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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(mark one)

For the quarterly period ended February 26, 2005

OR

For the transition period from ____________ to ____________

Commission file number: 000-04892

CAL-MAINE FOODS, INC.
(Exact name of registrant as specified in its charter)

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        

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 under the Exchange Act).

Yes           No    X  

        Number of shares outstanding of each of the issuer’s classes of common stock (exclusive of treasury shares), as of April 1, 2005.

CAL-MAINE FOODS, INC. AND SUBSIDIARIES

INDEX

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

See notes to condensed consolidated financial statements.

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CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
UNAUDITED

See notes to condensed consolidated financial statements.

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CAL-MAINE FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
UNAUDITED

See notes to condensed consolidated financial statements.

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CAL-MAINE FOODS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(in thousands, except share amounts)
February 26, 2005

        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 management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended February 26, 2005 are not necessarily indicative of the results that may be expected for the year ending May 28, 2005.

        The balance sheet at May 29, 2004 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 Cal-Maine Foods, Inc.‘s annual report on Form 10-K for the fiscal year ended May 29, 2004.

Stock Split

        On April 14, 2004, the shareholders of the Company approved amendments to the Certificate of Incorporation to facilitate a two-for-one stock split approved by the Board of Directors on January 26, 2004. The split was effected in the form of a stock dividend paid on April 23, 2004 to stockholders of record on April 14, 2004. All share and per share data in the financial statements have been adjusted to reflect this stock split.

Stock Based Compensation

We account for stock option grants in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees.”

The following table illustrates the effect on net income (loss) and earnings (loss) per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock- Based Compensation,” which require compensation cost for all stock-based employee compensation plans to be recognized based on the use of a fair value method (in thousands except per share amounts):

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The fair value of our stock options were estimated as of the date of the grant using a Black-Scholes option pricing model with the following weighted-average assumptions for the prior year grants: risk-free interest rate of 3.00%; a dividend yield of 1.00%; expected volatility of 39.2%; and a weighted average expected life of the options of 5 years.

        Inventories consisted of the following:

        Stock Repurchase Program 

On August 3, 2004, our Board of Directors approved a repurchase program whereby we may purchase up to 2,000,000 shares of our common stock. The repurchase program will expire on July 31, 2005. We do not have any other stock repurchase programs.

The following table sets forth the share repurchase activity for the third quarter ended February 26, 2005:  

        We are defendants in certain legal actions. It is our opinion, based on advice of legal counsel, that the outcome of these actions will not have a material adverse effect on our consolidated financial position or operations. Please refer to Part II, Item 1, of this report for a description of certain pending legal proceedings.

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        Basic earnings (loss) per share are based on the weighted average common shares outstanding. Diluted earnings per share include any dilutive effects of options and warrants. Options and warrants representing 107,725 shares were excluded from the calculation of diluted earnings per share for the nine month period ended February 26, 2005 because of the net loss for the period.

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ITEM 2. MANAGEMENTS’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        This report contains numerous forward-looking statements relating to our shell egg business, including estimated production data, expected operating schedules, expected capital costs and other operating data. Such forward-looking statements are identified by the use of words such as “believes,” “intends,” “expects,” “hopes,” “may,” “should,” “plan,” “projected,” “contemplates,” “anticipates” or similar words. Actual production, operating schedules, results of operations and other projections and estimates could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include (i) the risk factors set forth under Item 1 of our Annual Report on Form 10-K for the fiscal year ended May 29, 2004, (ii) the risks and hazards inherent in the shell egg business (including disease, pests, and weather conditions), (iii) changes in the market prices of shell eggs, and (iv) changes that could result from our future acquisition of new flocks or businesses. Readers are cautioned not to put undue reliance on forward-looking statements. We disclaim any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.

OVERVIEW

        Cal-Maine Foods, Inc. (“we”, “us”, “our”, or the “Company”) is primarily engaged in the production, grading, packaging, marketing and distribution of fresh shell eggs. Our fiscal year end is the Saturday closest to May 31.

        Our operations are fully integrated. At our facilities we hatch chicks, grow and maintain flocks of pullets (young female chickens, usually under 20 weeks of age), layers (mature female chickens) and breeders (male or female birds used to produce fertile eggs to be hatched for egg production flocks), manufacture feed, and produce, process and distribute shell eggs. We are the largest producer and marketer of shell eggs in the United States. We market the majority of our shell eggs in 28 states, primarily in the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States. We market our shell eggs through our extensive distribution network to a diverse group of customers, including national and regional grocery store chains, club stores, foodservice distributors and egg product manufacturers.

