CAL-MAINE FOODS INC
10-Ks and 10-Qs
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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
DC
20549
FORM
For the quarterly period ended
or
For the transition period from ____________ to ____________
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(I.R.S Employer Identification No.)
,
,
,
(Address of principal executive offices)
(Zip Code)
(
)
(Registrant’s telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
The
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.
☑
☐
Indicate by check
mark whether the
registrant has submitted
electronically every
Interactive Data File
required to be
submitted
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 such files).
☑
☐
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.
☑
Accelerated filer
☐
Non – 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 Exchange Act).
Yes
☐
☑
There were
value, outstanding as of September 27, 2022.
2
INDEX
Page
Number
Part I.
Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Other Information
Item 1.
Item 1A.
Item 2.
Item 6.
3
PART
I.
FINANCIAL
INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except for par value amounts)
(Unaudited)
August 27, 2022
May 28, 2022
Assets
Current assets:
Cash and cash equivalents
$
$
Investment securities available-for-sale
Trade and other receivables, net
Income tax receivable
Inventories
Prepaid expenses and other current assets
Total current
assets
Property, plant &
equipment, net
Investments in unconsolidated entities
Goodwill
Intangible assets, net
Other long-term assets
Total Assets
$
$
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses
$
$
Dividends payable
Total current
liabilities
Other noncurrent liabilities
Deferred income taxes, net
Total liabilities
Commitments and contingencies - see Note 11
—
—
Stockholders’ equity:
Common stock ($
Common stock - authorized
Class A convertible common stock - authorized and issued
Paid-in capital
Retained earnings
Accumulated other comprehensive loss, net of tax
(
2,350
)
(
1,596
)
Common stock in treasury at cost –
at May 28, 2022
(
28,495
)
(
28,447
)
Total Cal-Maine Foods,
Inc. stockholders’ equity
Noncontrolling interest in consolidated entity
(
359
)
(
206
)
Total stockholders’
equity
Total Liabilities and Stockholders’
Equity
$
$
See Notes to Condensed Consolidated Financial Statements.
4
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
Net sales
$
$
Cost of sales
Gross profit
Selling, general and administrative
(Gain) loss on disposal of fixed assets
(
213
)
Operating income (loss)
(
39,667
)
Other income (expense):
Interest income, net
Royalty income
Equity income of unconsolidated entities
Other, net
Total other income, net
Income (loss) before income taxes
(
33,864
)
Income tax expense (benefit)
(
15,838
)
Net income (loss)
(
18,026
)
Less: Loss attributable to noncontrolling interest
(
153
)
Net income (loss) attributable to Cal-Maine Foods, Inc.
$
$
(
18,026
)
Net income (loss) per common share:
Basic
$
$
(
0.37
)
Diluted
$
$
(
0.37
)
Weighted average
shares outstanding:
Basic
Diluted
See Notes to Condensed Consolidated Financial Statements.
5
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of
Comprehensive Income (Loss)
(In thousands)
(Unaudited)
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
Net income (loss)
$
(
18,026
)
Other comprehensive income (loss), before tax:
Unrealized holding loss on available-for-sale securities, net of reclassification
adjustments
(
997
)
(
224
)
Income tax benefit related to items of other comprehensive income
Other comprehensive loss, net of tax
(
754
)
(
170
)
Comprehensive income (loss)
(
18,196
)
Less: Comprehensive loss attributable to the noncontrolling interest
(
153
)
Comprehensive income (loss) attributable to Cal-Maine Foods, Inc.
$
$
(
18,196
)
See Notes to Condensed Consolidated Financial Statements.
6
Cal-Maine Foods, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
Cash flows from operating activities:
Net income (loss)
$
$
(
18,026
)
Depreciation and amortization
Deferred income taxes
(
1,324
)
(
15,838
)
Other adjustments, net
(
7,637
)
Net cash provided by (used in) operations
(
24,112
)
Cash flows from investing activities:
Purchases of investment securities
(
51,834
)
(
1,388
)
Sales and maturities of investment securities
Distributions from unconsolidated entities
Acquisition of business, net of cash acquired
(
44,823
)
Purchases of property,
plant and equipment
(
27,662
)
(
11,233
)
Net proceeds from disposal of property,
plant and equipment
Net cash used in investing activities
(
59,122
)
(
16,485
)
Cash flows from financing activities:
Payments of dividends
(
36,653
)
Purchase of common stock by treasury
(
45
)
(
18
)
Principal payments on finance lease
(
55
)
(
53
)
Net cash used in financing activities
(
36,753
)
(
71
)
Net change in cash and cash equivalents
(
40,668
)
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
$
See Notes to Condensed Consolidated Financial Statements.
7
Cal-Maine Foods, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
The
unaudited
condensed
consolidated
financial
statements
of
Cal-Maine
Foods,
Inc.
and
its
subsidiaries
(the
“Company,”
“we,” “us,” “our”)
have been prepared
in accordance with
the instructions
to Form 10-Q
and Article 10
of Regulation S-X
and
in
accordance
with generally
accepted
accounting
principles in
the
United
States of
America
(“GAAP”)
for
interim
financial
reporting and should
be read in conjunction
with our Annual Report
on Form 10-K
for the fiscal year
ended May 28,
2022 (the
“2022
Annual
Report”).
These
statements
reflect
all
adjustments
that
are,
in
the
opinion
of
management,
necessary
to
a
fair
statement of the results for
the interim periods presented
and, in the opinion of
management, consist of adjustments
of a normal
recurring nature.
Operating results for
the interim periods
are not necessarily
indicative of operating
results for the
entire fiscal
year.
Fiscal Year
The Company's fiscal
year ends on
the Saturday closest
to May 31.
Each of the three-month
periods ended on
August 27, 2022
and August 28, 2021 included
13 weeks
.
Use of Estimates
The preparation of the
consolidated financial statements in
conformity with GAAP 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.
Investment Securities
Our investment
securities are
accounted
for in
accordance with
ASC 320,
“Investments -
Debt and
Equity Securities”
(“ASC
320”).
The
Company
considers
all
its
debt
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.
We
classify
these
securities
as
current, because the
amounts invested are available
for current operations.
Available-for-sale
securities are carried at
fair value,
with unrealized
gains and
losses reported
as a
separate
component
of stockholders’
equity.
The Company
regularly
evaluates
changes to
the rating of
its debt securities
by credit
agencies and economic
conditions to assess
and record
any expected credit
losses through
the allowance
for credit
losses, limited
to the amount
that fair value
was less than
the amortized
cost basis. The
cost
basis
for
realized
gains
and
losses
on
available-for-sale
securities
is
determined
by
the
specific
identification
method.
Gains and losses are recognized in other income
(expenses) as Other, net in the Company's
Condensed Consolidated Statements
of
Operations.
Investments
in
mutual
funds
are
classified
as
“Other
long-term
assets”
in
the
Company’s
Condensed
Consolidated Balance Sheets.
Trade Receivables
Trade receivables
are stated at
their carrying
values, which
include a reserve
for credit losses.
As of August
27, 2022
and May
28,
2022,
reserves
for
credit
losses
were
$
customers based on
an evaluation of
each customer's financial
condition and credit
history.
Collateral is generally
not required.
The
Company
minimizes
exposure
to
counter
party
credit
risk
through
credit
analysis
and
approvals,
credit
limits,
and
monitoring
procedures.
In
determining
our
reserve
for
credit
losses,
receivables
are
assigned
an
expected
loss
based
on
historical loss information adjusted as needed for economic and
other forward-looking factors.
Immaterial Error Correction
Effective
on
May
30,
2021,
the
Company
acquired
the
remaining
%
membership
interest
in
Red
River
Valley
Egg
Farm,
LLC (“Red
River”),
including
certain
liabilities. During
the Company’s
third
quarter of
fiscal 2022,
management
determined
that
it
had
not
properly
eliminated
select
intercompany
sales
and
cost
of
sales
transactions
between
Red
River
and
the
corresponding
other wholly
-owned subsidiaries
of the
Company
in its
first and
second quarter
2022 Condensed
Consolidated
Statements
of
Operations.
