<PAGE> 1
SECURITIES EXCHANGE AND COMMISSION
Washington, D.C. 20549
FORM 8-K/A No. 1
Pursuant to Section 13 or 15 (d) of the
Securities and Exchange Act of 1934
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Form 8-K filed October 14, 1999 as
set forth in the pages attached hereto:
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: December 13, 1999 Cal-Maine Foods, Inc.
/s/ Charles F. Collins
----------------------
Vice-President/Controller
(Principal Accounting Officer)
CAL-MAINE FOODS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 000-04892 64-0500378
- ------------------------- ----------------------- -----------------
(State or other (Commission file (IRS Employer
jurisdiction of number) Identification
incorporation) Number)
</TABLE>
3320 Woodrow Wilson Avenue, Jackson, MS 39207
- --------------------------------------- -----
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (601) 948-6813
--------------
1
<PAGE> 2
The Current Report on Form 8-K of Cal-Maine Foods, Inc. (the
"Company"), dated September 30, 1999, and filed on October 14, 1999,
reported the acquisition by the Company on September 30, 1999, of
substantially all of the assets and assumption of certain liabilities of
Smith Farms, Inc. ("Smith Farms"). Items 7(a) and 7(b) of the report
stated that the historical financial statements of Smith Farms required
under Rule 3-05 of Regulation S-X, and the pro forma financial information
required under Article 11 of Regulation S-X would be filed by amendment.
The purpose of this amendment is to file such financial statements and
information.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of the Businesses Acquired.
(1) Audited combined balance sheet of Smith Farms, Inc. and Affiliates
as of June 30, 1999 and the related statement of operations and
statement of cash flows for the year ended June 30, 1999, including
the notes thereto and the related report of Ed Bercot & Company.
(b) Pro Forma Financial Information
(1) Pro Forma Condensed Consolidated Balance Sheet (Unaudited) of
Cal-Maine Foods, Inc. as of August 28, 1999.
(2) Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
of Cal-Maine Foods, Inc. for the year ended May 29, 1999.
(3) Pro Forma Condensed Consolidated Statement of Operations (Unaudited)
of Cal-Maine Foods, Inc. for the three months ended August 28, 1999.
(4) Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
(c) Exhibits
The following exhibit is filed herewith:
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
23 Consent of Ed Bercot & Company
</TABLE>
2
<PAGE> 3
Report of Independent Certified Public Accountant
Board of Directors
Smith Farms, Inc. and Affiliates
Flatonia, Texas
We have audited the accompanying combined balance sheet of Smith Farms, Inc. and
Affiliates as of June 30, 1999 and the related combined statements of operations
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Smith Farms, Inc. and
Affiliates as of June 30, 1999 and the combined results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Ed Bercot & Company
Ed Bercot & Company
Certified Public Accountants
Harlingen, Texas
July 23, 1999
3
<PAGE> 4
SMITH FARMS, INC. AND AFFILIATES
COMBINED BALANCE SHEET
YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 709,047
Accounts receivable 2,778,055
Inventories 5,621,066
Prepaid expenses 563,440
---------------
Total current assets 9,671,608
OTHER ASSETS
Cash surrender value of life insurance 56,726
PROPERTY, PLANT AND EQUIPMENT - AT COST
Building and improvements 6,344,756
Machinery and equipment 8,484,381
Capitalized leases 14,264,282
Cattle 485,308
Office furniture and equipment 249,300
Autos, trucks and trailers 2,029,833
---------------
31,857,860
Less accumulated depreciation (11,929,277)
---------------
19,928,583
Land 2,957,138
Construction in progress 12,762
---------------
Total property, plant and equipment 22,898,483
---------------
$32,626,817
===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES AND OWNERS' EQUITY
CURRENT LIABILITIES
<S> <C>
Accounts payable $ 3,131,484
Operating loans payable 791,575
Accrued expenses 652,514
Federal income taxes payable -
Deferred income taxes 1,053,356