        We currently produce approximately 75% of the total number of shell eggs sold by us, with approximately 13% of such total shell egg production being through the use of contract producers. Contract producers operate under agreements with us for the use of their facilities in the production of shell eggs by layers owned by us. We own the shell eggs produced under these arrangements. Approximately 25% of the total number of shell eggs sold by us is purchased from outside producers for resale, as needed, by us.

        Our operating income or loss is significantly affected by wholesale shell egg market prices, which can fluctuate widely and are outside of our control. Retail sales of shell eggs are generally 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.

        Our cost of production is materially affected by feed costs, which average about 55% of our total shell egg production cost. Changes in feed costs result in changes in 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 we have little or no control.

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RESULTS OF OPERATIONS

        The following table sets forth, for the periods indicated selected items from our Condensed Consolidated Statements of Operations expressed as a percentage of net sales.

        NET SALES

        Approximately 97% of our net sales consist of shell egg sales and 3% of our net sales include incidental feed sales to outside egg producers. Net sales for the third quarter of fiscal 2005 were $101.0 million, a decrease of $64.7 million, or 39.0% as compared to net sales of $165.7 million for the third quarter of fiscal 2004. The decrease was due to decreases in total dozens of shell eggs sold and shell egg selling prices, as compared with the same period in fiscal 2004. Dozens of shell eggs sold for the current third quarter were 144.4 million dozen, a decrease of 10.3 million dozen, or 6.7% as compared with fiscal 2004. Our production and processing facilities accounted for most of the decrease in dozens of shell eggs sold, with additional reductions in dozens purchased from outside (non-contract) shell egg producers making up the balance. Purchases of shell eggs from outside producers averages about 25% of our total dozens sold. Consumer demand was weaker than last year and shell egg supply was higher, both of which market factors resulted in lower shell egg selling prices during the current third quarter as compared to the fiscal 2004 third quarter. Our net average selling price per dozen of shell eggs for the third quarter of fiscal 2005 was $0.673, compared to $1.035 for the third quarter of fiscal 2004, a decrease of 35.0%. Our net average selling price is the blended price for all sizes and grades of shell eggs, including non-graded shell egg sales, breaking stock and undergrades.

        Net sales for the thirty-nine week period ended February 26, 2005 were $293.8 million, a decrease of $136.2 million, or 31.7%, as compared to net sales of $430.0 million for the thirty-nine week period ended February 28, 2004.Total dozens of shell eggs sold and net shell egg selling prices in the current thirty-nine week period decreased as compared to the same period in fiscal 2004. Dozens of shell eggs sold for the current thirty-nine week period were 438.4 million as compared to 455.3 million for the same period in fiscal 2004, a decrease of 3.7%. For the current thirty-nine week period, our net average selling price per dozen of shell eggs was $.645, as compared to $.911 per dozen for the same period in fiscal 2004, a decrease of 29.2%.

        COST OF SALES

        Cost of sales consists of costs directly related to production and processing of shell eggs, including feed costs, and purchases of shell eggs from outside egg producers. Cost of sales for the third quarter ended February 26, 2005 was $83.9 million, a decrease of $24.0 million, or 22.2%, as compared to cost of sales of $107.9 million for the third quarter of fiscal 2004. The decrease is due to lower number of dozens produced at company facilities, lower cost of purchases from outside egg producers and lower cost of feed ingredients. Dozens of shell eggs sold during the third quarter ended February 26, 2005 decreased 6.7%. As discussed above, lower company owned production accounted for most of the reduced number of dozens sold. The decrease in the cost of the shell eggs purchased from outside producers was due to weaker shell egg market conditions. Feed cost for the third quarter ended February 26, 2005 was $.202 per dozen of shell eggs, compared to the third quarter of fiscal 2004 cost per dozen of shell eggs of $.244, a decrease of 17.2%. The lower shell egg selling price was the primary reason for the decrease in gross profit from 34.9% of net sales for the quarter ended February 28, 2004 to 16.9% of net sales for the third quarter ended February 26, 2005.