The
errors
resulted
in
an
overstatement
of
Net
Sales and
Cost of
Sales
of
$
8
quarter of fiscal 2022
and $
(loss) or Net income (loss) per share.
We
evaluated
the
errors
quantitatively
and
qualitatively
in
accordance
with
Staff
Accounting
Bulletin
("SAB") No. 99 Materiality,
and
SAB No. 108 Considering
the
Effects
of
Prior
Year
Misstatements
when
Quantifying
Misstatements
in
the
Current
Year
Financial
Statements, and
determined
that
the
related
impact
was not material
to
our
condensed
consolidated
financial statements
for
the first
or second
quarters
of fiscal
2022,
but that
correcting
the cumulative
impact
of
the
errors
would
be
relevant
to
our
Condensed
Consolidated
Statements
of
Operations
for
the third
quarter
ended February
26,
2022. Accordingly,
we
have
reflected
the
correction
of
the
immaterial
error
for
the
first
quarter
of
fiscal
2022 as a reduction of Net Sales and Cost of Sales in the accompanying Condensed
Consolidated Statements of Operations.
New Accounting Pronouncements and Policies
No new accounting pronouncement issued or effective
during the fiscal year had or is expected to have a material
impact on our
Consolidated Financial Statements.
Note 2 - Investment
Securities
The following represents the Company’s
investment securities as of August 27, 2022 and May 28, 2022 (in
thousands):
August 27, 2022
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Total current
investment securities
$
$
$
$
Mutual funds
$
$
$
$
Total noncurrent
investment securities
$
$
$
$
May 28, 2022
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Total current
investment securities
$
$
$
$
Mutual funds
$
$
$
$
Total noncurrent
investment securities
$
$
$
$
Available-for-sale
Proceeds from
sales and
maturities of
investment securities
available-for-sale
were $
thirteen
weeks
ended August
27,
2022
and
August
28,
2021,
respectively.
Gross
realized
gains
for
the
thirteen
weeks
ended
August 27, 2022
and August 28,
2021 were $
weeks
ended
August
27,
2022
and
August
28,
2021
were
$
allowances
for credit losses at August 27, 2022 and May 28, 2022.
9
Actual maturities
may differ
from contractual
maturities as some
borrowers have
the right to
call or prepay
obligations with
or
without penalties. Contractual maturities of current investments at August
27, 2022 are as follows (in thousands):
Estimated Fair Value
Within one year
$
1-5 years
Total
$
Noncurrent
There were
and maturities of noncurrent
investment securities were $
realized gains for
the thirteen weeks
ended August 28, 2021
were $
weeks ended August 28, 2021.
Note 3 - Fair Value
Measurements
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
•
Level 2
directly or indirectly,
including:
◦
Quoted prices for similar assets or liabilities in active markets
◦
Quoted prices for identical or similar assets in non-active markets
◦
Inputs other than quoted prices that are observable for the asset or liability
◦
Inputs derived principally from or corroborated by other observable market
data
•
Level 3
significant to the fair value of the assets or liabilities
The disclosures of fair value of certain financial assets and liabilities that are recorded
at cost are as follows:
Cash and cash equivalents, accounts receivable,
and accounts payable:
short maturity of these instruments.
Lease obligations:
10
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
financial
assets and
liabilities measured at fair value on a recurring basis as of August 27, 2022 and May 28,
2022 (in thousands):
August 27, 2022
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Treasury bills
Mutual funds
Total assets measured at fair
value
$
$
$
$
May 28, 2022
Level 1
Level 2
Level 3
Balance
Assets
Municipal bonds
$
$
$
$
Commercial paper
Corporate bonds
Certificates of deposits
US government and agency obligations
Asset backed securities
Mutual funds
Total assets measured at fair
value
$
$
$
$
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 readily available
for current operations.
Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Note 4 - Inventories
Inventories consisted of the following as of August 27, 2022 and May 28,
2022 (in thousands):
August 27, 2022
May 28, 2022
Flocks, net of amortization
$
$
Eggs and egg products
Feed and supplies
$
$
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
August
27, 2022 and May
28, 2022 consisted of
approximately
Note 5 - Accrued Dividends Payable and Dividends per Common
Share
We
accrue dividends at
the end of
each quarter according
to the Company’s
dividend policy adopted
by its Board
of Directors.
The Company
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 GAAP
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
pays 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
11
not pay a dividend
for a subsequent profitable
quarter until the Company
is profitable on a cumulative
basis computed from the
date of the most recent quarter for which a dividend was paid. For the first
quarter of fiscal 2023, we will pay a cash dividend of
approximately $
On our
Condensed Consolidated
Statements of
Operations, we
determine dividends
per common
share in
accordance with
the
computation in the following table (in thousands, except per share data):
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
Net income (loss) attributable to Cal-Maine Foods, Inc.
$
$
(
18,026
)
Cumulative loss to be recovered prior to payment of divided at beginning of period
(
4,244
)
Net income available for dividend
$
$
1/3 of net income attributable to Cal-Maine Foods, Inc. available for dividend
Common stock outstanding (shares)
Class A common stock outstanding (shares)
Total common stock
outstanding (shares)
Dividends per common share*
$
$
*Dividends
per
common
share
=
1/3
outstanding (shares).
Note 6 - Equity
The following reflects equity activity for the thirteen weeks ended
August 27, 2022 and August 28, 2021 (in thousands):
Thirteen Weeks
Ended August 27, 2022
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Noncontrolling
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Interest
Total
Balance at May 28,
2022
$
$
$
(
28,447
)
$
$
(
1,596
)
$
$
(
206
)
$
Other comprehensive
loss, net of tax
—
—
—
—
(
754
)
—
—
(
754
)
Stock compensation
plan transactions
—
—
(
48
)
—
—
—
Dividends
—
—
—
—
—
(
41,742
)
—
(
41,742
)
Net income (loss)
—
—
—
—
—
(
153
)
Balance at August
27, 2022
$
$
$
(
28,495
)
$
$
(
2,350
)
$
$
(
359
)
$
Thirteen Weeks
Ended August 28, 2021
Cal-Maine Foods, Inc. Stockholders
Common Stock
Class A
Treasury
Paid In
Accum. Other
Retained
Amount
Amount
Amount
Capital
Comp. Loss
Earnings
Total
Balance at May 29, 2021
$
$
$
(
27,433
)
$
$
(
558
)
$
$
Other comprehensive loss, net of tax
—
—
—
—
(
170
)
—
(
170
)
Stock compensation plan transactions
—
—
(
18
)
—
—
Net loss
—
—
—
—
—
(
18,026
)
(
18,026
)
Balance at August 28, 2021
$
$
$
(
27,451
)
$
$
(
728
)
$
$
12
Note 7 - Net Income (Loss) per Common Share
Basic net
income (loss)
per share
is based
on the
weighted average
Common Stock
and Class
A Common
Stock outstanding.
Diluted net income
per share
is based on
weighted-average common
shares outstanding
during the
relevant period adjusted
for
the
dilutive
effect
of share-based
awards.
Restricted
shares
of
quarter of fiscal 2022. These shares were not included in the diluted net
loss per share calculation.
The
following
table
provides
a
reconciliation
of
the
numerators
and
denominators
used
to
determine
basic
and
diluted
net
income (loss) per common share (amounts in thousands, except per share data):
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
Numerator
Net income (loss)
$
$
(
18,026
)
Less: Loss attributable to noncontrolling interest
(
153
)
Net income (loss) attributable to Cal-Maine Foods, Inc.
$
$
(
18,026
)
Denominator
Weighted-average
common shares outstanding, basic
Effect of dilutive restricted shares
Weighted-average
common shares outstanding, diluted
Net income (loss) per common share attributable to Cal-Maine Foods,
Inc.