Current portion of long-term debt 1,804,464
---------------
Total current liabilities 7,433,393
LONG-TERM LIABILITIES
Notes payable 1,774,931
Capital lease payable 8,001,030
---------------
9,775,961
Less portion due within one year (1,804,464)
---------------
7,971,497
Deferred income taxes 863,548
---------------
Total long-term liabilities 8,835,045
---------------
Total liabilities 16,268,438
OWNERS' EQUITY
Common stock - $10 per value, 6000 shares authorized
and issued 62,890
Paid in capitol 199,332
Retained earnings 16,096,517
---------------
Total owners' equity 16,358,379
---------------
$32,626,817
===============
</TABLE>
5
<PAGE> 6
SMITH FARMS, INC. AND AFFILIATES
COMBINED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1999
<TABLE>
<S> <C>
NET SALES $53,976,985
OPERATING COSTS AND EXPENSES
Cost of feed, packing and eggs purchased 28,126,023
Contract payments 2,594,377
Depletion of hens 4,182,589
Salaries and wages 6,726,106
Employee taxes, insurance and benefits 906,369
Promotions and inspections 620,435
Depreciation 1,578,880
Equipment lease expense 568,981
Repairs 924,818
Truck and auto expenses 1,198,096
Taxes 265,125
Insurance 313,960
Utilities 658,758
Telephone 136,459
Supplies 525,390
Professional and advisory fees 159,885
Other expenses 502,681
Bad debts 22,219
----------------
Total operating costs and expenses 50,011,151
----------------
Net income from operations 3,965,834
OTHER INCOME (EXPENSES)
Interest expense (584,087)
Other income 46,088
----------------
Total other income (expenses) (537,999)
----------------
Income before provision for income taxes 3,427,835
Provision for income taxes 724,590
----------------
NET INCOME $2,703,245
================
PRO FORMA INCOME DATA
Net income, as reported $2,703,245
Pro forma income tax adjustment (unaudited) 677,355
----------------
Pro form net income (unaudited) $2,025,890
================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
SMITH FARMS, INC. AND AFFILIATES
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Cash flows from operating activities:
<S> <C> <C>
Net income $ 2,703,245
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation $ 1,578,880
Increase in cash surrender value of life
insurance (2,559)
Gain on sale of fixed assets (9,094)
(Increase) decrease in accounts receivable (241,382)
(Increase) decrease in inventories (590,480)
(Increase) decrease in prepaid expenses (247,870)
(Decrease) increase in accounts payable 240,079
(Decrease) increase in accrued expenses 71,954
(Decrease) increase in deferred income taxes 245,840
----------------
Total adjustments 1,045,368
----------------
Net cash provided by operating activities: 3,748,613
Cash flows from investing activities:
Purchase of machinery, equipment and land (3,189,554)
Proceeds from disposition of fixed assets 70,186
----------------
Net cash (used) by investing activities (3,119,368)
</TABLE>
7
<PAGE> 8
<TABLE>
<S> <C> <C>
Cash flows from financing activities:
Proceeds from operating loans - net 741,575
Proceeds from issuance of long-term debt 544,401
Retirement of long-term debt (1,000,680)
Principal reductions of capital leases (1,453,776)
Contributions by owners 516,420
Distributions to owners (448,115)
----------------
Net cash (used) by financing activities (1,100,175)
----------------
Net increase (decrease) in cash an cash equivalents (470,930)
Cash and cash equivalents at beginning of year 1,179,977
----------------
Cash and cash equivalents at end of year $ 709,047
================
SUPPLEMENTAL INFORMATION:
Interest paid $ 722,288
Income taxes paid $ 477,997
Capital lease obligations entered into during year $ 6,175,180
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
SMITH FARMS, INC. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINING FINANCIAL STATEMENTS
The combined financial statements include the accounts of Smith Farms,
Inc. and the following related partnerships: B & N Poultry, Harwood
Poultry Farms, Ltd., Klesel Farms, Ltd., Searcy Farms, Ltd. and
Berger/Novak Cattle, Ltd. The individuals that own the stock of Smith
Farms, Inc. also own the partnerships. All significant intercompany
transactions have been eliminated.
