**UNITEDSTATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington****, D.C. 20549**

**FORM 10-Q**

**(Mark one)**

| þ | **QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(d) OF 			THE SECURITIES EXCHANGE ACT OF 1934** |
|--------|-------------------------------------------------------------------------------------------------|

 

|                                                 |
|------------------------------------------------------|
| **For the quarterly period ended November 28, 2009** |
| **or**                                               |

 

| o | **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 333-115164**

 **U.S.****PREMIUM BEEF, LLC***(Exact name of registrant as specified in its charter)*

| **DELAWARE**                                                        |   | **20-1576986**                            |
|---------------------------------------------------------------------|--------|-------------------------------------------|
| **(State  or other jurisdiction of incorporation or organization)** |   | **(I.R.S.  Employer Identification No.)** |

**12200  North Ambassador Drive****Kansas  City****, MO 64163******(Addressof principal executive offices) 

**Telephone:(866) 877-2525**(Registrant’stelephone number, including area code) 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes þ Noo

 Indicate by checkmark whether the registrant has submitted electronically and posted on itscorporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of thischapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files).   Yes o No o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer,a non-accelerated filer or a small reporting company.  See definition of“accelerated filer”, “large accelerated filer” and “smaller reporting company”in Rule 12b-2 of the Exchange Act. (Check one):

| Large Accelerated Filer o   | Accelerated Filer o  | Non-Accelerated Filer		þ | Small Reporting Company		o |
|--------------------------------------------|--------------------------------|-------------------------------|---------------------------------|

Indicateby check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes o Noþ

The registrant’s unitsare not traded on an exchange or in any public market.  As of December 26, 2009,there were 735,385 Class A units and 755,385 Class B unitsoutstanding.     

 

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|                  | TABLE OF CONTENTS

                                                                     |         |
|-----------------------|----------------------------------------------------------------------------------------------|--------------|
| PART I.               | FINANCIAL INFORMATION                                                                        | **Page No.** |
|                  |                                                                                         |         |
| Item 1.               | Financial Statements.                                                                        | 1            |
|                  |                                                                                         |         |
| Item 2.               | Management’s  Discussion and Analysis of Financial Condition and Results of Operations. | 12           |
|                  |                                                                                         |         |
| Item 3.               | Quantitative and Qualitative Disclosures About Market Risk.                                  | 17           |
|                  |                                                                                         |         |
| Item 4T.              | Controls and Procedures.                                                                     | 18           |
|                  |                                                                                         |         |
|                  |                                                                                         |         |
| **PART II.**          | **OTHER INFORMATION**                                                                        |         |
|                  |                                                                                         |         |
| Item 1.               | Legal Proceedings.                                                                           | 19           |
|                  |                                                                                         |         |
|    Item 1A. | Risk Factors.                                                                                | 19           |
|                  |                                                                                         |         |
| Item 2.               | Unregistered Sales of Equity Securities and Use of Proceeds.                                 | 19           |
|                  |                                                                                         |         |
| Item 3.               | Defaults Upon Senior Securities.                                                             | 19           |
|                  |                                                                                         |         |
| Item 4.               | Submission of Matters to a Vote of Security Holders.                                         | 19           |
|                  |                                                                                         |         |
| Item 5.               | Other Information.                                                                           | 20           |
|                  |                                                                                         |         |
| Item 6.               | Exhibits.                                                                          | 20           |
|                  |                                                                                         |         |
|                  | Signatures.                                                                                  | 22           |

 

 

Unless the context indicates orotherwise requires, the terms “the Company”, “we”, “our” and “us” refer to U.S.Premium Beef, LLC (formerly known as U.S. Premium Beef, Ltd.) and itsconsolidated subsidiaries. As used in this report, the terms “NBP” and“National Beef” refer to National Beef Packing Company, LLC (formerly known asFarmland National Beef Packing Company, LP), a Delaware limited liabilitycompany, and “USPB” refers to U.S. Premium Beef, LLC (formerly known U.S.Premium Beef, Ltd.) prior to consolidation. 

**                                                                                               **

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**PART I.  FINANCIAL INFORMATION**

** **

**Item 1. Financial Statements.**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

| 1 |
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| **U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES**                       |
|--------------------------------------------------------------------------------------------|
| **Consolidated Balance Sheets**                                                  |
| (in thousands, except unit data)                                       |
|                                                                                       |   |   | **November 28,** |   | **August 29,** |
| **Assets**                                                                                 | **2009** |   | **2009** |
|                                                                                       |   |   | **(unaudited)** |   |   |
| Current assets:                                                                       |   |   |   |
|                                                                             | Cash and cash equivalents | $ | 18,864  |   | $ | 18,853  |
|                                                                                       | Accounts receivable, less allowance for returns and doubtful accounts |   |   |   |
|                                                                                       |     | of $1,876 and $1,511, respectively | 164,847  |   | 172,421  |
|                                                                                       | Due from affiliates | 3,596  |   | 4,586  |
|                                                                                       | Other receivables | 9,656  |   | 7,165  |
|                                                                                       | Inventories | 187,320  |   | 175,300  |
|                                                                                       | Other current assets | 16,115  |   | 16,602  |
|                                                                                       |   | Total current assets | 400,398  |   | 394,927  |
| Property, plant, and equipment, at cost                           | 508,784  |   | 499,977  |
|                                                                                       | Less accumulated depreciation | 186,498  |   | 175,103  |
|                                                                                       |   | Net property, plant, and equipment | 322,286  |   | 324,874  |
| Goodwill                                                                                   | 86,251  |   | 86,251  |
| Other intangible assets, net of accumulated amortization     |   |   |   |
|                                                                                       | of $13,117 and $12,123, respectively | 61,310  |   | 62,302  |
| Other assets                                                                          | 6,541  |   | 4,594  |
|                                                                                       |   | Total assets | $ | 876,786  |   | $ | 872,948  |
| **Liabilities and Capital Shares and Equities**                   |   |   |   |
| Current liabilities:                                                                  |   |   |   |
|                                                                                       | Current installments of long-term debt | $ | 28,796  |   | $ | 12,488  |
|                                                                                       | Cattle purchases payable | 68,148  |   | 49,806  |
|                                                                                       | Accounts payable - trade | 70,441  |   | 69,303  |
|                                                                                       | Due to affiliates | 1,112  |   | 1,048  |
|                                                                                       | Accrued compensation and benefits | 30,375  |   | 56,553  |
|                                                                                       | Accrued insurance | 15,775  |   | 16,344  |
|                                                                                       | Other accrued expenses and liabilities | 14,980  |   | 15,160  |
|                                                                                       | Distributions payable | 3,179  |   | 10,942  |
|                                                                                       |   | Total current liabilities | 232,806  |   | 231,644  |
| Long-term liabilities:                                                                |   |   |   |
|                                                                                       | Long-term debt, excluding current installments | 273,292  |   | 293,400  |
|                                                                                       | Other liabilities | 2,302  |   | 2,364  |
|                                                                                       |   | Total long-term liabilities | 275,594  |   | 295,764  |
|                                                                                       |   | Total liabilities | 508,400  |   | 527,408  |
|                                                                                       | Noncontrolling interest in NBP | 207,677  |   | 183,407  |
| Capital shares and equities:                                                |   |   |   |
|                                                                                       | Members' capital, 735,385 Class A units and 755,385 Class B units |   |   |   |
|                                                                                       |   | authorized, issued and outstanding | 109,417  |   | 111,085  |
|                                                                                       | Patronage notices | 48,682  |   | 48,682  |
|                                                                                       | Accumulated other comprehensive income (loss) attributable to USPB | 21  |   | (1) |
|                                                                                       |   | Total capital shares and equities attributable to USPB | 158,120  |   | 159,766  |
|                                                                                       | Noncontrolling interest in Kansas City Steak Company, LLC | 2,589  |   | 2,367  |
|                                                                                       |   | Total Capital Shares and Equities | 160,709  |   | 162,133  |
| Commitments and contingencies                                                    | -  |   | -  |
|                                                                                       |   | Total liabilities, noncontrolling interest in NBP and capital shares and equities | $ | 876,786  |   | $ | 872,948  |
|                                                                                       |   |   |   |   |   |
| See accompanying notes to consolidated financial statements. |   |   |   |

