-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A5lGWuMOwKA1lRYQ4Rm/CSqb9YPMZkgG6X1oXsD8Wr1lDKAkKOLWUj0gh1+hRSou v6BTOlF0mnmEQMXinvKP+A== 0000897069-02-000280.txt : 20020416 0000897069-02-000280.hdr.sgml : 20020416 ACCESSION NUMBER: 0000897069-02-000280 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020302 FILED AS OF DATE: 20020409 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAL MAINE FOODS INC CENTRAL INDEX KEY: 0000016160 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - LIVESTOCK & ANIMAL SPECIALTIES [0200] IRS NUMBER: 640500378 STATE OF INCORPORATION: DE FISCAL YEAR END: 0529 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04892 FILM NUMBER: 02605618 BUSINESS ADDRESS: STREET 1: 3320 WOODROW WILSON DRIVE CITY: JACKSON STATE: MS ZIP: 39207 BUSINESS PHONE: 6019486813 MAIL ADDRESS: STREET 1: 3320 WOODROW WILSON DR CITY: JACKSON STATE: MS ZIP: 39209 FORMER COMPANY: FORMER CONFORMED NAME: CHICKEN CHEF SYSTEMS INC DATE OF NAME CHANGE: 19710315 10-Q 1 slp269.txt FORM 10-Q 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 March 2, 2002 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 March 29, 2002. Common Stock, $0.01 par value 10,564,388 shares Class A Common Stock, $0.01 par value 1,200,000 shares CAL-MAINE FOODS, INC. AND SUBSIDIARIES INDEX Page Part I. Financial Information Number Item 1. Condensed Consolidated Financial Statements (unaudited) Condensed Consolidated Balance Sheets - March 2, 2002 and June 2, 2001 3 Condensed Consolidated Statements of Operations - Three Months and Nine Months Ended March 2, 2002 and March 3, 2001 4 Condensed Consolidated Statements of Cash Flow - Nine Months Ended March 2, 2002 and March 3, 2001 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Item 3. Quantitative and Qualitative Disclosures of Market Risk 11 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CAL-MAINE FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) March 2, 2002 June 2, 2001 ------------- ------------ (unaudited) (Note 1) ASSETS Current assets: Cash and cash equivalents $ 4,876 $ 13,129 Accounts receivable, net 18,409 16,017 Inventories 49,214 47,122 Prepaid expenses and other current assets 633 569 --------- --------- Total current assets 73,132 76,837 Notes receivable and investments 6,947 7,673 Goodwill 3,147 3,147 Other assets 2,239 2,447 Property, plant and equipment 255,956 248,297 Less accumulated depreciation (112,786) (103,649) --------- --------- 143,170 144,648 --------- --------- TOTAL ASSETS $ 228,635 $ 234,752 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable to banks $ 8,000 $ -- Accounts payable and accrued expenses 27,771 29,492 Current maturities of long-term debt 10,292 7,184 Current deferred income taxes 11,775 11,775 --------- --------- Total current liabilities 57,838 48,451 Long-term debt, less current maturities 110,050 111,156 Deferred expenses 1,450 1,450 Deferred income taxes 2,826 7,499 --------- --------- Total liabilities 172,164 168,556 Stockholders' equity: Common stock $0.01 par value per share: Authorized shares - 30,000,000 Issued and outstanding shares - 17,565,200 at March 2, 2002 and June 2, 2001 176 176 Class A common stock $0.01 par value: authorized, issued and outstanding 1,200,000 shares 12 12 Paid-in capital 18,784 18,784 Retained earnings 50,598 59,752 Common stock in treasury - 7,000,812 shares at March 2, 2002 and 6,863,512 shares at June 2, 2001 (13,099) (12,528) --------- --------- Total stockholders' equity 56,471 66,196 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 228,635 $ 234,752 ========= ========= See notes to condensed consolidated financial statements. 3 CAL-MAINE FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) UNAUDITED
13 Weeks Ended 39 Weeks Ended March 2, 2002 March 3, 2001 March 2, 2002 March 3, 2001 ------------- ------------- ------------- ------------- Net sales $ 86,927 $ 103,913 $ 243,114 $ 272,020 Cost of sales 74,908 83,354 219,004 225,297 --------- --------- --------- --------- Gross profit 12,019 20,559 24,110 46,723 Selling, general and administrative 10,543 11,148 31,012 31,698 --------- --------- --------- --------- Operating income (loss) 1,476 9,411 (6,902) 15,025 Other income (expense): Interest expense, net (2,046) (2,288) (6,368) (6,759) Other (291) 395 (283) 1,778 --------- --------- --------- --------- (2,337) (1,893) (6,651) (4,981) --------- --------- --------- --------- Income (loss) before income taxes (861) 7,518 (13,553) 10,044 Income tax expense (benefit) (310) 2,730 (4,843) 3,652 --------- --------- --------- --------- NET INCOME (LOSS) $ (551) $ 4,788 $ (8,710) $ 6,392 ========= ========= ========= ========= Net income (loss) per common share: Basic $ (.05) $ .40 $ (.74) $ .53 ========= ========= ========= ========= Diluted $ (.05) $ .40 $ (.74) $ .53 ========= ========= ========= ========= Dividends per common share $ .0125 $ .0125 $ .0375 $ .0375 ========= ========= ========= ========= Weighted average shares outstanding: Basic 11,764 11,983 11,802 12,096 ========= ========= ========= ========= Diluted 11,764 12,088 11,802 12,156 ========= ========= ========= =========
See notes to condensed consolidated financial statements. 4 CAL-MAINE FOODS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) UNAUDITED