Basic
$
$
(
0.37
)
Diluted
$
$
(
0.37
)
Note 8 – Revenue from Contracts with Customers
Satisfaction of Performance Obligation
The vast majority of the Company’s
revenue is derived from agreements with customers based on the customer
placing an order
for products. Pricing
for the most part
is determined when
the Company and
the customer agree
upon the specific
order, which
establishes the contract for that order.
Revenues are
recognized in
an amount
that reflects
the net
consideration we
expect to
receive in
exchange for
the goods.
Our
shell
eggs
are
sold
at
prices
related
to
independently
quoted
wholesale
market
prices
or
formulas
related
to
our
costs
of
production.
The
Company’s
sales
predominantly
contain
a
single
performance
obligation.
We
recognize
revenue
upon
satisfaction
of
the
performance
obligation
with
the
customer
which
typically
occurs
within
days
of
the
Company
and
the
customer agreeing upon the order.
Returns and Refunds
Some of our contracts
include a guaranteed sale
clause, pursuant to which
we credit the customer’s
account for product
that the
customer
is
unable
to
sell
before
expiration.
The
Company
records
an
allowance
for
returns
and
refunds
by
using
historical
return
data
and
comparing
to current
period
sales and
accounts receivable.
The allowance
is recorded
as a
reduction
in sales
with a corresponding reduction in trade accounts receivable.
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 the
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.’’
13
Disaggregation of Revenue
The following table provides revenue disaggregated by product category
(in thousands):
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
Conventional shell egg sales
$
$
Specialty shell egg sales
Egg products
Other
$
$
Contract Costs
The Company can incur costs to
obtain or fulfill a contract with a
customer. If the
amortization period of these costs is less
than
one year,
they are
expensed as
incurred. When
the amortization
period is
greater than
one year,
a contract
asset is
recognized
and
is amortized
over the
contract life
as a
reduction
in net
sales. As
of August
27,
2022 and
May 28,
2022,
the balance
for
contract assets is immaterial.
Contract Balances
The Company receives payment from customers based on specified terms that are
generally less than 30 days from delivery.
There are rarely contract assets or liabilities related to performance under the
contract.
Note 9 - Stock Based Compensation
Total stock-based
compensation expense was $
Unrecognized
compensation
expense
as a
result
of non
-vested
shares
of
restricted
stock outstanding
under
the
Amended
and
Restated 2012 Omnibus Long-Term
Incentive Plan at August 27, 2022 of $
period
of
Stock Compensation Plans in our 2022 Annual Report for further information
on our stock compensation plans.
The Company’s restricted share activity
for the thirteen weeks ended August 27, 2022 follows:
Number of
Shares
Weighted
Average Grant
Date Fair Value
Outstanding, May 28, 2022
$
Vested
(
3,240
)
Forfeited
(
2,778
)
Outstanding, August 27, 2022
$
Note 10 – Income Taxes
For
the
first
quarters
of
fiscal
2023
and
2022,
the
Company
recorded
income
tax
expense
of
$
benefit of $
% and
%, respectively.
Excluding the impact
of discrete
items
related
to
an
$
Valley
Egg Farm, LLC acquisition, the adjusted effective
tax rate for the first quarter of fiscal 2022 is
%.
Our effective tax
rate differs from
the federal statutory income
tax rate due to
state income taxes, certain
federal tax credits 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,
certain
nondeductible
expenses
and
net
income
or
loss
attributable
to
noncontrolling interest.
14
Note 11 - Commitments and Contingencies
Financial Instruments
The Company maintained
standby letters of credit
(“LOCs”) totaling $
the Company's Credit Facility.
The outstanding LOCs are for the
benefit of certain insurance companies
and are not recorded as
a liability on the consolidated balance sheets.
LEGAL PROCEEDINGS
State of Texas
v. Cal-Maine Foods, Inc. d/b/a Wharton;
and Wharton County Foods, LLC
On April
23, 2020,
the Company
and its subsidiary
Wharton County
Foods, LLC (“WCF”)
were named
as defendants in
State
of
Texas
v.
Cal-Maine
Foods,
Inc.
d/b/a
Wharton;
and
Wharton
County
Foods,
LLC,
Cause
No.
2020-25427,
in
the
District
Court of
Harris County,
Texas.
The State
of Texas
(the “State”)
asserted claims
based on
the Company’s
and WCF’s
alleged
violation
of
the
Texas
Deceptive
Trade
Practices—Consumer
Protection
Act,
Tex.
Bus.
&
Com.
Code
§§
17.41-17.63
(“DTPA”).
The
State
claimed
that
the
Company
and
WCF
offered
shell
eggs
at
excessive
or
exorbitant
prices
during
the
COVID-19
state
of
emergency
and
made
misleading
statements
about
shell
egg
prices.
The
State
sought
temporary
and
permanent
injunctions
against
the
Company
and
WCF
to
prevent
further
alleged
violations
of
the
DTPA,
along
with
over
$
prejudice. On September
11, 2020,
the State filed a
notice of appeal,
which was assigned
to the Texas
Court of Appeals
for the
First
District.
On
August
16,
2022,
the
appeals
court
reversed
and
remanded
the
case
back
to
the
trial
court
for
further
proceedings.
The
Company
and
WCF
are
considering
whether
to
appeal
this
decision
from
the
First
District.
Management
believes the risk of material loss related to this matter to be remote.
Bell et al. v. Cal-Maine Foods et al.
On
April
30, 2020,
the Company
was named
as one
of several
defendants
in
Bell et
al. v.
Cal-Maine
Foods et
al.,
Case No.
1:20-cv-461,
in
the
Western
District
of
Texas,
Austin
Division.
The
defendants
include
numerous
grocery
stores,
retailers,
producers, and farms. Plaintiffs assert that defendants
violated the DTPA
by allegedly demanding exorbitant or
excessive prices
for
eggs during
the
COVID-19
state of
emergency.
Plaintiffs
request
certification
of a
class of
all consumers
who purchased
eggs
in
Texas
sold,
distributed,
produced,
or
handled
by
any
of
the
defendants
during
the
COVID-19
state
of
emergency.
Plaintiffs seek to enjoin
the Company and other
defendants from selling eggs
at a price more than
10% greater than the price
of
eggs prior
to the
declaration
of the
state of
emergency
and damages
in the
amount
of $
each violation
impacting anyone
over 65
years old.
On December
1, 2020,
the Company
and
certain other
defendants filed
a
motion to
dismiss the
plaintiffs’
amended
class action
complaint. The
plaintiffs
subsequently filed
a motion
to strike,
and the
motion to
dismiss and
related proceedings
were referred
to a
United States
magistrate judge.
On July
14, 2021,
the magistrate
judge
issued
a
report
and
recommendation
to
the
court
that
the
defendants’
motion
to
dismiss
be
granted
and
the
case
be
dismissed without prejudice for lack of subject matter jurisdiction.
On September 20, 2021, the court dismissed the case without
prejudice.
On
July
13,
2022,
the
court
denied
the
plaintiffs’
motion
to
set
aside
or
amend
the
judgment
to
amend
their
complaint.
On March 15, 2022,
plaintiffs
filed a second suit
against the Company and
several defendants in
Bell et al. v.
Cal-Maine Foods
et al.,
Case No.
1:22-cv-246, in
the Western
District of
Texas,
Austin Division
alleging the
same assertions
as laid
out in
the
first
complaint.
On
August
12,
2022,
the
Company
and
other
defendants
in
the
case
filed
a
motion
to
dismiss
the
plaintiffs’
class action
complaint. On
September 6,
2022, the
plaintiffs’ filed
their opposition
to the
motion to
dismiss and
the Company
and other
defendants filed
their reply on
September 13,
2022. The
court has not
issued a ruling.
Management believes
the risk
of material loss related to both matters to be remote.
Kraft Foods Global, Inc. et al. v.
United Egg Producers, Inc. et al.