** **

** **

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| **U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES**                                        |
|-------------------------------------------------------------------------------------------------------------|
| **Consolidated Statements of Operations**                                                    |
| (in thousands, except per unit and per unit data)                   |
|                                                                                                        |   |   |   | **13 weeks ended** |   | **13 weeks ended** |
|                                                                                                        |   |   |   | **November 28, 2009** |   | **November 29, 2008** |
|                                                                                                        |   |   |   | **(unaudited)** |   | **(unaudited)** |
|                                                                                              |   |   |   |   |   |   |   |
| Net sales                                                                                              |   | $ | 1,342,610  |   | $ | 1,428,977  |
|                                                                                                        |   |   |   |   |   |   |   |
| Costs and expenses:                                                                               |   |   |   |   |
|                                                                                                        | Cost of sales |   | 1,273,312  |   | 1,404,038  |
|                                                                                                        | Selling, general, and administrative expenses |   | 13,189  |   | 12,886  |
|                                                                                                        | Depreciation and amortization |   | 12,758  |   | 9,969  |
|                                                                                                        |   | Total costs and expenses |   | 1,299,259  |   | 1,426,893  |
|                                                                                                        |   |   |   |   |   |   |   |
|                                                                                                        |   |   | Operating income |   | 43,351  |   | 2,084  |
|                                                                                                        |   |   |   |   |   |   |   |
| Other income (expense):                                                                           |   |   |   |   |
|                                                                                                        | Interest income |   | 31  |   | 181  |
|                                                                                                        | Interest expense |   | (4,563) |   | (6,852) |
|                                                                                                        | Equity in loss of aLF Ventures, LLC |   | -  |   | (25) |
|                                                                                                        | Other, net |   | 4  |   | 392  |
|                                                                                                        |   |   | Income (loss) before taxes |   | 38,823  |   | (4,220) |
|                                                                                                        |   |   |   |   |   |   |   |
| Income tax expense                                                                                |   | (400) |   | (369) |
|                                                                                                        |   |   | Net income (loss) |   | $ | 38,423  |   | $ | (4,589) |
| Less: Net (income) loss attributable to noncontrolling interest in: |   |   |   |   |
|                                                                                                        | Kansas City Steak Company, LLC |   | (223) |   | (172) |
|                                                                                                        | National Beef Packing Company, LLC |   | (12,735) |   | 1,516  |
| Net income (loss) attributable to U.S. Premium Beef, LLC            |   | $ | 25,465  |   | $ | (3,245) |
|                                                                                                        |   |   |   |   |   |   |   |
| Earnings (loss) per unit:                                                                    |   |   |   |   |
|                                                                                                        | Basic |   |   |   |   |
|                                                                                                        |   | Class A units |   | $ | 9.06  |   | $ | (1.46) |
|                                                                                                        |   | Class B units |   | $ | 24.89  |   | $ | (2.95) |
|                                                                                                        | Diluted |   |   |   |   |
|                                                                                                        |   | Class A units |   | $ | 8.92  |   | $ | (1.46) |
|                                                                                                        |   | Class B units |   | $ | 24.89  |   | $ | (2.95) |
|                                                                                                        |   |   |   |   |   |   |   |
| Outstanding weighted-average Class A and Class B units:                  |   |   |   |   |
|                                                                                                        | Basic |   |   |   |   |
|                                                                                                        |   | Class A units |   | 735,385  |   | 735,385  |
|                                                                                                        |   | Class B units |   | 755,385  |   | 735,385  |
|                                                                                                        | Diluted |   |   |   |   |
|                                                                                                        |   | Class A units |   | 747,471  |   | 735,385  |
|                                                                                                        |   | Class B units |   | 755,385  |   | 735,385  |
|                                                                                                        |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.                  |
|                                                                                                        |   |   |   |   |   |   |   |

** **

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| **U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES**                                        |
|-------------------------------------------------------------------------------------------------------------|
| **Consolidated Statements of Cash Flows**                                               |
| (in thousands)                                                                                         |
|                                                                                                        |   |   |   |   |   | **13 weeks ended** |   | **13 weeks ended** |
|                                                                                                        |   |   |   |   |   | **November 28, 2009** |   | **November 29, 2008** |
|                                                                                                        |   |   |   |   |   | **(unaudited)** |   | **(unaudited)** |
| Cash flows from operating activities:                                                   |   |   |   |   |
|                                                                                                        | Net income (loss) |   | $ | 38,423  |   | $ | (4,589) |
|                                                                                                        | Adjustments to reconcile net income (loss) to net cash provided by |   |   |   |
|                                                                                                        |   | operating activities: |   |   |   |   |
|                                                                                                        |   | Depreciation and amortization |   | 12,758  |   | 9,969  |
|                                                                                                        |   | Gain on disposal of property, plant, and equipment |   | (128) |   | (57) |
|                                                                                                        |   | Changes in assets and liabilities: |   |   |   |   |
|                                                                                                        |   |   | Accounts receivable |   | 7,574  |   | 39,678  |
|                                                                                                        |   |   | Due from affiliates |   | 990  |   | 3,457  |
|                                                                                                        |   |   | Other receivables |   | (2,491) |   | (318) |
|                                                                                                        |   |   | Inventories |   | (12,020) |   | (7,598) |
|                                                                                                        |   |   | Other assets |   | (443) |   | (19,413) |
|                                                                                                        |   |   | Cattle purchases payable |   | 8,713  |   | 3,095  |
|                                                                                                        |   |   | Accounts payable |   | (1,938) |   | (647) |
|                                                                                                        |   |   | Due to affiliates |   | 64  |   | (362) |
|                                                                                                        |   |   | Accrued compensation and benefits |   | (26,178) |   | (29,777) |
|                                                                                                        |   |   | Accrued insurance |   | (569) |   | 827  |
|                                                                                                        |   |   | Other accrued expenses and liabilities |   | (242) |   | 29,348  |
|                                                                                                        |   |   |   | Net cash provided by operating activities |   | 24,513  |   | 23,613  |
| Cash flows from investing activities:                                                   |   |   |   |   |
|                                                                                                   | Capital expenditures, including interest capitalized |   | (9,532) |   | (6,952) |
|                                                                                                        | Proceeds from sale of property, plant, and equipment |   | 484  |   | 360  |
|                                                                                                        |   | Net cash used in investing activities |   | (9,048) |   | (6,592) |
| Cash flows from financing activities:                                                   |   |   |   |   |
|                                                                                                        | Net (payments) receipts under revolving credit lines |   | (34,168) |   | 23,633  |
|                                                                                                        | Borrowings under term note payable |   | 75,000  |   | -  |
|                                                                                                        | Payments of term notes payable |   | (258) |   | (257) |
|                                                                                                        | Repayments of other indebtedness / capital leases |   | (4,576) |   | (1,280) |
|                                                                                                        | Purchase and cancellation of senior notes |   | (39,798) |   | (2,340) |
|                                                                                                        | Cash paid for financing costs |   | (1,018) |   | -  |
|                                                                                                        | Change in overdraft balances |   | 12,705  |   | 7,393  |
|                                                                                                        | Distributions to noncontrolling interests in National Beef Packing Company, LLC | (11,179) |   | (19,406) |
|                                                                                                        | Member distributions |   | (12,184) |   | -  |
|                                                                                                        |   |   |   | Net cash (used in) provided by financing activities | (15,476) |   | 7,743  |
|                                                                                                        | Effect of exchange rate changes on cash |   | 22  |   | (67) |
|                                                                                                        |   |   |   | Net increase in cash |   | 11  |   | 24,697  |
| Cash and cash equivalents at beginning of the period                |   | 18,853  |   | 77,399  |
| Cash and cash equivalents at end of the period                      |   | $ | 18,864  |   | $ | 102,096  |
| Supplemental cash disclosures:                                                                    |   |   |   |   |
|                                                                                                        | Cash paid during the period for interest |   | $ | 3,552  |   | $ | 2,723  |
|                                                                                                        | Cash paid during the period for taxes, net of refunds |   | $ | 79  |   | $ | 136  |
| Supplemental non-cash disclosures of investing and financing activities: |   |   |   |
|                                                                                                        | Assets acquired through capital lease |   | $ | 55  |   | $ | 44  |
|                                                                                                        |   |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.                  |
|                                                                                                        |   |   |   |   |   |   |   |   |

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**U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

** **

**(1)Interim Financial Statements**

**Basisof Presentation**

The accompanying unaudited Consolidated FinancialStatements have been prepared in accordance with U.S. generally acceptedaccounting principles (GAAP) for interim financial information; therefore, theydo not include all of the information and footnotes required by GAAP forcomplete financial statements. In the opinion of management, all adjustmentsconsidered necessary for a fair presentation have been included usingmanagement’s best estimates and judgments where appropriate.  These estimatesand judgments affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements.  The estimates and judgments will also affect the reported amountsfor certain revenues and expenses during the reporting period.  Actual resultscould differ materially from these estimates and judgments.  For furtherinformation, refer to the audited Consolidated Financial Statements and Notesto Consolidated Financial Statements, which are included in the Company’s AnnualReport on Form 10-K on file with the Securities and Exchange Commission (SEC)for the fiscal year ended August 29, 2009.  The results of operations for theinterim periods presented are not necessarily indicative of the results for afull fiscal year.  