39 Weeks Ended March 2, 2002 March 3, 2001 ------------- ------------- Cash flows provided by (used in) operating activities $ (5,742) $ 18,662 Cash flows from investing activities: Purchases of property, plant and equipment (5,694) (2,482) Construction of production facilities (6,730) (6,266) Payments received on notes receivable and from investments 161 939 Increase in note receivable, investments and other assets (212) (468) Net proceeds from sale of property, plant and equipment 977 607 -------- -------- Net cash used in investing activities (11,498) (7,670) Cash flows from financing activities: Net borrowings (payments) on notes payable to banks 8,000 (7,500) Long-term borrowings 9,000 3,106 Principal payments on long-term debt (6,998) (5,031) Purchases of common stock for treasury (571) (1,273) Payment of dividends (444) (456) -------- -------- Net cash provided by (used in) financing activities 8,987 (11,154) -------- -------- Net change in cash and cash equivalents (8,253) (162) Cash and cash equivalents at beginning of period 13,129 6,541 -------- -------- Cash and cash equivalents at end of period $ 4,876 $ 6,379 ======== ========
See notes to condensed consolidated financial statements. 5 CAL-MAINE FOODS, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (in thousands, except share amounts) March 2, 2002 (unaudited) 1. Presentation of Interim Information The accompanying unaudited condensed consolidated financial statements have been prepared 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 , all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended March 2, 2002 are not necessarily indicative of the results that may be expected for the year ended June 1, 2002. The balance sheet at June 2, 2001 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. For further information, refer to the consolidated financial statements and footnotes thereto included in the Cal-Maine Foods, Inc. and Subsidiaries Annual Report on Form 10-K for the year ended June 2, 2001. 2. Inventories Inventories consisted of the following: March 2, 2002 June 2, 2001 ------------------ ---------------- Flocks $31,411 $ 31,920 Eggs 3,646 3,149 Feed and supplies 11,220 9,459 Livestock 2,937 2,594 ------------------ ---------------- $49,214 $ 47,122 ================== ================ 3. Goodwill The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, effective June 3, 2001. Under SFAS No. 142, goodwill is no longer amortized but reviewed for impairment annually, or more frequently if certain indicators arise. No impairment loss resulted from the transitional impairment test completed during the quarter ended December 1, 2001. Had the Company been accounting for its goodwill under SFAS No. 142 for all periods presented, the Company's net income (loss) and income (loss) per share would have been as follows:
Thirteen Weeks Ended Thirty-Nine Weeks Ended March 2 March 3 March 2 March 3 2002 2001 2002 2001 ----------- ----------- ---------- ---------- Reported net income (loss) $ (551) $ 4,788 $ (8,710) $ 6,392 Add back goodwill amortization, net of tax -- 39 -- 117 --------- --------- --------- --------- Pro forma adjusted net income (loss) $ (551) $ 4,827 $ (8,710) $ 6,509 ========= ========= ========= ========= Basic and diluted net income(loss) per share: Reported net income (loss) $ (.05) $ .40 $ (.74) $ .53 Goodwill amortization, net of tax -- .00 -- .01 --------- --------- --------- --------- Pro forma adjusted basic and diluted net income (loss) per share $ (.05) $ .40 $ (.74) $ .54 ========= ========= ========= =========
6 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. The Company's fiscal year end is the Saturday nearest to May 31. The Company's operations are fully integrated. It owns facilities to hatch chicks, grow pullets, manufacture feed, and produce, process, and distribute shell eggs. The Company currently is the largest producer and distributor of fresh shell eggs in the United States. The shell egg segment sales, including feed sales to outside egg producers, accounted for 98% 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. The Company currently uses contract producers for approximately 16% 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, shell eggs are purchased, as needed, from outside producers for resale by the Company. 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 production is materially affected by feed costs, which average about 60% of Cal-Maine's total farm egg production cost. 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. According to U.S. Department of Agriculture reports, the egg industry has placed approximately 7% fewer baby chicks during the past four months as compared to the same period last year. This would indicate a smaller national layer flock during the last half of calendar 2002. Current demand for eggs is good for domestic use, but is expected to slow for the period following Easter to Labor Day. Current agricultural commodity futures prices indicate that feed ingredient prices should remain relatively low for the next few months. RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain items from the Company's Condensed Consolidated Statements of Operations expressed as a percentage of net sales.