As previously
reported, 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 Company
settled all
of these
cases, except
for
the claims
of certain
plaintiffs who sought substantial
damages allegedly arising from
the purchase of egg products (as
opposed to shell eggs). These
remaining plaintiffs
are Kraft
Food Global,
Inc., General
Mills, Inc.,
and Nestle
USA, Inc.
(the “Egg
Products Plaintiffs”)
and
The Kellogg Company.
On September
13, 2019,
the case
with the
Egg Products
Plaintiffs was
remanded from
a multi-district
litigation proceeding
in
the
United
States
District
Court
for
the
Eastern
District
of
Pennsylvania,
In
re
Processed
Egg
Products
Antitrust
Litigation,
MDL No. 2002, to
the United States District Court
for the Northern District
of Illinois, Kraft Foods Global,
Inc. et al. v.
United
15
Egg
Producers,
Inc.
et
al.,
Case
No.
1:11-cv-8808,
for
trial.
The
Egg
Products
Plaintiffs
allege
that
the
Company
and
other
defendants
violated
Section
1
of
the
Sherman
Act,
15.
U.S.C.
§
1,
by
agreeing
to
limit
the
production
of
eggs
and
thereby
illegally to raise the prices that plaintiffs
paid for processed egg products. In particular,
the Egg Products Plaintiffs are
attacking
certain features of
the United Egg
Producers animal-welfare guidelines
and program used by
the Company and
many other egg
producers. The
Egg Products
Plaintiffs seek
to enjoin
the Company
and other
defendants from
engaging in
antitrust violations
and seek treble money damages.
On May 2, 2022,
the court set trial for October
24, 2022, but on September
20, 2022, the court
cancelled the
trial date
due to
COVID-19 protocols
and converted
the trial
date to
a status
hearing to
reschedule the
jury trial.
We anticipate the
trial being rescheduled for the first or second calendar quarter of 2023.
In addition,
on October
24, 2019,
the Company
entered into
a confidential
settlement agreement
with The
Kellogg Company
dismissing
all
claims
against
the
Company
for
an
amount
that
did
not
have
a
material
impact
on
the
Company’s
financial
condition or results of operations. On November 11,
2019, a stipulation for dismissal was filed with the court,
and on March 28,
2022, the court dismissed the Company with prejudice.
The Company intends to
continue to defend the remaining
case with the Egg Products Plaintiffs
as vigorously as possible based
on
defenses
which
the
Company
believes
are
meritorious
and
provable.
Adjustments,
if
any,
which
might
result
from
the
resolution of
this remaining
matter with
the Egg
Products Plaintiffs
have not
been reflected
in the
financial statements.
While
management
believes
that
there
is
still
a
reasonable
possibility
of
a
material
adverse
outcome
from
the
case
with
the
Egg
Products Plaintiffs,
at the
present time,
it is not
possible to
estimate the
amount of
monetary exposure,
if any,
to the
Company
due
to
a
range
of
factors,
including
the
following,
among
others:
two
earlier
trials
based
on
substantially
the
same
facts
and
legal arguments
resulted
in findings
of no
conspiracy
and/or damages;
this trial
will be
before
a different
judge and
jury in
a
different
court
than
prior related
cases; there
are significant
factual
issues to
be
resolved; and
there
are requests
for damages
other than compensatory damages (i.e., injunction and treble money damages).
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. and affiliates, Cobb-Vantress,
Inc., Cargill, Inc. and its
affiliate, George’s,
Inc. and
its affiliate,
Peterson Farms, Inc.
and Simmons Foods,
Inc. 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
% 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 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.
16
ITEM
2.
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATIONS
The following
should be
read in
conjunction
with Management’s
Discussion and
Analysis of
Financial Condition
and Results
of Operations included
in Part II Item
7 of the Company’s
Annual Report on
Form 10-K for its
fiscal year ended May
28, 2022
(the “2022 Annual Report”), and the accompanying financial statements and
notes included in Part II Item 8 of the 2022 Annual
Report and in
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
future
production
data,
expected
construction
schedules,
projected
construction
costs,
potential
future
supply
of and
demand
for
our
products,
potential
future
corn
and
soybean price
trends,
potential
future
impact
on
our
business
of
the
COVID-19
pandemic,
potential
future
impact
on
our
business
of
new
legislation,
rules
or
policies,
potential
outcomes
of
legal
proceedings,
and
other
projected
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
outcomes
or
results
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
the
Company
and
its
industry. These
statements
are
not
guarantees
of
future
performance
and
involve
risks,
uncertainties,
assumptions,
and
other
factors
that
are
difficult
to predict
and
may 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 Part
I Item
1A of
the 2022
Annual
Report
(ii)
the
risks
and
hazards
inherent
in
the
shell egg
business
(including
disease, pests,
weather
conditions,
and
potential
for
product
recall),
including
but
not
limited
to
the
current
outbreak
of
highly
pathogenic
avian
influenza
(HPAI)
affecting
poultry
in the
U.S., Canada
and other
countries that
was first
detected in
commercial
flocks in
the U.S.
in February
2022, (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 risks or
changes that may cause conditions to
completing a pending acquisition not to be
met, (vi) risks
relating
to
the
evolving
COVID-19
pandemic,
including
without
limitation
increased
costs
and
rising
inflation
and
interest
rates, which
generally have been
exacerbated by Russia’s
invasion of Ukraine
starting February 2022,
(vii) our ability
to retain
existing
customers,
acquire
new
customers
and
grow
our
product
mix
and
(viii)
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 that
these forward-
looking
statements
will
prove
to
be
accurate. Further,
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 update publicly
these forward-looking statements,
whether because of
new information, future
events, or
otherwise.
GENERAL
Cal-Maine
Foods,
Inc.
(the
“Company,”
“we,”
“us,”
“our”)
is
primarily
engaged
in
the
production,
grading,
packaging,
marketing
and
distribution
of
fresh
shell
eggs.
Our
operations
are
fully
integrated
under
one
operating
segment.
We
are
the
largest producer
and distributor
of fresh
shell eggs
in the
United States
(“U.S.”).
Our total flock
of approximately
41.1 million
layers
and
11.4
million
pullets
and
breeders
is
the
largest
in
the
U.S.
We
sell
most
of
our
shell
eggs
to
a
diverse
group
of
customers, including
national and
regional grocery
store chains,
club stores,
companies servicing
independent supermarkets
in
the U.S., food
service distributors, and
egg product consumers
in states across
the southwestern, southeastern,
mid-western and
mid-Atlantic regions of the U.S.
Our
operating
results
are
materially
impacted
by
market
prices for
eggs
and
feed
grains
(corn
and
soybean
meal),
which
are
highly
volatile,
independent
of
each
other,
and
out
of
our
control.
Generally,
higher
market
prices
for
eggs
have
a
positive
impact
on
our
financial
results
while
higher
market
prices
for
feed
grains
have
a
negative
impact
on
our
financial
results.
Although we
use a
variety of
pricing mechanisms
in pricing
agreements with
our customers,
we sell
most of
our conventional
shell eggs
based on
formulas that
consider,
in varying
ways, independently
quoted regional
wholesale
market prices
for shell
eggs or formulas related to our costs of production which include the cost of corn and soybean
meal.
We
routinely
fill
our
storage
bins
during
harvest
season
when
prices
for
feed
ingredients
are
generally
lower.
To
ensure
continued
availability of
feed ingredients,
we may
enter into
contracts for
future purchases
of corn
and soybean
meal, and
as
part of these contracts,
we may lock-in
the basis portion of
our grain purchases
several months in
advance. Furthermore, due
to
the
more
limited
supply
for
organic
ingredients,
we
may
commit
to
purchase
organic
ingredients
in
advance
to
help
ensure
supply.
Ordinarily,
we do not enter
into long-term contracts
beyond a year
to purchase corn and
soybean meal or hedge
against
17
increases
in
the
prices
of
corn
and
soybean
meal.
Corn
and
soybean
meal
are
commodities
and
are
subject
to
volatile
price
changes
due
to
weather,
various
supply
and
demand
factors,
transportation
and
storage
costs,
speculators
and
agricultural,
energy and trade policies in the U.S. and internationally
and most recently the Russia-Ukraine war.
