Acquisition

3 Months Ended

Sep. 01, 2012

Acquisition [Abstract]

Acquisition

2.   Acquisition

On August 10, 2012, we purchased substantially all of the commercial egg assets of Pilgrim’s Pride Corporation (Seller), located in Pittsburg, Texas.   The purchase price totaled $18,818 based upon the preliminary valuation of the assets acquired.  The purchase price was funded from our available cash balances. The assets purchased by us include two production complexes with capacity for approximately 1.4 million laying hens, and the Seller’s13.6% interest in Texas Egg Products, LLC (TEP),  which gives the Company a majority interest in TEP. Effective August 10, 2012, these acquired operationswere merged into Cal-Maine Foods, Inc.

The following table presents the preliminary allocation of the purchase price to the assets acquired, based on their fair values:

Assets acquired:
Inventories	$	3,615
Property, plant, and equipment		15,203
Total assets acquired	$	18,818
Earn-out contingency		(2,500)
Net assets acquired	$	16,318

The purchase price for the property, plant and equipment includes a $2,500 earn-out contingency.   We have recorded this $2,500 contingency as a liability.   As per the agreement signed on August 10, 2012, this earn out provision employs a formulaic methodology that takes into account commodity feed prices and the price of shell eggs for the period September 2012 – August 2013.   The maximum payout under this earn-out provision is $2,500.   When this contingency is settled in fiscal 2014, we will book any difference between the recorded liability and the cash settlement to earnings.