Percentage of Net Sales 13 Weeks Ended 39 Weeks Ended March 2, 2002 March 3, 2001 March 2, 2002 March 3, 2001 ------------------------------------------------------------------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 86.2 80.2 90.0 82.8 ------------------------------------------------------------------- Gross profit 13.8 19.8 10.0 17.2 Selling, general & administrative 12.1 10.7 12.8 11.7 ------------------------------------------------------------------- Operating income (loss) 1.7 9.1 (2.8) 5.5 Other expense (2.7) (1.9) (2.7) (1.9) ------------------------------------------------------------------- Income (loss) before taxes (1.0) 7.2 (5.5) 3.6 Income tax expense (benefit) (0.4) 2.6 (1.9) 1.3 ------------------------------------------------------------------- Net income (loss) (0.6)% 4.6% (3.6)% 2.3% ===================================================================
7 NET SALES Net sales for the third quarter of fiscal 2002 were $86.9 million, a decrease of $17.0 million, or 16.3% as compared to net sales of $103.9 million for the third quarter of fiscal 2001. Total dozens of eggs sold increased in the current quarter and egg selling prices decreased as compared with prices last year. Dozens sold for the current quarter were 143.4 million dozen, an increase of 2.9 million dozen, or 2.1% as compared to the third quarter of last year. Although consumer demand was good, increased egg supply resulted in lower egg selling prices during the current quarter. The Company's net average selling price per dozen for the fiscal 2002 third quarter was $.576, compared to $.704 for the third quarter of last year, a decrease of 18.2%. Net sales for the thirty-nine weeks ended March 2, 2002 were $243.1 million, a decrease of $28.9 million, or 10.6%, as compared to net sales of $272.0 million for last year. As in the current quarter, total dozens sold increased and net egg selling prices decreased. Dozens sold for the current 39 week period were 420.1 million as compared to 408.9 million for the same period in last fiscal year, an increase of 2.7%. For the current 39 week period, the Company's net average selling price per dozen was $.547, compared to $.633 per dozen last year, a decrease of 13.6%. COST OF SALES Cost of sales for the third quarter ended March 2, 2002 was $74.9 million, a decrease of $8.4 million, or 10.1%, as compared to cost of sales of $83.4 million for last year's third quarter. The decrease is due to lower cost of purchases from outside egg producers and lower cost of feed ingredients. Dozens of eggs sold increased 2.1%. These additional dozens were the net result of an increase in dozens produced in Company facilities and a decrease in the number of dozens purchased from outside egg producers. A decrease in the cost of the eggs purchased from outside producers was due to weaker egg market conditions. Feed cost for the third quarter ended March 2, 2002 was $.193 per dozen, compared to last fiscal year's cost per dozen of $.213, a decrease of 9.4%. The lower egg selling prices resulted in a decrease in gross profit from 19.8% of net sales for the quarter ended March 3, 2001 to 13.8% of net sales for the current quarter ended March 2, 2002. For the thirty-nine week period ended March 2, 2002, cost of sales was $219.0, a decrease of $6.3 million, or 2.8%, as compared to cost of sales of $225.3 million for last year. As in the quarter, the decrease in cost of sales is the result of lower outside egg purchase cost and a decrease in the cost of feed. Feed cost for the current 39 weeks was $.195 per dozen, compared to $.198 per dozen last year, a decrease of 1.5%. The decrease in egg selling prices resulted in a decrease in gross profit from 17.2% of net sales for the prior year 39 week period to 10.0% for the current 39 week period. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the third quarter ended March 2, 2002 were $10.5 million, a decrease of $605,000, or 5.4%, as compared to $11.1 million for last fiscal year's third quarter. The decrease is due to a decrease in payroll and related expenses and decreased delivery costs. On a cost per dozen sold basis, selling, general and administrative expenses decreased $.005 per dozen, $.074 per dozen for the current quarter as compared to $.079 for the same period in the prior year. As a percent of net sales, selling, general and administrative expenses increased from 10.7% for fiscal 2001 third quarter to 12.1% for the current quarter. For the thirty-nine weeks ended March 2, 2002, selling, general and administrative expenses were $31.0 million, a decrease of $686,000, or 2.2%, as compared to $31.7 million for the same period in the prior fiscal year. The decreased cost was related to decreases in payroll and related expenses, and decreased delivery expenses. For the current period, fuel cost decreased 15% from the same period in the prior year. On a cost per dozen sold basis, selling, general and administrative expenses decreased slightly, $.074 for the current year and $.077 for last fiscal year. As a percent of net sales, selling, general and administrative expenses have increased from 11.7% for the prior 39 week period to 12.8% for the current 39 week period. 