An important competitive advantage
for Cal-Maine Foods is
our ability to meet
our customers’ evolving needs
with a favorable
product
mix
of
conventional
and
specialty
eggs,
including
cage-free,
organic
and
other
specialty
offerings,
as
well
as
egg
products.
We
have
also
enhanced
our
efforts
to
provide
free-range
and
pasture-raised
eggs
that
meet
consumers’
evolving
choice
preferences.
While
a
small
part
of
our
current
business,
the
free-range
and
pasture-raised
eggs
we
produce
and
sell
represent attractive offerings
to a subset of
consumers,
and therefore our customers,
and help us continue
to serve as the trusted
provider of quality food choices.
Retail
sales
of
shell
eggs
historically
have
been
highest
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.
Historically,
shell
egg
prices
tend
to
increase
with
the
start
of
the
school
year
and
tend
to
be
highest
prior
to
holiday
periods,
particularly
Thanksgiving,
Christmas
and
Easter.
Consequently,
and
all
other
things
being
equal, we would
expect to experience
lower selling prices, sales
volumes and net
income (and may incur
net losses) in our
first
and
fourth
fiscal
quarters
ending
in
August/September
and
May/June,
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.
HPAI
We
are
closely
monitoring
the
current
outbreak
of
highly
pathogenic
avian
influenza
(“HPAI”),
that
was
first
detected
in
commercial
flocks
in
the
U.S.
in
February
2022
and
which
was
most
recently
detected
in
commercial
flocks
in
the
U.S.
in
September
2022.
According
to
the
U.S.
Centers
for
Disease
Control
and
Prevention,
these
detections
do
not
present
an
immediate
public
health
concern.
There
have
been
no
positive
tests for
HPAI
at
any
Cal-Maine
Foods’
owned
or contracted
production
facility as
of September
27, 2022.
The USDA
division
of Animal
and Plant
Health Inspection
Service (“APHIS”)
reported
that approximately
35.6 million
commercial
layer hens
and 1.0
million
pullets have
been
depopulated
due
to HPAI.
According
to
APHIS,
the
most
recently
reported
outbreaks
of
HPAI
affecting
commercial
layer
hens
and
pullets
occurred
September
21,
2022
and
June
9,
2022,
respectively.
We
believe
the
HPAI
outbreak
will
continue
to
have
an
impact
on
the
overall
supply of
eggs through
the balance
of this
calendar year
and possibly
beyond. According
to LEAP
Market Analytics,
layer hen inventory is not projected to exceed the 320 million mark until October
of 2023.
While no
farm is
immune from
HPAI,
we believe
we have implemented
and continue
to maintain
robust biosecurity
programs
across our locations. We
are also working closely with federal, state and local government
officials and focused industry groups
to mitigate the risk of this and future outbreaks and effectively manage
our response, if needed.
CAGE-FREE EGGS
Ten
states
have
passed
legislation
or
regulations
mandating
minimum
space
or
cage-free
requirements
for
egg
production
or
mandated
the
sale
of
only
cage-free
eggs
and
egg
products
in
their
states,
with
implementation
of
these
laws
ranging
from
January
2022
to
January
2026.
These
states
represent
approximately
27%
of
the
U.S.
total
population
according
to
the 2020
U.S. Census.
In California
and Massachusetts,
which
collectively represent
14% of
the total
U.S. population
according to
the
2020 U.S. Census,
cage-free legislation went
into effect January
1, 2022. However,
these laws are subject
to judicial challenge,
and the
Supreme Court
of the U.S.
recently announced
that in
October 2022
it will
review a
case challenging
California’s
law
that requires the sale of only
cage-free eggs in that state. These laws
have already affected and,
if upheld, will continue to affect
sourcing,
production
and
pricing
of
eggs (conventional
as well
as specialty)
as the
national
demand
for
cage-free
production
could
be greater
than the
current supply,
which
would increase
the price
of cage-free
eggs, unless
more
cage-free production
capacity
is constructed.
Likewise, the
national supply
for eggs
from conventional
production
could exceed
consumer demand
which would decrease the price of conventional eggs.
A significant number
of our customers
have previously announced
goals to offer
cage-free eggs exclusively
on or before
2026,
subject in
most cases
to availability
of supply,
affordability and
customer demand,
among other
contingencies. Some
of these
customers have
recently changed
those goals
to offer
70% cage-free
eggs by
the end
of 2030.
Our customers
typically do
not
commit to long-term
purchases of specific quantities
or types of eggs
with us, and as
a result, it is difficult
to accurately predict
customer
requirements
for
cage-free
eggs.
We
are,
however,
engaging
with
our
customers
in
an
effort
to
achieve
a
smooth
transition
in meeting
their announced
goals and
needs.
Sales of
cage-free
eggs represented
approximately
19.4% of
our shell
egg revenues
for the
first quarter
of fiscal
2023.
We
have invested
significant capital
in recent
years to
acquire and
construct
cage-free facilities, and
we expect our focus
for future expansion will
continue to include cage-free
facilities. At the same
time,
18
we
understand
the
importance
of
our
continued
ability
to provide
more
affordable
conventional
eggs
in
order
to
provide
our
customers with a variety of egg choices and to address hunger in our
communities.
For
additional
information,
see
the
2022
Annual
Report,
Part
I,
Item
1,
“Business
–
Specialty
Eggs,”
“Business
–
Growth
Strategy” and
“Business –
Government
Regulation,” and
the first
risk factor
in Part
I Item
1A, “Risk
Factors” under
the sub-
heading “Legal and Regulatory Risk Factors.”
EXECUTIVE OVERVIEW
For the first quarter of fiscal
2023, we recorded a gross profit of
$217.5 million compared to $6.6 million
for the same period of
fiscal
2022,
with
the
increase
due
primarily
to
higher
shell
egg
prices
and
increased
volume
of
specialty
eggs
sold,
partially
offset by the increased
cost of feed ingredients
and processing, packaging
and warehouse costs. Our
total dozens sold increased
8.1% to 275.3
million dozen shell
eggs for the
first quarter of
fiscal 2023 compared
to 254.6 million
dozen for the
same period
of fiscal 2022. For the first
quarter of fiscal 2023, conventional
dozens sold decreased 2.3% and specialty
dozens sold increased
35.1% as
compared to
the same
quarter in
fiscal 2022.
Demand for
specialty eggs
increased in
the first
quarter of
fiscal 2023
compared to
the same prior
year period due
primarily to the
higher prices for
conventional eggs.
Further,
demand for specialty
eggs continued
to increase
as retailers
continued
to shift
to selling
cage-free
products
and
cage-free
legislation
went into
full
effect
in
California
and
Massachusetts
on
January
1,
2022.
We
benefited
from
the
strong
demand
for
specialty
eggs
as
we
placed more of our cage-free facilities into production and better utilized
our existing cage-free production capacity.
Conventional
egg
prices
increased
in
the
first
quarter
of
fiscal
2023
primarily
due
to
decreased
supply
caused
by
the
HPAI
outbreak
compounded
with
good
customer
demand.
See
the
discussion
under
the
heading
“HPAI”
above.
The
daily
average
price for
the UB
southeast large
index for
the first
quarter of
fiscal 2023
increased 133.8%
from the
comparable period
in the
prior
year.
Our net
average
selling price
per dozen
for
the first
quarter
of fiscal
2023
was $2.275
compared
to $1.235
in
the
prior-year period. Layer
hen numbers reported
by the USDA
as of September
21, 2022, were
305.3 million, which
represents a
decrease of
4.6% compared
with the
layer hen
inventory a
year ago.
The USDA
also reported
that the
hatch from
April 2022
through
August
2022
decreased
0.5%
as
compared
with
the
prior-year
period.
As
of
September
1,
2022,
however,
eggs
in
incubators were up 9.0% year-over-year,
indicating that layer flocks may increase in the future.
