UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(mark one)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended February 28, 1998
OR
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ____________ to ____________
Commission file number: 000-04892
CAL-MAINE FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware 64-0500378
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
3320 Woodrow Wilson Avenue, Jackson, Mississippi 39209
(Address of principal executive offices) (Zip Code)
(601) 948-6813
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No_____
Number of shares outstanding of each of the issuer's classes of common stock
(exclusive of treasury shares), as of April 2, 1998.
Common Stock, $0.01 par value 11,994,388 shares
Class A Common Stock, $0.01 par value 1,200,000 shares
CAL-MAINE FOODS, INC.
INDEX
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Page
Part I. Financial Information Number
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Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets -
February 28, 1998 and May 31, 1997 3
Condensed Consolidated Statements of Operations -
Three Months and Nine Months Ended
February 28, 1998 and March 1, 1997 4
Condensed Consolidated Statements of Cash Flow -
Nine Months Ended February 28, 1998 and
March 1, 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Part II. Other Information
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
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February 28, 1998 May 31, 1997
----------------- ------------
ASSETS (unaudited) (note)
Current assets:
Cash and cash equivalents $ 40,951 $ 23,737
Accounts receivable, net 17,012 13,086
Recoverable federal and state income taxes 162 1,137
Inventories - note 2 43,326 42,594
Prepaid expenses and other current assets 583 986
--------- ---------
Total current assets 102,034 81,540
Notes receivable and investments 4,274 4,747
Other assets 1,744 661
Property, plant and equipment 172,152 161,117
Less accumulated depreciation (72,385) (65,771)
--------- ---------
99,767 95,346
--------- ---------
TOTAL ASSETS $ 207,819 $ 182,294
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 29,028 $ 21,695
Current maturities of long-term debt 4,314 4,540
Current deferred income taxes 9,915 9,915
--------- ---------
Total current liabilities 43,257 36,150
Long-term debt, less current maturities 72,236 59,896
Deferred expenses 1,655 1,655
Deferred income taxes 9,951 9,951
--------- ---------
Total liabilities 127,099 107,652
Stockholders' equity:
Common stock $0.01 par value per share:
Authorized shares - 30,000,000
Issued and outstanding shares -
17,565,200 at February 28,
1998 and May 31, 1997 176 176
Class A common stock $0.01 par value,
authorized and issued 1,200,000 shares 12 12
Paid-in capital 18,785 18,785
Retained earnings 67,981 61,903
Common stock in treasury - 5,570,812
shares at February 28, 1998 and
5,583,200 shares at May 31, 1997 (6,234) (6,234)
--------- ---------
Total stockholders' equity 80,720 74,642
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 207,819 $ 182,294
========= =========
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See note next page. See notes to condensed consolidated financial statements.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
UNAUDITED
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13 Weeks Ended 39 Weeks Ended
Feb. 28, 1998 Mar. 1, 1997 Feb. 28, 1998 Mar. 1, 1997
------------- ------------ ------------- ------------
Net sales $ 89,344 $ 79,649 $ 232,502 $ 223,841
Cost of sales 74,416 60,521 196,668 177,016
-------- -------- --------- ---------
Gross profit 14,928 19,128 35,834 46,825
Selling, general and
administrative 9,509 7,497 25,093 21,739
-------- -------- --------- ---------
Operating income 5,419 11,631 10,741 25,086
Other income (expense):
Interest expense, net (446) (891) (2,146) (3,070)
Other 839 628 1,095 907
-------- -------- --------- ---------
393 (263) (1,051) (2,163)
-------- -------- --------- ---------
Income before
income taxes 5,812 11,368 9,690 22,923
Income tax expense 2,109 4,431 3,480 8,958
-------- -------- --------- ---------
NET INCOME $ 3,703 $ 6,937 $ 6,210 $ 13,965
======== ======== ========= =========
Net income per common share:
Basic $ 0.28 $ 0.54 $ 0.47 $ 1.17
======== ======== ========= =========
Diluted $ 0.28 $ 0.53 $ 0.46 $ 1.14
======== ======== ========= =========
Weighted average shares
outstanding:
Basic 13,194 12,902 13,192 11,972
======== ======== ========= =========
Diluted 13,422 13,197 13,436 12,244
======== ======== ========= =========
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Note: The balance sheet at May 31, 1997 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
See notes to condensed consolidated financial statements.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED
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39 Weeks Ended
Feb. 28, 1998 Mar. 1, 1997
------------- ------------
Cash flows from operating activities $ 17,404 $ 22,807