NATURE OF OPERATIONS
Smith Farms, Inc. and its affiliates (the Company) are headquartered in
Flatonia, Texas. The Company operates hen laying and egg processing
operations with facilities in central Texas and north-east Arkansas. The
Company owns hen houses, processing equipment, feed mills and hens and
also buys eggs from outside producers. The Company operates a fleet of
trucks to deliver eggs. Customers include major grocery chains and grocery
supply companies. The Company's market is north, east, central and south
Texas.
INVENTORIES
Pullet inventories are valued at cost, including the cost of the birds,
feed, medicine, labor and contract services. Hen inventories are based on
the cost of the pullets less depletion of that cost over a period of
approximately 75 weeks. Egg inventories are valued at lower of cost (first
in, first out) or market. Cost is determined based upon weekly market
prices less farm costs plus processing costs. Feed and supplies
inventories are valued at cost (first in, first out).
Inventories consisted of the following:
<TABLE>
<S> <C>
Hens $4,476,137
Eggs 411,529
Feed 430,896
Cartons and supplies 302,504
---------------
$5,621,066
===============
</TABLE>
9
<PAGE> 10
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
HEDGING OF FEED SUPPLIES
To help manage the risk of increases in the cost of feed, the Company will
purchase futures contracts to provide price protection of future feed
purchases. These purchases are treated as anticipatory hedges. No gain or
loss is recognized until the hedges are closed and feed is purchased. Any
gains or losses are treated as a decrease or increase in the cost of feed.
At June 30, 1999, the Company had open futures positions involving various
feed ingredients.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major improvements are
capitalized, whereas expenditures for maintenance and repairs are charged
to expense. As properties are retired or otherwise disposed of, the
property and related accumulated depreciation accounts are relieved of the
applicable amounts. Gains or losses resulting are charged to income.
It is the policy of the Company to provide depreciation based on the
estimated useful life of the individual units of property and equipment.
The depreciation methods and the estimated useful lives used as the basis
for the application of those methods are as follows:
<TABLE>
<CAPTION>
Estimated
Description Method Useful Life
- -------------------------------------------------------------
<S> <C>
Hen houses Straight-line 15 - 20
Other buildings Straight-line 20 - 40
Machinery and equipment Accelerated 5 - 8
Office furniture and
equipment Accelerated 5 - 8
Vehicles Accelerated 5 - 8
</TABLE>
SALES
Sales are reported net of any rebates or allowances allowed to customers.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, cash and cash equivalents
includes cash on hand, demand deposits and interest-bearing deposits with
maturities of three months or less.
10
<PAGE> 11
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from these
estimates.
NOTE B - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has several financial instruments, none of which are held for
trading purposes. The carrying value of cash, accounts receivable and
accounts payable approximates fair value because of the short maturity of
those instruments. The carrying values of debt approximate fair value
based on a review of rates and terms currently available to the Company.
NOTE C - CAPITALIZED LEASES
At June 30, 1999 the Company was leasing layer houses, processing and
other equipment under various capital leases. The leases have been
capitalized at amounts equal to the present value of the lease payments. A
corresponding entry is also made to record the related capital lease
obligations. The capitalized leases are depreciated using the same useful
lives listed in Note A. Depreciation expense related to the capitalized
leases is included in the Company's total depreciation expense.
NOTE D - LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt at June 30, 1999 consisted of the following:
<S> <C>
Note payable to utility cooperative to finance
purchase of a generator, due in monthly payments
of $7,140 plus interest at 7.45% through 2003.