Our farm
production costs
per dozen
produced for
the first
quarter of
fiscal 2023
increased 16.5%,
or $0.148,
compared to
the
first quarter of fiscal 2022
.
This increase was primarily
due to increased prices for
feed ingredients and a higher
basis in corn in
most of
our production
areas.
For the
first quarter
of fiscal
2023, the
average Chicago
Board of
Trade (“CBOT”)
daily market
price
was
$6.65
per
bushel
for
corn
and
$456
per
ton
for
soybean
meal,
representing
increases
of
11.5%
and
25.4%,
respectively, compared
to the average daily CBOT prices for the comparable period in the prior
year.
RESULTS OF
OPERATIONS
The
following
table
sets
forth,
for
the
periods
indicated,
certain
items
from
our
Condensed
Consolidated
Statements
of
Operations expressed as a percentage of net sales.
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
Net sales
100.0
%
100.0
%
Cost of sales
67.0
%
98.0
%
Gross profit
33.0
%
2.0
%
Selling, general and administrative
8.1
%
14.3
%
(Gain) loss on disposal of fixed assets
—
%
(0.1)
%
Operating income (loss)
24.9
%
(12.2)
%
Total other income, net
0.2
%
1.8
%
Income (loss) before income taxes
25.1
%
(10.4)
%
Income tax expense (benefit)
6.1
%
(4.9)
%
Net income (loss)
19.0
%
(5.5)
%
NET SALES
Total
net sales for
the first quarter
of fiscal 2023
were a record
$658.3 million
compared to $325.0
million for the
same period
of fiscal 2022.
19
Net shell
egg sales
represented 95.8%
and 97.1%
of total
net sales
for the
first quarters
of fiscal
2023 and
2022, respectively.
Shell egg sales classified
as “Other” represent
sales of hard-cooked
eggs and other
miscellaneous byproducts included
with our
shell egg operations.
The table below presents an analysis of our conventional and specialty shell egg
sales (in thousands, except percentage data):
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
Total net sales
$
658,344
$
324,986
Conventional
$
425,589
67.5
%
$
182,030
57.6
%
Specialty
200,820
31.8
%
132,458
42.0
%
Egg sales, net
626,409
99.3
%
314,488
99.6
%
Other
4,295
0.7
%
1,132
0.4
%
Net shell egg sales
$
630,704
100.0
%
$
315,620
100.0
%
Net shell egg sales as a percent of total net sales
95.8
%
97.1
%
Dozens sold:
Conventional
179,712
65.3
%
183,872
72.2
%
Specialty
95,605
34.7
%
70,750
27.8
%
Total dozens sold
275,317
100.0
%
254,622
100.0
%
Net average selling price per dozen:
Conventional
$
2.368
$
0.990
Specialty
$
2.101
$
1.872
All shell eggs
$
2.275
$
1.235
Egg products sales:
Egg products net sales
27,640
9,366
Pounds sold
16,502
15,269
Net average selling price per pound
1.675
0.613
Shell egg net sales
First Quarter – Fiscal 2023
vs. Fiscal 2022
-
In the
first quarter
of fiscal
2023,
conventional
egg sales
increased
$243.6 million,
or 133.8%,
compared to
the first
quarter of
fiscal 2022,
primarily due
to the
increase in
price for
conventional shell
eggs,
partially offset
by a decrease
in volume of
conventional eggs sold.
Changes in price
resulted in a
$247.6 million
increase and the
change in volume
resulted in a $4.1 million decrease in net sales, respectively.
-
We believe
prices for conventional eggs
were positively impacted by
a better alignment of the
size of the conventional
production layer
hen flock
and customer
and consumer
demand. Conventional
egg prices further
increased in
the first
quarter of fiscal 2023 primarily due to decreased supply caused by the HPAI
outbreak, discussed above.
-
Conventional
egg
prices
generally
respond
more
quickly
to
market
conditions
as
we
sell
the
majority
of
our
conventional
shell
eggs
based
on
formulas
that
adjust
periodically
and
take
into
account,
in
varying
ways,
independently
quoted regional
wholesale
market
prices for
shell eggs
or formulas
related to
our
costs of
production.
The
majority
of
our
specialty
eggs
are
typically
sold
at
prices
and
terms
negotiated
directly
with
customers
and
therefore do
not fluctuate
as much
as conventional
pricing. As
a result
of these
independently
quoted
whole markets
for
conventional
eggs
reaching
near
historical
highs,
the
average
selling
price
for
conventional
eggs
exceeded
the
average selling price for specialty eggs in the first quarter of fiscal 2023.
-
Specialty egg sales increased $68.4 million, or
51.6%, in the first quarter of fiscal 2023
compared to the first quarter of
fiscal 2022,
primarily due
to a
35.1% increase
in the
volume of
specialty eggs
sold, which
resulted in
a $46.5
million
increase in net sales.
-
According
to
Information
Resources,
Inc.,
Total
US
–
Multi
Outlet
for
the
latest
13
weeks
ended
August
27,
2022,
cage-free
eggs
dozens
sold
(including
free-range,
pasture-raised
and
organic)
increased
34.9%.
We
believe
this
increase in
demand was
positively impacted
by the
higher conventional
egg prices
as compared
to the
same period
in
20
the
prior
year.
Demand
for
specialty
eggs
was
further
positively
affected
by
California’s
and
Massachusetts’s
cage-
free mandates going into effect January 1, 2022, as well as more
retailers shifting to selling more cage-free products.
-
Our
specialty
egg
sales
in
the
first
quarter
of
fiscal
2023
versus
the
prior-year
period
benefitted
from
the
strong
demand
for
specialty
eggs
as
we
placed
more
of
our
cage-free
facilities
into
production,
and
we
better
utilized
our
existing cage-free production capacity.
Cage-free egg sales for the first
quarter of fiscal 2023 represented 19.4%
of our
total net shell egg
sales versus 22.1%
for the same prior
year period due
the higher conventional
egg prices. Cage-free
dozens sold increased 58% in the first of quarter of fiscal 2023 as compared
to the first quarter of fiscal 2022.
Egg products net sales
First Quarter – Fiscal 2023
vs. Fiscal 2022
-
Egg
products
net
sales
increased
$18.3
million
or
195.1%
for
the
first
quarter
of
fiscal
2023
compared
to
the
same
period of
fiscal 2022,
primarily due
to a
173.2% selling
price increase,
which had
a $17.5
million positive
impact on
net sales.
-
Our egg products
net average selling
price increased in
the first quarter
of fiscal 2023,
compared to the
first quarter of
fiscal 2022 as the supply decreased due to the HPAI
outbreak that started in February 2022. We
believe 13.4 million of
the
33.7
million
layers
culled
as
a
result
of
the
HPAI
outbreak
were
located
at
facilities
dedicated
to
support
inline
breaking facilities in Iowa and Ohio.
COST OF SALES
Costs of
sales for
the first
quarter of
fiscal 2023
were $440.9
million compared
to $318.3
million for
the same
period of
fiscal
2022.
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 (in thousands, except cost per dozen data):
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
%
Change
Cost of Sales:
Farm production
$
266,651
$
207,495
28.5
%
Processing, packaging, and warehouse
81,417
65,059
25.1
Egg purchases and other (including change in inventory)
68,298
37,973
79.9
Total shell eggs
416,366
310,527
34.1
Egg products
24,488
7,814
213.4
Total
$
440,854
$
318,341
38.5
%
Farm production costs (per dozen produced)
Feed
$
0.667
$
0.545
22.4
%
Other
$
0.379
$
0.353
7.4
%
Total
$
1.046
$
0.898
16.5
%
Outside egg purchases (average cost per dozen)
$
2.57
$
1.35
90.4
%
Dozens produced
257,654
236,458
9.0
%
Percent produced to sold
93.6%
92.9%
0.8
%
Farm Production
First Quarter – Fiscal 2023
vs. Fiscal 2022
-
Feed costs per dozen produced
increased 22.4% in the first quarter
of fiscal 2023
compared to the first quarter of fiscal
2022. This increase was primarily due to increased prices for corn, our primary
feed ingredient.
