CAL-MAINE FOODS INC

Notes to Condensed Consolidated Financial

Statements

Note 1 - Summary of Significant Accounting

Policies

Basis of Presentation

The unaudited condensed consolidated financial statements of

Cal-Maine Foods, Inc. and

its subsidiaries

(“Cal-Maine Foods,”

the

“Company,”

“we,” “us,”

“our”) have

been prepared

in

accordance with

the

instructions to

Form

10-Q

and Article

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 31,

(the “2025

Annual Report”).

These statements

reflect all

adjustments that

are, in

the

opinion of

necessary to

a

fair

statement

of

the

results

for

the

interim

periods presented

and,

in

the

opinion

of

consist of

adjustments of

a normal

recurring nature. Operating

results for

the

interim periods

are not

necessarily indicative of

results for the entire fiscal year.

Fiscal Year

fiscal year ends on the Saturday closest to May 31. Each of the three-month

and year-to-date periods ended on

November 29, 2025 and November

30, 2024 included

and

weeks, respectively.

Use of Estimates

The preparation

of the

condensed consolidated financial

statements in

conformity with

GAAP requires

management to

make

estimates

and

assumptions

that

affect

the

amounts

reported

in

the

condensed

and

accompanying notes. Actual results could

differ from those estimates.

Dividends Payable

Dividends are accrued

at the end of each quarter according to the Company’s dividend policy adopted by its Board of Directors

(“Board”).

pays a

dividend to

holders of its

(and, prior

to its conversion

to Common

Stock on

April

14,

2025,

Class

A

Common Stock)

on

a

quarterly

basis

for

each quarter

for

which

the

Company

reports

net

income

attributable

to

Foods,

Inc.,

computed

in

accordance with

GAAP,

in

an

amount

equal

to

one-third

(1/3)

of

such

quarterly net

income. Dividends

are paid

to stockholders

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

stockholders 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

Foods,

Inc.,

the

Company

will

not

pay

a

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. The dividend policy is subject

to periodic review by the

Board.

Revenue Recognition

The Company recognizes revenue

through the sale of its products to customers through retail, foodservice

and other distribution

channels.

The

majority

of

the

revenue is

derived

from

agreements

or

contracts

with

based

upon

the

customer

ordering

its

with

a

single

performance obligation

of

delivering

the

product.

The

Company

believes

the

performance obligation

is

met

upon

delivery

and

acceptance of

the

product

by

its

customers, which

occurs

upon

shipment or

delivery to

a customer

based on

the terms

of the

sale. Costs

paid to

third party

brokers to

obtain agreements are

expensed as the Company’s agreements are

generally less than one year.

Revenues are recognized in

an amount

that reflects the

net consideration we

expect to

receive in exchange for

delivery of

the

products.

periodically

offers

sales incentives

or other

programs such

as

rebates, discounts,

coupons, volume-

based incentives, guaranteed sales and other programs. The Company

records an estimated allowance for costs associated with

these programs, which is recorded as a reduction in revenue at the time of

sale using historical trends and projected redemption

rates

of

each program.

regularly

reviews

these estimates

and

any difference

between the

estimated costs

and

actual realization of these

programs would be recognized in the subsequent

period.

Index

Business Combinations

The Company applies the acquisition method of accounting, which

requires that once control is obtained, all the assets acquired

and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values

at

the

date

of acquisition.

The

excess

of

the

over

fair

values

of

identifiable

assets

and

is

recorded as

goodwill.

We

use various

models

and methods

to

determine the

fair values

of identifiable

liabilities,

such as

top-down and

bottom-up

approach for

inventory,

cost

method

and market

approach for

property,

and

relief-from-royalty and

multi-period

excess earnings to value intangibles. Significant estimates in valuing certain

intangible assets include, but are not limited to, the

amount and timing of future cash flows, growth

rates, discount rates and

useful lives.

New Accounting Pronouncements and Policies

In December 2023, the Financial

Accounting Standards Board (“FASB

”) issued Accounting Standards Update (“ASU”) 2023-

09,

Income Taxes (Topic

740. – Improvements to Income Tax Disclosures

. This ASU requires that an entity, on an annual basis,

disclose

income tax

information,

related

to

the

rate

reconciliation

and

income

taxes

paid.

The

ASU

is

intended to

enhance the transparency and

decision usefulness

of income

tax disclosures.

