017. The
current corn and soybean crops are ahead of schedule, and favorable growing conditions should support lower prices
for feed ingredients. However, the current geopolitical risks associated with the recently imposed and additional
proposed tariffs are creating more price volatility and uncertainty.

Growth Strategy and 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.

Our total flock, including pullets, layers and breeders increased from approximately 38.4 million at the end of fiscal
2013 to approximately 45.9 million as of June 2, 2018. The dozens of shell eggs sold increased from approximately
948.5 million in fiscal 2013 to approximately 1,037.7 million for fiscal 2018.

We continue to pursue opportunities to acquire companies engaged 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.

Federal antitrust laws require regulatory approval 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
during the last fiscal year represented approximately 20% of domestic shell egg sales, making us the largest producer
and distributor of shell eggs 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.

Through exclusive license agreements with EB in several key territories and our trademarked Farmhouse® and
4Grain® brands, we are a leading producer and marketer 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 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.

Shell Eggs

Production. Our operations are fully integrated. We hatch chicks, grow and maintain flocks of pullets, layers, and
breeders, manufacture feed, and produce, process, package, and distribute shell eggs. We produce approximately 84%
of our total shell eggs sold, with 91% of such production coming from company-owned facilities, and the other 9%
coming 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 produce
the majority of our chicks in our own hatcheries and obtain 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 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 $303.9 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.

Feed cost represents the largest element of our farm egg production cost, ranging from 57% to 66% 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.

After the eggs are produced, they are graded and packaged. Substantially all of our farms have modern “in-line”
facilities to mechanically gather, grade 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 to
greater efficiency, the in-line facilities 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.
Since shell eggs are perishable, we maintain very low egg inventories, usually consisting of approximately four days
of production.

Egg production activities are subject to risks inherent in the agriculture industry, such as weather conditions 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.

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 1,037.7 million dozen shell eggs sold by us in fiscal 2018, our flocks produced 873.3 million.

We sell our shell eggs to a diverse group of customers, including national and local grocery store chains, club stores,
foodservice distributors, and egg product consumers. We utilize electronic ordering and invoicing systems that enable
us to manage inventory for certain customers. Our top ten customers accounted for an aggregate of 69.4%, 69.5%, and
70.6% of net sales dollars for fiscal 2018, 2017, and 2016, respectively. Two customers, Wal-Mart Stores and Sam’s
Club, on a combined basis, accounted for 33.2%, 28.9%, and 28.9% of net sales dollars during fiscal 2018, 2017, and
2016, respectively.

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 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 sell our shell eggs at prices generally related to independently quoted wholesale market prices or at formulas related
to our costs of production. Wholesale prices are subject to wide fluctuations. The prices of shell eggs reflect fluctuations
in the quoted market and changes in corn and soybean meal prices, and the results of our 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 258 in 2013
to 276 in 2017. 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.

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, three 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 recent years 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 2018, specialty eggs accounted for 32.0% of our shell egg dollar sales and 23.5% of our shell

egg dozens sold, as compared to 43.6% of shell egg dollar sales and 22.9% of shell egg dozens sold in fiscal
2017. Additionally, specialty eggs sold through our co-pack arrangements accounted for an additional 1.8% of shell
egg dollar sales and 1.3% of shell egg dozens sold in fiscal 2018, compared with 3.1% of shell egg dollar sales and
1.6% of shell egg dozens sold in fiscal 2017. 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 17.7% of our shell egg dollar sales in fiscal 2018, compared to 23.2% in fiscal 2017. Based on dozens
sold, Egg-Land’s Best® branded eggs accounted for 13.2% of dozens sold for fiscal 2018, compared to 12.5% in fiscal
2017. 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 14.3% of our shell egg dollar sales in fiscal 2018, compared to
20.4% in fiscal 2017, and 10.4% of dozens sold for fiscal 2018, compared to 10.4% for fiscal 2017.

Egg Products. Egg products are shell eggs broken and sold in liquid, frozen, or dried form. In fiscal 2018 egg products
represented approximately 3% of our net sales compared with approximately 2% in fiscal 2017. 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 majority owned 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 industry remains highly fragmented but is characterized by a growing concentration of producers.
In 2017, 55 producers with one million or more layers owned 98% of the 314.2 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, and 1990,
when 56 producers with one million or more layers owned 64% of the 232 million total layers. We believe a continuation
of the concentration trend will result in reduced cyclicality of shell egg prices, but no assurance can be given in that
regard. A continuation of this trend could also create greater competition among fewer producers.

Patents and Trade Names. We own the trademarks Farmhouse®, Sunups®, Sunny Meadow® and 4Grain®. We do
not own any patents or proprietary technologies. We produce and market Egg-Land's Best® and Land O’ 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”), USDA,
Environmental Protection Agency (“EPA”), Occupational Safety and Health Administration and corresponding state
agencies, among others. 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 and EPA inspections. Our feed
production facilities are subject to FDA regulation and inspections. In addition, 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
will not 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.

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

to 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 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 that we will not be required to incur significant costs for compliance with such
laws and regulations in the future.

Employees. As of June 2, 2018, we had 3,573 employees, of whom 2,977 worked in egg production, processing and
marketing, 176 worked in feed mill operations and 420 were administrative employees, including our executive
officers. Approximately 4.3% of our personnel are part-time. None of our employees are covered by a collective
bargaining agreement. We consider our relations with employees to be good.

Our Corporate Information

We were founded in 1957 in Jackson, Mississippi. We were incorporated in Delaware in 1969. Our principal executive
office 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.
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, and all amendments to those reports are available, free of charge, through our website
as soon as reasonably practicable after they are filed with the SEC. Information concerning corporate governance
matters is also available on our website.

Our Common Stock is listed on The NASDAQ Global Select Market (“NASDAQ”) under the symbol “CALM.” On
June 1, 2018, the last sale price of our Common Stock on NASDAQ was $46.80 per share. Our fiscal year 2018 ended
June 2, 2018, and the first three fiscal quarters of fiscal 2018 ended September 2, 2017, December 2, 2017, and March
3, 2018. All references herein to a fiscal year means our fiscal year and all references to a year mean a calendar year.

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 Item 7. “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 could apply to any
company could also materially adversely affect our business, financial condition or results of operations.

Market prices of wholesale shell eggs are volatile and decreases in these prices can adversely impact our results
of operations.

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. Small increases in production, or small decreases in demand, can have a large adverse effect on shell
egg prices. Low shell egg prices adversely effect our revenues and profits.

Market prices for wholesale shell eggs have been volatile. Shell egg 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 high protein diets faded dramatically and prices fell. During the time of increased
demand, the egg industry geared up to produce more eggs, resulting 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 due 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 both our fiscal 2016 fourth quarter and fiscal 2017
second quarter. In fiscal 2018, non-specialty shell egg prices rebounded significantly due to strong demand illustrating
the volatility of our industry.

Shell egg prices are 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, and improved
nutritional reputation of eggs related to better scientific understanding of the role of cholesterol in diets have all
contributed to shell egg demand. However, there can be no assurance that the demand for shell eggs will not decline
in the future. Adverse publicity relating to health concerns and changes in the perception of the nutritional value of
shell eggs, 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.

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

Feed cost represents the largest element of our shell egg (farm) production cost, ranging from 57% to 66% 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,
various supply and demand factors, transportation and storage costs, and agricultural and energy policies in 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. 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. Alternatively, low feed costs
can encourage industry overproduction, possibly resulting in lower egg prices.

Due to the cyclical nature of our business, our financial results fluctuate from year to year and between different
quarters within a single fiscal year.

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 tended to increase the number of layers in
production with a resulting increase in the supply of shell eggs, which generally caused a drop in shell egg prices until
supply and demand returned to balance. As a result, our financial results from year to year vary
significantly. Additionally, as a result of seasonal fluctuations, our financial results fluctuate significantly between
different quarters within a single fiscal year.

We purchase a portion of the shell eggs we sell from outside producers and our ability to obtain such eggs at
prices and in quantities acceptable to us could fluctuate.

We produced approximately 84% of the total number of shell eggs we sold in fiscal 2018 and fiscal 2017, 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.

Our acquisition growth strategy subjects us to various risks.

We plan to continue to pursue a growth strategy, which includes acquisitions of other companies engaged in the
production and sale of shell eggs. 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 financial condition. In addition, federal antitrust laws require regulatory approval of acquisitions that exceed certain
threshold levels of significance.

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 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 debt.

Our largest customers have historically 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.

For the fiscal years 2018, 2017, and 2016, two customers, Wal-Mart Stores and Sam’s Clubs, on a combined basis,
accounted for 33.2%, 28.9%, and 28.9% of our net sales dollars, respectively. For fiscal years 2018, 2017, and 2016,
our top ten customers accounted for 69.4%, 69.5%, and 70.6% 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 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 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.

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.

We are subject to federal, state and local regulations relating to grading, quality control, labeling, sanitary control, and
waste disposal. As a fully-integrated shell egg producer, our shell egg facilities are subject to regulation and inspection
by the USDA, EPA, and FDA, as well as regulation by various state and local health and agricultural agencies, among
others. All of our shell egg production and feed mill facilities are subject to FDA regulation and inspections. In addition,
rules are often proposed that, if adopted as proposed, could increase our costs.

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.

If we fail to comply with an applicable law or regulation, 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 that we will not be required to incur significant costs for
compliance with such laws and regulations in the future.

Shell eggs and shell egg products are susceptible to microbial contamination, and we 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 material
adverse effect on our business, results of operations and financial condition.

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 the quality and quantity of shell eggs we produce and
distribute. The Company maintains controls and procedures to reduce the risk of exposing our flocks to harmful
diseases. Despite our efforts, outbreaks of avian disease can 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. 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 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.

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
tests for avian influenza at any of our locations. We have significantly increased the biosecurity 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 affect our business, results of operations, and financial
condition.

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.

We and many of our customers face pressure from animal rights groups, such as People for the Ethical Treatment of
Animals ("PETA"), and the Humane Society of the United States ("HSUS"), to require all companies that supply food
products operate their business in a manner that treats animals in conformity 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 legislative 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. Additionally, later in calendar 2018, California voters will
consider a referendum that mandates, over a period of time, that all egg production in California must be cage-free
with specific space requirements for laying hens. If passed, the referendum will also require that all eggs and egg
products sold in the state of California must be cage-free by a certain future date. This referendum, if adopted, could
affect sourcing and production of eggs in California, which would create uncertainty surrounding supply and pricing
in other areas of the country. In recent years, 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 for
these types of guidelines has resulted and will continue to result in additional costs 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 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 nor do we carry any significant key-man life insurance coverage on any such persons.

We are controlled by the family of our founder, Fred R. Adams, Jr. and, after the death of Mr. Adams, we expect
to be controlled by Adolphus B. Baker, our Chief Executive Officer and Chairman of the Board.

Fred R. Adams, Jr., our Founder and Chairman Emeritus, his son-in-law, Adolphus B. Baker, our Chief Executive
Officer and Chairman of the Board, and their spouses own all outstanding shares of our Class A Common Stock, which
has ten votes per share. Such persons also own 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 regularly consult 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, Mr. Adams,
his spouse, and Mr. Baker possessed 52.2%, 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.

As described in the Company’s Proxy Statement dated June 25, 2018 for a special meeting of shareholders on July 20,
2018 (the “Special Meeting Proxy Statement”) under the heading “Proposal No. 1 - Class A Common Stock Amendment
- Proposed Transactions” on pages 25-26, which description (the “Proposed Transactions Description”) is incorporated
by reference herein, upon the completion of transactions described therein prior to Mr. Adams’ death, we expect that
the Company would continue to be controlled by Mrs. Adams and Mr. Baker, acting jointly. After Mr. Adams’ death
and completion of the proposed transactions, we expect there would be a change of control of the Company to Mr.
Baker as the sole managing member of a limited liability company that would own all of the outstanding shares of
Class A Common Stock.

We understand that 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 more than 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. The
Adams and Baker families’ controlling ownership of our capital stock may adversely affect the market price of our
Common Stock.

We are and, after Mr. Adams’ death pursuant to the arrangements described above, we expect to continue to be, a
“controlled company,” as defined in Rule 5615(c)(1) of the NASDAQ’s listing standards. Accordingly, we are and,
pursuant to such arrangements, we expect to continue to be, 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.

Sales, or the availability for sale, of substantial amounts of our Common Stock could adversely affect the market
price of our Common Stock.

As described in the Proposed Transactions Description in the Special Meeting Proxy Statement, upon the completion
of transactions described therein, we expect that Mrs. Adams and Mr. Adams’ daughters, and certain other related
entities described therein (the “Stockholder Parties”), will hold a total of approximately 12 million shares of Common
Stock that are subject to the Agreement Regarding Common Stock described in Note 17 to our audited consolidated
financial statements in this report.

As described in the Proposed Transactions Description, we currently anticipate that the Stockholder Parties would
desire to sell a total of approximately 6.0 million shares of Common Stock, in initial sales under a Company registration
statement following Mr. Adams’ death. Although pursuant to the Agreement Regarding Common Stock 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 under 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.

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 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 legal proceedings see Item 3 below. Such lawsuits are expensive to defend, divert management’s
attention, and may result in significant 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.

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
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 2, 2018, we had $35.5 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 or 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 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 events beyond our control could negatively impact our business.

Fire, bioterrorism, pandemic, extreme weather or natural disasters, including droughts, floods, excessive cold or heat,
hurricanes or other storms, could impair the health or growth of our flocks, 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 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.

ITEM 2. PROPERTIES

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 2, 2018, the facilities included three breeding facilities, two hatcheries,

six wholesale distribution centers, 22 feed mills, 42 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 in our financial statements. Most of our operations are conducted
from properties we own.

As of June 2, 2018, we owned approximately 27,316 acres of land in various locations throughout our geographic
market area. We have the ability to hatch 21.2 million pullet chicks annually, grow 23.2 million pullets annually, house
42.7 million laying hens, and control the production of 39.1 million layers, with the remainder controlled by contract
growers. We own mills that can produce 746 tons of feed per hour, and processing facilities capable of processing
16,560 cases of shell eggs per hour (with each case containing 30 dozen shell eggs).

Over the past five fiscal years, our capital expenditures, excluding acquisitions of shell egg production and processing
facilities from others, have totaled an aggregate amount of approximately $303.9 million.

ITEM 3. LEGAL PROCEEDINGS

Egg Antitrust Litigation

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 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 (the “District
Court”), in three groups of cases - the “Direct Purchaser Putative Class Action”, the “Indirect Purchaser Putative Class
Action” and the “Non-Class Cases.”