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        Cost of sales for the thirty-nine week period ended February 26, 2005 was $261.0 million, a decrease of $33.7 million, or 11.4%, as compared to cost of sales of $294.7 million for the thirty-nine week period ended February 28, 2004. The decrease in cost of sales is the net result of a lower number of dozens produced at company owned facilities and lower outside shell egg purchase cost, offset by an increase in the cost of feed ingredients. Feed cost for the current thirty-nine week period was $.247 per dozen of shell eggs, as compared to $.225 per dozen for the same period in the prior fiscal year, an increase of 9.8%. The decrease in shell egg selling prices was the primary reason for the decrease in gross profit from 31.4% of net sales for last year’s thirty-nine week period as compared to a gross profit of 11.1% of net sales for the current thirty-nine week period.

        SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

        Selling, general and administrative expenses include costs of marketing, distribution, accounting and corporate overhead. Selling, general and administrative expense for the third quarter ended February 26, 2005 was $12.4 million, a decrease of $8.9 million, as compared to $21.3 million for the third quarter of fiscal 2004. In the fiscal 2004 third quarter, we recorded an expense for stock compensation of $9.5 million in connection with certain stock options and the related tandem stock appreciation rights. Excluding the $9.5 million expense for stock options, the current third quarter comparable increase for selling, general and administrative expense was $600,000, mostly due to increases in cost of insurance. Property and liability insurance costs have increased almost $500,000 and employee health insurance costs have increased $100,000. On a cost per dozen sold basis, excluding the fiscal 2004 $9.5 million stock option expense, selling, general and administrative expense was $.086 per dozen for the third quarter of fiscal 2005 as compared to $.076 for the third quarter of fiscal 2004. As a percent of net sales, selling, general and administrative expense decreased slightly from 12.9% for the third quarter of fiscal 2004 to 12.3% for the third quarter of fiscal 2005.

        Selling, general and administrative expenses for the thirty-nine week period ended February 26, 2005 was $36.5 million, a decrease of $21.3 million, as compared to $57.8 million for the thirty-nine week period ended February 28, 2004. In the fiscal 2004 thirty-nine week period, we recorded an expense of $24.1 million for stock compensation due to the increase in the market price of our outstanding common stock from $5.24 at May 31, 2003 to $37.48 at February 28, 2004, as compared to a benefit of $747,000 for the current thirty-nine week period ended February 26, 2005. The benefit is due to the decrease in the market price of our outstanding common stock from $13.80 at May 29, 2004 to $9.88 at February 26, 2005. Excluding the fiscal 2004 $24.1 million expense stock option expense, the current thirty-nine week period increase for selling, general and administrative expense was $2.8 million, or 4.87%. Of the $2.8 million increase, approximately $1.9 million was for increases in payroll and payroll related expenses, $526,000 for increases in property and liability insurance expenses, and $258,000 for increases in employee health insurance cost. On a cost per dozen sold basis, excluding the $24.1 million stock option expense in fiscal 2004, selling, general and administrative expense was $.083 for the current thirty-nine week period as compared to $.074 for the comparable period in fiscal 2004. As a percent of net sales, selling, general and administrative expense has decreased from 13.4% for the thirty-nine week period fiscal 2004 to 12.4% for the thirty-nine week period of fiscal 2005.

        OPERATING INCOME

        As the result of the above, operating income was $4.7 million for the third quarter ended February 26, 2005, as compared to operating income of $36.4 million for the third quarter of fiscal 2004. Operating income was 4.60% of net sales for the current fiscal third quarter, compared to operating income of 22.0% of net sales for the third quarter in fiscal 2004.

        For the thirty-nine week period ended February 26, 2005, operating loss was $3.7 million, as compared to operating income of $77.5 million for the thirty-nine week period ended February 28, 2004. Operating loss was 1.3% of net sales for the current thirty-nine week period as compared to operating income of 18.0% of net sales in the same thirty-nine week period in fiscal 2004.

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        OTHER INCOME / EXPENSE

        Other income or expense consists of costs or income not directly charged to, or related to, operations such as interest expense and equity from affiliates.

        Other expense for the third quarter ended February 26, 2005 was $544,000, a decrease of $1.4 million, as compared to other income of $856,000 for the third quarter of fiscal 2004 In the current third quarter, net interest expense decreased $4,000 and other income decreased $1.4 million. Net interest expense decreased as the result of reduced long-term debt balances and receipt of interest income from investments. In the fiscal 2004 third quarter, we received $944,000 interest income as part of an income tax refund. Other income for the current third quarter decreased from equity in losses of affiliates. As a percent of net sales, other expense was 0.5% for the current third quarter, as compared to other income of 0.5% for the same period in fiscal 2004.