ASU 2023-09

is effective

for annual

periods

beginning

after

15,

The

Company

is

currently

evaluating

the

impact

of

ASU

2023-09

on

its

consolidated financial statement disclosures.

In

2024,

the

FASB

issued

ASU

2024-03,

Income

Statement

—

Reporting

Comprehensive

Income

—

Expense

Disaggregation Disclosures (Subtopic 220-40)

. The objective of ASU 2024-03 is to improve disclosures about a public entity’s

expenses, primarily through additional disaggregation of income

statement expenses. Additionally,

in January 2025, the FASB

further clarified

the

effective date

of ASU

2024-03

with

the

issuance of ASU

2025-01. ASU

2024-03 is effective

for annual

periods beginning after December 15, 2026, and

interim periods within annual reporting

periods beginning after December 15,

2027. Early adoption is

permitted and may be applied either on

a prospective or retrospective basis.

The Company is currently

evaluating the impact of ASU 2024-03 on its

consolidated financial statement disclosures.

There are no other new accounting pronouncements

issued or effective during the fiscal year that had

or are expected to have a

material impact on our consolidated financial

statements.

Index

Note 2 - Acquisitions

Acquisition of Echo Lake Foods, LLC

Effective

June 2, 2025

, the Company

acquired Echo Lake Foods, LLC

and certain related companies (collectively “Echo Lake

Foods”). Echo Lake Foods

is based in

Burlington, Wisconsin

and produces, packages, markets and

distributes prepared foods,

including waffles, pancakes, scrambled

eggs, frozen cooked omelets, egg patties, toast and

diced eggs. The Company accounted

for the acquisition as a business combination.

The

Company

finalized

the

business

combination

during

the

second

quarter

of

fiscal

2026,

which

in

immaterial measurement period adjustments. The

following table summarizes the consideration paid for

Echo Lake Foods

and

the value of assets acquired

and liabilities assumed recognized

at the acquisition date (in thousands):

Cash consideration paid

$

275,406

Recognized amounts of identifiable

assets acquired and liabilities assumed

Cash

$

Investment securities available-for-sale

14,147

Accounts receivable

31,923

Inventories

21,601

Prepaid expenses and other current

assets

3,131

Property, plant & equipment

151,697

Intangible assets

36,800

259,414

Accounts payable and other current

(14,114)

Total identifiable net assets

245,300

30,106

$

275,406

Cash and

accounts receivable acquired

along with

liabilities assumed were

valued at

their carrying value

which approximates

fair value due to the short maturity of

these instruments.

Inventories consisted primarily of raw materials,

supplies and finished goods.

Raw materials and supplies

were valued at their

carrying value as management believes that their carrying value best approximates their fair value. Finished goods were valued

using both the bottom-up and top-down

approach. The bottom-up approach

measures the value of inventory as

the value created

by the

target company

(i.e., the costs

incurred, profit realized, and

tangible and intangible assets

utilized) pre-acquisition date.

The top-down

approach measures the

inventory as

the incremental

inventory value

created by

the market

participant

buyer as part of its

selling effort to an end customer (i.e.,

the costs that will be incurred, the profit

that will be realized, and the

tangible and intangible assets that will be

utilized) post-acquisition date.

Property,

plant and

equipment were

valued utilizing

the cost

approach and

market approach.

Machinery and

equipment were

valued

utilizing

the

cost

approach

which

is

based

on

replacement

or

reproduction

costs

of

the

assets

and

subtracting

any

depreciation resulting from physical deterioration and/or functional or economic obsolescence. Land and buildings were valued

utilizing the market approach

by using a real estate valuation.

Intangible assets consisted primarily of customer relationships and a

trade name. Customer relationships were valued using the

multi-period excess earnings method

and the trade name was valued

using the relief-from-royalty method.

represents the

excess of

the

of the

acquired business

over the

acquisition

date fair

the

net

assets acquired.

Goodwill recorded

in

connection with

the

Foods acquisition

is primarily

projected

synergies from

integrating the operations

of Echo

with the

operations of the

Company.

The Company recognized

goodwill of $

30.1

million as a result of the acquisition,

all of which is deductible for tax

purposes.

Index

The

Company

recorded transaction

costs

of

$

thousand in

the

first

fiscal 2026

and

$

6.6

million

in

the

fourth

quarter

of

fiscal

year

2025,

as

a

result

of

the

Echo

Lake

Foods

acquisition,

within

selling,

general

and

administrative expenses in the condensed

consolidated statements of income.