Cash flows from investing activities:
Purchases of property, plant and equipment (6,361) (4,354)
Purchase of shell egg production and processing
business (2,037) 0
Construction of production facilities (5,578) (6,552)
Payments received on notes receivable and from
investments 93 1,814
Increase in note receivable, investments and
other assets 521 0
Net proceeds from sale of property, plant and
equipment 832 559
-------- --------
Net cash used in investing activities (12,530) (8,533)
Cash flows from financing activities:
Net proceeds from public stock offering 0 10,580
Net proceeds from sale of Treasury Stock 79 0
Additional long-term borrowings 35,500 1,000
Principal payments on long-term debt and
capital leases (23,160) (5,434)
Purchases of common stock for treasury (78) (42)
Redemption of fractional shares of common stock (1) (5)
-------- --------
Net cash provided by financing activities 12,340 6,099
-------- --------
Increase in cash and cash equivalents 17,214 20,373
Cash and cash equivalents at beginning of period 23,737 3,959
-------- --------
Cash and cash equivalents at end of period $ 40,951 $ 24,332
======== ========
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See notes to condensed consolidated financial statements.
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(in thousands, except share amounts)
February 28, 1998
(unaudited)
1. Presentation of Interim Information
The accompanying unaudited condensed consolidated financial statements are
presented in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of the management of Cal-Maine Foods, Inc. (the "Company"), the
accompanying unaudited condensed consolidated financial statements include all
normal adjustments considered necessary to present fairly the financial position
as of February 28, 1998, and the results of operations for the thirteen and
thirty-nine weeks ended February 28, 1998 and March 1, 1997, and the cash flows
for the thirty-nine weeks ended February 28, 1998 and March 1, 1997. Interim
results are not necessarily indicative of results for a full year. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report for fiscal year ended May 31,
1997 on Form 10K.
2. Acquisition
In November 1997, the Company purchased the inventories and equipment of a
shell egg production and processing business for $2,037 and accounted for the
transaction as a purchase. In connection with the purchase, the Company leased
substantially all facilities of the business under operating leases with monthly
rentals of $22 through October 2004, with options to renew the leases for five
one-year terms. The operating results of these assets acquired are included in
the consolidated statements of the Company for the period subsequent to the
acquisition date.
3. Inventories
Inventories consisted of the following:
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Feb. 28, 1998 May 31, 1997
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Flocks $ 27,147 $ 26,674
Eggs and egg products 4,172 4,030
Feed and supplies 8,827 8,377
Livestock 3,180 3,513
-------- --------
$ 43,326 $ 42,594
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4. Long-Term Debt
In December 1997, the Company and three of its lenders agreed to revised terms,
amounts and interest rates for long-term debt extended to the Company. The
revised arrangements provide for a total of $40 million of borrowings under
notes, with maturities ranging from 10 to 15 years at a weighted average fixed
interest rate of 7.10%. Approximately $20 million of existing debt was
refinanced and the Company was provided with an additional $20 million of
working capital, of which $3.5 million has not been disbursed at this time.
5. Impact of Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share." Statement 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported earnings per
share. All earnings per share have been presented, and where applicable,
restated to conform to the Statement 128 requirements.
ITEM 2. MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is primarily engaged in the production, cleaning, grading, packing
and sale of fresh shell eggs and in the manufacture and sale of egg products.
The Company's fiscal year end is the Saturday closest to May 31.
The Company's operations are fully integrated. It owns facilities to hatch
chicks, grow pullets, manufacture feed, and produce, process, manufacture and
distribute shell eggs and egg products. The Company currently is the largest
producer and distributor of fresh shell eggs in the United States. Shell eggs
account for over 90% of the Company's net sales. The Company primarily markets
its shell eggs in the southwestern, southeastern, mid-western and mid-Atlantic
regions of the United States. Shell eggs are sold directly by the Company
primarily to national and regional supermarket chains. Egg products are sold
both on a direct basis and through egg product brokers to institutional users,
including manufacturers of baked goods, mayonnaise and confections.