        For the thirty-nine week period ended February 26, 2005, other expense was $1.9 million, an increase of $1.5 million as compared to $459,000 for the same thirty-nine week period in fiscal 2004. For the current period, net interest expense decreased $1.8 million and other income decreased $3.3 million. Net interest expense decreased as the result of reduced long-term debt balances and receipt of interest income from investments. Other income for the current thirty-nine week period decreased from equity in losses of affiliates. As a percent of net sales, other expense was 0.6% for the current thirty-nine week period, as compared to 0.1% for the same thirty-nine week period in fiscal 2004.

        INCOME TAXES

        As a result of the above, our pre-tax income was $4.1 million for the third quarter ended February 26, 2005, as compared to pre-tax income of $37.3 million for the third quarter of fiscal 2004. For the current third quarter, an income tax expense of $1.7 million was recorded with an effective tax rate of 41.4%, as compared to an income tax expense of $13.4 million with an effective rate of 36.0% for last year’s third quarter. The effective tax rate for each period differs from the statutory federal income tax rate due to state income taxes and due to the relationship of certain non-deducible expenses to our income (loss) before income taxes.

        For the thirty-nine week period ended February 26, 2005, our pre-tax loss was $5.7 million, as compared to pre-tax income of $77.0 million for the thirty-nine week period ended February 28, 2004. For the current thirty-nine week period, an income tax benefit of $1.9 million was recorded with an effective tax rate of 32.9%, as compared to an income tax expense of $27.8 million with an effective tax rate of 36.0% for the same thirty-nine week period in fiscal 2004. The effective tax rate for each period differs from the statutory federal income tax rate due to state income taxes and due to the relationship of certain non-deducible expenses to our income (loss) before income taxes.

        NET INCOME

        Net income for the third quarter ended February 26, 2005 was $2.4 million, or $0.10 per basic and diluted share, as compared to net income of $23.9 million, or $.99 per basic share and $.98 diluted share, for the third quarter of fiscal 2004.

        For the thirty-nine week period ended February 26, 2005, net loss was $3.8 million, or $0.16 per basic and diluted share, as compared to net income of $49.2 million, or $2.07 per basic share and $2.03 per diluted share, for the thirty-nine week period ended February 28, 2004.

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        CAPITAL RESOURCES AND LIQUIDITY

        Our working capital at February 26, 2005 was $80.9 million, as compared to $92.9 million at May 29, 2004. Our current ratio was 2.49 at February 26, 2005, as compared to 2.58 at May 29, 2004. Our need for working capital generally is highest in the last and first fiscal quarters ending in May and August, respectively, when egg prices are normally at seasonal lows. Seasonal borrowing needs frequently are higher during these quarters than during other fiscal quarters. We have a $35.0 million line of credit with three banks, $2.1 million of which was utilized as a standby letter of credit at February 26, 2005. Our long-term debt at February 26, 2005, including current maturities, amounted to $81.7 million, as compared to $90.0 million at May 29, 2004.

        In the thirty-nine week period ended February 26, 2005, $5.0 million in net cash was provided by operating activities. This compares to $66.7 million of net cash for the thirty-nine week period ended February 28, 2004. In the thirty-nine weeks ended February 26, 2005, $34.2 million was provided from the maturity of short-term investments, $424,000 was provided from notes receivable and from investments, $505,000 was provided from disposal of property, plant and equipment and $8.2 million was used for purchases of property, plant and equipment. In addition, $2.6 million was provided from the issuance of common stock from the treasury, net cash of $7.6 million was used in the repurchase of common stock for the treasury, $892,000 was used for payments of dividends on the common stock and $8.4 million was used for principal payments on long-term debt. The net result of these activities was an increase in cash of $17.7 million since May 29, 2004.

        In the thirty-nine week period ended February 28, 2004, $5.6 million was used for purchases of property, plant and equipment, $461,000 was received from sales of property, plant and equipment, $2.0 million was used for construction projects and net cash of $1.5 million was used to increase notes receivable and investments. In addition, $8.1 million was received from the exercise of stock options, and $445,000 was used for payments of dividends on our common stock. Borrowings of $5.0 million were received in additional long-term debt and $20.0 million was received in restructuring and re-pricing certain other long-term debt. Payments of $41.8 million were made on long-term debt. The net result was an increase in cash of approximately $49.0 million.