NB Finance Corp., a wholly-owned finance subsidiary ofNBP, is a co-issuer on a joint and several basis with NBP of the senior notes,which are NBP’s senior unsecured obligations, ranking equal in right of paymentwith all of its other senior unsecured obligations.  NB Finance Corp. hasnominal assets and conducts no business or operations. There are no significantrestrictions on the ability of subsidiaries to transfer funds to NBP.

**(2)New Accounting Pronouncements**

On June 29, 2009, the Financial Accounting StandardsBoard (FASB) issued *FASB Accounting Standards Codification* (the ASC)under ASC 105-10 as the source of authoritative accounting principlesrecognized by the FASB to be applied by nongovernmental entities.  Thispronouncement was effective for financial statements issued for interim andannual periods ending after September 15, 2009 for most entities.  On theeffective date, all non-SEC accounting and reporting standards was superseded. Rules and interpretive releases of the SEC under the authority of federalsecurities laws are also sources of authoritative U.S. GAAP for SECregistrants.  All other accounting literature is considered non-authoritative. The switch to ASC affects the manner in which companies refer to U.S. GAAP infinancial statements and note disclosures.  The Company adopted this body ofaccounting for the quarterly period ended November 28, 2009, as required, andadoption did not have a material impact on our consolidated financial statementstaken as a whole.  

In December 2007, the FASB issued *BusinessCombinations*under ASC 805.* *This statement requires an acquirer torecognize the assets acquired, the liabilities assumed, and any noncontrollinginterest in the acquiree at the acquisition date to be measured at their fairvalue as of that date.  An acquirer is required to recognize assets orliabilities arising from all other contingencies (contractual contingencies) asof the acquisition date, measured at their acquisition-date fair values, onlyif it is more likely than not that they meet the definition of an asset or aliability in FASB Concepts Statement No. 6, *Elements of FinancialStatements.*  Any acquisition-related costs are to be expensed instead ofcapitalized.  The Company adopted ASC 805 on August 30, 2009 and the impactwill depend on future acquisitions at the time.

Also in December 2007, the FASB issued *NoncontrollingInterests in Consolidated Financial Statements - an Amendment of ARB No. 51*under ASC 810-10-65 which establishes accounting and reporting standards forthe noncontrolling interest (minority interest) in a subsidiary.  ASC810-10-65 requires non-controlling interests held by parties other than theparent in subsidiaries be clearly identified, labeled, and presented in theconsolidated balance sheet within equity, but separate from the parent'sequity.  The Company’s adoption of ASC 810-10-65 as of August 30,2009 changed the presentation of non-controlling interests.

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In February 2008, the FASB issued *Fair Value Measurements*under ASC 820-10 which deferred the effective date of fair value measurementfor nonfinancial assets and nonfinancial liabilities, except for items that arerecognized or disclosed at fair value in an entity’s financial statements on arecurring basis, at least annually.   There was no impact when the Companyadopted for these nonfinancial assets and nonfinancial liabilities on August30, 2009.  These assets and liabilities are measured at fair value on anongoing basis but are reported at fair value only in certaincircumstances. 

**(3)Inventories**

Inventories at November 28, 2009 and August 29, 2009 consistedof the following (in thousands):

|                                                | **November 28, 2009** |         | **August 29, 2009** |
|-----------------------------------------------------|---------------------------------|--------------|-------------------------------|
|                                                |                            |         |                          |   |
| Dressed and boxed meat products |                            | $            | 125,761                  |   | $ | 119,274  |
| Beef by-products                               |                            | 33,798  |                          | 29,756  |
| Supplies and other                        |                            | 27,761  |                          | 26,270  |
|                                                |                            | $            | 187,320                  |   | $ | 175,300  |
|                                                |                            |         |                          |   |

** **

**(4)Comprehensive Income (Loss) Attributable to USPB**

Comprehensive income (loss), which consists of netincome (loss) and foreign currency translation adjustments, was as follows forthe periods indicated (in thousands): 

|                                                                                                       |                                                    |                                  | **13 weeks ended**    |   | **13 weeks ended**    |
|------------------------------------------------------------------------------------------------------------|---------------------------------------------------------|---------------------------------------|---------------------------------|--------|---------------------------------|
|                                                                                                       |                                                    |                                  | **November 28, 2009** |   | **November 29, 2008** |
| Net income (loss)                                                                                |                                                    | $                                     | 38,423                     |   | $                               | (4,589) |
| Other comprehensive loss:                                                                        |                                                    |                                  |                            |   |
|                                                                                             | Foreign currency translation adjustments |                                  | (20)                            |   | (67)                            |
|                                                                                                       |                                          | Comprehensive income (loss) |                            | $      | 38,403                     |   | $ | (4,656) |
| Comprehensive (income) loss attributable to noncontrolling interest in: |                                                    |                                  |                            |   |
|                                                                                                       | Kansas City Steak Company, LLC      |                                  | (223)                           |   | (172)                           |
|                                                                                                       | National Beef Packing Company, LLC  |                                  | (12,735)                        |   | 1,516                      |
| Comprehensive income (loss) attributable to USPB                                  |                                                    | $                                     | 25,445                     |   | $                               | (3,312) |
|                                                                                                       |                                                    |                                  |                            |   |                            |   |

** **

**(5)Noncontrolling Interests In NBP**

At any time after certain dates, the earliest beingJuly 31, 2010, the latest being July 31, 2011, NBP’s Chief Executive Officer,Timothy M. Klein (referred to herein as “Mr. Klein”), and/or NBPCo Holdingshave the right to request that NBP repurchase their interests in NBP, the valueof which is to be determined by a specified formula or a mutually agreedprocess.  If NBP is unable to effect the repurchase within a specified time,the requesting member(s) have the right to cause a sale process to commence. 

TheCompany accounts for changes in the redemption value of the noncontrolling interestsin NBP by accreting the change in value from the date of change through theearliest redemption date of the respective interests in NBP.  At November 28,2009, the value of the noncontrolling interests in NBP was determined to be $253.9million, which was in excess of its carrying value.  After giving effect to theaccretion of value, the carrying value of noncontrolling interests in NBP atNovember 28, 2009 was $207.7 million.  Offsetting the change in the value ofthe noncontrolling interests in NBP is a corresponding change in members’capital.   

GAAPrequires the Company to determine the fair value of the noncontrollinginterests in NBP at the end of each reporting period.  To the extent that thisvalue increases, this change in fair value is accreted over the redemptionperiod as discussed above.  Since the second quarter of fiscal year 2009,management has used certain agreed upon redemption prices that were used in theUnit Redemption Agreements in measuring the fair value of the noncontrollinginterests in NBP held by NBPCo Holdings.  The Unit Redemption Agreement betweenNBP and Mr. Klein and affiliates provides for a formula-based method ofcalculating their Class B interests in NBP which was used in valuing theinterest of Mr. Klein and affiliates at November 28, 2009.

 

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Thetotal value of the noncontrolling interests in NBP at November 28, 2009increased by approximately $13.4 million compared to the value at August 29,2009.  The increase in the value of the noncontrolling interests in NBPrecorded on the balance sheet reflects the increase in the unit valuerepresented by the Unit Redemption Agreements.      

**(6)Contingencies**

National Beef Leathers LLC (NBL), a wholly-ownedsubsidiary of NBP, has been named as a defendant in fourteen currently pendinglawsuits involving NBL’s tannery located in St. Joseph, Missouri.  NBLpurchased certain assets of the tannery from Prime Tanning in March 2009.  Thelawsuits are pending in the Circuit Courts of Buchanan County, Clinton County,Ray County, and DeKalb County, Missouri and in the U.S. District Court for theWestern District of Missouri and were filed between April 22, 2009 and December17, 2009.  The lawsuits allege that Prime and NBL spread wastewater sludgecontaining hexavalent chromium in four counties in northwest Missouri.  Thelawsuits currently include twelve actions filed by individuals and twopurported class actions.  The plaintiffs are seeking an unspecified amount ofdamages for wrongful death, personal injury, pain and suffering, economic damages,punitive damages, diminished property values and medical monitoring.  NBL isvigorously defending the cases.  