21
-
For the
first quarter
of fiscal
2023, the
average daily
Chicago Board
of Trade
(“CBOT”) market
price was
$6.65 per
bushel
for
corn
and
$456
per
ton
of
soybean
meal
representing
increases
of
11.5%
and
25.4%,
respectively,
as
compared to the average daily CBOT prices for the first quarter of fiscal 202
2.
Supplies of
corn and soybean
remained tight
relative to demand
in the first
quarter of
fiscal 2023 as
evidenced by a
low stock-
to-use
ratio
for
corn,
as
a
result
of
weather-related
shortfalls
in
production
and
yields,
ongoing
disruptions
related
to
the
COVID-19
global
pandemic
and
the
Russia-Ukraine
war
and
its
impact
on
the
export
markets.
Basis
levels
for
corn
ran
significantly
higher
in
our
area
of
operations
compared
to
our
prior
year
first
fiscal
quarter.
For
fiscal
2023,
we
expect
continued corn and soybean upward pricing pressures and further market
volatility to affect feed costs.
Processing, packaging, and warehouse
First Quarter – Fiscal 2023
vs. Fiscal 2022
-
Cost of packaging materials increased 16.1% compared to the first quarter of
fiscal 2022 due to rising inflation.
-
Labor costs increased 24.4%
due to wage increases and increased use of contract labor in response to labor shortages
.
-
Dozens processed increased 8.6% compared to the first quarter of fiscal 2022,
which resulted in a $2.2 million increase
in costs.
Egg purchases and other (including change in inventory)
First Quarter – Fiscal 2023
vs. Fiscal 2022
-
Costs in
this category
increased
primarily
due
to higher
egg prices,
partially offset
by the
decrease
in the
volume of
outside egg purchases, as our percentage of produced to sold increased
to 93.6% from 92.9%.
GROSS PROFIT
Gross profit for
the first quarter
of fiscal 2023
was $217.5 million
compared to $6.6
million for the
same period of
fiscal 2022.
The increase
of $210.9
million was
primarily due
to higher
egg prices
as well
as the
increased volume
of specialty
eggs sold,
partially offset by the increased cost of feed ingredients
and processing,
packaging and warehouse costs.
SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES
Selling,
general,
and
administrative
expenses
("SGA")
include
costs
of
marketing,
distribution,
accounting
and
corporate
overhead. The following table presents an analysis of our SGA expenses (in thousands):
Thirteen Weeks
Ended
August 27, 2022
August 28, 2021
$ Change
% Change
Specialty egg expense
$
13,067
$
13,715
$
(648)
(4.7)
%
Delivery expense
19,916
13,936
5,980
42.9
%
Payroll, taxes and benefits
10,987
9,939
1,048
10.5
%
Stock compensation expense
1,025
1,001
24
2.4
%
Other expenses
8,612
7,934
678
8.5
%
Total
$
53,607
$
46,525
$
7,082
15.2
%
First Quarter – Fiscal 2023
vs. Fiscal 2022
Specialty egg expense
-
Specialty egg
expense, which includes
franchise fees, advertising
and promotion
costs, generally
aligns with specialty
egg
volumes,
which
were
up
35.1%
for
the
first
quarter
of fiscal
2023
compared
to
the
same
period
of
fiscal
2022.
However,
our specialty egg
expense decreased by
4.7%, primarily due
to increased sales
to other
Eggland’s Best,
Inc.
(“EB”)
franchisees,
including
unconsolidated
affiliates,
Specialty
Eggs,
LLC
and
Southwest
Specialty
Eggs,
LLC.
These franchisees
that were
responsible for
the franchise
fees, advertising
and promotion
costs associated
with those
sales, which resulted in reduced costs for us. Also, the higher prices for
conventional eggs and the comparatively lower
prices for specialty eggs diminished
the need to promote specialty eggs;
as a result, EB temporarily reduced
the related
franchise fees for certain specialty egg products to encourage continued production
of these products.
22
Delivery expense
-
The increased
delivery expense
is primarily
due to
the increase
in fuel
and labor
costs for
both our
fleet and
contract
trucking.
Payroll, taxes and benefits expense
-
The increase
in payroll,
taxes and
benefits expense
is primarily
due
to increased
wages for
all employees
due
to the
inflationary market.
OPERATING
INCOME (LOSS)
For the first quarter of fiscal 2023,
we recorded operating income of $163.9 million
compared to operating loss of $39.7 million
for the same period of fiscal 2022.
OTHER INCOME (EXPENSE)
Total
other
income
(expense)
consists
of
items
not
directly
charged
or
related
to
operations,
such
as
interest
income
and
expense, royalty income, equity income or loss of unconsolidated
entities, and patronage income, among other items.
For the first quarter of fiscal
2023, we earned $1.1 million of interest
income compared to $290 thousand for
the same period of
fiscal
2022.
The
increase
resulted
from
significantly
higher
investment
balances.
The
Company
recorded
interest
expense
of
$148 thousand and $58 thousand for the first quarters
ended August 27, 2022 and August 28, 2021, respectively.
Other,
net for
the first
quarter ended
August 27,
2022, was
income of
$155 thousand
compared to
income of
$5.2 million
for
the same
period of
fiscal 2022.
The decrease
is primarily
due to
our acquisition
of the
remaining 50%
membership interest
in
Red
River
in
the
first
quarter
of
fiscal
2022
as
we
recognized
a
$4.5
million
gain
due
to
the
remeasurement
of
our
equity
investment.
INCOME TAXES
For the
first quarter
of fiscal
2023, pre-tax
income was
$165.5 million
compared to
pre-tax loss
of $33.9
million for
the same
period of
fiscal 2022.
We
recorded income
tax expense
of $40.3
million for
the first
quarter of
fiscal 2023,
which reflects
an
effective
tax
rate
of
24.4%,
compared
to
an
income
tax
benefit
of
$15.8
million
in
the
prior
year
period,
which
reflects
an
effective tax
rate of 46.8%.
Excluding the
impact of discrete
items related to
a $8.3
million net
tax benefit
recorded in the
first
quarter of
fiscal 2022
in connection
with the
Red River
Valley
Egg Farm,
LLC (“Red
River”) acquisition,
income tax
benefit
for the comparable period of fiscal 2022 was $7.6 million, which reflects an
adjusted effective tax rate of 22.4%.
Our effective tax
rate differs from
the federal statutory income
tax rate due to
state income taxes, certain
federal tax credits 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,
certain
nondeductible
expenses
and
net
income
or
loss
attributable
to
noncontrolling interest.
NET INCOME ATTRIBUTABLE
TO CAL-MAINE FOODS, INC.
Net income
attributable to Cal-Maine
Foods, Inc. for
the first quarter
ended August 27,
2022, was $125.3
million, or $2.58
per
basic and $2.57 per diluted
common share, compared to net
loss attributable to Cal-Maine
Foods, Inc. of $18.0 million
or $0.37
per basic and diluted common share for the same period of fiscal 2022.
LIQUIDITY AND CAPITAL
RESOURCES
Working
Capital and Current Ratio
Our working
capital at
August 27,
2022 was $548.5
million, compared
to $476.8
million at
May 28,
2022. The
calculation of
working capital is
defined as current
assets less current liabilities.
Our current ratio
was 3.4 at August
27, 2022, compared with
3.6 at May 28, 2022. The current ratio is calculated by dividing current
assets by current liabilities.
Cash Flows from Operating Activities
For
the thirteen
weeks
ended August
27, 2022,
$172.8
million
in net
cash
was
provided by
operating
activities,
compared
to
$24.1
million used
by operating
activities for
the comparable
period in
fiscal 2022.
The increase
in cash
flow from
operating
23
activities
resulted
primarily
from
higher
selling
prices
for
conventional
and
specialty
eggs
as
well
as
increased
volume
of
specialty
egg
sales,
partially
offset
by
increased
costs
of
feed
ingredients
compared
to
the
prior-year
period.