The Company currently uses contract producers for approximately 33% of its total
egg production. Contract producers operate under agreements with the Company
for the use of their facilities in the production of shell eggs by layers owned
by the Company, which owns the eggs produced. Also, some shell eggs are
purchased for resale by the Company from other, outside producers.
The Company's operating income or loss is significantly affected by wholesale
shell egg market prices, which can fluctuate widely and are outside of the
Company's control. Retail sales of shell eggs are greatest during the fall and
winter months and lowest during the summer months. Prices for shell eggs
fluctuate in response to seasonal factors and a natural increase in egg
production during the spring and early summer.
The Company's cost of sales is materially affected by feed costs, which
average about 50% of Cal-Maine's' total cost of eggs sold. Changes in
feed costs result in changes in the Company's cost of goods sold. The cost of
feed ingredients is affected by a number of supply and demand factors such as
crop production and weather, and other factors, such as the level of grain
exports, over which the Company has little or no control.
Management's discussion contains forward-looking statements which involve risks
and uncertainties and the Company's actual experience may differ materially from
that discussed as follows. Factors that may cause such a difference include,
but are not limited to, those discussed in "Factors Affecting Future
Performance", below, as well as future events that have the effect of reducing
the Company's available cash balances, such as unanticipated operating losses or
capital expenditures related to possible future acquisitions. Readers are
cautioned not to place undue reliance on forward-looking statements, which
reflect management's analysis only as the date hereof. The Company assumes no
obligation to update forward-looking statements. See also the Company's
report to be filed from time to time with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
Factors Affecting Future Performance. The Company's future operating results
may be affected by various trends and factors which are beyond the Company's
control. These include adverse changes in shell egg prices and in the grain
market. Accordingly, past trends should not be used to anticipate future
results and trends. Further, the Company's prior performance should
not be presumed to be an accurate indication of future performance.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items from
the Company's condensed consolidated statements of income expressed as a
percentage of net sales.
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Percentage of Net Sales
13 Weeks Ended 39 Weeks Ended
Feb. 28, 1998 Mar. 1, 1997 Feb. 28, 1998 Mar. 1, 1997
------------- ------------ ------------- ------------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 83.3 76.0 84.6 79.1
------ ------ ------ ------
Gross profit 16.7 24.0 15.4 20.9
Selling, general &
administrative 10.6 9.4 10.8 9.7
------ ------ ------ ------
Operating income 6.1 14.6 4.6 11.2
Other expense 0.4 (0.3) (0.4) (1.0)
------ ------ ------ ------
Income before taxes 6.5 14.3 4.2 10.2
Income tax expense 2.4 5.6 1.5 4.0
------ ------ ------ ------
Net income 4.1% 8.7% 2.7% 6.2%
====== ====== ====== ======
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NET SALES
Net sales for the third quarter of fiscal 1998 were $89.3 million, an increase
of $9.7 million, or 12.2%, as compared to net sales for the third quarter of
fiscal 1997. This increase is the net result of an increase in dozens sold, a
decrease in price per dozen sold, and an increase in feed sales to outside egg
producers. For the current quarter, 112.2 million dozens were sold as compared
to 96.1 million dozens for the third quarter last year, an increase of 16.1
million dozens or 16.8%. Purchases from outside producers accounted for
approximately 65% of the increase in the number of dozens sold. For the current
quarter, the Company's net average selling price per dozen was $.706, compared
to $.782 per dozen for the comparable quarter last year, a decrease of $.076 per
dozen or 9.7%. The selling price decrease is due to increased production and
egg supply within the industry and lower export sales. Average large shell egg
market prices decreased approximately $.083 per dozen for the current quarter as
compared to last year's quarter. During the second quarter of this fiscal year,
the Company purchased and leased assets of a production, processing and
marketing operation in Georgia. For the current quarter, that location had
$6.4 million in feed sales to outside egg producers and accounted for 8.1% of
the dozens sold. As a percent of net sales for the current quarter, that
acquisition accounted for 14.4% of net sales. During the fourth quarter of the
last fiscal year, the Company also purchased production and processing assets of
another operation in Georgia. For the current third quarter, these Georgia
acquisitions combined accounted for 18.7% of net sales and 14.4 million dozens,
or 89%, of the increase in dozens sold.