NBP is a party to a number of other lawsuits andclaims arising out of the operation of its business.  Management believes theultimate resolution of such matters should not have a material adverse effecton the Company’s financial condition, results of operations or liquidity.

**(7) Fair Value Measurements**

The Company determines fair value utilizing athree-level fair value hierarchy that prioritizes the inputs used to measurefair value.  The fair value hierarchy gives the highest priority to quotedmarket prices (Level 1) and the lowest priority to unobservable inputs (Level3).  The three levels of inputs used to measure fair value are as follows:

-  Level 1 – quoted prices in active markets foridentical assets or liabilities accessible by the reporting entity. 
-  Level 2 – observable inputs other than quoted pricesincluded in Level 1, such as quoted prices for similar assets and liabilities inactive markets; quoted prices for identical or similar assets and liabilitiesin markets that are not active; or other inputs that are observable or can becorroborated by observable market data.
-  Level 3 – unobservable inputs for an asset orliability.  Unobservable inputs should only be used to the extent observableinputs are not available.

The following table details the assets and liabilitiesmeasured at fair value on a recurring basis as of November 28, 2009 and alsothe level within the fair value hierarchy used to measure each category ofassets.

| (in thousands)                                                           |                            |          |                             |   |                       |   |                           |
|-------------------------------------------------------------------------------|---------------------------------|---------------|----------------------------------|--------|----------------------------|--------|--------------------------------|
|                                                                          |                            |          | **Quoted Prices in**   |   |                       |   |                           |
|                                                                          |                            |          | **Active Markets for** |   | **Significant Other** |   | **Significant**                |
|                                                                          |                            |          | **Identical Assets**        |   | **Observable Inputs** |   | **Unobservable**               |
| **Description**                                                               | **November 28, 2009** |          | **(Level 1)**               |   | **(Level 2)**         |   | **Inputs (Level 3)** |
|                                                                          |                            |          |                             |   |                       |   |                           |
| Other current assets -derivatives                              | $                               | 542      |                             | $      | 542                   |   | $                              | -  |   | $ | -  |
|                                                                          |                            |          |                             |   |                       |   |                           |
| Other accrued expenses and liabilities - derivatives | $                               | 4,287    |                             | $      | 3,628                 |   | $                              | 659  |   | $ | -  |
|                                                                          |                            |          |                             |   |                       |   |                           |
| Noncontrolling interests in NBP                                | $                               | 207,677  |                             | $      | -                     |   | $                              | 207,677  |   | $ | -  |
|                                                                          |                            |          |                             |   |                       |   |                           |
|                                                                          |                            |          |                             |   |                       |   |                           |

The Company has not elected the option to report anyof the selected financial assets and liabilities at fair value.

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** **

**(8)Disclosure about Derivative Instruments and Hedging Activities**

As part of NBP’s ongoing operations, NBP is exposed to market risks such as changes in commodity prices.  To manage these risks, NBP may enter into the following derivative transactions pursuant to its established policies:

-  Forward purchase contracts for cattle for use in the beefplants
-  Exchange traded futures contracts for cattle 
-  Exchange traded futures contracts for grain 

While management believes each of these instrumentshelps mitigate various market risks, they are not designated and accounted foras hedges as a result of the extensive recordkeeping requirements associatedwith hedge accounting.  Accordingly, the gains and losses associated with thechange in fair value of the instruments are recorded to net sales and cost of salesin the period of change.  Certain firm commitments for live cattle purchasesand all firm commitments for boxed beef sales are treated as normal purchasesand sales and not recorded at fair value.

NBP enters into certain commodity derivatives, primarilywith a diversified group of highly rated counterparties.  The maximum amount ofloss due to the credit risk of the counterparties, should the counterpartiesfail to perform according to the terms of the contracts, is deemed to beimmaterial as of November 28, 2009 as all derivatives in an asset position areexchange-traded contracts.  The exchange-traded contracts have been enteredinto under a master netting agreement.  None of the derivatives entered intohave credit-related contingent features.  NBP has $6.0 million in cash collateralposted on its derivative liabilities.

Thefollowing table presents the fair values as discussed in Note 7 and otherinformation regarding derivative instruments not designated as hedginginstruments as of November 28, 2009 (in thousands of dollars):

|                     |   | **Derivative Asset**                       |   | **Derivative Liability**                   |
|--------------------------|--------|-------------------------------------------------|--------|-------------------------------------------------|
|                     |   | **As of November 28, 2009** |   | **As of November 28, 2009** |
|                     |   | **Balance**                                     |   |                                            |   | **Balance** |   |   |
|                     |   | **Sheet**                                       |   |                                            |   | **Sheet** |   |   |
|                     |   | **Location**                                    |   | **Fair Value**                             |   | **Location** |   | **Fair Value** |
|                     |   |                                            |   |                                            |   |   |   |   |   |   |   |
|                     |   |                                            |   |                                            |   |   |   |   | Accrued |   |   |
|                     |   | Other current                              |   |                                            |   | expenses and |   |   |
| Commodity contracts | assets |                                            |   | $                                               | 542  |   | other liabilities |   | $ | 4,287  |
|                     | Total  |                                            |   |                                            |   |   | $ | 542  |   |   |   | $ | 4,287  |
|                     |   |                                            |   |                                            |   |   |   |   |   |   |   |

 

Thefollowing table presents the impact of derivative instruments on the ConsolidatedStatement of Operations for the thirteen week period ended November 28, 2009(in thousands of dollars):

 

| **Derivatives Not**            |   | **Location of Gain (Loss)** |   |   | **Amount of Gain** |
|-------------------------------------|--------|--------------------------------------------|--------|--------|------------------------------|
| **Designated as Hedging** |   | **Recognized in Income on** |   |   | **(Loss) Recognized**   |
| **Instruments**                     |   | **Derivatives**                            |   |   | **in Income On**   |
|                                |   |                                       |   |   |                         |   | 13 weeks ended |
|                                |   |                                       |   |   |                         |   | November 28, 2009 |
|                                |   |                                       |   |   |                         |   |   |   |
| Commodity contracts            |   | Net sales                             |   |   | $                            | (6,757) |
| Commodity contracts            |   | Cost of sales                    |   |   | 3,543                   |
|                                | Total  |                                       |   |   |                         | $ | (3,214) |
|                                |   |                                       |   |   |                         |   |   |   |
|                                |   |                                       |   |   |                         |   |   |   |

**(9) Income (Loss) Attributable to USPB Per Unit**

Under the LLC structure, earnings of the Company areto be distributed to unitholders based on their proportionate share ofunderlying equity, and, as a result, income (loss) attributable to USPB perunit (EPU) has been presented in the accompanying Consolidated Statement ofOperations and in the table that follows.

 

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Basic EPU excludesdilution and is computed by first allocating a portion of net income (loss) attributableto USPB to Class A units and the remainder is allocated to Class B units. OnNovember 2, 2009, the Company’s members approved changing the allocation ofincome from 33% to the Class A’s and 67% to the Class B’s to 10% to the ClassA’s and 90% to the Class B’s.  Accordingly, for the thirteen week period endedNovember 28, 2009, the pro-rata share of income earned through November 1, 2009was allocated 33% to the Class A’s and 67% to the Class B’s and the remainderof the income for the current quarter was allocated 10% to the Class A’s and90% to the Class B’s.  Income (loss) allocated to the Class A and Class B unitsis then divided by the weighted-average number of Class A and Class B unitsoutstanding for the period to determine the basic EPU for each respective classof unit.  Class A units and Class B units shall be issued, redeemed, andtransferred together on a one for one basis until the board of directorsdetermines the extent and conditions under which Class A units and Class Bunits may be issued, redeemed, and transferred separately.