Note is secured by the equipment. $ 357,001
Capital leases payable to Farm Credit Leasing
Services, Inc. due in monthly payments of
approximately $263,885 including principal and
interest at approximately 8.5%. 8,001,030
Notes payable to Norwest Bank to finance the purchase
of several tracts of land, due in monthly payments of
$5,009 plus interest at 8% through 2002. The notes are
secured by deeds of trust covering the land purchased. 426,428
</TABLE>
11
<PAGE> 12
NOTE D - LONG-TERM DEBT - CONTINUED
<TABLE>
<S> <C>
Notes payable to Smith Holding Company, Inc. to
finance purchase of equipment and land, due in
monthly payments of $27,319 including principal
and interest at 8%. The notes are unsecured. 718,012
Note payable to individuals to finance purchase
of land, due in annual payments of $10,000 plus
interest at 7% through April, 2007. Remaining
balance is due April, 2008. Loan secured by
deed of trust on 240 acres. 190,000
Note payable to Norwest Bank to finance
construction of pullet houses, due in 36
monthly principal installments of $36,111
plus interest at 8% through October 1999.
Loan secured by pullet houses, equipment and
land. 83,490
----------------
$9,775,961
================
</TABLE>
Principal maturities are as follows for the years ending June 30:
<TABLE>
<S> <C>
2000 $1,804,465
2001 1,903,889
2002 2,014,023
2003 2,300,533
2004 1,361,969
Thereafter 391,082
--------------
$9,775,961
==============
</TABLE>
Several of the notes are guaranteed by the stockholders.
NOTE E - LEASES
The Company leases various trucks, trailers and refrigeration units from
Farm Credit Leasing Services, Inc. under noncancellable operating leases
expiring at various dates through 2002. Lease expense for 1999 was
$567,181.
12
<PAGE> 13
NOTE E - LEASES (CONTINUED)
At June 30, 1999, future minimum lease payments under such leases were as
follows:
<TABLE>
<CAPTION>
Year ending
June 30,
- ----------------
<S> <C>
2000 $ 200,122
2001 177,742
2002 43,595
2003 -
2004 -
--------------
$ 421,459
==============
</TABLE>
The leases are guaranteed by the stockholders.
NOTE F - LINE OF CREDIT
Smith Farms, Inc. has a $5,000,000 line of credit with Norwest Bank Texas
which is secured by hen and egg inventories and accounts receivable and is
guaranteed by the Company's stockholders. The line of credit was never
used during the 1999 year.
NOTE G - PROVISION FOR INCOME TAXES
Smith Farms, Inc. files a consolidated Federal income tax return with its
parent company, Smith Holding Company, Inc. The preceding three fiscal
years are subject to audit by the Internal Revenue Service. The Company is
contingently liable for any tax assessment.
The Federal income tax expense differs from the expected Federal income
tax expense for the period, computed by applying the statutory U. S.
Federal Corporate tax rate of 34% to income before Federal income taxes,
as follows:
<TABLE>
<S> <C>
Computed tax expense at 34% $ 711,497
Expenses not deductible 13,093
----------------
$ 724,590
================
</TABLE>
13
<PAGE> 14
NOTE G - PROVISION FOR INCOME TAXES - CONTINUED
Income tax expense consists of the following:
<TABLE>
<S> <C>
Current $ 478,750
Deferred 245,840
----------------
$ 724,590
================
</TABLE>
Significant components of the Company's deferred tax liabilities are as
follows:
<TABLE>
<S> <C>
Current deferred tax liabilities:
Inventories $1,053,356
Long-term deferred tax liabilities:
Property, plant and equipment 863,548
----------------
Total deferred tax liabilities $1,916,904
================
</TABLE>
NOTE H - PRO FORMA INCOME TAXES
The following unaudited pro forma information reflects income tax expense
as if the Company including the Affiliates had been subject to federal and
state income taxes:
<TABLE>
<S> <C>
Current:
Federal $1,322,774
State 79,171
----------------
Pro forma income taxes 1,401,945
Income taxes as reported (724,590)
----------------
Pro forma income tax adjustment $ 677,355
================
</TABLE>
NOTE I - EMPLOYEE SAVINGS PLAN
The Company has established an employee thrift plan or 401(K) plan for its
employees. The Company currently matches 25% of employee contribution up
to 5% of employee's compensation. For the year ended June 30, 1999, the
Company contributed $28,545 to the plan.