Net sales for the thirty-nine weeks ended February 28, 1998 were $232.5
million, an increase over last year of $8.7 million, or 3.9%. As in the current
quarter, the sales increase is the net result of an increase in dozens sold,
a decrease in price per dozen sold, and an increase in feed sales to outside
egg producers. For the current year, dozens sold were 313.6 million dozen,
an increase over last year of 32.7 million dozen, or 11.6%. Increased company
production accounted for 13.8 million dozen, or 42.2%, of the increase in dozens
sold, with the balance from outside sources. For the current period, the
Company's net average selling price per dozen was $.675 per dozen, compared to
$.747 per dozen last year, a decrease of $.072 per dozen, or 9.6%. Average
large shell egg market prices decreased approximately $.077 per dozen for the
current year as compared to last year's thirty-nine week period. The same egg
market conditions mentioned above for the current quarter caused the decline
in market prices. For the current thirty-nine weeks, the two Georgia
acquisitions accounted for 12.3% of net dollar sales and 10.5% of the Company's
egg production.
COST OF SALES
Total cost of sales for the third quarter ended February 28, 1998 was $74.4
million, an increase of $13.9 million, or 23%, over a cost of sales of $60.5
million for the comparable period last year. This increase is primarily the
result of an increase in dozens sold and feed sold to outside producers. Of
the increase in dozens sold, 65% was applicable to eggs purchased from outside
sources, which are at higher cost than eggs produced by the Company.
For the current quarter compared to last year, cost of feed per dozen eggs
decreased and, due to lower shell egg market prices, cost per dozen of outside
eggs purchased decreased. Feed cost per dozen for the third quarter ended
February 28, 1998, was $.245 as compared to the cost per dozen of $.258 for
the third quarter last year, a decrease of 5%. A good 1997 harvest of corn
and soybeans kept the cost of feed ingredients in the moderate range. The
decrease in egg selling prices resulted in a decrease of gross profit from 24%
of net sales in the quarter ended March 1, 1997 to 16.7% for the current
quarter ended February 28, 1998.
For the thirty-nine week period ended February 28, 1998, total cost of sales
was $196.7 million, an increase of $19.7 million, or 11.1%, over a cost of
sales of $177.0 million for last year. As in the current quarter above, the
increase is the result of an increase in dozens sold and feed sold to
outside producers. The cost of feed per dozen eggs decreased, and cost per
dozen of outside eggs purchased decreased. Feed cost per dozen for the current
year was $.254, a decrease of $.033 per dozen, or 11.5%, as compared to last
year's cost per dozen of $.287. Last year's higher cost of feed ingredients
was the result of poor crop conditions, as compared to a better crop and lower
cost of feed ingredients this year. Although egg production and purchase
costs decreased and dozens sold increased for the current thirty-nine week
period, the decrease in egg selling prices resulted in a decrease in gross
profit. For the current year, gross profit was 15.4% of net sales,
as compared to 20.9% for last year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expense for the third quarter ended
February 28, 1998 was $9.5 million, an increase of $2.0 million, or 26.8%, as
compared to an expense of $7.5 million for the comparable period last year.
This is the result of an increase in dozens sold, the acquisitions of two
operations in Georgia, and increases in advertising and promotion of a new
market for specialty eggs. The current quarter selling and delivery expenses
for the Georgia operations accounted for $1.3 million of the $2.0 million
increase in selling, general and administrative expenses over last year. In
the third quarter of the current fiscal year, the Company expanded markets for
specialty eggs in New York City and other existing markets, resulting in an
increase of approximately $500,000 in fees, promotions and commissions expenses
from the same quarter in the prior year. When compared on a dozens sold basis,
selling, general and administrative expense was 8.5 cents per dozen for the
current quarter as compared to 7.8 cents per dozen for last year's quarter, an
increaseof 9%. As a percent of net sales, selling, general and administrative
expense has increased from 9.4% for the third quarter last year to 10.6% for the
current quarter.
For the thirty-nine weeks ended February 28, 1998, selling, general and
administrative expense was $25.1million, an increase of $3.4 million, or 15.4%,
as compared to $21.7 million for the same period last year. The two Georgia
acquisitions accounted for $2.6 million of the increase and the specialty egg
market expansion accounted for $700,000. On a per dozen sold basis, selling,
general and administrative expense was 8 cents per dozen sold this year,
compared to 7.7 cents per dozen sold for last year. As a percent of net sales,
selling, general and administrative expense increased from 9.7% last year to
10.8% for this year.