Diluted EPU reflects the potential dilution that couldoccur if potential Class A unit purchase rights were exercised or contractualappreciation rights were converted into units.   Upon termination of the CEOemployment agreement and until eighteen months after the termination of the CEOemployment agreement, at the election of the CEO, or upon mutual agreement ofthe Board of the Company and the CEO, the CEO may purchase up to 20,000 Class Aunits, or upon agreement of the CEO and the Board of the Company, the CEO mayconvert the contractual unit appreciation rights to up to 20,000 Class Aunits.  The diluted EPU reflects the circumstances of termination of the CEOemployment agreement, and the election of CEO or agreement by the Board of theCompany and the CEO for the CEO to purchase or convert contractual rights tothe maximum 20,000 Class A units at $55 per unit for the periods as provided inthe CEO employment agreement.  

Diluted EPU was not computed for fiscal year 2010 forClass B units as the CEO exercised his right to purchase 20,000 Class B unitsat an exercise price of $0 per unit on August 4, 2009.   The diluted loss perlinked unit calculation for the thirteen week period ending November 29, 2008in the following table excludes the effect of the 20,000 unit purchase rightsnoted above as the effect of including them would have been anti-dilutive tothe calculation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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| **Income (Loss) Per Unit Calculation**                                   |                         |                         |          |
|----------------------------------------------------------------------------------------------|------------------------------|------------------------------|---------------|
|                                                                                         |                         | **13 weeks ended** |          | **13 weeks ended** |
|                                                                                         |                         | **November 28,**        |          | **November 29,** |
| (In thousands, except unit and per unit data)             | **2009**                     |                         | **2008**      |
|                                                                                         |                         | (unaudited)                  |          | (unaudited) |
| **Basic income (loss) per unit**                                         |                         |                         |          |
| Income (loss) attributable to USPB available to                |                         |                         |          |
|                                                                                         | unitholders (numerator) | $                            | 25,465   |   | $ | (3,245) |
|                                                                                         |                         |                         |          |   |
| Weighted average outstanding units (denominator)                         |                         |                         |          |
|                                                                                         | Class A                 | 735,385                 |          | 735,385  |
|                                                                                         | Class B                 | 755,385                 |          | 735,385  |
|                                                                                         |                         |                         |          |   |
| Per unit amount                                                                    |                         |                         |          |
|                                                                                         | Class A                 | $                            | 9.06     |   | $ | (1.46) |
|                                                                                         | Class B                 | $                            | 24.89    |   | $ | (2.95) |
|                                                                                         |                         |                         |          |   |
| **Diluted income (loss) per unit:**                                      |                         |                         |          |
| Income (loss) attributable to USPB available to                |                         |                         |          |
|                                                                                         | unitholders (numerator) | $                            | 25,465   |   | $ | (3,245) |
|                                                                                         |                         |                         |          |   |
| Weighted average outstanding Class A units                          | 735,385                 |                         | 735,385  |
| Effect of dilutive securities - Class A unit options | 12,086                  |                         | -        |
|                                                                                         | Units (denominator)     | 747,471                 |          | 735,385  |
|                                                                                         |                         |                         |          |   |
| Weighted average outstanding Class B units                          | 755,385                 |                         | 735,385  |
| Effect of dilutive securities - Class B unit options | -                       |                         | -        |
|                                                                                         | Units (denominator)     | 755,385                 |          | 735,385  |
|                                                                                         |                         |                         |          |   |
| Per unit amount                                                                    |                         |                         |          |
|                                                                                         | Class A                 | $                            | 8.92     |   | $ | (1.46) |
|                                                                                         | Class B                 | $                            | 24.89    |   | $ | (2.95) |
|                                                                                         |                         |                         |          |   |

 

**(10)Subsequent Events**

The Company hasevaluated subsequent events for potential disclosure or recognition through January8, 2010, the issuance date of the financial statements.

OnDecember 11, 2009, NBP provided notice of its intent to redeem the remaining$27.1 million aggregate principal amount of its senior notes on January 11,2010. This $27.1 million in senior notes is recorded in long-term debt,excluding current maturities.

OnDecember 7, 2009, the Company entered into the First Amendment to Amended andRestated Credit Agreement and Security Agreement (Agreement).  The Amendmentprovides for the release from CoBank’s security interest of the portion of theNational Beef Packing Company, LLC interests which are owned by U.S. PremiumBeef, LLC and held by CoBank as Collateral that is to be exchanged inconnection with the initial public offering of National Beef, Inc.  TheAmendment also provides for a reduction in the amount available under theTranche B Commitment to $10 million from $13 million.  The Amendment iseffective if the initial public offering of National Beef, Inc. occurs on orbefore February 28, 2010. 

 

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On October 13, 2009, National Beef, Inc. (NBI) filed a  registration statement on Form S-1 with the U.S. Securities and Exchange  Commission regarding a proposed initial public offering (IPO) of shares of  its Class A common stock.  On December 17, 2009, NBI postponed the IPO  for an indefinite period of time. NBP has incurred approximately $2.1 million  in IPO-related costs.  These IPO-related costs have been included in  other receivables and other assets as they were to be reimbursed by NBI at thecompletion of the IPO.  These costs will be expensed if the Company doesnot proceed with the IPO during the second quarter of fiscal year 2010. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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**Item2.  Management’s Discussion and Analysis of Financial Condition and Results ofOperations.**

The following discussion shouldbe read in conjunction with our consolidated financial statements and relatednotes and other financial information appearing elsewhere in this report.

**DisclosureRegarding Forward-Looking Statements**

This report contains“forward-looking statements,” which are subject to a number of risks anduncertainties, many of which are beyond our control.  Forward-lookingstatements are typically identified by the words “believe,” “expect,”“anticipate,” “intend,” “estimate” and similar expressions.  Actual resultscould differ materially from those contemplated by these forward-lookingstatements as a result of many factors, including economic conditions generallyand in our principal markets, the availability and prices of live cattle andcommodities, food safety issues, livestock disease, including theidentification of cattle with Bovine Spongiform Encephalopathy (BSE), productcontamination and recall concerns, competitive practices and consolidation inthe cattle production and processing industries and among our customers,actions of domestic or foreign governments, hedging risk, changes in interestrates and foreign currency exchange rates, trade barriers and exchangecontrols, consumer demand and preferences, the cost of compliance withenvironmental and health laws, loss of key customers, loss of key employees,labor relations, and consolidation among our customers.  

In light of these risks and uncertainties,there can be no assurance that the results and events contemplated by theforward-looking information contained in this report will in fact transpire.Readers are cautioned not to place undue reliance on these forward-lookingstatements. We do not undertake any obligation to update or revise anyforward-looking statements. All subsequent written or oral forward-lookingstatements attributable to us or persons acting on our behalf are expresslyqualified in their entirety by these factors.  Please review Part II. Item 1A,*RiskFactors*, included in this report, for other important factors that couldcause actual results to differ materially from those in any suchforward-looking statements.

**OverallIndustry Outlook**

Although improving global and domestic economicconditions should begin to support beef demand in 2010, the overall UnitedStates (U.S.) employment situation is expected to keep potential gains incheck.  Fed cattle supplies are expected to decline again during calendaryear 2010 as the cattle industry continues to grapple with a slowing butongoing herd liquidation.  The competing protein situation is expected toimprove on projected smaller 2010 pork production and a slight increase inbroiler output.  Absolute price levels for both cattle and beef areexpected to increase modestly in calendar year 2010 from calendar year 2009 ledprimarily by contracting supply.  Any sustained gains in cattle and beefprices will require a much more robust demand than the past twelvemonths.  Global beef and beef by-product demand should continue to postmodest year-on-year gains given the currency spreads to the U.S. dollar andimproved overall economic conditions.

**BeefExport Markets**

Exportmarkets for U.S. beef products remain constrained since the discovery of asingle case of BSE in the State of Washington in December 2003, as well asother isolated cases.  In July 2006, Japan agreed to reopen its market to U.S.beef from cattle aged 20 months and younger.   In April 2008, our Brawleyfacility was suspended from shipping beef to Japan following the discovery of ashort loin which included a portion of a spinal column, a specified riskmaterial, prohibited by Japan.  Our Brawley facility was subsequently clearedto resume shipments to Japan on September 19, 2008.  South Korea announced aprovisional opening of its border to U.S. beef from animals 30 months andyounger in September 2006 but subsequently closed its border again in October2007.  South Korea reopened its border and started inspecting U.S. beef nearthe end of June 2008.  Our Dodge City facility was removed for two days fromthe eligible supplier list to Mexico beginning on December 23, 2008 for analleged issue that arose in September 2008 on a basis which we believe to beuntrue and unfounded.  These constraints and uncertainties have historicallyhad a negative impact on beef margins during the periods in which theyoccurred.