NOTE J - MAJOR CUSTOMERS AND CREDIT RISKS
For the year ended June 30, 1999, three customers each generated sales in
excess of 10% of the Company's sales. Sales to these three customers
totaled approximately 70% of total revenues.
14
<PAGE> 15
NOTE J - MAJOR CUSTOMERS AND CREDIT RISKS (CONTINUED)
The Company is principally engaged in the production and sale of eggs to
large supermarket chains in Texas. Sales are made on credit with payment
generally due within thirty days or less. The Company's ability to collect
amounts due from customers may be affected by economic fluctuations in the
grocery industry. The Company carries credit risk insurance on major
accounts.
At June 30, 1999 the Company had $600,000 on deposit at banks in excess of
FDIC insurance coverage.
NOTE K - COMPENSATED ABSENCES
Employees of the Company are entitled to paid vacation depending on length
of service. Accrued absences at June 30, 1999 were $117,380.
NOTE L - SUBSEQUENT EVENTS
Subsequent to June 30, 1999, the Company entered into significant capital
leases with Farm Credit Leasing, Inc. in connection with a major capital
improvements program. When finished, the program will include two
additional processing plants and multiple layer and pullet houses. The
total cost of the program is estimated to be approximately $25 million and
the total construction period will be more than two years.
Subsequent to June 30, 1999, the Company sold substantially all of its egg
production and processing assets to Cal-Maine Foods, Inc.
15
<PAGE> 16
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited pro forma condensed consolidated balance sheet as of
August 28, 1999 and the related unaudited pro forma condensed consolidated
statements of operations for the three months ended August 28, 1999 and year
ended May 29, 1999 of Cal-Maine Foods, Inc. ("Cal-Maine") give effect to the
September 30, 1999 purchase of substantially all of the assets and assumption of
certain liabilities of Smith Farms, Inc. and certain related companies ("Smith
Farms") effective September 18, 1999.
The pro forma condensed consolidated balance sheet combines the unaudited August
28, 1999 condensed consolidated balance sheet of Cal-Maine with the unaudited
condensed combined balance sheet of Smith Farms. The pro forma condensed
consolidated statement of operations for the three months ended August 28, 1999
combine the unaudited results of operations of Cal-Maine for the three months
ended August 28, 1999 with the unaudited results of operations of Smith Farms
for the three months ended September 30, 1999. The pro forma condensed
consolidated statement of operations for the year ended May 29, 1999 combine the
audited results of operations of Cal-Maine for the year ended May 29, 1999 with
the audited results of operations of Smith Farms for the year ended June 30,
1999. The pro forma condensed consolidated financial statements are based on the
historical financial statements of Cal-Maine and Smith Farms, giving effect to
the assumptions and adjustments in the accompanying notes to the pro forma
condensed consolidated financial statements.
The pro forma condensed consolidated financial statements have been prepared by
Cal-Maine's management and include such adjustments to reflect the pro forma
financial results as if the acquisition described above had occurred as of
August 28, 1999 for the pro forma condensed consolidated balance sheet and as of
May 31, 1998 for the pro forma condensed consolidated statements of operations.
These pro forma condensed consolidated financial statements may not be
indicative of the results that actually would have occurred if the purchase had
been in effect on the dates indicated or which may be obtained in the future.
The pro forma condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes of Cal-Maine
included in its annual report on Form 10-K for the year ended May 29, 1999 and
the historical financial statements and notes thereto of Smith Farms included
elsewhere in this Form 8-K/A No. 1.