The Direct Purchaser Putative Class Action. The named plaintiffs in these cases alleged that they purchased eggs or
egg products directly from a defendant and sued on behalf of themselves and a putative class of others who claimed
to be similarly situated. As previously reported, in November 2014, the District 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 named plaintiffs in these cases 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 District Court denied the indirect purchaser plaintiffs’
motion for class certification. On June 28, 2018, the Company entered into a settlement agreement with the indirect
purchaser plaintiffs, for an immaterial amount, and on July 17, 2018, the Court entered an order dismissing all indirect
purchaser plaintiffs’ claims against the Company and other defendants.

The Non-Class Cases. In the remaining 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. On April 4, 2018, the Court entered a final judgement dismissing all claims against the Company
brought by the following non-class plaintiffs: 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., with prejudice, pursuant to the Company’s previously announced $80.8 million
settlement with the named plaintiffs.

District Court. Even though the appealing egg-products plaintiffs had asked the Third Circuit to remand the case for
trial, the Third Circuit declined, instead remanding the case for further proceedings, including the suggestion that the
District Court determine whether the egg-products plaintiffs had sufficient evidence of causation and damages to
submit the case to a jury. On March 5, 2018, defendants filed a motion in the District Court seeking leave to file a
motion for summary judgment in light of the remand statements in the Third Circuit’s opinion. Plaintiffs opposed that
motion, and on March 26, 2018, the defendants filed a reply in support of the motion. On July 16, 2018, the court
granted the defendants’ motion for leave allowing the defendants to re-file a motion for summary judgment no later
than August 17, 2018. The Company intends to file a motion for summary judgment by this deadline based on the
non-class egg products plaintiffs’ failure to present any triable issue of fact on the elements of causation and damages
in their claims related to the purchases of processed egg products.

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 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. 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., Cobb-Vantress, Inc., Cargill, Inc., George’s, Inc.,
Peterson Farms, Inc., Simmons Foods, Inc., and certain affiliates of the foregoing 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.

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 ISSUER PURCHASES OF EQUITY SECURITIES

Our Common Stock is traded on the NASDAQ Global Select Market under the symbol “CALM”. The closing price
for our Common Stock on July 17, 2018 was $45.85 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 2017 and fiscal 2018.

Fiscal Year
Ended

June 3, 2017

June 2, 2018

Sales Price

Fiscal Quarter

High

Low

Dividends (1)

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

$ 45.75 $ 40.11 $

46.15
45.45
41.25

36.50
37.95
36.35

$ 39.70 $ 34.40 $

49.75
47.45
49.95

36.95
40.30
43.30

—
—
—
—

—
—
—
0.351

(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 Adolphus Baker, and their spouses. As a result of
the transactions described in the Proposed Transactions Description in the Special Meeting Proxy Statement, we expect
that, after July 20, 2018, all of the outstanding shares of Class A Common Stock will be owned by a limited liability
company of which Mr. Baker is the sole managing member and will be voted at the direction of Mr. Baker and Mrs.
Adams acting jointly, and that, after the death of Mr. Adams, such shares will be voted at the direction of Mr. Baker.
For additional information about our capital stock, see Note 13 and 17 to the Notes to Consolidated Financial Statements
in this report.

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 2018 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 2, 2018. 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 1, 2013 in the stock or index. Each date plotted indicates the last day of a fiscal quarter.

Stockholders

At July 17, 2018, there were approximately 313 record holders of our Common Stock and approximately 33,203
beneficial owners whose shares were held by nominees or broker dealers.

Dividends

Cal-Maine has a 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 in an amount equal to one-third (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. The Company’s loan agreements provide that unless otherwise approved by its lenders, the Company must

limit 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 of default.

Recent Sales of Unregistered Securities

No sales of securities without registration under the Securities Act of 1933 occurred during our fiscal year ended June 2,
2018.

Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plan Information

(a)

(b)

(c)

Number of
securities to be
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
Equity compensation plans not
approved by shareholders
Total

— $

—
— $

—

—
—

423,092

—
423,092

(a) There were no outstanding options, warrants or rights as of June 2, 2018. There were 241,290 shares of
restricted stock outstanding under our 2012 Omnibus Long-Term Incentive Plan as of June 2, 2018.

(b) There were no outstanding options, warrants or rights as of June 2, 2018.
(c) Shares available for future issuance as of June 2, 2018 under our 2012 Omnibus Long-Term Incentive

Plan.

For additional information, see Note 10 to Notes to the Consolidated Financial Statements.

ITEM 6. SELECTED FINANCIAL DATA

Statement of Operations Data (in thousands, except
per share data)

June 2,
2018†

June 3,
2017 ^

May 28,
2016

52 weeks

53 weeks

52 weeks

May 30,
2015

52 weeks

May 31,
2014*

52 weeks

Fiscal Years Ended

Net sales

Cost of sales

Gross profit

Selling, general and administrative

Legal settlement expense - See Note 12

Loss (gain) on disposal of fixed assets

Operating income (loss)

Other income (expense):

Interest expense

Interest income

Patronage dividends

Equity in income of affiliates

Other, net

Total other income

Income (loss) before income tax and noncontrolling
interest

Income tax expense (benefit)

Net income (loss) including noncontrolling interest

Less: Net income (loss) attributable to noncontrolling
interest

Net income (loss) attributable to Cal-Maine Foods, Inc.

Net income (loss) per common share:

Basic

Diluted

Cash dividends per common share

Weighted average shares outstanding:

Basic

Diluted

Balance Sheet Data (in thousands)

Working capital

Total assets

Total debt (including current maturities)

Total stockholders’ equity

Operating Data:

1,502,932

1,074,513

$ 1,908,650

1,576,128

1,440,907

1,141,886

1,028,963

1,260,576

1,180,407

1,138,143

361,046

177,148

80,750

473

45,550

173,980

—

3,664

648,074

177,760

—

(1,563)

395,721

160,386

—

568

302,764

156,712

—

651

102,675

(132,094)

471,877

234,767

145,401

(265)

3,697

8,286

3,517

(573)

14,662

117,337

(8,859)

126,196

264

125,932

2.60

0.35

48,353

48,468

(318)

(1,156)

(2,313)

(3,755)

3,103

7,665

1,390

5,960

4,314

6,930

5,016

268

1,798

6,893

2,657

2,747

1,099

6,139

3,512

9,446

17,800

15,372

11,782

16,441

(114,294)

(39,867)

(74,427)

487,249

169,202

318,047

(149)

2,006

(74,278) $

316,041

(1.54) $

— $

6.56

6.53

2.18

48,362

48,195

48,365

246,549

84,268

162,281

1,027

161,254

3.35

3.33

1.11

48,136

48,437

479,682

371,527

542,832

407,418

1,150,447

1,033,094

1,111,765

6,090

955,682

10,939

844,493

25,570

917,361

928,653

50,860

704,562

161,842

52,035

109,807

600

109,207

2.27

2.26

0.73

48,095

48,297

354,743

811,661

61,093

594,745

Total number of layers at period-end (thousands)

Total shell eggs sold (millions of dozens)

36,340

1,037.7

36,086

1,031.1

33,922

1,063.1

33,696

1,063.1

32,372

1,013.7

†

Results for fiscal 2018 include tax benefit related to the Tax Cuts and Jobs Act tax reform legislation and the subsequent revaluation of the
Company's deferred tax liabilities at the new, lower tax.

^ 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.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

RISK FACTORS; FORWARD-LOOKING STATEMENTS

For information relating to important risks and uncertainties that could materially adversely affect our business,
securities, financial condition or operating results, reference is made to the disclosure set forth under Item 1A 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.”

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 2, 2018 (52 weeks), June 3, 2017 (53 weeks), and May 28, 2016 (52 weeks) for the most recent three fiscal
years.

Our operations are fully integrated. We hatch chicks, grow and maintain flocks of pullets (female chickens, under 18
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 the largest
producer and marketer of shell eggs in the U.S. We market the majority of our shell eggs in the southwestern,
southeastern, mid-western, and mid-Atlantic regions of the U.S. We market 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 consumers.

Our operating results are directly tied to egg prices, which are highly volatile and subject to wide fluctuations, and are
outside of our control. For example, the Urner-Barry Southeastern Regional Large Egg Market Price per dozen eggs,
for our fiscal 2006-2018 ranged from a low of $0.55 during fiscal 2006 to a high of $3.00 during fiscal 2018. 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 tended to increase the number of layers in production
with a resulting increase in the supply of shell eggs, which generally caused a drop in shell egg prices until supply and
demand returned 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 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 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.

From April through June 2015, our industry experienced a significant avian influenza (“AI”) outbreak, primarily in
the upper Midwestern U.S. There were no positive tests for AI at any 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 and eventually exceed
pre-AI levels by late 2016. Recent USDA reports show the chick hatch rate has been up for the last eight months, and
has increased by approximately 10% since the beginning of calendar 2018. Given this trend, the projected increase
in the U.S. laying hen flock and potential excess shell egg supply could create additional pricing pressure.

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 both our fiscal 2016 fourth quarter and our fiscal 2017
second quarter. During our fiscal 2018, non-specialty shell egg prices rebounded significantly due to strong demand,
illustrating the volatility of our industry. Our net average selling price per dozen shell eggs for fiscal 2018 increased
to $1.397 compared to $1.007 for fiscal 2017, including an increase in non-specialty shell egg prices to $1.226 in
fiscal 2018 compared to $0.705 in fiscal 2017.

We are one of the largest producers and marketers of value-added specialty shell eggs in the U.S. For accounting
purposes, we classify nutritionally enhanced, cage-free, organic and brown eggs as specialty shell eggs. They have
been a significant and growing segment of the market in recent years. In recent years, a significant 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. We are working with our customers to achieve
smooth progress 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.

For fiscal 2018, we produced approximately 84% of the total number of shell eggs sold by us, with approximately 9%
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 2018, approximately
16% of the total number of shell eggs sold by us were purchased from outside producers for resale.

Our cost of production is materially affected by feed costs, which are highly volatile and subject to wide fluctuation. For
fiscal 2018, feed costs averaged about 57% of our total farm egg production cost. Changes in market prices for corn
and soybean meal, the primary ingredients in the feed we use, result in changes in our cost of goods sold. For our
last five fiscal years, average feed cost per dozen sold ranged from a low of $0.39 in fiscal 2018 to a high of $0.49 in
fiscal 2014. 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, transportation and storage
costs, demand and the agricultural and energy policies of the U.S. and foreign governments. The current corn and
soybean crops are ahead of schedule, and favorable growing conditions should support lower prices for feed ingredients.
However, the current geopolitical risks associated with the recently imposed and additional proposed tariffs are creating
more price volatility and uncertainty.

RESULTS OF OPERATIONS

The following table sets forth, for the fiscal years indicated, certain items from our consolidated statements of
operations expressed as a percentage of net sales.

Net sales
Cost of sales
Gross profit
Selling, general and administrative
Legal settlement expense
Loss (gain) on disposal of fixed assets
Operating income (loss)
Other income
Income (loss) before income taxes and noncontrolling interest
Income tax expense (benefit)
Net income (loss) including noncontrolling interest
Less: Net income (loss) attributable to noncontrolling interest
Net income (loss) attributable to Cal-Maine Foods, Inc.

June 2, 2018

100.0 %
76.0 %
24.0 %
11.8 %
5.4 %
— %
6.8 %
1.0 %
7.8 %
(0.6)%
8.4 %
— %
8.4 %

June 3, 2017 May 28, 2016
100.0 %
66.0 %
34.0 %
9.3 %
— %
(0.1)%
24.8 %
0.8 %
25.6 %
8.9 %
16.7 %
0.1 %
16.6 %

100.0 %
95.8 %
4.2 %
16.2 %
— %
0.3 %
(12.3)%
1.7 %
(10.6)%
(3.7)%
(6.9)%
— %
(6.9)%

Executive Overview of Results – June 2, 2018, June 3, 2017, and May 28, 2016

Our operating results are significantly affected by wholesale shell egg market prices and feed costs, which can fluctuate
widely and are outside of our control. The majority of our 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 cost of corn and soybean meal. The following table shows our net income (loss),
gross profit, net average shell egg selling price, the average Urner Barry wholesale large shell egg prices in the southeast
region, and feed cost per dozen produced for each of our three most recent fiscal years.

Fiscal Year ended

June 2, 2018

June 3, 2017

May 28, 2016

Net income (loss) attributable to Cal-Maine Foods, Inc. -
(in thousands)
Gross profit (in thousands)
Net average shell egg selling price (rounded)
Average Urner Barry Spot Egg Market Quotations 1
Feed cost per dozen produced

125,932 $
361,046
1.40
1.49
0.394

(74,278) $
45,550
1.01
0.85
0.399

316,041
648,074
1.74
1.79
0.414

1- Average Thursday price 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 egg sales, breaking stock and
undergrades. In fiscal 2016, our net average net selling price reflected strong demand for shell eggs across our markets
as well as supply constraints resulting from the outbreak of avian influenza ("AI"), and feed costs decreased over the
previous fiscal year. In fiscal 2017, our net average selling price and dozens sold decreased over the previous fiscal
year primarily due to the oversupply of eggs resulting from the repopulation of the national flock of laying hens to
levels exceeding the pre-AI flock and a reduced demand for egg products. In fiscal 2018, strong demand resulted in
an increase in our average selling price and dozens sold, and feed costs continued to decrease over prior years. Results
for fiscal 2018 were favorably affected by a $43.0 million tax benefit related to the Tax Cuts and Jobs Act and were

negatively affected by an after-tax charge of $54.8 million recorded in the second quarter related to the settlement of
certain previously disclosed antitrust litigation. Gross profit and net income for fiscal 2018 increased significantly
compared to the prior year, primarily due to increased selling prices for non-specialty eggs.

Fiscal Year Ended June 2, 2018 Compared to Fiscal Year Ended June 3, 2017

NET SALES

Net sales for the fiscal year ended June 2, 2018 were $1,502.9 million, an increase of $428.4 million, or 39.9%, from
net sales of $1,074.5 million for fiscal 2017. We believe the increase was primarily due to strong demand for eggs in
fiscal 2018, resulting in significantly higher prices for non-specialty eggs, contrasted with fiscal 2017 in which we
experienced an oversupply of eggs resulting from the market disruption caused by the AI outbreak in 2015 discussed
above.

In fiscal 2018, shell egg sales made up approximately 97% of our net sales. Total dozens sold in fiscal 2018 were
1,037.7 million, an increase of 6.6 million dozen, or 0.6%, compared to 1,031.1 million sold in fiscal 2017 resulting
in an increase in net sales of $6.6 million for fiscal 2018 compared with the prior year.

Net average selling price of shell eggs increased from $1.007 per dozen for fiscal 2017 to $1.397 per dozen for fiscal
2018, an increase of $0.39 per dozen, or 38.7%, primarily reflecting increased demand for eggs compared with the
prior year in which we experienced an oversupply of eggs. The increase in sales price in fiscal 2018 from fiscal 2017
resulted in a corresponding increase in net sales of approximately $404.7 million. 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.

