Summary of Significant Accounting Policies

6 Months Ended

Nov. 29, 2025

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 - Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements of Cal-Maine Foods, Inc. and its subsidiaries (“Cal-Maine Foods,”

the “Company,” “we,” “us,” “our”) have been prepared in accordance with the instructions to Form 10-Q and Article 10 of

Regulation S-X and in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for

interim financial reporting and should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended

May 31, 2025 (the “2025 Annual Report”). These statements reflect all adjustments that are, in the opinion of management,

necessary to a fair statement of the results for the interim periods presented and, in the opinion of management, consist of

adjustments of a normal recurring nature. Operating results for the interim periods are not necessarily indicative of operating

results for the entire fiscal year.

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to May 31. Each of the three-month and year-to-date periods ended on

November 29, 2025 and November 30, 2024 included

13

and

26

weeks, respectively.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make

estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and

accompanying notes. Actual results could differ from those estimates.

Dividends Payable

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

(“Board”). The Company pays a dividend to holders of its Common Stock (and, prior to its conversion to Common Stock on

April 14, 2025, Class A Common Stock) on a quarterly basis for each quarter for which the Company reports net income

attributable to Cal-Maine Foods, Inc., computed in accordance with GAAP, in an amount equal to

one-third

(1/3) of such

quarterly net income. Dividends are paid to stockholders of record as of the 60th day following the last day of such quarter,

except for the fourth fiscal quarter. For the fourth quarter, the Company pays dividends to stockholders of record on the 65th

day after the quarter end. Dividends are payable on the 15th day following the record date. Following a quarter for which the

Company does not report net income attributable to Cal-Maine Foods, Inc., the Company will not pay a dividend for a

subsequent profitable quarter until the Company is profitable on a cumulative basis computed from the date of the most recent

quarter for which a dividend was paid. The dividend policy is subject to periodic review by the Board.

Revenue Recognition

The Company recognizes revenue through the sale of its products to customers through retail, foodservice and other distribution

channels. The majority of the Company’s revenue is derived from agreements or contracts with customers based upon the

customer ordering its products with a single performance obligation of delivering the product. The Company believes the

performance obligation is met upon delivery and acceptance of the product by its customers, which generally occurs upon

shipment or delivery to a customer based on the terms of the sale. Costs paid to third party brokers to obtain agreements are

expensed as the Company’s agreements are generally less than one year.

Revenues are recognized in an amount that reflects the net consideration we expect to receive in exchange for delivery of the

products. The Company periodically offers sales incentives or other programs such as rebates, discounts, coupons, volume-

based incentives, guaranteed sales and other programs. The Company records an estimated allowance for costs associated with

these programs, which is recorded as a reduction in revenue at the time of sale using historical trends and projected redemption

rates of each program. The Company regularly reviews these estimates and any difference between the estimated costs and

actual realization of these programs would be recognized in the subsequent period.

Business Combinations

The Company applies the acquisition method of accounting, which requires that once control is obtained, all the assets acquired

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

the date of acquisition. The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as

goodwill.

We use various models and methods to determine the fair values of identifiable assets and liabilities, such as top-down and

bottom-up approach for inventory, cost method and market approach for property, and relief-from-royalty and multi-period

excess earnings to value intangibles. Significant estimates in valuing certain intangible assets include, but are not limited to, the

amount and timing of future cash flows, growth rates, discount rates and useful lives.

New Accounting Pronouncements and Policies

In December 2023, the Financial Accounting Standards Board (“FASB ”) issued Accounting Standards Update (“ASU”) 2023-

09,

Income Taxes (Topic 740) – Improvements to Income Tax Disclosures

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

disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The ASU is

intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual

periods beginning after December 15, 2024. The Company is currently evaluating the impact of ASU 2023-09 on its

consolidated financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03,

Income Statement

—

Reporting Comprehensive Income

—

Expense

Disaggregation Disclosures (Subtopic 220-40)

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

expenses, primarily through additional disaggregation of income statement expenses. Additionally, in January 2025, the FASB

further clarified the effective date of ASU 2024-03 with the issuance of ASU 2025-01. ASU 2024-03 is effective for annual

periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15,

2027. Early adoption is permitted and may be applied either on a prospective or retrospective basis. The Company is currently

evaluating the impact of ASU 2024-03 on its consolidated financial statement disclosures.

There are no other new accounting pronouncements issued or effective during the fiscal year that had or are expected to have a

material impact on our consolidated financial statements.