Acquisition of Clean Egg, LLC

Effective

October 10, 2025

, the Company acquired certain assets of Clean Egg, LLC (“Clean

Egg”) based in Langwood, Texas,

for approximately $

23.7

million. The assets acquired included

thousand brown cage-free and

free-range layers and pullets

and

other

inventory,

machinery

and

equipment

related

to

its

processing

facility

and

contract

production.

The

Company

accounted for the acquisition as a

business combination.

Note 3 - Investment

Securities Available-for-Sale

The following

represents the Company’s

investment securities

available-for-sale as of

2025 and

May 31,

Amortized

Cost

Gains

Losses

Estimated

Fair Value

$

19,861

$

$

—

$

19,918

21,329

—

21,323

534,429

2,547

—

536,976

4,240

—

4,252

142,433

—

142,629

44,404

—

44,440

Total current investment securities

$

766,696

$

2,848

$

$

769,538

Amortized

Cost

Gains

Losses

Estimated

Fair Value

$

21,695

$

$

—

$

21,698

90,880

—

90,830

431,378

—

431,508

5,200

—

5,194

240,655

—

240,395

103,119

—

103,083

Total current investment securities

$

892,927

$

$

$

892,708

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 investment securities at November

29, 2025 are as follows (in thousands):

Estimated Fair Value

Within one year

$

316,249

1-5 years

453,289

Total

$

769,538

Note 4 - Fair Value Measurements

is required

to categorize both

financial and nonfinancial

liabilities based on

the following

fair value

hierarchy. The fair

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

Index

•

Level 2

• Inputs

other than

quoted prices

included in

Level 1

that are

observable for

the

asset or

liability,

either

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

• Unobservable inputs for the asset or

liability that are supported by little or no market activity and that are

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

The carrying amount approximates fair

value due to the short maturity of these instruments.

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 November

and May

31, 2025

(in

thousands):

Level 1

Level 2

Level 3

Balance

Assets

$

—

$

19,918

$

—

$

19,918

—

21,323

—

21,323

—

536,976

—

536,976

—

4,252

—

4,252

—

142,629

—

142,629

—

44,440

—

44,440

Total assets measured at fair value

$

—

$

769,538

$

—

$

769,538

Liabilities

Contingent consideration

$

—

$

—

$

23,000

$

23,000

Total liabilities measured at fair value

$

—

$

—

$

23,000

$

23,000

Level 1

Level 2

Level 3

Balance

Assets

$

—

$

21,698

$

—

$

21,698

—

90,830

—

90,830

—

431,508

—

431,508

—

5,194

—

5,194

—

240,395

—

240,395

—

103,083

—

103,083

Total assets measured at fair value

$

—

$

892,708

$

—

$

892,708

Liabilities

Contingent consideration

$

—

$

—

$

21,500

$

21,500

Total liabilities measured at fair value

$

—

$

—

$

21,500

$

21,500

Investment securities – available-for-sale

are all classified as Level 2 and 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.

Contingent consideration classified

as Level 3

consists

of the potential

obligation to pay

an earnout to

Fassio Egg Farms,

Inc.

(“Fassio”) contingent on

the acquired business

meeting certain return

on profitability

milestones over a

three-year

period that

commenced on the date of the

acquisition in the second quarter of fiscal 2024. The fair value of the

contingent consideration is

Index

estimated using a discounted cash flow model. Key assumptions and

unobservable inputs that require

significant judgment used

in the estimate include

weighted average cost of

capital, egg prices, projected

revenue and expenses over

the period for which

the

contingent

consideration

is

measured,

and

the

probability

assessments

with

respect

to

the

likelihood

of

achieving

the

forecasted projections.

The following table shows the beginning

and ending balances in fair value

of the contingent consideration (in thousands):

Fassio Contingent Consideration

Balance, May 31, 2025

$

21,500

Fair value adjustments

1,500

Balance, November 29, 2025

$

23,000

Adjustments to the fair value of contingent consideration

are recorded within the selling, general

and administrative expenses in

the condensed consolidation statements of income.

Note 5 - Inventories

Inventories consisted of the following as

of November 29, 2025 and May

31, 2025 (in thousands):

Flocks, net of amortization

$

174,456

$

166,507

Feed and supplies

109,583

99,188

Raw materials and finished goods inventory

56,549

29,975

$

340,588

$

295,670

We

grow

and

maintain

flocks

of

layers

(mature

female

chickens),

pullets

(female

chickens,

under

weeks

of

age),

and

breeders

(male

and

female

chickens

used

to

produce

fertile

eggs

to

hatch

for

egg

production

flocks).