Egg products accounted for approximately 3% of our net sales. These revenues were $43.5 million for the fiscal year
ended June 2, 2018 compared with $24.9 million for the fiscal 2017.

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

June 2, 2018
52 weeks

June 3, 2017
53 weeks

June 2, 2018
13 weeks

June 3, 2017
14 weeks

(Amounts in thousands)

$ 1,502,932

$ 1,074,513

$ 443,095

(Amounts in thousands)
$ 274,584

956,909
467,469
26,092
8,943
$ 1,459,413

65.6%
32.0%
1.8%
0.6%

548,858
457,617
32,689
10,423
100.0% $ 1,049,587

52.3% 294,892
43.6% 124,400
7,216
2,152
100.0% $ 428,660

3.1%
1.0%

68.8% 145,454
29.0% 112,744
7,198
2,594
100.0% $ 267,990

1.7%
0.5%

97%

98%

97%

780,362
244,022
13,329
1,037,713

75.2%
23.5%
1.3%

778,538
236,067
16,525
100.0% 1,031,130

75.5% 184,301
64,081
22.9%
3,573
1.6%
100.0% 251,955

73.1% 207,428
61,862
25.5%
3,725
1.4%
100.0% 273,015

54.3%
42.0%
2.7%
1.0%
100.0%

98%

76.0%
22.7%
1.3%
100.0%

Net sales
Shell egg sales:
Non-specialty
Specialty
Co-pack specialty
Other
Net shell egg sales
As a percent of net
sales
Dozens sold:
Non-specialty
Specialty
Co-pack specialty
Total dozens sold

Net average selling price per dozen:
All shell eggs
Non-specialty
Specialty

1.397
1.226
1.916

$
$
$

1.007
0.705
1.939

$
$
$

1.694
1.600
1.941

$
$
$

0.973
0.701
1.823

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 2018, non-specialty shell eggs
represented approximately 65.6% of our shell egg revenue, compared to 52.3% for fiscal 2017, reflecting the large
increase in net average selling price for non-specialty eggs from $0.705 per dozen in fiscal 2017 to $1.226 per dozen
in fiscal 2018. Sales of non-specialty shell eggs accounted for approximately 75.2% and 75.5% of total shell egg
volume in fiscal 2018 and 2017, respectively.

For the thirteen-week period ended June 2, 2018, non-specialty shell eggs represented approximately 68.8% of our
shell egg revenue, compared to 54.3% for the fourteen-week period ended June 3, 2017, reflecting the large increase
in net average selling price for non-specialty eggs during the fourth quarter of fiscal 2018 compared to the same period
of last year ($1.600 per dozen in the 2018 period compared to $0.701 per dozen in the 2017 period) partially offset by
a decrease in non-specialty dozens sold. For the thirteen-week period ended June 2, 2018, non-specialty shell eggs
accounted for approximately 73.1% of the total shell egg volume, compared to 76.0% for the fourteen-week period
ended June 3, 2017. The volume decrease for non-specialty shell eggs for the fiscal 2018 fourth quarter reflected the
extra week of sales in the prior year period.

of shell egg volume in fiscal 2018 compared to 1.6% in fiscal 2017. Our net average selling price for specialty eggs
was $1.916 per dozen for fiscal 2018 compared to $1.939 per dozen for fiscal 2017. 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 years as non-specialty
egg prices declined in fiscal 2017 and rebounded in fiscal 2018, while specialty egg prices remained much more stable.

For the thirteen-week period ended June 2, 2018, specialty shell eggs and specialty shell eggs sold through co-pack
arrangements represented approximately 29.0% and 1.7%, respectively, of our shell egg revenue, compared to 42.0%
and 2.7%, respectively, for the fourteen-week period ended May 28, 2017. For the thirteen-week period ended June 2,
2018, specialty shell eggs and specialty shell eggs sold through co-pack arrangements accounted for approximately
25.5% and 1.4%, respectively, of the total shell egg volume, compared to 22.7% and 1.3%, respectively, for the fourteen-
week period ended June 3, 2017. Our net average selling price for specialty shell eggs and specialty shell eggs sold
through co-pack arrangements was $1.941 per dozen for the fiscal 2018 fourth quarter compared to $1.823 per dozen
for the fiscal 2017 fourth quarter.

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 majority owned subsidiary Texas Egg
Products, LLC (“TEP”). For fiscal 2018 egg product sales were $43.5 million, an increase of $18.6 million, or 74.7%,
compared to $24.9 million for fiscal 2017. Egg products volume for fiscal 2018 was 66.0 million pounds, an increase
of 0.7 million pounds, or 1.1%, compared to 65.3 million pounds for fiscal 2017. In fiscal 2018, the selling price per
pound was $0.659 compared to $0.382 for fiscal 2017, an increase of 72.5%. The increase in market prices for egg
products in the current fiscal year is due to increased demand for egg products.

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 our cost of sales:

(Amounts in thousands)

June 2,
2018

June 3,
2017

Percent
Change

June 2,
2018

June 3,
2017

Percent
Change

52 weeks

53 weeks

13 weeks

14 weeks

Fiscal Year Ended

Quarter Ended

Cost of sales:
Farm production
Processing and packaging
Outside egg purchases and other

Total shell eggs

Egg products
Other
Total

$ 603,887 $ 598,412
202,225
207,495
1,008,132
19,766
1,065
$1,141,886 $1,028,963

214,078
287,472
1,105,437
35,551
898

0.9 % $ 155,471 $ 159,482
54,896
53,734
5.9 %
41,663
81,623
38.5 %
256,041
290,828
9.7 %
6,075
10,743
79.9 %
(15.7)%
462
308
11.0 % $ 301,879 $ 262,578

(2.5)%
(2.1)%
95.9 %
13.6 %
76.8 %
(33.3)%
15.0 %

Farm production cost (per dozen
produced)
Feed
Other
Total

Outside egg purchases (average cost
per dozen)

0.394 $
0.303
0.697 $

0.399
0.294
0.693

(1.3)% $
3.1 %
0.6 % $

0.416 $
0.311
0.727 $

0.381
0.298
0.679

9.2 %
4.4 %
7.1 %

1.45 $

1.01

43.6 % $

1.82 $

0.90

102.2 %

Dozen produced
Dozen sold

873,307
1,037,713

870,252
1,031,130

0.4 %
0.6 %

215,729
251,955

237,006
273,015

(9.0)%
(7.7)%

Cost of sales for the fiscal year ended June 2, 2018 was $1,141.9 million, an increase of $112.9 million, or 11.0%,
compared to $1,029.0 million for fiscal 2017. Comparing fiscal 2018 to fiscal 2017, average cost per dozen purchased
from outside shell egg producers and dozens produced increased while cost of feed ingredients decreased. For the
2018 fiscal year we produced 84.2% of the eggs sold by us, as compared to 84.4% for the previous year. Feed cost
for fiscal 2018 was $0.394 per dozen, compared to $0.399 per dozen for the prior fiscal year, a decrease of 1.3%. The
decrease in feed cost per dozen resulted in a decrease in cost of sales of $4.4 million for fiscal 2018 compared with
fiscal 2017.

For the thirteen weeks ended June 2, 2018, compared to the fourteen weeks ended June 3, 2017, cost of sales increased
$39.3 million, or 15.0%, from $262.6 million in the fourth quarter of fiscal 2017, to $301.9 million in the current
period. Feed cost per dozen for the fourth quarter of fiscal 2018 was $0.416, compared to $0.381 for the same quarter
of fiscal 2017, an increase of 9.2%, reflecting increased feed ingredient costs.

Gross profit, as a percentage of net sales, was 24.0% for fiscal 2018, compared to 4.2% for fiscal 2017. The increase
resulted primarily from higher selling prices for non-specialty eggs and stronger demand.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

(Amounts in thousands)

Specialty egg
Delivery expense
Payroll and overhead
Stock compensation
Other expenses
Total

June 2, 2018
52 Weeks

Fiscal Years Ended
June 3, 2017
53 Weeks

Change

Percent
Change

54,300 $
53,177
37,191
3,467
29,014
177,149 $

56,522 $
53,282
35,101
3,427
25,648
173,980 $

(2,222)
(105)
2,090
40
3,366
3,169

(3.9)%
(0.2)%
6.0 %
1.2 %
13.1 %
1.8 %

Selling, general and administrative expenses ("SG&A"), which include costs of marketing, distribution, accounting
and corporate overhead, were $177.1 million in fiscal 2018, an increase of $3.2 million, or 1.8%, compared to $174.0
million for fiscal 2017. As a percent of net sales, selling, general and administrative expense decreased from 16.2%
in fiscal 2017 to 11.8% in fiscal 2018, due to the increase in net sales in fiscal 2018.

The decrease in specialty egg expense for fiscal 2018 compared to fiscal 2017 is due to refunded promotional allowances
and reduced current year promotions. Payroll and overhead increased $2.1 million, or 6.0%, compared to the same
period of last year primarily due to increased bonuses, partially offset by fiscal 2018 having one less week than fiscal
2017. As a percentage of net sales, payroll and overhead is 2.5% and 3.3% for fiscal 2018 and 2017, respectively. As
a percentage of net sales, delivery expense is 3.5% and 5.0% for fiscal 2018 and 2017, respectively, decreasing due
to the increased net sales in fiscal 2018.

(Amounts in thousands)

Specialty egg
Delivery expense
Payroll and overhead
Stock compensation
Other expenses
Total

Quarters Ended

June 2, 2018
13 Weeks

June 3, 2017
14 Weeks

Change

Percent
Change

16,878 $
13,496
10,024
888
7,817
49,103 $

14,364 $
13,712
11,156
947
7,816
47,995 $

2,514
(216)
(1,132)
(59)
1
1,108

17.5 %
(1.6)%
(10.1)%
(6.2)%
— %
2.3 %

SG&A expense was $49.1 million for the fourteen weeks ended June 2, 2018, an increase of $1.1 million, or 2.3%,
compared to $48.0 million for the thirteen weeks ended June 3, 2017. The increase in specialty egg expense for the
fiscal 2018 fourth quarter is attributable to timing of advertising and promotion expenses. Payroll and overhead
decreased $1.1 million, or 10.1%, compared to the same period of last year due to the extra week in the prior fiscal
year period.

LEGAL SETTLEMENT EXPENSE

On December 29, 2017, the Company reached an agreement on material terms of the settlement of several large direct
action purchasers' antitrust claims against the Company. Pursuant to the agreement, the Company settled the claims
with a single $80.8 million payment, which is $54.8 million net of tax, or $1.13 per basic and diluted share. The
Company paid the settlement on March 23, 2018.

LOSS ON DISPOSAL OF FIXED ASSETS

We recorded losses on disposal of fixed assets of $473,000 and $3.7 million for fiscal 2018 and 2017, respectively,
due to the retirement of layer houses at certain locations in the prior year period.

OPERATING INCOME (LOSS)

As a result of the above, our operating income was $102.7 million for fiscal 2018, compared to operating loss of $132.1
million for fiscal 2017.

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 2018 was $14.7 million compared to $17.8 million for fiscal 2017. As a percent of net sales,
total other income was 1.0% for fiscal 2018, compared to 1.7% for fiscal 2017.

The Company recorded interest income of $3.7 million in fiscal 2018, compared to $3.1 million for the same period
of last year. We recorded interest expense of $482,000 and $1.4 million in fiscal 2018 and 2017, respectively, of which
$217,000 was capitalized in fiscal 2018 compared with $1.1 million in fiscal 2017. Interest income from available
for sale securities increased due to higher average invested balances and higher rates earned. 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 $621,000
from $7.7 million in fiscal 2017 to $8.3 million in fiscal 2018.

Equity in income of affiliates for fiscal 2018 was $3.5 million compared to $1.4 million for fiscal 2017. The increase
of $2.1 million is primarily due to increased income from specialty egg sales in our unconsolidated specialty egg joint
ventures and reduced losses at our Red River joint venture.

Other, net for fiscal 2018 was a loss of $573,000 compared to income of $6.0 million for fiscal 2017. The decrease
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

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act of 2017 (the
“Act”). The new tax legislation reduces the United States corporate tax rate from 35% to 21% effective January 1,
2018.

For the fiscal year ended June 2, 2018, our pre-tax income was $117.3 million, compared to pre-tax loss of $114.3
million for fiscal 2017. Income tax benefit of $8.9 million was recorded for fiscal 2018 with an effective income tax
rate of 7.6%, including the impact of the Act, compared to income tax benefit of $39.9 million for fiscal 2017 with an
effective income tax rate of 34.9%. Due to the enactment of the Act, we recorded an income tax benefit of $43 million
for the year ended June 2, 2018 related to revaluation of our net deferred tax liabilities.

The rate change is administratively effective at the beginning of our fiscal year, resulting in a blended rate for the fiscal
year period. As a result, the blended statutory tax rate for the fiscal year is 29.1%.

At June 2, 2018, the Company had an income tax payable of $17.4 million compared to an income tax receivable of
$52.7 million at June 3, 2017. The change is primarily due to receipt during the second quarter of fiscal 2018 of a
$45.0 million federal tax refund related to the carryback of fiscal 2017 losses combined with the fiscal year 2018's net
income.

For the thirteen weeks ended June 2, 2018, our pretax income was $93.9 million and our income tax expense was $21.8
million with an effective income tax rate of 23.3%, including the impact of the Act. The low effective rate was primarily
related to additional income tax benefit recorded in connection with the Act.

Historically, our effective rate differs from the federal statutory income tax rate due to state income taxes and certain
items included in income for financial reporting purposes that are not included in taxable income for income tax
purposes, including tax exempt interest income, the domestic manufacturers deduction, and net income or loss
attributable to noncontrolling interest. The enacted rate change from 35% to 21% also caused the fiscal year effective
rate to be significantly different from the Company’s historical annual effective rate. The Company’s effective federal
income tax rate for future fiscal years under current legislation is expected to be 21% plus a state income tax effective
rate of approximately 3%.

NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST

Net income attributable to noncontrolling interest for fiscal 2018 was $264,000 compared to net loss of $149,000 for
fiscal 2017.

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

As a result of the above, net income for fiscal 2018 was $125.9 million, or $2.60 per basic and diluted share, compared
to net loss of $74.3 million, or $1.54 per basic and diluted share for fiscal 2017.

Fiscal Year Ended June 3, 2017 Compared to Fiscal Year Ended May 28, 2016

NET SALES

In fiscal 2017, approximately 98% of our 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 $834.2 million, or 43.7%, 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 average 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.

