CAL-MAINE FOODS INCCALM
CAL-MAINE FOODS INC Fair Value Disclosure
Note 4 - Fair Value Measures
The Company is required to categorize both financial and nonfinancial assets and liabilities based on the following fair value
hierarchy. The fair value of an asset is the price at which the asset could be sold in an orderly transaction between unrelated,
knowledgeable, and willing parties able to engage in the transaction. A liability’s fair value is defined as the amount that would
be paid to transfer the liability to a new obligor in a transaction between such parties, not the amount that would be paid to settle
the liability with the creditor.
●
Level 1
●
Level 2
directly or indirectly, including:
o
Quoted prices for similar assets or liabilities in active markets
o
Quoted prices for identical or similar assets in non-active markets
o
Inputs other than quoted prices that are observable for the asset or liability
o
Inputs derived principally from or corroborated by other observable market data
●
Level 3
to the fair value of the assets or liabilities
The disclosure of fair value of certain financial assets and liabilities recorded at cost are as follows:
Cash and cash equivalents, accounts receivable, and accounts payable:
short maturity of these instruments.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
In accordance with the fair value hierarchy described above, the following table shows the fair value of our financial assets and
liabilities that are required to be measured at fair value on a recurring basis as of May 31, 2025 and June 1, 2024 (in thousands):
May 31, 2025
Level 1
Level 2
Level 3
Balance
Investment securities available-for-sale
Municipal bonds
$
—
$
21,698
$
—
$
21,698
Commercial paper
—
90,830
—
90,830
Corporate bonds
—
431,508
—
431,508
Certificates of deposits
—
5,194
—
5,194
US government and agency obligations
—
240,395
—
240,395
Treasury bills
—
103,083
—
103,083
Total investment securities available-for-sale
measured at fair value
$
—
$
892,708
$
—
$
892,708
Liabilities
Contingent consideration
—
—
21,500
21,500
Total liabilities measured at fair value
$
—
$
—
$
21,500
$
21,500
June 1, 2024
Level 1
Level 2
Level 3
Balance
Investment securities available-for-sale
Municipal bonds
$
—
$
4,059
$
—
$
4,059
Commercial paper
—
137,735
—
137,735
Corporate bonds
—
232,592
—
232,592
Certificates of deposits
—
3,491
—
3,491
US government and agency obligations
—
154,269
—
154,269
Asset backed securities
—
3,124
—
3,124
Treasury bills
—
39,229
—
39,229
Total investment securities available-for-sale
measured at fair value
$
—
$
574,499
$
—
$
574,499
Liabilities
Contingent consideration
—
—
6,500
6,500
Total liabilities measured at fair value
$
—
$
—
$
6,500
$
6,500
Investment securities available-for-sale are all classified as Level 2 and consist of securities with maturities of three months or
longer when purchased. Observable inputs for these securities are yields, credit risks, default rates, and volatility.
Contingent consideration classified as Level 3 consists of the potential obligation to pay an earnout to the sellers of Fassio
contingent on the acquired business meeting certain return on profitability milestones over a
three-year
the date of the acquisition. The fair value of the contingent consideration is estimated using a discounted cash flow model. Key
assumptions and unobservable inputs that require significant judgement used in the estimate include weighted average cost of
capital, egg prices, projected revenue and expenses over the period for which the contingent consideration is measured, and the
probability assessments with respect to the likelihood of achieving the forecasted projections. See further discussion in
The following table shows the beginning and ending balances in fair value of the contingent consideration:
Fassio Contingent Consideration
Balance, June 1, 2024
$
6,500
Fair value adjustments
15,000
Balance, May 31, 2025
$
21,500
Adjustments to the fair value of contingent consideration are recorded within selling, general and administrative expenses in the
consolidated statements of income.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jul 22, 2025 | Showing above |
| 2024 | Jul 23, 2024 | |
| 2023 | Jul 25, 2023 | |
| 2022 | Jul 19, 2022 | |
| 2021 | Jul 19, 2021 | |
| 2020 | Jul 20, 2020 | |
| 2019 | Jul 22, 2019 | |
| 2018 | Jul 23, 2018 | |
| 2017 | Jul 24, 2017 | |
| 2016 | Jul 18, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.