Our

total

flock

at

November 29, 2025 and May

31, 2025 consisted

of approximately

11.4

11.5

million pullets and breeders and

49.3

48.3

million layers, respectively.

Note 6 - Equity

The following reflects equity activity for

the thirteen weeks ended November

29, 2025 and November 30, 2024 (in thousands):

Thirteen Weeks Ended November 29, 2025

Paid In

Amount

Amount

Capital

Comp. Income

Total

Balance at August 30, 2025

$

$

(85,891)

$

82,134

$

$

2,698,811

$

5,158

$

2,701,917

Other comprehensive income,

net of tax

—

—

—

—

—

Stock compensation plan

transactions

—

1,380

—

—

—

1,384

Contributions

—

—

—

—

—

Repurchase of shares

—

—

—

—

—

0.719

per share)

—

—

—

—

(34,223)

—

(34,223)

—

—

—

—

102,759

102,927

Balance at November 29, 2025

$

$

$

83,514

$

1,326

$

$

6,305

$

Index

Thirteen Weeks Ended November 30, 2024

Class A

Paid In

Amount

Amount

Amount

Capital

Comp. Loss

Total

Balance at August 31,

$

$

$

(31,632)

$

77,503

$

(474)

$

1,856,405

$

(3,490)

$

1,899,063

loss, net of tax

—

—

—

—

(434)

—

—

(434)

Stock compensation

plan transactions

—

—

(29)

1,097

—

—

—

1,068

Contributions to

Crepini Foods LLC

—

—

—

—

—

—

6,485

6,485

Acquisition of

in MeadowCreek Foods

LLC

—

—

—

—

—

(3,826)

3,826

—

1.489

per

share)

Common

—

—

—

—

—

(65,911)

—

(65,911)

Class A common

—

—

—

—

—

(7,147)

—

(7,147)

—

—

—

—

—

219,064

(705)

218,359

Balance at November

30, 2024

$

$

$

(31,661)

$

78,600

$

(908)

$

1,998,585

$

6,116

$

2,051,483

Twenty-six Weeks Ended November 29, 2025

Paid In

Comp. Income

Amount

Amount

Capital

(Loss)

Total

Balance at May 31, 2025

$

$

(85,893)

$

80,845

$

(1,007)

$

2,565,928

$

5,391

$

2,566,015

income, net of tax

—

—

—

2,333

—

—

2,333

Stock compensation plan

transactions

—

2,669

—

—

—

2,675

Contributions

—

—

—

—

—

Repurchase of shares

—

—

—

—

—

2.097

per

share)

—

—

—

—

(100,680)

—

(100,680)

—

—

—

—

302,099

(65)

302,034

Balance at November 29,

$

$

$

83,514

$

1,326

$

$

6,305

$

Index

Twenty-six Weeks Ended November 30, 2024

Class A

Paid In

Amount

Amount

Amount

Capital

Comp. Loss

Total

Balance at June 1, 2024

$

$

$

(31,597)

$

76,371

$

(1,773)

$

1,756,395

$

(3,104)

$

1,797,043

income, net of tax

—

—

—

—

—

—

Stock compensation

plan transactions

—

—

(64)

2,229

—

—

—

2,165

Contributions to

Crepini Foods LLC

—

—

—

—

—

—

6,485

6,485

Acquisition of

in MeadowCreek

Foods LLC

—

—

—

—

—

(3,826)

3,826

—

2.509

per

share)

Common

—

—

—

—

—

(110,986)

—

(110,986)

Class A common

—

—

—

—

—

(12,038)

—

(12,038)

—

—

—

—

—

369,040

(1,091)

367,949

Balance at November

30, 2024

$

$

$

(31,661)

$

78,600

$

(908)

$

1,998,585

$

6,116

$

2,051,483

Note 7 - Net Income per Common

Share

Basic net

income per

share

Inc. is

based on

the

weighted average shares

of Common

Stock

(and when they

were outstanding

shares of

Class A

Common Stock) outstanding.

All shares of

Class A

were

converted into Common

Stock on

April 14, 2025.