8 OPERATING INCOME As the result of the above, operating income was $1.5 million for the third quarter ended March 2, 2002, as compared to operating income of $9.4 million for last year's fiscal third quarter. Operating income was 1.7% of net sales for the current fiscal quarter, compared to operating income of 9.1% of net sales for the same quarter in the prior year. For the thirty-nine weeks ended March 2, 2002, operating loss was $6.9 million, compared to operating income of $15.0 million for last fiscal year. Operating loss was 2.8% of net sales for the current 39 week period compared to operating income of 5.5% of net sales in the same period in the prior year. OTHER EXPENSE Other expense for the third quarter ended March 2, 2002 was $2.3 million, an increase of $445,000, as compared to the third quarter of last fiscal year. In the current quarter, net interest expense decreased $242,000 and other income decreased $686,000. Net interest expense decreased as the result of lower interest rates and capitalized interest on construction projects. Other income for the current quarter decreased from equity in losses of affiliates. As a percent of net sales, other expense was 2.7% for the current third quarter, compared to 1.9% for the same period in the prior year. For the thirty-nine weeks ended March 2, 2002, other expense was $6.7 million, an increase of $1.7 million, or 33.5%, as compared to $5.0 million for the same period in the prior year. For the current period, net interest expense decreased $391,000 and other income decreased $2.1 million. Net interest expense increased due to lower interest rates. The decrease in other income is due to a decreased of $785,000 from equity in losses of affiliates and due to settlement of an insurance claim for $650,000 recorded in the prior 39 week period. As a percent of net sales, other expense was 2.7% for the current period, as compared to 1.9% for the same period in the prior year. INCOME TAXES As a result of the above, the Company's pre-tax loss was $861,000 for the quarter ended March 2, 2002, compared to pre-tax income of $7.5 million for last year's quarter. For the current quarter, an income tax benefit of $310,000 was recorded with an effective tax rate of 36.0%, as compared to an income tax expense of $2.7 million with an effective rate of 36.3% for last year's comparable quarter. For the thirty-nine week period ended March 2, 2002, the Company's pre-tax loss was $13.6 million, compared to pre-tax income of $10.0 million for last year. For the current thirty-nine week period, an income tax benefit of $4.8 million was recorded with an effective tax rate of 35.7%, as compared to an income tax expense of $3.7 million with an effective rate of 36.4% for last year's comparable period. NET INCOME (LOSS) Net loss for the third quarter ended March 2, 2002 was $551,000, or $.05 per basic share, compared to net income of $4.8 million, or $.40 per basic share for last fiscal year's third quarter. For the thirty-nine week period ended March 2, 2002, net loss was $8.7 million, or $.74 per basic share, compared to last fiscal year's net income of $6.4 million, or $.53 per basic share. 9 CAPITAL RESOURCES AND LIQUIDITY The Company's working capital at March 2, 2002 was $15.3 million, compared to $28.4 million at June 2, 2001. The Company's current ratio was 1.26 at March 2, 2002, as compared with 1.59 at June 2, 2001. The Company's need for working capital generally is highest in the first and second fiscal quarters ending in August and November. During the first quarter egg prices are normally at seasonal lows. In the second quarter, the Company usually builds inventories and receivable balances in anticipation of the holiday season. Seasonal borrowing needs frequently are higher during these periods than during other fiscal periods. The Company had a $35 million line of credit with three banks of which $8.0 million was outstanding at March 2, 2002. The Company's long-term debt at that date, including current maturities, totaled $120.3 million, as compared to $118.3 million at June 2, 2001. For the thirty-nine weeks ended March 2, 2002, $5.7 million in net cash was used in operating activities. This compares to $18.7 million that was provided by operating activities for the comparable period last fiscal year. In the current thirty-nine week period, $5.7 million was used for purchases of property, plant and equipment, $977,000 was received from sales of property, plant and equipment, and $6.7 million was used for construction projects. Net cash of $212,000 was used for additions to investments and other assets and payments of $161,000 were received on notes receivable and investments. Approximately $571,000 was used for purchase of common stock for the treasury and $444,000 was used for payments of dividends on the Company's common stock. Proceeds of $8.0 million were received from net borrowings on notes payable to banks and long-term borrowings