OPERATING INCOME
As the result of the above, operating income was $5.4 million for the third
quarter ended February 28, 1998, as compared to $11.6 million for last year's
comparable quarter. As a percent of net sales, the fiscal 1998 quarter had a
6.1% operating income, compared to 14.6% for last year.
For the thirty-nine weeks ended February 28, 1998, operating income was $10.7
million, compared to $25.1 million for last year. As a percent of net sales,
operating income was 4.6% for the current year, as compared to 11.2% for last
year.
OTHER INCOME (EXPENSE)
Other income for the third quarter ended February 28, 1998 was $393,000, as
compared to an expense of $263,000 for the third quarter last year, an increase
in income of $656,000. For the current quarter, $540,000 was received from
two insurance claims. As a percent of net sales for the current quarter,
other income was .4% as compared to other expense of .3% for last year.
For the thirty-nine weeks ended February 28, 1998, other expense was $1.1
million, a reduction of $1.1 million, as compared to other expense of $2.2
million for last year's comparable period. In addition to the $540,000
insurance claims mentioned above, net interest expense for this year decreased
approximately $924,000. Net interest expense was $2.1 million for this
year as compared to $3.1 million for last year. For the current year, interest
income was $505,000 more than last year, and $311,000 more of capitalized
interest was recorded. As a percent of net sales, other expense decreased
from 1% last year to .4% this year.
INCOME TAXES
As a result of the above, the Company's pre-tax income was $5.8 million for the
quarter ended February 28, 1998, compared to pre-tax income of $11.4 million for
last year's quarter. For the current quarter, an income tax expense of $2.1
million was recorded with an effective tax rate of 36.3%, as compared to an
income tax expense of $4.4 million with and effective rate of 39% for last
year's comparable quarter.
The Company's pre-tax income for the thirty-nine week period ended February 28,
1998 was $9.7 million, compared to $22.9 million for last year. For the current
thirty-nine week period, an income tax expense of $3.5 million was recorded with
an effective rate of 35.9%, as compared to an income tax expense of $9.0
million with an effective rate of 39.1% for last year's comparable period.
The Company's lower effective rate for the current quarter and year-to-date, as
compared to last year's effective rate, is due primarily to an increase in tax-
exempt interest income as a percent of pretax income during the current year as
compared to the prior year. In addition, the deferred tax liability and related
income tax expense increased in the prior year because the federal statutory
rate increased to 35% from 34% because the Company's taxable income exceeded the
amount for which the maximum rate is required.
NET INCOME
Net income for the third quarter ended February 28, 1998 was $3.7 million, or
$.28 per diluted share, compared to net income of $6.9 million, or $.53 per
diluted share for last year's third quarter.
For the thirty-nine week period ended February 28, 1998, net income was $6.2
million, or $.46 per diluted share, compared to last year's net income of $14.0
million, or $1.14 per diluted share.
CAPITAL RESOURCES AND LIQUIDITY
The Company's working capital at February 28, 1998 was $58.8 million, compared
to $45.4 million at May 31, 1997. The Company's need for working capital
generally is highest in the first and last fiscal quarters ending in August and
May, respectively, when egg prices are normally at seasonal lows. Seasonal
borrowing needs frequently are higher during these periods than during other
fiscal periods. The Company had an unused $35 million line of credit with
three banks at February 28, 1998. The Company's long-term debt at that date,
including current maturities and capitalized lease obligations, totaled $76.6
million.
In December 1997, the Company and three of its lenders agreed to revised terms,
amounts and interest rates for long-term debt extended to the Company. The
revised arrangements provide for a total of $40 million of borrowings under
notes, with maturities ranging from 10 to 15 years at a weighted average fixed
interest rate of 7.10%. Approximately $20 million of existing debt was
refinanced and the Company was provided with an additional $20 million of
working capital, of which $3.5 million has not been disbursed at this time.
Substantially all trade receivables collateralize the Company's line of credit,
and property, plant and equipment collateralize the Company's long-term debt.
The Company is required by certain provisions of these loan agreements to (1)
maintain minimum levels of working capital and net worth; (2) limit dividends,
capital expenditures, lease obligations and additional long-term borrowings;
and (3) maintain various current and cash-flow coverage ratios, among other
restrictions. The Company was in compliance with these provisions at February
28, 1998.