Diluted net income per

share attributable to

Cal-Maine Foods, Inc.

is based

on weighted-average shares of

outstanding during the

relevant period adjusted for

the dilutive effect

of share-

based awards.

Index

The

table

a

reconciliation

of

the

numerators

and

denominators

used

to

determine

basic

and

diluted

net

income per common share attributable to

Cal-Maine Foods, Inc. (amounts in

thousands, except per

share data):

Numerator

$

102,927

$

218,359

$

302,034

$

367,949

Less: Gain (loss) attributable to

(705)

(65)

(1,091)

Net income attributable to Cal-Maine

$

102,759

$

219,064

$

302,099

$

369,040

Denominator

Weighted-average common shares

outstanding, basic

48,019

48,765

48,150

48,762

Effect of dilutive restricted shares

Weighted-average common shares

outstanding, diluted

48,167

48,970

48,295

48,953

Net income per common share

attributable to Cal-Maine Foods, Inc.

Basic

$

2.14

$

4.49

$

6.27

$

7.57

Diluted

$

2.13

$

4.47

$

6.26

$

7.54

Note 8 - Stock Based Compensation

Total stock-based compensation expense was $

2.7

million and $

2.2

million for the twenty-six weeks ended November

and November 30, 2024, respectively.

Unrecognized compensation expense as

a result

of non-vested

shares of

equity-based awards outstanding

under the

Amended

and Restated 2012 Omnibus Long-Term Incentive Plan at November 29, 2025 of $

6.9

million will be recorded over a weighted

average period of

1.9

years. Refer to Part II Item

8, Notes to Consolidated Financial Statements and Supplementary Data, Note

13 – Stock-Based Compensation in our 2025

Annual Report for further information

on our stock compensation plans.

The Company’s equity-based award activity for the twenty-six

weeks ended November

29, 2025 was as follows:

Number of

Shares

Weighted

Average Grant

Date Fair Value

Outstanding, May 31, 2025

212,717

$

66.93

Granted

17,424

100.42

Vested

(529)

54.10

Forfeited

(1,411)

84.09

Outstanding, November 29, 2025

228,201

$

69.41

Index

Note 9 – Segment Reporting

The Company has

one

operating and

one

reportable segment, which is the production, packaging, marketing

and distribution of

shell eggs,

prepared foods and egg

products. The Company is managed on a

consolidated basis.

operating segment is

determined on the

basis of our

organizational structure and information that

is regularly

reviewed by our Chief Operating Decision Maker (“CODM”). The Company’s

CODM is Sherman Miller,

President and Chief

Executive Officer. The CODM reviews net income, which is reported on the Condensed Consolidated Statements of Income,

to

assess the performance of, and

make decisions on

how to

allocate resources to, the

segment. The CODM utilizes

expense information regularly provided in the

CODM package in order to assist

with assessing performance and deciding how

to

allocate

resources,

which

align

with

the

expense

categories

as

disclosed

on

the

face

of

the

Condensed

Consolidated Statements of Income. The measure of

segment assets is reported on

the Condensed

Consolidated Balance Sheet

as Total assets.

Revenue primarily

derives from

the

sales of

shell

eggs,

prepared foods,

and egg

products throughout

the

United States.

The

shell egg

product offerings

include specialty

and conventional

shell

eggs. Specialty shell

eggs include

organic, brown,

free-range, pasture-raised

and nutritionally

enhanced eggs.

Conventional shell

eggs sales

represent

all

other

shell egg sales not sold as specialty shell eggs. The Company’s prepared

foods include offerings such as pre-cooked egg patties,

folded and

scrambled egg

formats, hard-cooked

eggs,

pancakes,

waffles,

and specialty

wraps.

Egg

products include

liquid and frozen egg products.

Other sales represent

feed sales, miscellaneous byproducts and

resale products.

The following table provides revenue

disaggregated by product category

Conventional shell egg sales

$

363,865

$

616,891

$

869,806

$

1,101,627

Specialty shell egg sales

285,702

286,970

569,158

543,747

71,650

10,439

155,586

19,377

34,531

30,212

71,638

56,449

Other

13,750

10,159

25,912

19,342

$

769,498

$

954,671

$

$

The following table provides revenue

disaggregated by sales channel

Retail

$

625,363

$

810,420

$

1,365,150

$

1,480,129

Foodservice

124,936

133,880

277,021

243,725

Other

19,199

10,371

49,929

16,688

$

769,498

$

954,671

$

$

Retail customers include primarily national and regional

grocery store chains, club stores,

and companies servicing independent

supermarkets

in

the

U.S.