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We cannot presently assess thefull economic impact of the consequences of BSE on the U.S. beef packingindustry or on our operations.  Existing or new import restrictions oradditional regulatory restrictions or disruptions in domestic and foreignconsumer demand for beef could have a material adverse effect on the Company’srevenues and net income.

**RecentEvents**

OnDecember 7, 2009, the Company entered into the First Amendment to Amended andRestated Credit Agreement and Security Agreement (Agreement).  The Amendmentprovides for the release from CoBank’s security interest of the portion of theNational Beef Packing Company, LLC interests which are owned by U.S. PremiumBeef, LLC and held by CoBank as Collateral that is to be exchanged inconnection with the initial public offering of National Beef, Inc.  TheAmendment also provides for a reduction in the amount available under theTranche B Commitment to $10 million from $13 million.  The Amendment iseffective if the initial public offering of National Beef, Inc. occurs on orbefore February 28, 2010.

OnNovember 3, 2009, the United Food and Commercial Workers Union (the UFCWU)filed a petition with the Regional Office of the National Labor Relations Board(the NLRB) in Kansas City, Missouri seeking to represent 2,200 employees whowork at NBP’s Dodge City, Kansas facility.  The UFCWU does not currentlyrepresent any employees at this location.  NBP estimates that there areapproximately 2,700 to 2,800 eligible employees at the Dodge City facility tovote per NLRB standards.  The NLRB has set January 21 and 22, 2010 as the datesfor the election. 

**Resultsof Operations**

***Thirteen weeks ended November 28, 2009 compared to thirteen weeks endedNovember 29, 2008***

*General.*  Netincome for the thirteen weeks ended November 28, 2009 of approximately $38.4million was realized compared to a net loss of approximately $4.6 million forthe thirteen weeks ended November 29, 2008, an improvement of $43.0 million.  Saleswere lower in the thirteen weeks ended November 28, 2009 compared to thethirteen weeks ended November 29, 2008 due in part to an approximate 2.7%decrease in the average volume of cattle processed.  The average sales pricesper head decreased approximately 2.6% during this reporting period as thedemand for beef products during this quarter was not as strong as compared tothe same quarter of last year. 

Total costs and expenses of $1,299.3 million and $1,426.9million for the thirteen weeks ended November 28, 2009 and November 29, 2008,respectively, were 96.8% and 99.9% as a percentage of net sales.  A drop inlive cattle prices of approximately 10.5% was able to offset the drop in thevolume of cattle processed and the drop in average sales prices per head,resulting in improved operating income of approximately $41.3 million for thethirteen week period ended November 28, 2009 as compared to the thirteen weekperiod ended November 29, 2008.

*Net Sales*. Net sales were $1,342.6 million for the thirteen weeks ended November 28, 2009compared to $1,429.0 million for the thirteen weeks ended November 29, 2008, a decreaseof $86.4 million, or 6.0%.  The decrease in net sales principally resulted froman approximate 2.6% decrease in the average sales prices per head during the firstquarter of fiscal year 2010 as the demand for beef products during the thirteenweeks ended November 28, 2009 was not as strong as compared to the thirteenweeks ended November 29, 2008.  Also contributing to the decrease in net saleswas an approximate 2.7% decline in the average volume of cattle processed. Offsetting these decreases was an approximate $15.7 million loss on the mark tomarket adjustment on cattle futures contracts that we entered into during thefirst quarter of fiscal year 2009 to offset the risk of fixed-price salescommitments that did not recur in the first quarter of fiscal year 2010.

*Cost of Sales*. Cost of sales was $1,273.3 million for the thirteen weeks ended November 28,2009 compared to $1,404.0 million for the thirteen weeks ended November 29, 2008,a decrease of approximately $130.7 million, or 9.3%.  The decrease wasprimarily a result of an approximate 10.5% decrease in cattle prices for thecomparable periods.  Also contributing to the decrease was a decline in thevolume of cattle processed of approximately 2.7% during the first quarter of fiscalyear 2010 as compared to the same period of fiscal year 2009.  

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*Selling, General and Administrative Expenses*.  Selling, general and administrative expenses were $13.2million for the thirteen weeks ended November 28, 2009 compared to $12.9million for the thirteen weeks ended November 29, 2008, a slight increase of$0.3 million, or 2.3%.  

*Depreciation and Amortization Expense*.  Depreciation and amortization expenses were $12.8million for the thirteen weeks ended November 28, 2009 compared to $10.0million for the thirteen weeks ended November 29, 2008, an increase of $2.8 million,or 28.0%.  Depreciation expense increased due to fixed assets being placed intoservice, primarily at our Dodge City and Liberal beef plants, during fiscalyear 2009 and as a result of the purchase of the membership interests in April2009, which was accounted for by USPB using the purchase method.

*Operating Income.*  Operating income was approximately $43.4 million for the thirteenweeks ended November 28, 2009 compared to operating income of approximately $2.1million for the thirteen weeks ended November 29, 2008, an improvement of $41.3million. This improvement in operatingincome during the first quarter of fiscal year 2010 resulted primarily fromlower live cattle prices relative to the prices received for beef products and alower negative mark to market adjustmenton cattle futures contracts as compared to the first quarter of fiscal year2009.

*Interest Expense*.  Interest expense was $4.6 million for the thirteen weeks endedNovember 28, 2009 compared to $6.9 million for the thirteen weeks endedNovember 29, 2008, a decrease of $2.3 million, or 33.3%.  The decrease ininterest expense during the thirteen weeks ended November 28, 2009 as comparedto the thirteen weeks ended ended November 29, 2008 was due primarily to thepurchase and cancellation of senior notes of approximately $100.0 millionduring the twelve-month period ended November 28, 2009.  Also contributing tothe decline in interest expense was (i) a decrease of approximately 98 basispoints in interest rates on our variable rate debt during the thirteen weeksended November 28, 2009 compared to the thirteen weeks ended ended November 29,2008 and (ii) an approximate $30.5 million decrease in the weighted averageprincipal amount of our variable rate debt at November 28, 2009 as compared toNovember 29, 2008.  

*Income Tax Expense*.  Income tax expense was $0.4 million for the thirteen weeks endedNovember 28, 2009 and November 29, 2008, respectively.  Income tax expense isrecorded on income from our subsidiary, National Carriers, Inc., which isorganized as a C Corporation.  

*Net Income (Loss).*  As a result of the factors described above, net income for thethirteen week period ended November 28, 2009 was approximately $38.4 millioncompared to a net loss of approximately $4.6 million for thirteen weekperiod ended November 29, 2008, an increase of approximately $43.0 million.

*Net (Income) Loss Attributable to NoncontrollingInterest in NBP.*  Noncontrollinginterest in the net income of NBP for thethirteen weeks ended November 28, 2009 was $12.7 million compared to noncontrolling interest in the net loss for the thirteen weeks ended November 29, 2008 of $1.5million, a change of $14.2 million. The noncontrollinginterest in NBP represents the minority owners’ interest in NBP’s earnings.

**Liquidityand Capital Resources**

As of November 28, 2009, we had net working capital (theexcess of current assets over current liabilities) of approximately $167.6 million,which included $3.2 million in distributions payable and cash and cashequivalents of $18.9 million.  As of August 29, 2009, we had net workingcapital of approximately $163.3 million, which included $10.9 million indistributions payable and cash and cash equivalents of $18.9 million.  Ourprimary sources of liquidity are cash flows from operations and availableborrowings under NBP’s amended and restated credit facility (Credit Facility).

As of November 28, 2009, we had $302.1 million oflong-term debt, of which $28.8 million was classified as a current liability. As of November 28, 2009, NBP’s Credit Facility consisted of a $251.9 millionterm loan, all of which was outstanding, and a $225.0 million revolving line ofcredit loan, which had no outstanding borrowings, outstanding letters of creditof $35.1 million and available borrowings of $154.7 million, based on the mostrestrictive financial covenant calculations.  Cash flows from operations andborrowings under NBP’s Credit Facility have funded its working capitalrequirements, acquisitions, capital expenditures and other general corporatepurposes.  NBP was in compliance with all of its financial covenants under the CreditFacility as of November 28, 2009. USPB was in compliance with all of thefinancial covenants under its Amended and Restated Credit Agreement as of November28, 2009.