        Substantially all trade receivables and inventories collateralize our line of credit and property, plant and equipment collateralize our long-term debt under our loan agreements with our lenders. Unless otherwise approved by our lenders, we are required by provisions of these loan agreements to (1) maintain minimum levels of working capital (ratio of not less than 1.25 to 1) and net worth (minimum of $90.0 million tangible net worth); (2) limit dividends to an aggregate amount not to exceed $500,000 per quarter (allowed if no default), capital expenditures (not to exceed depreciation for the same four fiscal quarters), long-term borrowings (total funded debt to total capitalization not to exceed 55%); and (3) maintain various current and cash-flow coverage ratios (1.25 to 1), among other restrictions. At February 26, 2005, we were in compliance with the provisions of all loan agreements. Under certain of the loan agreements, the lenders have the option to require the prepayment of any outstanding borrowings in the event we undergo a change in control.

        We currently have a $2.2 million deferred tax liability due to a subsidiary’s change from a cash basis to an accrual basis taxpayer on May 29, 1988. The Taxpayer Relief Act of 1997 provides that this liability is payable ratably over the 20 years beginning in fiscal 1999. However, such taxes will be due in their entirety in the first fiscal year in which there is a change in ownership control so that we no longer qualify as a “family farming corporation.” We are currently making annual payments of approximately $150,000 related to this liability. However, while these current payments reduce cash balances, payment of the $2.2 million deferred tax liability would not impact our consolidated statement of operations or stockholders’ equity, as these taxes have been accrued and are reflected on our consolidated balance sheet.

        Impact of Recently Issued Accounting Standards.

        In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4.” SFAS No. 151 amends Accounting Research Bulletin (“ARB”) No. 43, Chapter 4, to clarify that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current-period charges. In addition, SFAS No. 151 requires that allocation of fixed production overhead to inventory be based on the normal capacity of the production facilities. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company is currently assessing the impact that SFAS No. 151 will have on the results of operations, financial position or cash flows.

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        In December 2004, the FASB issued SFAS 123(R), “Share Based Payment”. Statement 123(R) is effective for public companies at the beginning of the first interim or annual period after June 15, 2005. This statement eliminates the ability to account for share-based compensation using the intrinsic value-based method under APB Opinion No. 25, “Accounting for Stock Issued to Employees.” Statement 123(R) will require the Company to calculate equity-based compensation expense for stock options and employee stock purchase plan rights granted to employees based on the fair value of the equity instrument at the time of grant. Currently, the Company discloses the pro forma net income (loss) and the related pro forma income (loss) per share information in accordance with SFAS 123 and SFAS 148, “Accounting for Stock-Based Compensation Costs-Transition and Disclosure.” The Company has not evaluated the impact that Statement 123(R) will have on its financial position and results of operations.

         Critical Accounting Policies. We suggest that our Summary of Significant Accounting Policies, as described in Note 1 of the Notes to Consolidated Financial Statements included in Cal-Maine Foods, Inc. and Subsidiaries annual report on Form10-K for the fiscal year ended May 29, 2004, be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations. There have been no changes made to the critical accounting policies identified in our Annual Report on Form 10-K for the year ended May 29, 2004.

ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

        There have been no material changes in the market risk reported in the Company’s Annual Report on Form 10-K for the fiscal year ended May 29, 2004.

ITEM 4. CONTROLS AND PROCEDURES

        Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in our periodic reports filed with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods required. Our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective based on their evaluation of such controls and procedures as of the end of the period covered by this report. There were no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during our last fiscal quarter that has materially affected or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        Except as noted below, there have been no new matters or changes to matters identified in our Annual Report on Form 10-K for the year ended May 29, 2004.

        Going Private Litigation

        On August 18, 2003, we announced that our Board of Directors had approved a 2,500 to 1 reverse stock split, subject to stockholder approval, in order to effect a going private transaction. Multiple suits were filed during the fall season of 2003 in the Chancery Court of New Castle County, Delaware against us, seeking to enjoin the going private transaction.

        The lawsuits were consolidated by the Chancery Court but were dismissed, prior to any discovery or trial, as moot cases inasmuch as we elected not to proceed with the going private transaction.

        The Plaintiff’s attorneys petitioned the Delaware court for attorneys’ fees and were awarded $831,600 by the Chancellor. We appealed the award of fees to the Supreme Court of Delaware. The Supreme Court affirmed the lower court and the judgment was paid, including accrued interest, in September 2004.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 6. EXHIBITS

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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.

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