Foodservice

include

companies

that

sell

food

and

related

items

to

restaurants, convenience

stores, healthcare and education facilities

and hotels.

Note 10 - Commitments and Contingencies

In re Shell Eggs Litigation

Since

6,

2025,

the

Company

has

been

named

as

a

defendant

in

eight

lawsuits

filed

in

federal

court

alleging

substantially identical claims, including: (1) the following lawsuits in the Southern

District of Indiana: (a) King Kullen Grocery

Co., Inc.

v.

Inc., et

No. 1:25-cv-2274,

(b) Nineteenseventynine LLC

d/b/a The

Breakfast Joynt

v.

al., Case No. 1:25-cv-2301, (c)

Taylor Egg

Products, Inc. v.

al., Case No.

1:25-cv-2554,

and

(d)

Hudson

v.

Foods,

Inc.

et

al.,

Case

No.

1:25-cv-02573;

(2)

the

lawsuits

in

the

Northern District of Illinois: (a) Birchmans Parisian, LLC (d/b/a Lisciandro's Restaurant) v.

Cal-Maine Foods, Inc., et al., Case

No. 1:25-cv-14030, (b) Phil-N-Cindy's Lunch, Inc. v.

al., Case No.

1:25-cv-14082, (c) Yell-O-Glow

Index

Corporation v.

Inc., et

No. 1:25-cv-15084,

and (d)

Tariq

Habash, Delia

Govea, Andrew

Phillips,

and

Catalina

Torres

v.

Urner

Barry

Publications,

Inc.,

Foods,

Inc.,

et

al.,

Case

No.

1:25-cv-14112;

and

(3)

the

following lawsuits in the Western

District of Wisconsin:

(a) Matthew Edlin v. Cal-Maine Foods,

Inc., et al., Case No. 3:25-cv-

and

(b)

India

Price,

Lakia

Session,

and

Karen

Solomon

v.

Foods,

Inc.,

et

al.,

Case

No.

3:25-cv-1016.

The

lawsuits generally

allege that the

along with other

egg producers and industry

associations, conspired to

artificially

inflate the prices of conventional shell

eggs nationwide, primarily through manipulation of industry

price benchmarks (such a

s

the

Urner

Barry

Egg

Index

and

Eggs

Clearinghouse,

Inc.

spot

market),

coordinated

and

supply

restrictions,

particularly during the calendar year 2022 avian flu outbreak. In each case, the plaintiff seeks certification of a putative class of

either direct or

indirect purchasers, monetary

damages, injunctive

relief, attorneys’ fees,

and, in

some cases,

restitution under

Section 1 of the Sherman Act, 15 U.S.C.

§ 1 (the “Sherman Act”) and

various state antitrust and

consumer protection statutes.

On

November 19,

2025,

a motion

to

transfer all

cases

to

the

Southern

of Indiana

was filed

with

the

Joint

Panel

on

Multidistrict Litigation (“JPML”) to

consolidate the actions for pre-trial proceedings.

The defendants, including

the Company,

have responded

to

such motion

also seeking

consolidation in

the

Southern District

of Indiana.

The parties

in

each case

have

agreed to stay the deadline for

the Company to

answer or otherwise respond to the

complaints pending JPML proceedings. No

discovery

has

taken

place

in

any

of

the

actions.

The

Company

disputes

plaintiffs’

allegations

in

each of

these

actions

and

intends to vigorously defend itself in these

actions.

Civil Investigative Demand

In

March

2025,

the

Company

received

a

Civil

Investigative

Demand

(“CID”)

from

the

Department

of

Justice

(“DOJ”)

in

connection with an antitrust investigation to determine whether there is,

has been or may be

a violation of the

antitrust laws by

anticompetitive conduct

by

and among

egg producers.

In August

2025, the

Company received

a subpoena

from the

State

of

New York

requesting information and documents

related to its investigation

of anticompetitive conduct and high egg

prices in

the egg

Additionally, various

state Attorneys

General have sought

to join

the DOJ’s

investigation or

have requested

access to the confidential disclosures by the Company to DOJ.

The Company is complying with the CID and the subpoena and

cooperating with the investigations. Management

cannot predict the eventual scope, duration or

outcome of these investigations

and is unable to estimate the amount or range

of potential losses, if any, at this time.

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

v.