 

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Inaddition to outstanding borrowings under its Credit Facility, the Company  hadoutstanding borrowings under industrial revenue bonds of $12.2 million, seniornotes of $27.1 million, a term loan with CoBank, of which approximately $1.8million was outstanding, a $13.0 million revolving line of credit loan, whichhad no outstanding borrowings, and capital leases and other obligations of $9.1million as of November 28, 2009.

On December 7, 2009, the Company entered into theFirst Amendment to Amended and Restated Credit Agreement and Security Agreement(Agreement).  The Amendment provides for the release from CoBank’s securityinterest of the portion of the National Beef Packing Company, LLC interestswhich are owned by U.S. Premium Beef, LLC and held by CoBank as Collateral thatis to be exchanged in connection with the initial public offering of NationalBeef, Inc.  The Amendment also provides for a reduction in the amount availableunder the Tranche B Commitment to $10 million from $13 million.  The Amendmentis effective if the initial public offering of National Beef, Inc. occurs on orbefore February 28, 2010.

NBP believes that available borrowings under its CreditFacility and cash provided by operating activities will be sufficient tosupport its working capital, capital expenditures and debt service requirementsfor the foreseeable future.  Under the April 13, 2009 amendment to its CreditFacility, NBP is required to purchase or redeem $100.0 million aggregateprincipal amount of its outstanding senior notes on or before December 31, 2009. NBP financed this required purchase with the increased available line of creditof $25.0 million and increased available term borrowings of up to $75.0 million. As of November 28, 2009, NBP has purchased the entire $100.0 million aggregateprincipal amount of its senior notes to be purchased.  On December 11, 2009, weprovided notice of our intent to redeem the remaining $27.1 million aggregateprincipal amount of our senior notes on January 11, 2010.  NBP’s ability togenerate sufficient cash, however, is subject to certain general economic,financial, industry, legislative, regulatory and other factors beyond itscontrol.  For a review of the obligations that affect liquidity, please see the*Cash Payment Obligations* table in Item 7. *Management’s Discussion andAnalysis of Financial Condition and Results of Operations* of our AnnualReport on Form 10-K for the fiscal year ended August 29, 2009.

*OperatingActivities*

Net cash provided by operating activities in the thirteenweeks ended November 28, 2009 was $24.5 million compared to $23.6 million inthe thirteen weeks ended November 29, 2008.  The $0.9 million increase was due primarilyto an increase of approximately $43.0 million in net income during the thirteenweeks ended November 28, 2009 as compared to the thirteen weeks ended November29, 2008, offset by a net decrease in cash generated from changes in netcurrent assets during the thirteen week period ended November 28, 2009 ascompared to the thirteen week period ended November 29, 2008.

*InvestingActivities*

Net cash used in investing activities was $9.0 millionin the thirteen weeks ended November 28, 2009 compared to $6.6 million in thethirteen weeks ended November 29, 2008.  This increase in cash used was primarilyattributable to an approximate $2.6 million increase in expenditures forproperty, plant and equipment during the thirteen weeks ended November 28, 2009as compared to the thirteen weeks ended November 29, 2008.

*FinancingActivities*

Net cash used in financing activities was $15.5million during the thirteen weeks ended November 28, 2009 compared to net cash providedby financing activities of $7.7 million during the thirteen weeks ended November 29, 2008.  The change was primarilyattributed to an approximate $57.8 million change in net revolver creditborrowings, the purchase and cancellation of an additional $37.5 million of thesenior notes, and a $4.0 million increase in distributions.  This change waspartially offset by an approximate $75.0 million in borrowings under our termnote payable.

* *

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*Amendedand Restated Credit Agreement and Security Agreement*

OnDecember 7, 2009, the Company entered into the First Amendment to Amended andRestated Credit Agreement and Security Agreement (Agreement).  The Amendmentprovides for the release from CoBank’s security interest of the portion of theNational Beef Packing Company, LLC interests which are owned by U.S. PremiumBeef, LLC and held by CoBank as Collateral that is to be exchanged inconnection with the initial public offering of National Beef, Inc.  TheAmendment also provides for a reduction in the amount available under theTranche B Commitment to $10 million from $13 million.  The Amendment iseffective if the initial public offering of National Beef, Inc. occurs on orbefore February 28, 2010. 

*Amended and RestatedSenior Credit Facility*

EffectiveApril 13, 2009, NBP’s Credit Facility was amended to permit the redemption of itsmembership interests in the amount of $125.5 million, including the authorizationand issuance of Class A1 units to help fund the redemption.  In addition, theterms of NBP’s Credit Facility were amended to:  (1) increase the borrowingsunder the Credit Facility by up to $100.0 million, of which up to $75.0 millionis under the term loan and $25.0 million is available under the revolving lineof credit; (2) increase the applicable margin on the rates of interest of theterm loan and revolving line of credit; (3) revise the payment schedule of theterm loan; (4) shorten the maturity date of the term loan; (5) remove therestrictions on purchasing the senior notes and require the repurchase orredemption of $100 million aggregate principal amount of senior notes; (6)increase the amount of capital expenditures NBP can make in any fiscal yearfrom $50 million to $60 million, or $65 million if NBP expends less than $55million in the immediately preceding fiscal year; and (7) add a financialcovenant requiring NBP to maintain a specified Funded Debt to EBITDA ratio. 

The borrowings under the Credit Facility bear interestat LIBOR or the Base Rate, plus the applicable margin.  The applicable marginfor the revolving line of credit and the term loan will be based on borrowingbase availability with grids for amounts greater than $150.0 million, $50.0million to $150.0 million and less than $50.0 million.  As of November 28,2009, the interest rates for the revolving loan and the term loan wereapproximately 5.25% and 4.10%, respectively.

NBP’s funded debt to EBITDA ratio is not to be morethan 3.75 to 1.00 at the end of each fiscal quarter.  If the borrowing baseavailability is less than $50.0 million for five consecutive business days orless than $35.0 million on any single business day during any fiscal quarter, afixed charge ratio of 1:15 to 1:00 must be maintained at the end of eachsubsequent fiscal quarter until the borrowing base availability has beengreater than or equal to $50.0 million for 90 consecutive days.   As of November28, 2009, NBP had met this borrowing base availability requirement under itsCredit Facility.  The advance rates under the borrowing base are 90% oneligible accounts and 70% on eligible inventory.

Theborrowings under the revolving loan are available for NBP’s working capitalrequirements, capital expenditures and other general corporate purposes.  TheCredit Facility is secured by a first priority lien on substantially all of NBP’sassets.  The principal amount outstanding under the term loan is due andpayable in equal installments of approximately $2.5 million on the lastbusiness day of each June and December commencing December 2009 throughDecember 2010, after which required installment payments increase toapproximately $4.8 million.  All outstanding amounts of the term loan are dueand payable on July 25, 2012.  Prepayment of the term loan is allowed at anytime.

TheCredit Facility contains customary affirmative covenants, including, withoutlimitation, conduct of business, the maintenance of insurance, compliance withlaws, maintenance of properties, keeping of books and records, and thefurnishing of financial statements.  The facility also contains customarynegative covenants, including without limitation, restrictions on thefollowing:  distributions, mergers, sale of assets, investments andacquisitions, encumbrances, indebtedness, affiliate transactions, and ERISAmatters.

The Credit Facility contains customary events ofdefault, including without limitation, failure to make payment when due,materially incorrect representations and warranties, breach of covenants,events of bankruptcy, default of other indebtedness that would permitacceleration of such indebtedness, the occurrence of one or more unstayed orundischarged judgments in excess of $3.0 million, changes in custody or controlof NBP’s property, changes in control of NBP, the failure of any of the loandocuments to remain in full force, and NBP’s failure to properly fund itsemployee benefit plans.  The facility also includes customary provisionsprotecting the lenders against increased cost or loss of yield resulting fromchanges in tax, reserve, capital adequacy and other requirements of law.

 

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** **

**Item3. Quantitative and Qualitative Disclosures about Market Risk.**

The principalmarket risks affecting our business are exposure to changes in prices forcommodities, such as livestock and boxed beef, and interest rate risk.

*Commodities.*NBPuses various raw materials, many of which are commodities. Raw materials aregenerally available from several different sources, and NBP presently believesthat it can obtain them as needed.  Commodities are subject to pricefluctuations that may create price risk. From time to time, NBP may hedgecommodities in order to mitigate this price risk. While this may tend to limit itsability to participate in gains from commodity price fluctuations, it alsotends to reduce the risk of loss from changes in commodity prices.  To theextent the contracts are not designated as normal purchases, NBP reflectscommodity contract gains and losses as adjustments to the basis of underlyingcommodities purchased; gains or losses are recognized in the statement ofoperations as a component of costs of goods sold.