Fiscal Years Ended

Quarters Ended

June 3, 2017
53 weeks

May 28, 2016
52 weeks

June 3, 2017
14 weeks

May 28, 2016
13 Weeks

(Amounts in thousands)

$ 1,074,513

$ 1,908,650

$ 274,584

(Amounts in thousands)
$ 303,020

548,858
457,617
32,689
10,423
$ 1,049,587

52.3% 1,243,377
534,754
43.6%
49,282
3.1%
10,533
1.0%
100.0% $ 1,837,946

67.7% 145,454
29.1% 112,744
7,198
2,594
100.0% $ 267,990

2.7%
0.5%

54.3% 163,882
42.0% 118,356
9,021
3,245
100.0% $ 294,504

2.7%
1.0%

98%

96%

98%

778,538
236,067
16,525
1,031,130

75.5%
22.9%
1.6%

791,058
241,603
20,936
100.0% 1,053,597

75.1% 207,428
61,862
22.9%
3,725
2.0%
100.0% 273,015

76.0% 189,850
58,856
22.7%
4,371
1.3%
100.0% 253,077

55.6%
40.2%
3.1%
1.1%
100.0%

97%

75.0%
23.3%
1.7%
100.0%

Net sales
Shell egg sales:

Non-specialty
Specialty
Co-pack specialty
Other
Net shell egg sales
As a percent of net
sales
Dozens sold:
Non-specialty
Specialty
Co-pack specialty
Total dozens sold

Net average selling price per dozen:
All shell eggs
Non-specialty
Specialty

1.007
0.705
1.939

$
$
$

1.735
1.572
2.213

$
$
$

0.973
0.701
1.823

$
$
$

1.152
0.863
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, compared to 67.7% for fiscal 2016, reflecting the large
decrease in 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 2017 period compared to the same period of 2016 ($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 fiscal 2017 and the last two quarters of
fiscal 2016 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 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.

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 majority owned subsidiary Texas Egg
Products, LLC (“TEP”). For fiscal 2017 egg product sales were $24.9 million, a decrease of $45.8 million, or 64.7%,
compared 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 for egg
products in fiscal year 2017 is due to reduced demand for egg products in contrast with extraordinarily high prices for
the prior fiscal year which reflected the shortage of supply caused by AI.

COST OF SALES

(Amounts in thousands)

Cost of sales:
Farm production
Processing and packaging
Outside egg purchases and other

Total shell eggs

Egg products
Other
Total

Fiscal Year Ended

Quarter Ended

June 3,
2017
53 weeks

May 28,
2016
52 weeks

Percent
Change

June 3,
2017
14 weeks

May 28,
2016
13 weeks

Percent
Change

$ 598,412 $ 562,521
184,586
464,008
1,211,115
48,584
877
$1,028,963 $1,260,576

202,225
207,495
1,008,132
19,766
1,065

6.4 % $ 159,482 $ 135,187
45,089
54,896
9.6 %
75,311
41,663
(55.3)%
255,587
256,041
(16.8)%
6,473
6,075
(59.3)%
21.4 %
280
462
(18.4)% $ 262,578 $ 262,340

18.0 %
21.8 %
(44.7)%
0.2 %
(6.1)%
65.0 %
0.1 %

Farm production cost (per dozen
produced)
Feed
Other
Total

Outside egg purchases (average cost
per dozen)

0.399 $
0.294
0.693 $

0.414
0.279
0.693

(3.6)% $
5.4 %
— % $

0.381 $
0.298
0.679 $

0.396
0.290
0.686

(3.8)%
2.8 %
(1.0)%

1.01 $

1.72

(41.3)% $

0.90 $

1.11

(18.9)%

Dozen produced
Dozen sold

870,252
1,031,130

819,307
1,053,597

6.2 %
(2.1)%

237,006
273,015

198,950
253,077

19.1 %
7.9 %

Cost of sales for the fiscal year ended June 3, 2017 was $1,029.0 million, a decrease of $231.6 million, or 18.4%,
compared to 1,260.6 million for fiscal 2016. Comparing fiscal 2017 to fiscal 2016, average cost per dozen purchased
from outside shell egg producers and 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 2017 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.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

(Amounts in thousands)

Specialty egg
Delivery expense
Payroll and overhead
Stock compensation
Other expenses
Total

Fiscal Years Ended

June 3, 2017
53 Weeks

May 28, 2016
52 Weeks

Change

Percent
Change

56,522 $
53,282
35,101
3,427
25,648
173,980 $

61,294 $
49,629
39,149
3,018
24,670
177,760 $

(4,772)
3,653
(4,048)
409
978
(3,780)

(7.8)%
7.4 %
(10.3)%
13.6 %
4.0 %
(2.1)%

Selling, general and administrative expenses ("SG&A"), which include costs of marketing, distribution, accounting
and corporate overhead, were $174.0 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 fiscal year 2017 as well as a 4.1% increase due to the impact of the acquisitions.

(Amounts in thousands)

Specialty egg
Delivery expense
Payroll and overhead
Stock compensation
Other expenses
Total

Quarters Ended

June 3, 2017
14 Weeks

May 28, 2016
13 Weeks

Change

Percent
Change

14,364 $
13,712
11,156
947
7,816
47,995 $

13,768 $
11,945
9,450
843
6,398
42,404 $

596
1,767
1,706
104
1,418
5,591

4.3%
14.8%
18.1%
12.3%
22.2%
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
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 fiscal 2016 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 2017 period, an increase in legal and audit fees in the 2017 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.

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 million in 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.

CAPITAL RESOURCES AND LIQUIDITY

Our working capital at June 2, 2018 was $479.7 million, compared to $371.5 million at June 3, 2017. The calculation
of working capital is defined as current assets less current liabilities. Our current ratio was 5.45 at June 2, 2018
compared to 6.74 at June 3, 2017. The current ratio is calculated by dividing current assets by current liabilities. 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. We have $4.2 million in outstanding standby letters of credit, which
are collateralized with cash. Our long-term debt and capital leases at June 2, 2018, including current maturities,
amounted to $6.1 million, compared to $10.9 million at June 3, 2017.

On July 10, 2018, subsequent to the end of our fiscal year, we entered into a $100.0 million Senior Secured Revolving
Credit Facility ("the Revolving Credit Facility"). As of July 20, 2018, no amounts were borrowed under the facility.
See Notes 8 and 17 in the Notes to Consolidated Financial Statements for information regarding our long-term debt
instruments.

Net cash provided by operating activities was $200.4 million for fiscal year 2018 compared with net cash used in
operating activities of $45.9 million for fiscal year 2017. Increased gross profit margins resulting from higher egg
prices contributed greatly to our increase in cash flow from operations.

For fiscal 2018, approximately $127.7 million was provided from the sale and maturity of short-term investments,
$275.3 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 invested $4.1 million in the Red River Valley Egg Farm LLC joint
venture. For additional information see Note 3 to Notes to Consolidated Financial Statements. Approximately $19.7
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 $4.8 million
was used for principal payments on long-term debt. The net result of these and other activities was an increase in cash
of $30.9 million from June 3, 2017.

For the fiscal year ended June 3, 2017, $45.9 million in net cash was used in operating activities. This compares to
$388.4 million of net cash provided by operating activities for the fiscal year ended May 28, 2016. Decreased gross
profit margins resulting from lower egg prices contributed greatly to our decrease in cash flow from operations in
fiscal 2017 compared to fiscal 2016.

For fiscal 2017, approximately $248.3 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. Approximately $66.7 million was used to purchase
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.

of working capital (current 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 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 2, 2018, 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.

The credit agreement governing our Revolving 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 minimum working capital
ratio of 2.00 to 1.00 and (ii) an annual limit on capital expenditures of $100.0 million. Additionally, the credit agreement
requires that Fred R. Adams Jr., his spouse, natural children, sons-in-law or grandchildren, or any trust, guardianship,
conservatorship or custodianship for the primary benefit of any of the foregoing, or any family limited partnership,
similar limited liability company or other entity that 100% of the voting control of such entity is held by any of the
foregoing, shall maintain at least 50% of the Company’s voting stock. Failure to satisfy any of these covenants will
constitute a default under the terms of the credit agreement. In addition, under the terms of the credit agreement,
dividends are restricted to the Company’s current dividend policy of one-third of the Company’s net income computed
in accordance with generally accepted accounting principles. The Company is allowed to repurchase up to $75.0 million
of its capital stock in any year provided there is no default under the credit agreement and the borrower has availability
of at least $20.0 million under the Revolving Credit Facility.

In recent years we have made significant investments in new and remodeled facilities to meet the increasing demand
for cage-free, organic and other specialty eggs, including through our previously discussed Red River joint venture.
We have contributed $58.0 million to the joint venture to fund our share of construction, startup costs, and operating
losses. The farm is in full production. We estimate we will make additional contributions of approximately $2 million
to fund our share of the remaining construction costs, which are primarily related to the construction of a feed mill.
Additionally, the following table represents material construction projects approved as of July 20, 2018 (in thousands):

Project

Location

Projected
Completion

Projected
Cost

Spent as of
June 2,
2018

Remaining
Projected
Cost

Convertible/Cage-Free Layer Houses

Hoboken, GA

October 2018

3,329

Pullet Houses

Convertible/Cage-Free Layer Houses

Lake City, FL

November 2018

Lake City, FL

Bushnell, FL

Pittsburg, TX

March 2019

May 2019

4,672

11,782

11,543

11,069

468

812

905

—

2,861

3,860

10,877

11,528

11,069

42,395

2,200

40,195

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 8, and on lease obligations
in Note 7, in the Notes to the Consolidated Financial Statements.

Total

2019

2020

2021

2022

2023

Thereafter

Long-Term Debt & Capital
Leases (Principal)
Long-Term Debt & Capital
Leases (Interest)
Operating Leases

Total

6,090 $

3,536 $

1,696 $

205 $

215 $

224 $

399
2,486
8,975 $

248
865
4,649 $

70
531
2,297 $

34
487
726 $

25
380
620 $

15
206
445 $

214

7
17
238

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

For information on changes in accounting principles and new accounting principles, see “Impact of Recently Issued
Accounting Standards” in Note 1 to the Consolidated Financial Statements.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. generally accepted accounting standards 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.

Management suggests our Summary 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 the critical accounting policies that most impact our consolidated
financial statements are described below.

INVESTMENTS IN SECURITIES AVAILABLE-FOR-SALE

Our investment securities are accounted for in accordance with ASC 320, “Investments-Debt and Equity
Securities” (“ASC 320”). The Company considers all investment securities for which there is a determinable fair
market value and no restrictions on the Company's ability to sell within the next 12 months as available-for-sale, and
carries them at fair value, with unrealized gains and losses reported as a separate component of stockholders' equity.
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.

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 flocks are valued principally at the lower of cost (first-in, first-out method) or
net realizable value. If market prices for eggs and feed grains move substantially lower, we record adjustments to
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. Flock mortality is charged to cost of sales as incurred. High
mortality
flock
inventories. Management continually monitors each flock and attempts to take appropriate actions to minimize the
risk of mortality loss.

from disease or extreme

in abnormal write-downs

temperatures would

result

LONG-LIVED ASSETS

long-lived assets are primarily comprised of buildings,

improvements, machinery and
Depreciable
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 5 to 15 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 $66.8 million at June 2, 2018. The combined total assets and
total liabilities of these companies were approximately $304.9 million and $40.1 million, respectively, at June 2, 2018.

GOODWILL

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.

At June 2, 2018, goodwill represented 3.1% of total assets and 3.7% of stockholders’ equity. Goodwill relates to the
following (in thousands):

Fiscal Year
1999
2006
2007
2008
2009
2009
2009
2010
2013
2014
2017
2017

Description

Amount

Acquisition of Hudson Brothers, Inc.
Acquisition of Hillandale Farms, LLC
Acquisition of Green Forest Foods, LLC
Revised Hillandale incremental purchase price
Revised Hillandale incremental purchase price
Acquisition of Zephyr Egg, LLC
Acquisition of Tampa Farms, LLC
Revised Hillandale incremental purchase price
Acquisition of Maxim Production Co., Inc.
Purchase of joint venture partner’s 50% in Delta Egg
Acquisition of Foodonics International, Inc.
Acquisition of Happy Hen Egg Farms, Inc.
Total Goodwill

3,147
869
179
9,257
2,527
1,876
4,600
(338)
2,300
4,779
3,389
2,940
35,525

REVENUE RECOGNITION AND DELIVERY COSTS

The Company recognizes revenue only when all of the following criteria have been met:

• Persuasive evidence of an arrangement exists;
• Delivery has occurred;
• The fee for the arrangement is determinable; and
• Collectability is reasonably assured.

The Company believes the above criteria are 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 $53.2 million, $53.3 million, and $49.6 million in fiscal years 2018,
2017, and 2016, respectively. Sales revenue reported in the accompanying Consolidated Statements of Operations 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.

In May 2014, the Financial Accounting Standards Board (the "FASB") issued ASU 2014-09 "Revenue from Contracts
with Customers" (Topic 606) ("ASU 2014-09"), which supersedes most existing revenue recognition guidance. The
Company adopted ASU 2014-09 on June 3, 2018. See Note 1: Significant Accounting Policies of the Notes to
Consolidated Financial Statements under the caption Impact of Recently Issued Accounting Standards for details of
the Company’s adoption of ASU 2014-09.

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.’’

STOCK BASED COMPENSATION

stock and performance-based shares to be recognized in the statement of operations based on their fair values. ASC
718 requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing
cash flow. See Note 10: Stock Compensation Plans in the Notes to the Consolidated Financial Statements for more
information.

INCOME TAXES

We determine our effective tax rate by estimating our permanent differences resulting from differing treatment of items
for tax and accounting purposes. We are periodically audited by taxing authorities. Any audit adjustments affecting
permanent differences could have an impact on our effective tax rate.

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 eggs, corn and soybean meal, which are
commodities subject to significant price fluctuations due to market conditions that are largely beyond our control. We
are focused on growing our specialty shell egg business because the selling prices of specialty shell eggs are generally
not as volatile as non-specialty shell egg prices. The following table outlines the impact of price changes for corn and
soybean meal on feed cost per dozen:

Feed ingredient

Corn

Soybean Meal

Approximate change in feed ingredient cost
$ 0.25 change in the average market price
per bushel
$ 25.00 change in the average market price
per ton

Approximate
impact on feed
costs per dozen

Approximate dollar
impact on farm
production cost for the
2018 fiscal year

0.01 $

8,733,070

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.

INTEREST RATE RISK

The fair value of our debt is sensitive to changes in the general level of U.S. interest rates. At June 2, 2018 we maintained
all of our debt as fixed rate in nature which mitigated the impact of fluctuations in interest rates. As previously discussed,
subsequent to the end of fiscal 2018, we entered into a $100.0 million Senior Secured Revolving Credit Facility which
bears interest at a variable rate. 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 the net
fair value of our outstanding debt by $65,000 at June 2, 2018.