Inc. d/b/a

Wharton; and

Wharton County

Foods, LLC,

Cause No.

2020-25427, in

the District

Court of

Harris County,

Texas.

The State

(the “State”) asserted

claims based

on the

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

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

$

100,000

in damages. On August 13,

2020, the court granted the

defendants’ motion to dismiss the

State’s original petition with

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. On October 31, 2022, the

Company and WCF appealed the First District Court’s decision to the Supreme Court of

Texas.

On September

29, 2023,

the Supreme Court

denied the

Company’s Petition

for Review

and remanded to

the

trial

court

for

further

proceedings.

On

30,

2024,

the

State

filed

an

amended

petition,

to

address

a

procedural deficiency

that

the

State

to

plead

it

was

seeking

monetary

relief

over

$

1.0

million

restitution,

civil

penalties,

attorney’s

fees

and

costs.

Pre-trial

proceedings

are

progressing

in

accordance

with

the

court’s

schedule. Management believes

the risk of material loss related to this

matter to be remote.

Kraft Foods Global, Inc. et al. v. United Egg Producers,

Inc. et al.

On September 25, 2008,

the Company was named

as one of

several defendants in numerous

antitrust cases involving

the U.S.

shell

egg industry.

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, until

a subsequent settlement

was reached as described

below, 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

Court

for the

Eastern

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

Egg

Producers, Inc.

et

No. 1:11

-cv-8808, for

trial.

The Egg

Products Plaintiffs

alleged that

violated

Section

of

the

Sherman

Act, 15.

U.S.C.

§

1,

by

agreeing to

limit the

production of

eggs

and thereby

Index

illegally

to raise

the

prices that

plaintiffs paid

for processed

egg products.

In particular,

the

Egg

Products Plaintiffs

attacked

certain features of the United Egg Producers animal-welfare guidelines and program used by the Company and many other egg

producers.

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 trial of this case began on October 17, 2023. On

December 1, 2023, the jury returned a decision awarding the Egg

Products

Plaintiffs $

17.8

million in damages. On November 6, 2024, the court

entered a final judgement against the Company and other

defendants, jointly

and severally,

totaling

$

43.6

million

after trebling.

On

December 4,

2024,

the

Company

filed a

renewed

motion for judgment as a matter of law or for a new trial, and a motion to alter or amend the judgment. On December 13, 2024,

the

court granted

defendants’ November

20,

motion

to

stay

enforcement of

the

judgment

and entered

an agreed

order

requiring the

defendants to

post security during

post-judgment proceedings and

appeal, and stayed

proceedings to

enforce the

judgment until the disposition of the post-judgment motions and ultimate appeals. On

December 17, 2024, the Company posted

a bond

in

the approximate

amount of

$

23.9

million, representing

a portion

of the

total bond

required to

preserve the

right to

appeal

the

trial

court’s

decision.

Another

defendant

posted

a

bond

for

the

remaining

amount.

On

19,

2025,

the

plaintiffs filed a motion

to lift stay of

proceedings on attorney’s fees and

costs, and on December 5,

2025, the defendants filed

their

response

in

opposition

to

such

motion.

The

court

has

not

ruled

on

this

motion.

intends

to

to

vigorously defend the claims asserted by

the Egg Products Plaintiffs.

If the

jury’s

decision is

ultimately upheld, the

Company would

be jointly and

severally liable with

other defendants for

treble

damages,

or

$

43.6

subject to

credit

for

certain

settlements

with

previous settling

defendants, plus

the

Egg

Product

Plaintiffs’

reasonable

attorneys’

fees.

During

our

second

fiscal

2024,

we

recorded

an

accrued

expense

of

$

19.6

selling, general and

administrative expenses in

the Company’s

Statements of

Income and

classified

as

other

noncurrent liabilities

in

the

Balance Sheets.

Although

less

than

the

bond

posted

by

the

the

accrual

represents

our

estimate

of

the

proportional

share

of

the

reasonably

possible ultimate damages award, excluding the Egg Product Plaintiffs’ attorneys’

fees that we believe would be approximately

offset

by

the

credits

noted

above.

We

have

entered

into

a

judgment

allocation

and

joint

defense

agreement with

the

other

defendants remaining in the case. Our accrual may change

in the future to the extent we are successful in further proceedings in

the litigation.