For the thirty-nine weeks ended February 28, 1998, $17.4 million in net cash
was provided by operating activities. This compares to net cash from operating
activities of $22.8 million for the comparable period last year. For the
current thirty-nine week period, additional long-term borrowings of $35.5
million were received from the revised lending arrangements mentioned above.
During this current period, $5.6 million was expended for construction of the
Chase facility and $6.4 million was used for purchases of property, plant and
equipment. In November, $2.0 million was used to purchase the inventories and
rolling stock of a shell egg production, processing and distribution business.
In addition, principal payments of $23.2 million were made on long-term debt and
capital leases. The net result of activities during the period was an increase
in cash and equivalents of $17.2 million.
For the comparable thirty-nine week period last year, $22.8 million cash was
provided by operating activities, and $1.0 million in long-term borrowings were
received through industrial revenue bonds. Net proceeds of $10.6 million were
received from a public stock offering. For the period last year, $6.6 million
was used for construction, $4.4 million was used for purchases of property,
plant and equipment, and $5.4 million was used for repayment of long-term debt
and capital leases. The net result during the period was an increase in cash
and equivalents of $20.4 million.
At February 28, 1998, the Company had expended, since the start of the project,
approximately $17.1 million in the construction of the Chase facility. The
Company is financing approximately $13.5 million of the currently estimated
$20.0 million to complete the project through industrial revenue bonds maturing
in 2011. Borrowings under the industrial revenue bond agreement totaled $10.0
million at February 28, 1998. The Company has begun site preparation for
construction of new shell egg production and processing facilities in Waelder,
Texas. The estimated cost of construction is approximately $13.9 million with
financing plans of approximately $10.4 million in borrowings from an insurance
company.
YEAR 2000 ISSUE
The Company currently has a program underway to ensure that all significant
computer systems are year 2000 compliant. All major systems are upgradeable
with commercially available software packages. The Company expects no material
impact from the year 2000 issue on its internal information systems or on its
ability to continue normal business operations with suppliers or other third
parties who fail to address the issue. The Company will continue to monitor
and evaluate the impact of the year 2000 on its operations. Any costs
associated with implementation of the Company's year 2000 program would be
within normal expenditures for hardware and software.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On March 30, 1998, the Company announced that it will discontinue production
of egg products at its plant in Jackson, Mississippi, effective in about 60
days. The Jackson egg products facility represents less than 2% of the
Company's total assets. The Jackson plant, built 29 years ago, would require
extensive remodeling and refurbishing to continue to meet regulatory
requirements and operate efficiently.
The Company plans to continue to be involved in the egg products business
by building or acquiring an egg products operation in the future at a location
not yet determined.
The Company currently has an ownership interest in an egg products plant in
Georgia.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
The following Part I exhibit is filed herewith:
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Exhibit
Number Exhibit
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27 Financial data schedule
</TABLE>
b. Reports on Form 8-K
No Current Report on Form 8-K was filed by the Company covering an event during
the third quarter of fiscal 1998.
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.
<TABLE>
<S> <C>
CAL-MAINE FOODS, INC.
(Registrant)
Date: April 3, 1998 /s/ Bobby J. Raines
------------------------------
Bobby J. Raines
Vice President/Treasurer
(Principal Financial Officer)
Date: April 3, 1998 /s/ Charles F. Collins
------------------------------
Charles F. Collins
Vice President/Controller
(Principal Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-30-1998
<PERIOD-END> FEB-28-1998
<CASH> 40,951
<SECURITIES> 0
<RECEIVABLES> 17,012
<ALLOWANCES> 0
<INVENTORY> 43,326
<CURRENT-ASSETS> 102,034
<PP&E> 172,152
<DEPRECIATION> 72,385
<TOTAL-ASSETS> 207,819
<CURRENT-LIABILITIES> 43,257
<BONDS> 0
0
0
<COMMON> 188
<OTHER-SE> 80,532
<TOTAL-LIABILITY-AND-EQUITY> 207,819
<SALES> 232,502
<TOTAL-REVENUES> 232,502
<CGS> 196,668
<TOTAL-COSTS> 196,668
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,146
<INCOME-PRETAX> 9,690
<INCOME-TAX> 3,480
<INCOME-CONTINUING> 6,210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,210
<EPS-PRIMARY> .47
<EPS-DILUTED> .46
</TABLE>