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

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, Mississippi

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Cal-Maine Foods, Inc. and Subsidiaries (the
“Company”) as of June 2, 2018 and June 3, 2017, the related consolidated statements of operations, comprehensive
income (loss), stockholders’ equity and cash flows, for each of the three years in the period ended June 2, 2018, and
the related consolidated notes and schedule listed in the Index at Item 15(a) (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 the Company and subsidiaries at June 2, 2018 and June 3, 2017, and the results of its operations
and its cash flows for each of the three years in the period ended June 2, 2018, in conformity with accounting principles
generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company’s internal control over financial reporting as of June 2, 2018, based on the criteria
established in Internal Control - Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission, and our report dated July 20, 2018 expressed an unqualified opinion thereon.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on the Company’s 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 the Company 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, 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 accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe our audits provide a reasonable basis for our opinion.

/s/Frost, PLLC

We have served as the Company’s auditor since 2007.

Little Rock, Arkansas
July 20, 2018

Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except for par value amounts)

June 2,
2018

June 3,
2017

Assets
Current assets:
Cash and cash equivalents
Investment securities available-for-sale
Receivables:

Trade receivables, less allowance for doubtful accounts of $268 in 2018 and $386 in 2017
Income tax receivable
Other

Inventories
Prepaid expenses and other current assets
Total current assets
Other assets:

Investments in affiliates
Goodwill
Other intangible assets
Other long-lived assets

Property, plant and equipment, less accumulated depreciation
Total assets
Liabilities and stockholders' equity
Current liabilities:

Trade accounts payable
Accrued dividends payable

Accrued wages and benefits
Accrued income taxes payable

Accrued expenses and other liabilities
Current maturities of long-term debt

Total current liabilities

Long-term debt, less current maturities
Other noncurrent liabilities
Deferred income taxes

Total liabilities
Commitments and contingencies – See Notes 7, 8, and 12
Stockholders' equity:
Common stock, $.01 par value
120,000 shares authorized and 70,261 shares issued in 2018 and 2017
43,831 and 43,777 shares outstanding in 2018 and 2017, respectively
Class A convertible common stock, $.01 par value
4,800 shares authorized, issued and outstanding in 2018 and 2017, respectively
Paid-in capital
Retained earnings
Accumulated other comprehensive loss, net of tax
Common stock in treasury, at cost – 26,430 and 26,484 shares in 2018 and 2017, respectively
Total Cal-Maine Foods, Inc. stockholders' equity
Noncontrolling interest in consolidated entities
Total stockholders’ equity
Total liabilities and stockholders' equity

See accompanying notes.

48,431
282,586

80,731
—
5,108
85,839
168,644
2,020
587,520

66,806
35,525
26,307
8,905
137,543
425,384
1,150,447

37,840
17,093

18,967
17,446

12,956
3,536
107,838
2,554
8,318
76,055
194,765

17,564
138,462

61,261
52,691
3,248
117,200
160,692
2,288
436,206

65,731
35,525
29,149
8,299
138,704
458,184
1,033,094

30,629
—

15,809
—

13,415
4,826
64,679
6,113
7,527
110,282
188,601

703

48
53,323
924,918
(693)
(24,966)
953,333
2,349
955,682
1,150,447

48
49,932
816,046
(128)
(23,914)
842,687
1,806
844,493
1,033,094

Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)

Net sales

Cost of sales

Gross profit

Selling, general and administrative

Legal settlement expense - See Note 12

(Gain) loss on disposal of fixed assets

Operating income (loss)

Other income (expense):

Interest expense

Interest income

Patronage dividends

Equity in income of affiliates

Other, net

Total other income

Income (loss) before income taxes and noncontrolling interest

Income tax expense (benefit)

Net income (loss) including noncontrolling interest

Less: Net income (loss) attributable to noncontrolling interest

Net income (loss) attributable to Cal-Maine Foods, Inc.

Net income (loss) per share:

Basic

Diluted

Weighted average shares outstanding:

Basic

Diluted

See accompanying notes.

Fiscal years ended

June 2,
2018

52 weeks

June 3,
2017

53 weeks

May 28,
2016

52 weeks

1,502,932

1,074,513

1,141,886

361,046

177,148

80,750

473

102,675

(265)

3,697

8,286

3,517

(573)

14,662

117,337

(8,859)

126,196

264

1,028,963

45,550

173,980

—

3,664

(132,094)

(318)

3,103

7,665

1,390

5,960

17,800

(114,294)

(39,867)

(74,427)

(149)

125,932

(74,278) $

2.60

(1.54) $

48,353

48,468

48,362

1,908,650

1,260,576

648,074

177,760

—

(1,563)

471,877

(1,156)

4,314

6,930

5,016

268

15,372

487,249

169,202

318,047

2,006

316,041

6.56

6.53

48,195

48,365

Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)

Net income (loss), including noncontrolling interests

Other comprehensive income (loss), before tax:

Unrealized holding gain (loss) on available-for-sale securities, net of reclassification adjustments

(Increase) decrease in accumulated postretirement benefits obligation, net of reclassification adjustments

Other comprehensive loss, before tax

Income tax benefit related to items of other comprehensive income

Other comprehensive loss, net of tax

Comprehensive income (loss)

Less: comprehensive income (loss) attributable to the noncontrolling interest

Fiscal years ended

June 2,
2018

June 3,
2017

May 28,
2016

126,196

(74,427) $

318,047

(1,151)

249

(902)

(370)

(532)

125,664

264

177

(334)

(157)

(77)

(80)

(25)

(118)

(143)

(73)

(70)

(74,507)

(149)

317,977

2,006

Comprehensive income (loss) attributable to Cal-Maine Foods, Inc.

125,400

(74,358) $

315,971

See accompanying notes.

Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(in thousands)

Common Stock

Balance at May 30, 2015

Dividends

Issuance of restricted stock from treasury, net of forfeitures

Purchase of company stock - shares withheld to satisfy withholding obligation
in connection with the vesting of restricted stock

Restricted stock compensation expense

Tax benefit on nonqualifying disposition of incentive stock options

Distribution to noncontrolling interest partners

Net income for fiscal 2016

Other comprehensive loss, net of tax

Amount

Class A
Shares

Class A
Amount

Treasury
Shares

Treasury
Amount

Paid In
Capital

Retained
Earnings

Accum.
Other
Comp.
Income
(Loss)

Noncontrolling
Interest

Total

70,261

703

4,800

26,563

$ (20,482) $ 43,304

$ 679,969

998

$ 704,562

(105,570)

(76)

(58)

(1,848)

3,071

316,041

(70)

(918)

2,006

(105,570)

—

(1,848)

3,071

(918)

318,047

(70)

Balance at May 28, 2016

70,261

703

4,800

26,524

$ (22,272) $ 46,404

$ 890,440

(48) $

2,086

$ 917,361

Issuance of restricted stock from treasury, net of forfeitures

Purchase of company stock - shares withheld to satisfy withholding obligation
in connection with the vesting of restricted stock

Restricted stock compensation expense

Cumulative adjustment to restricted stock compensation from the adoption of
ASU 2016-09

Reclass of equity portion of American Egg Products in connection with
Foodonics' acquisition

Distribution to noncontrolling interest partners

Net loss for fiscal 2017

Other comprehensive loss, net of tax

Balance at June 3, 2017

Issuance of restricted stock from treasury, net of forfeitures

Purchase of company stock - shares withheld to satisfy withholding obligation
in connection with the vesting of restricted stock

Restricted stock compensation expense

Reclassification of stranded tax effects from change in tax rates

Dividends

Contribution from noncontrolling interest partners

Net income for fiscal 2018

Other comprehensive loss, net of tax

Balance at June 2, 2018

See accompanying notes.

(80)

(73)

(1,715)

3,427

174

(174)

(74,278)

—

(1,715)

3,427

—

(73)

(58)

(73)

(80)

(149)

(74,427)

(80)

70,261

703

4,800

26,484

$ (23,914) $ 49,932

$ 816,046

(128) $

1,806

$ 844,493

(80)

(76)

(1,128)

3,467

—

(1,128)

3,467

—

(17,093)

279

126,196

(532)

279

264

(33)

(17,093)

125,932

(532)

70,261

703

4,800

26,430

$ (24,966) $ 53,323

$ 924,918

(693) $

2,349

$ 955,682

Cal-Maine Foods, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)

Fiscal year ended

June 2,
2018

June 3,
2017

May 28,
2016

126,196

(74,427) $

318,047

54,026

(33,809)

(3,517)

472

3,467

—

1,680

31,403

(7,952)

28,378

200,415

(275,287)

127,664

—

(4,100)

6,581

(19,671)

963

(163,850)

(4,849)

279

(1,128)

—

(5,698)

30,867

17,564

49,113

14,833

(1,390)

3,664

3,427

—

3,398

(209)

(37,222)

2,386

(9,491)

(45,918)

(29,849)

248,292

(85,822)

(19,900)

6,586

(66,657)

52,734

(16,510)

(73)

(1,715)

—

(18,298)

(11,482)

29,046

48,431

17,564

44,592

19,392

(5,016)

(1,563)

3,071

(798)

6,599

—

21,160

(8,539)

(8,508)

388,437

(403,204)

285,853

—

(33,959)

5,427

(76,125)

2,860

(219,148)

(25,290)

(918)

(1,760)

(120,942)

(148,910)

20,379

8,667

29,046

(45,101) $

(15,233) $

166,840

265

317

1,067

Cash flows from operating activities

Net income (loss) including noncontrolling interests

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

Deferred income taxes

Equity in income of affiliates

(Gain) loss on disposal of property, plant and equipment

Stock compensation expense, net of amounts paid

Recovery of note receivable

Amortization of investment securities

Other

Change in operating assets and liabilities, net of effects from acquisitions:

(Increase) decrease in receivables and other assets

(Increase) decrease in inventories

Increase (decrease) in accounts payable, accrued expenses and other liabilities

Net cash provided by (used in) operating activities

Cash flows from investing activities

Purchases of investments securities

Sales and maturities of investment securities

Acquisition of businesses, net of cash acquired

Investment in Red River Valley Egg Farm LLC

Payments received on notes receivable and from investments in affiliates

Purchases of property, plant and equipment

Net proceeds from disposal of property, plant and equipment

Net cash provided by (used in) investing activities

Cash flows from financing activities

Principal payments on long-term debt

Contributions from (distributions to) noncontrolling interest partners

Purchase of common stock by treasury (including tax benefit on nonqualifying disposition of
incentive stock options)

Payments of dividends

Net cash used in financing activities

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental cash flow information:

Cash paid (received) during the year for:

Income taxes paid (refunds received), net

Interest (net of amount capitalized)

See accompanying notes.

Cal-Maine Foods, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
June 2, 2018

1. Significant Accounting Policies

Principles of Consolidation

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, processing and distribution of shell eggs. The Company’s
operations are significantly affected by the market price fluctuation of its principal product, shell eggs, and the costs
of its principal feed ingredients, corn, soybean meal, and other grains.

The Company sells 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 the southeastern,
southwestern, mid-western and mid-Atlantic regions of the United States. Credit is extended based upon an evaluation
of each customer’s financial condition and credit history and generally collateral is not required. Credit losses have
consistently been within management’s expectations. Two customers, Wal-Mart and Sam’s Club, on a combined basis,
accounted for 33.2%, 28.9% and 28.9% of the Company’s net sales in fiscal years 2018, 2017, and 2016, respectively.

Fiscal Year

The Company’s fiscal year-end is on the Saturday nearest May 31, which was June 2, 2018 (52 weeks), June 3, 2017
(53 weeks), and May 28, 2016 (52 weeks) for the most recent three fiscal years.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting
principles 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 (“FDIC”)
up to $250,000. At June 2, 2018 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 loss in
such accounts. The Company manages this risk through maintaining cash deposits and other highly liquid investments
in high quality financial institutions.

We primarily utilize a cash management system with a series of separate accounts consisting of lockbox accounts for
receiving cash, concentration accounts where 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 2, 2018, and June 3, 2017, checks outstanding in excess
of related book cash balances totaled $418,000 and $2.0 million, 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 its investment 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. We had unrealized losses, net of tax, of $294,000 at June 2, 2018, compared with
unrealized gains, net of tax, of $473,000 at June 3, 2017, both of 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.

At June 2, 2018 and June 3, 2017, we had $282.6 million and $138.5 million, respectively, of current investment
securities available-for-sale consisting of commercial paper, U.S. government obligations, government agency bonds,
certificates of deposit, variable rate demand notes, 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 2, 2018 and June 3, 2017 we had $3.1
million and $2.5 million, respectively, of investments in mutual funds which are considered long term and are a part
of “Other Investments” in the Consolidated Balance Sheet.

Investment in Affiliates

The equity method of accounting is used when the Company has a 20% to 50% interest in other entities or when the
Company exercises significant influence over the entity. 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. 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.

Trade Receivables and Allowance for Doubtful Accounts

Trade receivables are comprised primarily of amounts owed to the Company from customers, which amounted to
$80.7 million at June 2, 2018 and $61.3 million at June 3, 2017. They are presented net of an allowance for doubtful
accounts of $268,000 at June 2, 2018 and $386,000 at June 3, 2017. The Company extends credit to customers based
upon an evaluation of each customer’s financial condition and credit history. Although credit risks associated with our
customers 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
expected to be collected. For all other customers, we recognize reserves for bad debt based on the length of time the
receivables are aged, generally 100% for amounts aged more than 60 days. Collateral is generally not required. Credit
losses have consistently been within management’s expectations. At both June 2, 2018 and June 3, 2017 two customers
accounted for approximately 33.4% and 27.5% of the Company’s trade accounts receivable, respectively.

Inventories

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

The cost associated with flocks, consisting principally of chick purchases, 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. 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 information is not utilized by management in the operation of the Company.

Property, Plant and Equipment

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 over the asset’s estimated useful life.

Impairment of Long-Lived Assets

The Company reviews the carrying value of long-lived assets, other than goodwill, for impairment whenever events
and circumstances indicate the carrying value of an asset may 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 the fair value of assets. The factors considered by management in performing this
assessment include current operating results, trends and prospects, the manner in which the property is used, and the
effects of obsolescence, demand, competition, and other economic factors.

Intangible Assets

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 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.

Dividends

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 computed in accordance with generally accepted accounting
principles in an amount equal to one-third (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, 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. Dividends payable, which would
represent accrued unpaid dividends applicable to the Company's fourth quarter, were $17.1 million at June 2, 2018
and zero at June 3, 2017.

Net income (loss) attributable to Cal-Maine Foods, inc.
Cumulative losses to be recovered prior to payment of dividend
at beginning of the period

Net income (loss) attributable to Cal-Maine Foods, Inc. available
for dividend

1/3 of net income attributable to Cal-Maine Foods, Inc.