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

and Tyson

Foods, Inc.,

Cobb-Vantress,

Inc., Cargill,

Inc., George’s,

Inc., Peterson

Farms, Inc.

and Simmons

Foods,

Inc., and

certain of

their affiliates.

The State

of Oklahoma

claims that

through

the

disposal of

chicken

litter the defendants polluted

the Illinois River Watershed.

This watershed provides water to

eastern Oklahoma. The complaint

sought

injunctive relief

and monetary

damages, but

the

claim for

monetary damages

was dismissed

by

the

court. Cal-Maine

Foods,

Inc.

discontinued

in

the

watershed in

or

around

Since

the

litigation

began,

Foods,

Inc.

purchased

%

of

the

membership

interests

of

Benton

County

Foods,

LLC,

which

is

an

ongoing

shell

egg

operation within the

Illinois River Watershed.

Benton County Foods,

LLC is not

a defendant in

the litigation. We

also have

a

number of small contract producers

that operate in the area.

The non-jury trial in the case began

in September 2009 and concluded in

February 2010. On January 18, 2023, the court

entered

findings of fact and conclusions

of law in favor of

the State

of Oklahoma, but no

penalties were assessed. The court found

the

defendants jointly and

severally liable for

state law nuisance,

federal common law

nuisance, and state law

trespass. The

court

also found the

producers vicariously liable for

the actions of

their contract producers. On

June 12,

2023, the court ordered

the

parties

to

mediate,

but

the

mediation

was

unsuccessful.

On

June

26,

2024,

the

district

court

denied

defendants’

motion

to

dismiss

the

case.

On

September

13,

2024,

a

status

hearing

was

held

and

the

court

scheduled

an

evidentiary

hearing

for

December 3,

2024,

to

determine

whether

any

legal

remedy

is

available

based

on

the

now

15-year-old

record

and

changed

circumstances of the Illinois River watershed.

On June 17, 2025, the court entered an

opinion and order that found that the State

satisfied its

burden to

show that

conditions in the

Illinois River watershed

have not

materially changed since

the original trial

and

the

case

was

not

moot.

On

July

9,

2025,

the

State

of

Oklahoma filed

its

form

of proposed

final judgment

and

brief in

support

thereof seeking

over $100

million

in

total

fines from

all

defendants, including

approximately $

18.2

fines

from the Company, plus attorneys’ fees. On July 30, 2025, the Company and other defendants filed

their form of proposed final

judgment and

brief in support

thereof seeking no

monetary fines or

penalties. On

December 9, 2025,

the court

entered a final

judgment imposing approximately $420,000

in total penalties

for all

defendants and awarding certain

non-monetary remedies,

injunctive

relief.

Pursuant

to

the

final

judgment,

the

Company

is

to

pay

approximately $

70,000

in

penalties.

The

judgment also entitles the

State of Oklahoma to

an award of

attorneys’ fees and costs in

an amount to

be determined at a later

Index

date. The defendants expect to appeal this judgement.

No

accrual for this legal proceeding has been recorded as such amount is

not deemed material.

The injunctive relief provides for,

among other things, a special master to

oversee an investigation, develop a remediation plan

subject to

court approval, and

provide ongoing monitoring of

remediation projects, the costs

of which will

be paid jointly

and

severally

by

the

defendants.

The

are

to

fund

$10

million

within

days

of

appointment

of

the

special

master,

and

ongoing

funding

of

$5

million

any

time

the

fund

is

below

$5

million.

This

funding

obligation is

expected

to

for

the

years

term.

The

are

in

discussions

of

a

expense

sharing

agreement;

however, the

Company

does not

currently expect

to

have a

material share

of the

funding. The

injunctive relief

also

certain

annual

and

certain

on

future

within

the

Illinois

River

Watershed,

including relating to removal of litter,

storage, transportation, disposal and future land applications.

The Company is reviewing

the

final judgement

and currently

cannot estimate

the range

of possible

losses, but

currently does

not expect

these additional

requirements to have a material

impact on its operations.

On December 29, 2025, the defendants, including the Company, filed a motion to stay enforcement

of the judgment, and a brief

in support

thereof, pending the

defendants’ appeals to

the United States

Court of

Appeal for the

Tenth

Circuit. The Company

intends to continue to vigorously defend

the claims asserted by the State of Oklahoma.

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.

Index

ITEM

MANAGEMENT’S

DISCUSSION

AND

ANALYSIS

OF

FINANCIAL

CONDITION

AND

RESULTS

OF