CALM

Business Context and Reporting Period

Company: Cal-Maine Foods, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: July 28, 2005 (Signed August 2, 2005)
Reporting Period: This filing reports on a material definitive agreement entered into on July 28, 2005, and references financial results for the fiscal year ended May 28, 2005.

Key Financial Metrics and Transaction Details

Acquisition Transaction:

• Target: Hillandale Farms of Florida, Inc. and Hillandale Farms, Inc. (collectively "Hillandale").
• Structure: Formation of Hillandale, LLC to hold assets, liabilities, and operations.
• Initial Purchase: Cal-Maine will acquire 51% of membership units for an estimated cost of $30 million to $35 million, subject to adjustment.
• Remaining Interest: Cal-Maine will purchase the remaining 49% in equal installments over 48 months at book value.
• Funding: Cash from available funds and borrowings as necessary.

Operational Impact:

• Expected increase in egg production capacity: Approximately 30%.
• Hillandale operates in Florida, Georgia, and Alabama with over 30 years of history.

Financial Results:

• The filing references a press release (Exhibit 99.1) for fiscal year results ended May 28, 2005, but does not contain specific revenue, profit, cash flow, or margin figures within this text.

Material Changes Versus Prior Period

This filing does not provide comparative financial data for the current period versus the prior period. The primary material change is the entry into the acquisition agreement with Hillandale, which represents a significant expansion of the Company's asset base and production capacity.

Guidance, Outlook, and Risks

Outlook: The acquisition is expected to significantly expand the Company's market presence in the Southeastern United States and increase production capacity by 30% upon completion.
Risks and Contingencies:

• The initial purchase price ($30-$35 million) is subject to upward or downward adjustment based on valuations agreed upon by the parties.
• The transaction requires borrowings to the extent necessary, which may impact the Company's debt profile.

Management Commentary: Management views Hillandale as a major egg production and marketing company with a strong regional presence.

Important Facts for Investor Verification

• Verify the final adjusted purchase price for the initial 51% stake, as the $30-$35 million figure is an estimate.
• Review the attached press release (Exhibit 99.1) for specific fiscal year 2005 financial results (revenue, net income, cash flow) not included in this summary text.
• Confirm the terms of the 48-month installment plan for the remaining 49% interest and the methodology for calculating book value.
• Assess the impact of necessary borrowings on the Company's liquidity and debt covenants.