The
increase
in
Other adjustments, net is primarily due to a $67.4 million balance for
income taxes payable as of August 27, 2022.
Cash Flows from Investing Activities
We continue
to invest in our facilities, with $27.7
million used to purchase property,
plant and equipment for the thirteen
weeks
ended
August
27,
2022,
compared
to
$11.2
million
in
the
same
period
of
fiscal
2022. In
the
first
quarter
of
fiscal
2022,
we
acquired the
remaining 50%
membership interest
in Red
River Valley
Egg Farm,
LLC for
$44.8 million,
net of
cash acquired.
Purchases
of investments
were $51.8
million
in
the first
quarter
of fiscal
2023,
compared to
$1.4
million
in fiscal
2022.
The
increase in
purchases of
investments is
primarily due
to the
increased cash
provided by
operating activities
noted above.
Sales
and
maturities of
investment
securities were
$20.3
million
for
the thirteen
weeks ended
August
27,
2022,
compared
to $39.4
million for the comparable period in fiscal 2022.
Cash Flows from Financing Activities
We paid dividends
of $36.7 million in the first quarter of fiscal 2023.
As of
August 27,
2022,
cash increased
$76.9 million
since May
28, 2022,
compared to
a decrease
of $40.7
million during
the
same period of fiscal 2022.
Credit Facility
We
had no
long-term debt
outstanding at
August 27,
2022 or
May 28,
2022. On
November 15,
2021, we
entered into
a credit
agreement
that
provides
for
a
senior
secured
revolving
credit facility
(the
“Credit
Facility”),
in
an
initial
aggregate
principal
amount
of
up
to
$250
million
with
a
five-year
term.
As
of
August
27,
2022,
no
amounts
were
borrowed
under
the
Credit
Facility. We
have $4.1 million in
outstanding standby letters of
credit, issued under our
Credit Facility for the benefit
of certain
insurance companies. Refer
to Part II Item
8. Notes to the
Financial Statements, Note
10 – Credit
Facility included
in our 2022
Annual Report for further information regarding our long-term debt.
Material Cash Requirements
We
continue
to
monitor
the
increasing
demand
for
cage-free
eggs
and
to
engage
with
our
customers
in
efforts
to
achieve
a
smooth transition toward
their announced commitment
timeline for cage-free
egg sales. As previously
reported, during the
first
quarter of
fiscal 2023, our
Board of Directors
approved another
capital project
to expand our
cage-free production
capabilities.
The
project
at
Chase,
Kansas
will
convert
existing
conventional
layer
capacity
to
cage-free
capacity
for
approximately
1.5
million cage-free hens and include remodels of all remaining pullet facilities. Project
completion is expected by year-end 2025.
The following table presents material construction projects approved
as of August 27, 2022 (in thousands):
Project(s) Type
Projected
Completion
Projected Cost
Spent as of August
27, 2022
Remaining
Projected Cost
Cage-Free Layer & Pullet Houses/Processing
Facility
Fiscal 2023
$
132,161
115,343
16,818
Cage-Free Layer & Pullet Houses
Fiscal 2023
24,923
19,548
5,375
Cage-Free Layer & Pullet Houses
Fiscal 2024
42,591
383
42,208
Cage-Free Layer & Pullet Houses
Fiscal 2025
94,183
7,729
86,454
$
293,858
$
143,003
$
150,855
We believe our
current cash balances, investments, cash flows from operations, and Credit Facility will be sufficient
to fund our
current capital needs for at least the next 12 months.
IMPACT OF
RECENTLY
ISSUED/ADOPTED ACCOUNTING STANDARDS
For
information
on
changes
in
accounting
principles
and
new
accounting
policies,
see
24
CRITICAL ACCOUNTING ESTIMATES
Critical accounting
estimates
are those
estimates
made
in accordance
with U.S.
generally
accepted
accounting
principles that
involve
a
significant
level
of
estimation
uncertainty
and
have
had
or
are
reasonably
likely
to
have
a
material
impact
on
our
financial
condition
or results
of operations.
There
have been
no changes
to our
critical accounting
estimates identified
in our
2022 Annual Report.
ITEM 3. QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our exposure to market risk during
the thirteen weeks ended August 27, 2022 from the
information provided in Item 7A. Quantitative and Qualitative Disclosures
About Market Risk in our 2022 Annual Report.
ITEM 4.
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 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 August 27, 2022 at the reasonable
assurance level.
Changes in Internal Control Over Financial Reporting
There
was no
change
in our
internal control
over financial
reporting
that occurred
during the
quarter
ended
August
27, 2022
that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
25
PART
II. OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
Refer
to
the
discussion
of
certain
legal
proceedings
involving
the
Company
and/or
its
subsidiaries
in
(i)
our
2022
Annual
Report,
Part
I
Item
3
Legal
Proceedings,
and
Part
II
Item 8,
Notes
to
Consolidated
Financial
Statements
and
Supplementary
Data, Note 18: Commitments
and Contingencies, and
(ii) in this Quarterly
Report in
of the Notes to Condensed Consolidated Financial Statements, which discussions are incorporated
herein by reference.
ITEM 1A.
RISK
FACTORS
There have been no material changes in the risk factors previously disclosed in the
Company’s 2022 Annual
Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
The following table is a summary of our first quarter 2023 share repurchases:
Issuer Purchases of Equity Securities
Total
Number of
Maximum Number
Shares Purchased
of Shares that
Total
Number
Average
as Part of Publicly
May Yet
Be
of Shares
Price Paid
Announced Plans
Purchased Under the
Period
Purchased (1)
per Share
Or Programs
Plans or Programs
05/29/22 to 06/25/22
286
$
47.04
—
—
06/26/22 to 07/23/22
609
52.48
—
—
07/24/22 to 08/27/22
—
—
—
—
895
$
50.74
—
—
(1)
As permitted under our Amended and Restated 2012
Omnibus Long-Term Incentive Plan, these shares were withheld by us to satisfy
tax withholding
ITEM 6. EXHIBITS
Exhibits
No.
Description
3.1
3.2
31.1*
31.2*
32**
101.SCH*+
Inline XBRL Taxonomy
Extension Schema Document
101.CAL*+
Inline XBRL Taxonomy
Extension Calculation Linkbase Document
101.DEF*+
Inline XBRL Taxonomy
Extension Definition Linkbase Document
101.LAB*+
Inline XBRL Taxonomy
Extension Label Linkbase Document
101.PRE*+
Inline XBRL Taxonomy
Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained
in Exhibit 101)
*
Filed herewith as an Exhibit.
**
Furnished herewith as an Exhibit.
+
Submitted electronically with this Quarterly Report.
26
SIGNATURES
Pursuant to
the requirements
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.
CAL-MAINE FOODS, INC.
(Registrant)
Date:
September 27, 2022
/s/ Max P.
Bowman
Max P.
Bowman
Vice President, Chief Financial
Officer
(Principal Financial Officer)
Date:
September 27, 2022
/s/ Matthew S. Glover
Matthew S. Glover
Vice President – Accounting
(Principal Accounting Officer)
TABLE OF CONTENTS
Part I. FinancialItem 1. Financial StatementsNote 1 - Summary Of Significant Accounting PoliciesNote 2 - InvestmentNote 3 - Fair Value MeasurementsNote 4 - Inventories Inventories Consisted Of The Following As Of August 27, 2022 and May 28, 2022 (in Thousands):Note 4 - InventoriesNote 5 - Accrued Dividends Payable and Dividends Per Common ShareNote 6 - EquityNote 7 - Net Income (loss) Per Common ShareNote 8 Revenue From Contracts with CustomersNote 9 - Stock Based CompensationNote 10 Income TaxesNote 11 - Commitments and ContingenciesItem 2. Management SItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. ControlsPart II. Other InformationItem 1. Legal ProceedingsItem 1A. RiskItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 6. Exhibits