Common stock outstanding (shares)

Class A common stock outstanding (shares)

Total common stock outstanding (shares)

13 Weeks
Ended
June 2,
2018

71,767

14 Weeks
Ended
June 3,
2017
(24,471) $

52 Weeks
Ended
June 2,
2018

125,932

53 Weeks
Ended
June 3,
2017
(74,278)

(20,488)

(50,182)

(74,653)

(375)

51,279

(74,653) $

51,279

(74,653)

17,093

43,831

4,800

48,631

Dividends per common share*

0.351

— $

0.351

—

*Dividends per common share = 1/3 of Net income (loss) attributable to Cal-Maine Foods, Inc. available for dividend ÷ Total
common stock outstanding (shares).

Treasury Stock

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 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 all of the following criteria have been met:

• Persuasive evidence of an arrangement exists;
• Delivery has occurred;
• The fee for the arrangement is determinable; and
• Collectability is reasonably assured.

The Company believes the above criteria are 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 $53.2 million, $53.3 million, and $49.6 million in fiscal years 2018,
2017, and 2016, respectively. Sales revenue reported in the accompanying consolidated statements of 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.

In May 2014, the Financial Accounting Standards Board (the "FASB") issued ASU 2014-09 "Revenue from Contracts
with Customers" (Topic 606) ("ASU 2014-09"), which supersedes most existing revenue recognition guidance. We
adopted ASU 2014-09 on June 3, 2018. See the caption below, "Impact of Recently Issued Accounting Standards"
for details of our adoption of ASU 2014-09.

Sales Incentives provided to Customers

Advertising Costs

The Company expensed advertising costs as incurred of $6.3 million, $12.1 million, and $10.3 million in fiscal 2018,
2017, and 2016, respectively.

Income Taxes

Income taxes are provided using the liability method. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities 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 interest on the portion of the tax benefit not recognized.
The Company shall initially and subsequently measure the largest amount of tax benefit that is greater than 50% likely
of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. 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

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 of operations based on their fair values. ASC
718 requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing
cash flow. See Note 10: Stock Compensation Plans for more information.

Net Income (Loss) per Common Share

Basic net 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.

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 of
131,292 were excluded from the calculation of diluted earnings per share because their inclusion would have been
antidilutive. The computations of basic net income per share and diluted net income per share are as follows (in
thousands):

Net income (loss) attributable to Cal-Maine Foods, Inc.

125,932 $

June 2, 2018

June 3, 2017 May 28, 2016
316,041

(74,278) $

Basic weighted-average common shares (including Class A)

48,353

48,362

48,195

Effect of dilutive securities:
Common stock options and restricted stock
Dilutive potential common shares

Net income (loss) per common share:
Basic

Diluted

Contingencies

115
48,468

—
48,362

170
48,365

2.60 $

(1.54) $

2.60 $

(1.54) $

6.56

6.53

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 Accounting Standards

In May 2014, 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 goods 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.

The Company adopted the new standard on June 3, 2018 utilizing the full retrospective method. The Company’s
assessment efforts included an evaluation of certain revenue contracts with customers and related sales incentives.
The Company’s adoption of ASU 2014-09 will not have a material impact on the results of operations or financial
position.

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 not expect ASU 2016-02 to have a material impact on the results of operations or financial position; however,
the Company’s assessment is not complete.

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.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income, which allows
for reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting
from the Tax Cuts and Jobs Act. ASU 2018-02 is effective for annual reporting periods beginning after December 15,
2018, and interim periods within those annual periods. Early adoption is permitted. The company early adopted ASU
2018-02 in the fourth quarter of fiscal 2018 and reclassified $33,000 from accumulated other comprehensive income
to retained earnings as a result of ASU 2018-02.

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. Acquisitions

Fiscal 2017 Acquisitions

On October 16, 2016, 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.

On February 18, 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 following table summarizes the aggregate purchase price allocation for Foodonics and Happy Hen (in thousands):

Inventory
Property, plant and equipment
Intangible assets
Liabilities assumed
Total identifiable net assets
Goodwill
Purchase price
Deferred purchase price
Cash consideration paid

8,278
49,849
26,400
(2,034)
82,493
6,329
88,822
(3,000)
85,822

Pro-forma information, which is usually presented for information purposes only 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.

3. Investment in Affiliates

The Company has several investments in non-consolidated affiliates that are accounted for using the equity method
of accounting. As of June 2, 2018, the Company owns 50% of each of Red River Valley Egg Farm, LLC, Specialty
Eggs, LLC, and Southwest Specialty, LLC. Investment in affiliates are included in “Other Investments” in the
accompanying Consolidated Balance Sheets and totaled $64.2 million and $62.8 million at June 2, 2018 and at June 3,
2017, respectively.

Equity in income of affiliates of $3.5 million, $1.4 million, and $5.0 million from these entities has been included in
the Consolidated Statements of Operations for fiscal 2018, 2017, and 2016, respectively.

The condensed consolidated financial information for the Company's unconsolidated joint ventures was as follows:

Net sales

Net income

Total assets

Total liabilities

Total equity

For the fiscal year ended

June 2, 2018

June 3, 2017

May 28, 2016

137,612

7,071

134,056

5,859

128,197

86,072

2,804

131,871

6,543

125,328

91,320

10,090

100,700

5,697

95,003

The Company is a member of Eggland’s Best, Inc. (“EB”), which is a cooperative. At June 2, 2018 and June 3, 2017,
“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 June 2, 2018 and June 3, 2017 was $2.6 million and $2.9 million, respectively.

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):

June 2, 2018

For the fiscal year ended
June 3, 2017

May 28, 2016

Sales to affiliates
Purchases from affiliates
Dividends from affiliates

59,295
81,043
4,664

59,073
73,713
6,581

June 2, 2018

June 3, 2017

4,603
3,525

61,094
79,419
4,550

4,643
3,617

Accounts receivable from affiliates
Accounts payable to affiliates

4. Inventories

Inventories consisted of the following (in thousands):

Flocks, net of accumulated amortization
Eggs
Feed and supplies

June 2, 2018

June 3, 2017

96,594 $
17,313
54,737
168,644 $

98,059
14,911
47,722
160,692

We grow and maintain flocks of layers (mature female chickens), pullets (female chickens, under 18 weeks of age),
and breeders (male and female chickens used to produce fertile eggs to hatch for egg production flocks). Our total
flock at June 2, 2018, consisted of approximately 9.6 million pullets and breeders and 36.3 million layers.

The Company expensed amortization and mortality associated with the flocks to cost of sales as follows (in thousands):

?
?

Amortization
Mortality
Total flock costs charge to cost of sales

5. Goodwill and Other Intangible Assets

117,774 $
4,438
122,212 $

Goodwill and other intangibles consisted of the following (in thousands):

June 2, 2018

June 3, 2017

118,859 $
5,213
124,072 $

May 28, 2016
106,459
3,665
110,124

Franchise

Customer

Non-
compete

Right of use

Water

Total other

Other Intangibles

Goodwill

rights

relationships

agreements

intangible

rights

Trademark

intangibles

Balance May 28, 2016

29,196 $

397 $

3,685 $

28 $

128 $

720

— $

Additions

Amortization

Balance June 3, 2017

Amortization

6,329

—

35,525

—

24,000

(1,183)

23,214

(1,631)

1,900

(925)

4,660

(1,078)

100

(24)

104

(18)

—

(62)

(66)

—

720

—

400

(15)

385

(49)

Balance June 2, 2018

35,525 $

21,583 $

3,582 $

86 $

— $

720

336 $

4,958

26,400

(2,209)

29,149

(2,842)

26,307

For the Other Intangibles listed above, the gross carrying amounts and accumulated amortization are as
follows (in thousands):

?
?

Other intangible assets:

Franchise rights
Customer relationships
Non-compete agreements
Right of use intangible

Water rights *
Trademark

Total

June 2, 2018

June 3, 2017

Gross carrying
amount

Accumulated
amortization

Gross carrying
amount

Accumulated
amortization

29,284
19,544
200
191

720
400
50,339

(7,701) $
(15,962)
(114)
(191)
—
(64)
(24,032) $

29,284
19,544
200
191

720
400
50,339

(6,070)
(14,884)
(96)
(125)
—
(15)
(21,190)

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 2018, 2017, and 2016 totaled $2.8 million, $2.2 million, and $2.6 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
$
2,766

2019

2020

2021

2022

2023

Thereafter

Total

?
?
?

6. Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

Land and improvements
Buildings and improvements
Machinery and equipment
Construction-in-progress

Less: accumulated depreciation

2,766

2,228

1,924

13,979

25,587

June 2,
2018

June 3,
2017

90,757 $
360,030
478,997
9,307
939,091
513,707
425,384 $

87,276
342,933
460,218
36,752
927,179
468,995
458,184

Depreciation expense was $51.1 million, $48.8 million and $41.4 million in fiscal years 2018, 2017 and 2016,
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 of damaged assets, clean-up and demolition costs, and post-event costs are recognized as income 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 losses related to property damage

are recorded within “Other income (expense).” Insurance recoveries related to business interruption are classified as
operating cash flows and recoveries related to property damage are classified as investing cash flows in the statement
of cash flows. Insurance claims incurred or finalized during the fiscal years ended 2018, 2017, and 2016 are discussed
below.

In the second quarter of fiscal 2016, a contract producer owned pullet complex in Florida was damaged by fire. The
fire destroyed two contract producer owned pullet houses that contained the Company’s flocks. In the third quarter
of fiscal 2016, the Company’s Shady Dale, Georgia complex was damaged by a fire. The fire destroyed two pullet
houses. These claims were resolved in fiscal 2017 and did not have a material impact on the Company’s results of
operations.

7. Leases

Future minimum payments under non-cancelable operating leases that have initial or remaining non-cancelable terms
in excess of one year at June 2, 2018 are as follows (in thousands):

2019
2020
2021
2022
2023
Thereafter
Total minimum lease payments

865
531
487
380
206
17
2,486

Substantially all of the leases require the Company to pay taxes, maintenance, insurance and certain other operating
expenses applicable to the leased assets. Vehicle rent expense totaled $578,000, $475,000 and $190,000 in fiscal
2018, 2017 and 2016, respectively. Rent expense excluding vehicle rent was $3.2 million, $3.5 million, and $3.9
million in fiscal 2018, 2017 and 2016, respectively, primarily 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):

Note payable at 6.20%, due in monthly principal installments of $250,000, plus interest,

maturing in fiscal 2020

Note payable at 5.40%, due in monthly principal installments of $125,000, plus interest,

maturing in fiscal 2019

Capital lease obligations

Total debt

Less: current maturities

Long-term debt, less current maturities

June 2,
2018

June 3,
2017

4,500

7,500

250

1,340

6,090

3,536

2,554

1,750

1,689

10,939

4,826

6,113

The aggregate annual fiscal year maturities of long-term debt at June 2, 2018 are as follows (in thousands):

2019
2020
2021
2022
2023
Thereafter

3,536
1,696
205
215
224
214
6,090

Certain property, plant, and equipment is pledged as collateral on our notes payable. 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 2, 2018, 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 2, 2018.

Interest, net of amount capitalized, of $265,000, $318,000, and $1.1 million was paid during fiscal 2018, 2017 and
2016, respectively. Interest of $217,000, $1.1 million and $1.1 million was capitalized for construction of certain
facilities during fiscal 2018, 2017 and 2016, respectively.

On July 10, 2018, subsequent to the end of our fiscal year, we entered into a $100.0 million Senior Secured Revolving
Credit Facility with BMO Harris Bank and Greenstone Farm Credit Services. See Note 17, "Subsequent Events" for
details.

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 per
occurrence. The Company's expenses including accruals for incurred but not reported claims were approximately
$16.1 million, $14.0 million, and $11.8 million in fiscal years 2018, 2017 and 2016, respectively. The liability recorded
for incurred but not reported claims was $1.1 million as of June 2, 2018 and $900,000 as of June 3, 2017.

The Company has a KSOP plan that covers substantially all employees (“the Plan”). The Company makes contributions
to the Plan at a rate of 3% of 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, and vest
immediately. The Company's cash contributions to the Plan were $3.3 million, $3.2 million, and $2.9 million in fiscal
years 2018, 2017 and 2016, respectively. The Company did not make direct contributions of the Company’s common
stock in fiscal years 2018, 2017, or 2016. Dividends on the Company’s common stock are paid to the Plan in cash. The
Plan acquires the Company’s 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 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.

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 the plan were $110,000, $110,000, and $102,000 in fiscal years 2018, 2017, and 2016,
respectively. The liability recorded related to these agreements was $1.5 million at June 2, 2018 and $1.6 million at
June 3, 2017.

In December 2006, 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 $298,000, $290,000, and $284,000 in fiscal
2018, 2017 and 2016, respectively. Payments made under the plan were $42,000 and $147,000 in fiscal 2018 and
2017, respectively. The liability recorded related to these agreements was $3.1 million and $2.5 million at June 2,
2018 and June 3, 2017, respectively.

Deferred compensation expense for both plans totaled $693,000, $616,000 and $347,000 in fiscal 2018, 2017 and
2016, respectively.

Postretirement Medical Plan

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 lifetime benefits under the
plan. Officers and their spouses, who retired prior to May 1, 2012, must participate in Medicare Plans A and B. Officers,
and their spouses, who retire on or after May 1, 2012 must participate in Medicare Plans A, B, and D.

The plan is accounted for in accordance with ASC 715, “Compensation – Retirement Benefits”, 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 million at June 2, 2018 and June 3, 2017. The remaining disclosures associated with ASC 715 are
immaterial to the Company’s financial statements.

10. Stock Compensation Plans

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 inherent in
the awards under the 2012 Plan. The maximum number of shares of common stock 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 us or one of our subsidiaries (except for incentive stock options which may be
granted only to our employees). As of June 2, 2018, there were 423,092 shares available for future issuance under the
2012 Plan.

In January 2018, the Company granted 88,965 restricted shares from treasury. The restricted shares vest three years
from the grant date, or upon death or disability, change in control, or retirement (subject to certain requirements). The
restricted shares contain no other service or performance conditions. Restricted stock is awarded in the name of the
recipient and except for the right of 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 over the vesting period.

Our unrecognized compensation expense as a result of non-vested shares was $5.9 million at June 2, 2018 and June 3,
2017. The unrecognized compensation expense will be amortized to stock compensation expense over a period of 2.1
years.

The Company recognized stock compensation expense of $3.5 million, $3.4 million, and $1.7 million for equity awards
in fiscal 2018, 2017, and 2016, respectively.

A summary of our equity award activity and related information for our restricted stock is as follows:

Outstanding, May 28, 2016
Granted
Vested
Forfeited
Outstanding, June 3, 2017
Granted
Vested
Forfeited
Outstanding, June 2, 2018

?
?
?