16
<PAGE> 17
<TABLE>
<CAPTION>
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AUGUST 28, 1999
(in thousands)
Cal-Maine Pro Forma (2) Pro Forma
Historical Adjustments Consolidated
-------------------------- -------------
ASSETS
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 28,192 $ (28,192) (3) $ -
Receivables 15,781 2,689 18,470
Inventories 37,281 7,571 44,852
Prepaid expenses and other 4,213 228 4,441
-------------------------- -------------
Total current assets 85,467 (17,704) 67,763
Property and equipment, net 111,735 37,313 149,048
Other assets 14,085 - 14,085
-------------------------- -------------
Total assets $ 211,287 $ 19,609 $ 230,896
========================== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ - $ 8,013 (3) $ 8,013
Accounts payable and accrued expenses 24,324 71 24,395
Current maturities of long-term debt
and capital lease liability 4,517 2,150 6,667
Deferred income taxes 10,294 - 10,294
-------------------------- -------------
Total current liabilities 39,135 10,234 49,369
Long-term debt and capital lease
liability, less current maturities 85,799 9,375 95,174
Deferred expenses 1,489 - 1,489
Deferred income taxes 10,285 - 10,285
-------------------------- -------------
136,708 19,609 156,317
Stockholders' equity 74,579 - 74,579
-------------------------- -------------
Total liabilities and stockholders' equity $ 211,287 $ 19,609 $ 230,896
========================== =============
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements
(unaudited).
17
<PAGE> 18
<TABLE>
<CAPTION>
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED MAY 29, 1999
(in thousands, except per share amounts)
Smith
Cal-Maine Farms Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
------------------------------------ -------------
<S> <C> <C> <C> <C>
Net sales $287,954 $53,977 $ - $341,931
Cost of sales 242,022 46,559 2,050 (4) 290,631
------------------------------------ -------------
Gross profit 45,932 7,418 (2,050) 51,300
Selling, general and
administrative
expenses 36,406 3,452 - 39,858
------------------------------------ -------------
Operating income 9,526 3,966 (2,050) 11,442
Interest expense (5,195) (584) 194 (5) (5,585)
Interest income 2,202 - (2,062) (6) 140
Other income 1,454 46 - 1,500
------------------------------------ -------------
Income before income taxes 7,987 3,428 (3,918) 7,497
Income tax expense (benefit) 2,907 725 (903) (7) 2,729
------------------------------------ -------------
Net income $ 5,080 $ 2,703 $ (3,015) $4,768
==================================== =============
Net income per share:
Basic $ 0.39 $ 0.37
============= =============
Diluted $ 0.39 $ 0.36
============= =============
Weighted average shares outstanding:
Basic 12,999 12,999
============= =============
Diluted 13,114 13,114
============= =============
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements
(unaudited).
18
<PAGE> 19
<TABLE>
<CAPTION>
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED AUGUST 28, 1999
(in thousands, except per share amounts)
Cal-Maine Smith Farms Pro Forma Pro Forma
Historical Historical Adjustments Consolidated
----------------------------------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 59,055 $ 11,337 $ - $ 70,392
Cost of sales 57,322 10,953 611 (4) 68,886
----------------------------------------- -------------
Gross profit 1,733 384 (611) 1,506
Selling, general and
administrative expenses 9,096 1,293 - 10,389
----------------------------------------- -------------
Operating loss (7,363) (909) (611) (8,883)
Interest expense (1,407) (74) (93) (5) (1,574)
Interest income 376 - (376) (6) -
Other income (loss) (111) 57 - (54)
----------------------------------------- -------------
Loss before income taxes (8,505) (926) (1,080) (10,511)
Income tax expense (benefit) (3,141) - (741) (7) (3,882)
----------------------------------------- -------------
Net loss $ (5,364) $ (926) $ (339) $ (6,629)
========================================= =============
Net income per share:
Basic $ (0.43) $ (0.53)
============= =============
Diluted $ (0.43) $ (0.53)
============= =============
Weighted average shares
outstanding:
Basic 12,450 12,450
============= =============
Diluted 12,450 12,450
============= =============
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements
(unaudited).