of $9.0 million were received. Payments of $7.0 million were made on long-term debt. The net result was a decrease in cash of approximately $8.3 million. For the comparable period last year, $2.5 million was used for purchases of property, plant and equipment, $607,000 was received from sales of property, plant and equipment, and $6.3 million was used for construction projects. Net cash of $468,000 was used for additions to investments and other assets and payments of $939,000 were received on notes receivable and investments. Approximately $1.3 million was used for purchase of common stock for the treasury and $456,000 was used for payments of dividends on the Company's common stock. Additional long-term borrowings of $3.1 million were received. Payments of $5.0 million were made on long-term debt and $7.5 million was paid on the note payable to bank. The net result was a decrease in cash of approximately $162,000. Substantially all trade receivables and inventories 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. At June 2, 2001, the Company did not meet certain of these provisions on its long-term debt agreements and obtained waivers of these requirements through fiscal 2002. As of March 2, 2002, the Company did not meet certain provisions of a loan agreement with a financial institution and received waivers from the institution. The Company is in compliance with all loan agreements as waived or amended. Under certain of the loan agreements, the lenders have the option to require the prepayment of any outstanding borrowings in the event of a change in the control of the Company. In fiscal 2001, the Company began construction of a new shell egg production and processing facility in Guthrie, Kentucky, with completion of the facility expected in fiscal 2003. The total cost of the facility is approximately $18.0 million, of which $3.2 million was incurred through March 2, 2002. The Company has commitments from an insurance company to receive $10.0 million in long-term borrowings and from a leasing company to receive $7.5 million applicable to the Guthrie facility. Including the construction project, the Company has projected capital expenditures of $15.5 million fiscal 2002, which will be funded by cash flows from operations and additional long-term borrowings. As part of the Smith Farms purchase in September 1999, the Company completed construction of egg production and processing facilities in Searcy, Arkansas and Flatonia, Texas. The projects were funded by a leasing company. The Searcy facility was completed in the current fiscal first quarter at cost of approximately $20.0 million and the Flatonia facility was completed in the current fiscal second quarter at a cost of approximately $16.0 million. These facilities are leased with seven year terms and accounted for as operating leases. Impact of Recently Issued Accounting Standards. Effective June 3, 2001, the Company adopted Financial Accounting Standards No. 141, "Business Combinations" (SFAS No. 141). SFAS No. 141 eliminates the pooling-of-interests method of accounting for business combinations except for qualifying business combinations that were initiated prior to July 10 1, 2001. SFAS No. 141 also includes new criteria to recognize intangible assets separately from goodwill. The requirements of SFAS 141 are effective for any business combination accounted for by the purchase method that is completed after June 30, 2001. The Company also adopted Statement of Financial Accounting Standards No.142, "Goodwill and Other Intangible Assets"(SFAS No 142), effective June 3, 2001. Under SFAS No. 142, goodwill is no longer amortized but reviewed for impairment annually, or more frequently if certain indicators arise. The Company completed its transitional impairment test in the quarter ended December 1 ,2001 and no impairment loss resulted. Forward Looking Statements. The foregoing statements contain forward-looking statements, which involve risks, and uncertainties and the Company's actual experience may differ materially from that discussed above. 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 reports 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 beyond the Company's control. These include adverse changes in shell egg prices and in the grain markets. 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. ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK There have been no material changes in the market risk reported in the Company's fiscal 2001 annual report on Form 10-K. 11 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits None 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 2002. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CAL-MAINE FOODS, INC. (Registrant) Date: April 9, 2002 /s/ Bobby J. Raines -------------------------------------- Bobby J. Raines Vice President/Treasurer (Principal Financial Officer) Date: April 9, 2002 /s/ Charles F. Collins -------------------------------------- Charles F. Collins Vice President/Controller (Principal Accounting Officer) 13 -----END PRIVACY-ENHANCED MESSAGE-----