11. Income Taxes

Income tax expense (benefit) consisted of the following:

Number
of
Shares

Weighted
Average
Grant Date
Fair Value

288,900
86,215
(121,148)
(6,232)
247,735
88,965
(85,990)
(9,420)
241,290

35.97
43.00
26.90
39.66
35.97
43.81
36.76
42.43
42.30

Current:
Federal
State

Deferred:
Federal
Enacted rate change
State

June 2,
2018

Fiscal year ended
June 3,
2017

May 28,
2016

18,560 $
6,390
24,950

11,038
(42,973)
(1,874)
(33,809)
(8,859) $

(48,030) $
(6,670)
(54,700)

13,076
—
1,757
14,833
(39,867) $

132,250
17,560
149,810

17,096
—
2,296
19,392
169,202

Significant components of the Company’s deferred tax liabilities and assets were as follows:

Deferred tax liabilities:

Property, plant and equipment
Inventories
Investment in affiliates
Other comprehensive income
Other

Total deferred tax liabilities

Deferred tax assets:
Accrued expenses
State operating loss carryforwards
Other comprehensive loss
Other

Total deferred tax assets
Net deferred tax liabilities

June 2,
2018

June 3,
2017

47,899 $
25,494
7,996
—
1,616
83,005

3,013
566
95
3,276
6,950
76,055 $

68,830
38,270
8,563
290
4,656
120,609

4,308
—
—
6,019
10,327
110,282

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:

Statutory federal income tax (benefit)

State income tax (benefit)

Domestic manufacturers deduction

Enacted rate change

Tax exempt interest income

Other, net

Fiscal year end

June 2,
2018

June 3,
2017

May 28,
2016

34,105

3,200
(2,545)
(42,973)
(101)
(545)
(8,859) $

(39,950) $
(3,193)
4,095

—
(206)
(613)
(39,867) $

169,835

12,906
(13,332)
—
(233)
26

169,202

Following the enactment of the Act, the United States Securities and Exchange Commission issued guidance in Staff
Accounting Bulletin 118 which provides the Company up to a one-year measurement period, beginning on the Act’s
enactment date, in which to complete the required analysis and accounting for the effects of the Act. The guidance
allows the Company to record provisional adjustments related to the impacts of the Act when the accounting for the
effects of the Act is incomplete, but when reasonable estimates can be made regarding the effects of the Act.

In the fiscal 2018 third quarter our accounting for the Act was not complete, because it required the Company to
estimate the timing of settlement of the temporary differences from which our deferred taxes arose; however, we were
able to make reasonable estimates, and we recorded those estimates as provisional adjustments. The Company
completed additional analysis during its fourth quarter and further adjustments to the provisional amounts were required.
As a result, the Company has recorded a $43.0 million tax benefit in connection with the Act for fiscal year 2018.

Federal and state income taxes of $2.1 million, $3.7 million, and $167.2 million were paid in fiscal years 2018, 2017,
and 2016, respectively. Federal and state income taxes of $47.2 million, $17.6 million, and $320,000 were refunded
in fiscal years 2018, 2017, and 2016, respectively.

We had no significant unrecognized tax benefits at June 2, 2018 or June 3, 2017. Accordingly, 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 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 beginning
with fiscal year 2013 remain open to examination by 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 $4.2 million at June 2, 2018. These
LOCs are collateralized with cash 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

The only non-class plaintiffs that are not included in the settlement agreement are the following companies that sought
substantial damages allegedly arising from the purchase of egg products (as opposed to shell eggs): Conopco, Inc.,
Kraft Food Global, Inc., General Mills, Inc., Nestle USA, Inc., and The Kellogg Company. The egg products plaintiffs
sought treble damages and injunctive relief under the Sherman Act attacking certain features of the UEP animal-welfare
guidelines and program used by the Company and many other egg producers. On September 6, 2016, the District Court
granted defendants’ motion for summary judgment and dismissed with prejudice all claims based on the purchase of
egg products. That ruling was appealed to the United States Court of Appeals for the Third Circuit, and on January
22, 2018, the Third Circuit reversed the District Court’s grant of summary judgement and remanded the case to the
District Court. Even though the appealing egg-products plaintiffs had asked the Third Circuit to remand the case for
trial, the Third Circuit declined, instead remanding the case for further proceedings, including the suggestion that the
District Court determine whether the egg-products plaintiffs had sufficient evidence of causation and damages to
submit the case to a jury. On March 5, 2018, defendants filed a motion in the District Court seeking leave to file a
motion for summary judgment in light of the remand statements in the Third Circuit’s opinion. Plaintiffs opposed that
motion, and on March 26, 2018, the defendants filed a reply in support of the motion. On July 16, 2018, the court
granted the defendants’ motion for leave allowing the defendants to re-file a motion for summary judgment no later
than August 17, 2018. The Company intends to file a motion for summary judgment by this deadline based on the
non-class egg products plaintiffs’ failure to present any triable issue of fact on the elements of causation and damages
in their claims related to the purchases of processed egg products.

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., Simmons Foods, Inc., and certain affiliates of the foregoing. 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.

Other Matters

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 Common Stock and
Class A Common Stock

The Company has two classes of capital stock: Common Stock and Class A Common Stock. Except as otherwise
required by law or the Company's certificate of incorporation, 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. The Common Stock and Class A Common
Stock have equal liquidation rights and the same dividend rights. In the case of any stock dividend, 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
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 one share of Common Stock at
any time. Prior to amendments to the Company’s certificate of incorporation approved at a special stockholders’
meeting on July 20, 2018, the Class A Common Stock could only be issued to Fred R. Adams, Jr., the Company’s
Founder and Chairman Emeritus, and members of his immediate family, defined as his spouse, his natural children,
his sons-in-law and his grandchildren. In the event any share of Class A Common Stock, by operation of law or otherwise
was, or was deemed to be owned by any person other than Mr. Adams or a member of his immediate family, the Class
A Common Stock would automatically convert into Common Stock, whereby the voting power of such stock would
be reduced from ten votes per share to one vote per share. Also, shares of Class A Common Stock would 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 were transferred, by any means, to any person other than Mr. Adams or a member of
his immediate family.

As further described in Note 17, at a special meeting on July 20, 2018, the Company’s stockholders approved
amendments to the Company’s certificate of incorporation to change the restrictions on who may hold Class A Common
Stock, add certain other provisions and make certain ancillary changes.

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.

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.

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. Under its current policies, the
Company does not use interest rate derivative instruments to manage exposure to interest rate changes. A one percent
(1%) decrease in interest rates would increase the net fair value of the Company’s debt by $65,000 at June 2, 2018.
The fair value and carrying value of the Company’s long-term debt were as follows (in thousands):

5.40 – 6.20% Notes payable

Long-term leases

June 2, 2018

June 3, 2017

Carrying Value

Fair Value

Carrying Value

Fair Value

4,750

1,340

6,090

4,732

1,171

5,903

9,250

1,689

10,939

9,295

1,520

10,815

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 2, 2018 and June 3,
2017 (in thousands):

Assets

US government and agency obligations

Municipal bonds

Certificates of deposits

Commercial paper

Corporate bonds

Variable rate demand notes

Asset backed securities

Mutual funds

Total assets measured at fair value

June 2, 2018

Quoted Prices

in Active

Significant

Markets for

Identical

Instruments

(Level 1)

Other

Significant

Observable

Unobservable

Inputs

(Level 2)

Inputs

(Level 3)

Total

Balance

— $

23,817

— $

—

20,666

2,507

17,920

214,083

600

2,993

—

3,071
3,071

—
282,586

—
— $

23,817

20,666

2,507

17,920

214,083

600

2,993

3,071
285,657

June 3, 2017

Quoted Prices

in Active

Significant

Markets for

Identical

Instruments

(Level 1)

Other

Significant

Observable

Unobservable

Inputs

(Level 2)

Inputs

(Level 3)

Total

Balance

Assets

US government and agency obligations

Municipal bonds

Corporate bonds

Foreign government obligations

Asset backed securities

Mutual funds

Total assets measured at fair value

—

2,459

— $

20,216

— $

36,873

75,790

—

5,583

—

20,216

36,873

75,790

—

5,583

2,459

138,462

— $

140,921

Our 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.

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. Investment Securities

Investment securities consisted of the following (in thousands):

US government and agency obligations
Municipal bonds
Certificates of deposit
Commercial paper
Corporate bonds
Variable rate demand notes
Asset backed securities
Total current investment securities

Mutual funds
Total noncurrent investment securities

June 2, 2018

Gains in

Losses in

Accumulated
Other
Comprehensive

Income

Amortized

Cost

— $
—
—
—
—
—
—
— $

1,034
1,034

174
31
3
6
1,190
—
17
1,421

—
— $

23,991
20,697
2,510
17,926
215,273
600
3,010
284,007

2,037
2,037

Estimated
Fair

Value

23,817
20,666
2,507
17,920
214,083
600
2,993
282,586

3,071
3,071

June 3, 2017

Gains in

Losses in

Accumulated
Other
Comprehensive

Income

— $
34
21
—
55

753
753

43
—
—
—
43

—
— $

Estimated
Fair

Value

20,216
36,873
75,790
5,583
138,462

2,459
2,459

Amortized

Cost

20,259
36,839
75,769
5,583
138,450

1,706
1,706

US government and agency obligations
Municipal bonds
Corporate bonds
Asset backed securities
Total current investment securities

Mutual funds
Total noncurrent investment securities

Proceeds from the sales and maturities of available-for-sale securities were $127.7 million, $248.2 million, and $285.9
million during fiscal 2018, 2017, and 2016, respectively. Gross realized gains on those sales and maturities during
fiscal 2018, 2017, and 2016 were $25,000, $231,000, and $131,000, respectively. Gross realized losses on those sales
and maturities during fiscal 2018, 2017, and 2016 were $83,000, $7,000, and $110,000, respectively. For purposes
of determining gross realized gains and losses, the cost of securities sold is based on the specific identification method.

Unrealized holding gains and (losses), net of taxes, for fiscal 2018, 2017, and 2016 were as follows (in thousands):

Current Investments

Noncurrent Investments

Total unrealized holding gains (losses)

(1,083) $
316
(767) $

(54) $
164

110

22
(31)
(9)

June 2, 2018

June 3, 2017

May 28, 2016

Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay
obligations with or without call or prepayment penalties. Contractual maturities of investment securities at June 2,
2018, are as follows (in thousands):

Within one year
1-3 years

Estimated Fair Value

111,676
170,910
282,586

17. Quarterly Financial Data: (unaudited, amount in thousands, except per share data):

Net sales
Gross profit
Net income (loss) attributable to Cal-Maine Foods, Inc.
Net income (loss) per share:
Basic
Diluted

$
$

Fiscal Year 2018

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

262,845 $
17,336
(15,993)

361,172 $
82,396
(26,136)

435,820 $
120,098
96,294

443,095
141,216
71,767

(0.33) $
(0.33) $

(0.54) $
(0.54) $

1.99 $
1.99 $

1.48
1.48

During the Company's second quarter of fiscal 2018, we recorded $80.8 million legal settlement of several large direct
action purchasers' antitrust claims against the Company. Also during the second quarter of fiscal 2018, the Tax Cuts

and Jobs Act of 2017 was enacted. This resulted in an initial revaluation of our deferred tax liabilities during the second
quarter which favorably impacted our results by $35.0 million. In the fourth quarter of fiscal 2018, we completed our
analysis of the Act and recorded additional tax benefit of $8.0 million.

Net sales
Gross profit
Net income (loss) attributable to Cal-Maine Foods, Inc.
Net income (loss) per share:
Basic
Diluted

$
$

First
Quarter

Fiscal Year 2017

Second
Quarter

Third
Quarter

Fourth
Quarter

239,845 $
(9,569)
(30,936)

253,544 $
3,948
(23,010)

306,540 $
39,165
4,139

274,584
12,006
(24,471)

(0.64) $
(0.64) $

(0.48) $
(0.48) $

0.09 $
0.09 $

(0.51)
(0.51)

During the Company's fourth quarter of fiscal 2017, we elected to carry back fiscal 2017 net operating losses to recover
taxes paid in fiscal 2015, which affects the comparability between quarters. The net operating loss carryback resulted
in a $4.1 million decrease in the income tax benefit, as the carryback reduced prior year taxable income and as a result
reduced the benefit of prior year domestic manufacturers deductions, a portion of which were therefore reversed in
the fourth quarter of fiscal 2017.

16.

Subsequent Events

Revolving Credit Facility.

On July 10, 2018, we entered into a $100.0 million Senior Secured Revolving Credit Facility (the “Revolving Credit
Facility”) with a five-year term. The credit agreement for the Revolving Credit Facility includes an accordion feature
permitting the Company, with the consent of the administrative agent, to increase the revolving commitments in the
aggregate up to $125.0 million. As of July 20, 2018, no amounts were borrowed under the facility.

The interest rate is based, at the Company’s election, on either the Eurodollar Rate plus the Applicable Margin or the
Base Rate plus the Applicable Margin. The “Eurodollar Rate” means the reserve adjusted rate at which Eurodollar
deposits in the London interbank market for an interest period of one, two, three, six or twelve months (as selected by
the Company) are quoted. The “Base Rate” means a fluctuating rate per annum equal to the highest 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
Eurodollar Rate for an interest period of one month plus 1% per annum, subject to certain interest rate floors. The
“Applicable Margin” means 0.00% to 0.75% per annum for Base Rate Loans and 1.00% to 1.75% per annum for
Eurodollar Rate Loans, in each case depending upon the average outstanding balance at the quarterly pricing date. The
Company will pay a commitment fee of 0.20% on the unused portion of the facility.

The Revolving Credit Facility is guaranteed by all the current and future wholly-owned direct and indirect domestic
subsidiaries of the Company, 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 Revolving 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 minimum working capital
ratio of 2.00 to 1.00 and (ii) an annual limit on capital expenditures of $100.0 million. Additionally, the credit agreement
requires that Fred R. Adams Jr., his spouse, natural children, sons-in-law or grandchildren, or any trust, guardianship,
conservatorship or custodianship for the primary benefit of any of the foregoing, or any family limited partnership,
similar limited liability company or other entity that 100% of the voting control of such entity is held by any of the

foregoing, shall maintain at least 50% of the Company’s voting stock. Failure to satisfy any of these covenants will
constitute a default under the terms of the credit agreement. Further, dividends are restricted to the Company’s current
dividend policy of one-third of the Company’s net income computed in accordance with generally accepted accounting
principles. The Company is allowed to repurchase up to $75.0 million of its capital stock in any year provided there
is no default under the credit agreement and the Company has availability of at least $20.0 million under the facility.

The credit agreement also includes customary events of default and customary remedies upon the occurrence of an
event of default, including acceleration of the amounts due and foreclosure of the collateral.