19
<PAGE> 20
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands)
1. On September 30, 1999, Cal-Maine Foods, Inc. ("Cal-Maine") purchased
substantially all of the assets and assumed certain liabilities of Smith
Farms, Inc. and certain related companies ("Smith Farms") effective as of
September 18, 1999 for $36,205 in a transaction accounted for as a purchase.
The assets purchased represent Smith Farms' egg production and processing
operations in Texas and Arkansas, including approximately 3.9 million laying
hens and growing pullets, two feed mills, three egg production complexes and
feed and egg delivery equipment.
2. The pro forma adjustments to the Condensed Consolidated Balance Sheet as of
August 28, 1999 include the following purchase accounting adjustments to
reflect Smith Farms' assets and liabilities at their estimated fair values as
of September 18, 1999:
<TABLE>
<S> <C>
Accounts receivable $2,689
Inventories 7,571
Prepaid expenses and other 228
Property and equipment 37,313
Accrued expenses (71)
Long-term debt (11,525)
---------------
$36,205
===============
</TABLE>
The pro forma adjustments reflected in the pro forma Condensed Consolidated
Statements of Operations for the fiscal year ended May 29, 1999 and the three
months ended August 28, 1999, as described in notes 4, 5, 6 and 7 reflect the
effects of the transaction as if it had been consummated May 31, 1998.
3. The pro forma adjustments to cash and cash equivalents and note payable to
bank as of August 28, 1999 assumes that Smith Farms' purchase price of
$36,205 was funded from cash and cash equivalents and advances under
Cal-Maine's existing line of credit.
20
<PAGE> 21
CAL-MAINE FOODS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
(in thousands)
4. The pro forma adjustments to cost of sales includes increased depreciation
expense of $2,050 for the year ended May 29, 1999 and $611 for the three
months ended August 28, 1999 from the write-up of property, plant and
equipment to its estimated fair value and to reflect consistency with
Cal-Maine's estimated useful lives of the property, plant and equipment
acquired.
5. The pro forma adjustments to interest expense includes a $194 decrease for
the year ended May 29, 1999 and a $26 decrease for the three months ended
August 28, 1999 to exclude interest expense on long-term debt not assumed by
Cal-Maine. The pro forma adjustment to interest expense for the three months
ended August 28, 1999 includes a $119 increase to record the interest expense
incurred on the pro forma note payable to bank. For the year ended May 29,
1999, there was sufficient cash and cash equivalents to fund the purchase
price of Smith Farms; therefore, a pro forma adjustment to interest expense
is not necessary.
6. The pro forma adjustment of $2,062 for the year ended May 29, 1999 and $376
for the three months ended August 28, 1999 to interest income reflects the
reduction of Cal-Maine's cash and cash equivalents for the purchase price of
Smith Farms.
7. The pro forma adjustment of $903 for the year ended May 29, 1999 and $741 for
the three months ended August 28, 1999 reflects pro forma income taxes at
Cal-Maine's effective tax rate.
21
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (No. 333-20169) and related prospectus pertaining to the Cal-Maine
Foods, Inc. 1993 Stock Option Plan and in the Post-Effective amendment No. 1 to
Form S-1 on Form S-3 (No. 333-14809) and related prospectus pertaining to shares
underlying common stock purchase warrants of Cal-Maine Foods, Inc. of our report
dated July 23, 1999, with respect to the combined financial statements of Smith
Farms, Inc and Affiliates for the year ended June 30, 1999 included in Cal-Maine
Foods, Inc.'s Current Report on Form 8-K/A No. 1 dated December 13, 1999.
/s/ Ed Bercot & Company
Harlingen, Texas
December 9, 1999
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