Amendments to the Company’s Certificate of Incorporation.

At a special meeting on July 20, 2018, the Company’s stockholders approved amendments to the Company’s certificate
of incorporation. The Company’s amended and restated certificate of incorporation, reflecting the amendments
approved by the stockholders, is included as an exhibit to this report, and the description of the amendments below is
qualified by reference to such exhibit.

Pursuant to the amendments, the term “immediate family member” was expanded to include the estates of each of the
persons included as “immediate family members.” In addition, the amendments added a number of arrangements and
entities that will be permitted to receive and hold shares of Class 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 and which have a specified relationship with
another Permitted Transferee or immediate family member. Accordingly, the amendments were designed to permit
immediate family members to hold Class A Common Stock indirectly through common estate planning vehicles but
not to change or expand the group or class of individuals who may beneficially own Class A Common Stock, with ten
votes per share, under the certificate of incorporation prior to the amendments.

In addition, the amendments added the following provisions to the Company’s certificate of incorporation:

•

a sunset provision pursuant to which all of the outstanding Class A Common Stock will automatically convert
into Common Stock if either: (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 and Common Stock, in the aggregate, are beneficially owned by immediate
family members and/or Permitted Transferees;

a provision that once shares of Class A Common Stock are converted into Common Stock, the shares of Class
A Common Stock will be retired and may not be reissued; and

provisions providing or clarifying that the Class A Common Stock and Common Stock will be treated identically
with respect to consideration in a merger or tender offer, dividends or other distributions (except pro rata
subdivisions, combinations, stock splits or dividends, where the Class A Common Stock would continue to
have ten votes per share, rather than one vote per share like Common Stock), and distribution rights in the
event of dissolution.

The amendments also made certain ancillary changes to update certain provisions of the certificate of incorporation
that were out-of-date or obsolete and to correct a typographical error.

Agreement Regarding Common Stock (and Registration Rights).

On June 4, 2018, the Company’s Board of Directors authorized the Company to enter into an Agreement Regarding
Common Stock (including the Registration Rights exhibit thereto) with Jean Reed Adams (the spouse of Fred R. Adams,
Jr., the Company’s Founder and Chairman Emeritus) and Mr. Adams’ four daughters, to be joined by certain Permitted
Transferees thereof (collectively, the “Stockholder Parties”). A copy of the Agreement Regarding Common Stock is

included as Exhibit 10.1 to this report, and the description of the agreement below is qualified by reference to such
exhibit.

The Agreement Regarding Common Stock relates to the approximately 12 million shares of Common Stock expected
to be held by the Stockholder Parties (together, the “Subject Shares”) after completion of certain anticipated transfers
of shares of the Company’s Common Stock and Class A Common Stock..

Pursuant to the Agreement Regarding Common Stock, the Stockholder Parties agree to cooperate with the Company
in any proposed transfer of the Subject Shares and to ensure that all appropriate securities filings and reports are timely
made. The agreement provides that if any Stockholder Party 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 Stockholder Party will, subject to the approval of a special committee of
independent directors of the Board of Directors (“Special Committee”), 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.

Pursuant to the agreement, if the Company receives a right of first refusal notice, the Special Committee would review
and approve or disapprove any share repurchase pursuant to the Company’s right of first refusal and any matter related
thereto, including (i) the number of shares, if any, to be purchased by the Company; and (ii) the amount of debt, if any,
to be incurred by the Company in connection with any repurchase.

The agreement provides specified registration rights to the Stockholder Parties for the sale of their shares of Company
Common Stock after the death of Mr. Adams. The stockholders requesting registration and the Company will each pay
50% of the costs of the Company related to the sale of shares, provided that if the Company determines to participate
in any offering, it will pay 100% of the costs. The selling stockholders will pay any fees of underwriters relating to
the sale of their shares, and the Company will pay the fees of underwriters relating to sales of any shares by the
Company.

The Stockholder Parties may include Subject Shares in any offering pursuant to the registration rights only so long as
immediate family members and Permitted Transferees, as defined in the Company’s certificate of incorporation, will
continue to own shares that have at least a majority of the Company’s voting power.

The Agreement Regarding Common Stock terminates with respect to all Stockholder Parties immediately upon such
time as Stockholder Parties, collectively, no longer own shares that have at least a majority of the Company’s voting
power. The agreement may terminate earlier as to a particular Stockholder Party under certain circumstances as set
forth in the Agreement Regarding Common Stock.

In connection with the negotiations relating to the amendments to the Company’s certificate of incorporation, the
conservatorship established to manage Mr. Adams’ affairs, of which Mrs. Adams and Mr. Baker are co-conservators,
agreed to pay for the costs of the Special Committee relating to the amendments, the Agreement Regarding Common
Stock and related matters, including fees of counsel and the financial adviser to the Special Committee, up to $750,000.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years ended June 2, 2018, June 3, 2017, and May 28, 2016
(in thousands)

Balance at
Beginning of
Period

Charged to
Cost and
Expense

Write-off
of Accounts

Balance at
End of
Period

Description

Year ended June 2, 2018
Allowance for doubtful accounts

Year ended June 3, 2017
Allowance for doubtful accounts

Year ended May 28, 2016
Allowance for doubtful accounts

386

128

727

(176) $

165

513

225

268

386

727

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

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
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 2, 2018 at the reasonable assurance level.

Internal Control Over Financial Reporting

(a) 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. 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. 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 2, 2018. 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 2, 2018 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

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, Mississippi

Opinion on Internal Control Over Financial Reporting

We have audited Cal-Maine Foods, Inc. and Subsidiaries’ (the “Company”) internal control over financial reporting as of June 2,
2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the “COSO criteria”). In our opinion, the Company maintained, in all material
respects, effective control over financial reporting as June 2, 2018, based on the COSO criteria.

We have also 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 operations, comprehensive income (loss),
stockholders’ equity and cash flows of Cal-Maine Foods, Inc. and Subsidiaries, and our report dated July 20, 2018 expressed an
unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its 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 entity’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company 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 audit in accordance with the standards of the 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’s 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 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; (2) provide reasonable assurance that transactions are recorded as necessary
to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the entity are being made only in accordance with authorizations of management and directors of the
entity; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the entity’s 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/Frost, PLLC

Little Rock, Arkansas
July 20, 2018

In connection with its evaluation of the effectiveness, as of June 2, 2018, 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 2, 2018, that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

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 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 2018 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 COMPENSATION

The information concerning executive compensation 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
2018 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 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 2018 Annual Meeting of Shareholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

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 2018 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 2018 Annual Meeting of Shareholders.

PART IV.

ITEM 15. EXHIBITS, 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:

Report of Independent Registered Public Accounting Firms.

Consolidated Balance Sheets – June 2, 2018 and June 3, 2017

Consolidated Statements of Operations – Fiscal Years Ended June 2, 2018, June 3, 2017, and May 28,
2016

Consolidated Statements of Comprehensive Income (Loss) – Fiscal Years Ended June 2, 2018, June 3,
2017, and May 28, 2016

Consolidated Statements of Changes in Stockholders' Equity for the Fiscal Years Ended June 2, 2018,
June 3, 2017, and May 28, 2016

Consolidated Statements of Cash Flows for the Fiscal Years Ended June 2, 2018, June 3, 2017, and
May 28, 2016

Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedule

Schedule II – Valuation and Qualifying Accounts

49 - 72

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

The following exhibits are filed herewith or incorporated by reference:

Exhibit
Number

3.1

3.2

10.1

10.2*

10.3*

10.4

10.5

10.6*

10.7*

10.8*

10.9*

10.10

21**

23.1**

31.1**

31.2**

32***

99.1

99.2

99.3

Exhibit
Second Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to
Exhibit 3.1 in the Registrant’s Form 8-K, filed July 20, 2018).

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).

Agreement Regarding Common Stock, including Registration Rights Exhibit (attached) (incorporated by
reference to Exhibit 10.1 to the Registrant’s Form 8-K, filed June 5, 2018.

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).

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).

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).

Credit Agreement, dated July 10, 2018, among the Registrant and BMO Harris Bank N.A., as Administrative
Agent, Swingline Lender and L/C Issuer, BMO Harris Bank N.A. and Greenstone Farm Credit Services,
ACA, as lenders, and BMO Capital Markets, as the sole Lead Arranger and sole Book Runner (incorporated
by reference to Exhibit 10.1 in the Registrant's Form 8-K filed July 10, 2018).
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).

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).

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).

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).

Settlement Agreement, dated January 30, 2018, between the Registrant and the Direct Action Plaintiffs from
the multidistrict litigation in In re Processed Egg Products Antitrust Litigation, MDL 2002, Case No. 2:08-
md-2002-GEKP (incorporated by reference to Exhibit 10.1 in the Registrant's Form 10-Q for the quarter
ended March 3, 2018, filed April 2, 2018).

Subsidiaries of the Registrant

Consent of FROST, PLLC

Rule 13a-14(a) Certification of Chief Executive Officer

Rule 13a-14(a) Certification of Chief Financial Officer

Section 1350 Certifications of the Chief Executive Officer and the Chief Financial Officer

Press release dated July 23, 2018 announcing interim and annual financial information (incorporated by
reference to Exhibit 99.1 in the Company’s Form 8-K, filed July 23, 2018).

Amended and Restated Memorandum of Understanding (incorporated by reference from Exhibit 3 to
Schedule 13D/A dated June 5, 2018 filed by or on behalf of Fred R. Adams, Jr., Jean Morris Adams and
Adolphus B. Baker, individually and in other capacities as set forth therein).

Proposed Transactions Description (incorporated by reference to the description under the heading “Proposal
No. 1 - Class A Common Stock Amendment - Proposed Transactions” on pages 25-26 of the Registrant’s
Definitive Proxy Statement for the Special Meeting of Stockholders on July 20, 2018, filed June 25, 2018)

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 assets of the Company and its subsidiaries on a consolidated
basis. The Company agrees to furnish to the Securities and Exchange Commission, upon request, copies of any such
instrument.

(c)

Financial Statement Schedules Required by Regulation S-X

The financial statement schedule required by Regulation S-X is filed at page 73. 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.

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, Mississippi.

SIGNATURES

CAL-MAINE FOODS, INC.

/s/ Adolphus B. Baker
Adolphus B. Baker
President, Chief Executive Officer and Chairman of the Board
Date:

July 20, 2018

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

/s/ Adolphus B. Baker
Adolphus B. Baker

/s/ Timothy A. Dawson
Timothy A. Dawson

Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)

Vice President, Chief Financial
Officer and Director
(Principal Financial Officer)

/s/ Michael D. Castleberry
Michael D. Castleberry

Vice President, Controller
(Principal Accounting Officer)

/s/ Sherman L. Miller
Sherman L. Miller

President, Chief Operating
Officer and Director

/s/ Letitia C. Hughes
Letitia C. Hughes

/s/ James E. Poole
James E. Poole

/s/ Steve W. Sanders
Steve W. Sanders

Director

Date

July 20, 2018

Subsidiaries of Cal-Maine Foods, Inc.

Exhibit 21

Name of Subsidiary

Southern Equipment Distributors, Inc.
South Texas Applicators, Inc.
American Egg Products, LLC
Texas Egg Products, LLC
Benton County Foods, LLC
Wharton County Foods, LLC

Place of Incorporation or
Organization

Percentage of Outstanding Stock
or Ownership Interest Held by
Registrant

Mississippi
Delaware
Georgia
Texas
Arkansas
Texas

100%
100%
100%
72.1% (1)
100%
100%

(1)

Limited liability company of which Cal-Maine Foods, Inc. and Wharton County Foods, LLC are members
have 50.3% and 21.8%, respectively.

Consent of Independent Registered Public Accounting Firm

Exhibit 23.1

We hereby consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-180470) of Cal-Maine
Foods, Inc. pertaining to the Cal-Maine Foods, Inc. KSOP and the Registration Statement (Form S-8 No. 333-184310) pertaining
to the Cal-Maine Foods, Inc. 2012 Omnibus Long-Term Incentive Plan, of our reports dated July 20, 2018, relating to the
consolidated financial statements and financial statement schedules, and the effectiveness of Cal-Maine Foods, Inc. and
Subsidiaries’ internal control over financial reporting, which appear in the Annual Report to Stockholders, which is incorporated
by reference in this Annual Report on Form 10-K.

/s/ Frost, PLLC

Little Rock, Arkansas

July 20, 2018

Exhibit 31.1

Certification
Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934,
As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Adolphus B. Baker, certify that:

I have reviewed this Annual Report on Form 10-K of Cal-Maine Foods, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed

under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

designed under our supervision, 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;

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

/s/ Adolphus B. Baker
Adolphus B. Baker
President, Chief Executive Officer, and Chairman of the Board

Date:

July 20, 2018

Certification
Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934,
As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2

I, Timothy A. Dawson, certify that

I have reviewed this Annual Report on Form 10-K of Cal-Maine Foods, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

/s/ Timothy A. Dawson
Timothy A. Dawson

Vice President and Chief Financial Officer

Date:

July 20, 2018

Certifications Pursuant to 18 U.S.C. §1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32

Solely for the purposes of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, we, the undersigned Chief Executive Officer and Chief Financial Officer of Cal-Maine Foods, Inc. (the “Company”), hereby
certify, based on our knowledge, that the Annual Report on Form 10-K of the Company for the fiscal year ended June 2, 2018 (the
“Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.

/s/ Adolphus B. Baker

Adolphus B. Baker

President, Chief Executive Officer, and Chairman of the Board

/s/ Timothy A. Dawson

Timothy A. Dawson

Vice President and Chief Financial Officer

Date:

July 20, 2018

CORPORATE INFORMATION

Corporate Information
Cal-Maine Foods, Inc.
3320 W. Woodrow Wilson Avenue
Jackson, Mississippi 39209-3409
(601) 948-6813
www.calmainefoods.com

Transfer Agent
Computershare Investor Services
P.O. Box 505000
Louisville, Kentucky 40233

800-254-5196
www.computershare.com/investor

Independent Registered
Public Accounting Firm
Frost, PLLC
425 West Capitol, Suite 3300
Little Rock, Arkansas 72201

Annual Meeting
10:00 a.m. Central Time
October 5, 2018
Cal-Maine Foods, Inc. Corporate Offices
3320 W. Woodrow Wilson Avenue
Jackson, Mississippi

Form 10-K
The Form 10-K, including the financial statements and
schedules thereto, for the year ended June 2, 2018,
as well as other information about Cal-Maine Foods,
Inc. may be obtained without charge by writing to
Ms. Jenny Davis, Investor Relations, at the Company’s
corporate offices.

CAL-MAINE FOODS, INC

3320 W. Woodrow Wilson Avenue
Jackson, Mississippi 39209-3409
(601) 948-6813
www.calmainefoods.com