NBP purchases cattle for use in its processingbusinesses. From time to time, NBP enters into forward purchase contracts atprices determined prior to the delivery of the cattle. The commodity price riskassociated with these activities can be hedged by selling (or buying) theunderlying commodity, or by using an appropriate commodity derivativeinstrument. The particular hedging instrument NBP uses depends on a number offactors, including availability of appropriate derivative instruments.

NBP sells commodity beef products in its business.Commodity beef products are subject to price fluctuations that may create pricerisk. From time to time, NBP enters into forward sales contracts at pricesdetermined prior to shipment. NBP may hedge the commodity price risk associatedwith these activities in order to mitigate this price risk.  While this maytend to limit its ability to participate in gains from commodity pricefluctuations, it also tends to reduce the risk of loss from changes incommodity beef prices.  To the extent the contracts are not designated asnormal sales, NBP reflects commodity contract gains and losses as adjustmentsto the basis of underlying commodities sold; gains or losses are recognized inthe statement of operations as a component of net sales. 

From time to time, NBP purchases cattle futures andoptions contracts.  Its primary use of these contracts is to partiallydetermine its future input costs when it has committed forward sales purchaseorders from customers at a specified fixed price.  On November 28, 2009, NBPheld futures contracts covering approximately 136 million pounds of cattle.  Thelongest duration futures contract owned is thirteen months.  In accordance withASC Topic 815, *Accounting for Derivative Instruments and Hedging Activities*,as amended, NBP accounts for futures contracts and their related firm purchasecommitments at fair value. Certain firm commitments for live cattle purchasesand all firm commitments for boxed beef sales are treated as “normal purchasesand sales” and not marked to market.  ASC Topic 815 imposes extensiverecordkeeping requirements in order to treat a derivative instrument as a hedgefor accounting purposes. Derivatives qualify for treatment as hedges when thereis a high correlation between the change in fair value of the instrument andthe related change in fair value of the underlying commitment. For derivativesthat qualify as effective hedges, the change in fair value has no net effect onearnings until the hedged transaction affects earnings. For derivatives thatare not designated as hedging instruments, or for the ineffective portion of ahedging instrument, the change in fair value does affect current period netearnings.

While management believes each of these instrumentshelps mitigate various market risks, they are not designated and accounted foras hedges as a result of the extensive recordkeeping requirements of thisstatement. Accordingly, the gains and losses associated with the change in fairvalue of the instrument and the offsetting gains and losses associated withchanges in the market value of certain of the firm purchase commitments relatedto the futures contracts are recorded to income and expense in the period ofchange.

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NBPuses a sensitivity analysis to evaluate the effect that changes in the marketvalue of commodities will have on these commodity derivative instruments.  NBPfeels that sensitivity analysis more appropriately reflects the potentialmarket value exposure associated with the use of derivative instruments.  As ofNovember 28, 2009 and August 29, 2009, the potential change in the fair valueof the derivative instruments we hold that are not designated as normalpurchases or sales, assuming a hypothetical 10% decrease in the underlyingcommodity price in each year, was $1.2 million and $16.4 million, respectively. This significant change was primarily due to the cattle futures contracts that NBPentered into during the first quarter of fiscal year 2009 to offset the risk offixed-price sales commitments.

*Interest Rates.*  As a result of our normal borrowing andleasing activities, our operating results are exposed to fluctuations ininterest rates, which we manage primarily through our regular financingactivities. We generally maintain limited investments in cash and cashequivalents.

We have long-termdebt with variable interest rates. Short-term debt is primarily comprised ofthe current portion of long-term debt maturing twelve months from the balancesheet date.  Our variable interest expense is sensitive to changes in thegeneral level of interest rates.   As of November 28, 2009, the weightedaverage interest rate on our $265.9 million of variable interest debt wasapproximately 3.93%.  As of August 29, 2009, the weighted average interest rateon our $229.5 million of variable rate debt was approximately 3.36%.

We had totalinterest expense of approximately $4.6 million during the thirteen weeks endedNovember 28, 2009.  The estimated increase in interest expense from ahypothetical 200 basis point increase in applicable variable interest rateswould have been approximately $1.2 million during the thirteen weeks endedNovember 28, 2009.

*ForeignOperations.*  Transactionsdenominated in a currency other than an entity’s functional currency may exposethat entity to currency risk. Although we operate in international marketsincluding Japan, South Korea and China, product sales are predominately made inUnited States dollars, and therefore, currency risks are limited.

**Item4T.  Controls and Procedures.**

We maintain asystem of controls and procedures designed to provide reasonable assurance asto the reliability of the Consolidated Financial Statements and otherdisclosures included in this report, as well as to safeguard assets fromunauthorized use or disposition. We evaluated the effectiveness of the designand operation of our disclosure controls and procedures as defined in theSecurities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e) undersupervision and with the participation of management, including our ChiefExecutive Officer and Chief Financial Officer. Based upon that evaluation, asof the end of the period covered by this Quarterly Report on Form 10-Q, ourChief Executive Officer and Chief Financial Officer concluded that ourdisclosure controls and procedures were effective in alerting them, in a timelymanner, to material information required to be included in our periodicSecurities and Exchange Commission filings.  There have been no changes in ourinternal controls over financial reporting during the thirteen weeks ended November28, 2009 that have materially affected, or are reasonably likely to materiallyaffect, our internal control over financial reporting.  The design of anysystem of controls and procedures is based in part upon certain assumptionsabout the likelihood of future events. 

** **

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**PARTII. OTHER INFORMATION**

** **

**Item 1. Legal Proceedings.**

For informationregarding legal proceedings, see Note 6. *Contingencies* to our ConsolidatedFinancial Statements included in Part I- *Item 1* of this Form 10-Q,which is incorporated herein by reference. 

**Item 1A. Risk Factors.**

The risk factors setforth in our Annual Report on Form 10-K for the fiscal year ended August 29,2009 have not materially changed.  Please refer to the Company’s report on Form10-K for the fiscal year ended August 29, 2009 to consider those risk factors.

**Item 2. UnregisteredSales of Equity Securities and Use of Proceeds.**

None.

**Item 3. Defaults UponSenior Securities.**

None. 

**Item4. Submission of Matters to a Vote of Security Holders.**

At aSpecial Meeting of Members of USPB on November 2, 2009, members were asked toconsider two amendments to USPB’s Limited Liability Company Agreement (LLCAgreement).  (The proposed amendments were described in a proxy statementmailed to members on October 21, 2009;  that proxy statement was includedas Exhibit 20.1 to a report on Form 8-K filed by the Company on October 21,2009.)  At the special meeting, USPB’s members approved two sets ofamendments, including one set of amendments that modified the allocation ofprofits, losses, other allocation items and distributions between the Company’sClass A units and its Class B units.  The allocation amendmentsinclude provisions allocating profits and losses such that the holders ofClass A units will receive 10% of the profit and loss experienced by theCompany and the Class B units will receive 90% of the profit and lossexperienced by the Company.  This is in contrast to the provisions of theLLC Agreement prior to the amendments; under the prior provisions, Class Aunits received 33% of the Company’s profit and loss and Class B units received 67%of profit and loss.  

Theother set of amendments clarified the authority of the Company to conductredemptions of Class B units in certain circumstances.  Under thoseredemption amendments, the Company is now authorized to complete a voluntaryredemption of Class B units either i) at a fixed priced determined by the Boardof Directors and agreed to by the unitholders accepting the redemption offer orii) at a price determined by those unitholders who wish to accept a redemptionoffer through a procedure such as a “Dutch Auction”.  In addition, subjectto a number of conditions specified in the redemption amendments, the Companyis authorized to complete the redemption of Class B units on a mandatory basis. 

Anaffirmative vote of members holding a majority of the voting power of eachclass of units was required to approve the two proposals.  The members holdingClass A units are each entitled to one vote per member, and the members holdingClass B units are each entitled to one vote per Class B unit owned by such member. Members delivered 333 valid ballots to the Company; ballots that were notdelivered to the Company were considered a no vote.  Out of a potential of 449Class A unit votes, 327 voted for the first proposal and 326 voted for thesecond proposal.  Out of 755,385 potential Class B unit votes, 651,586 votedfor the first proposal and 650,578 voted for the second proposal.

 

 

 

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TheAnnual Meeting of members of USPB was held on December 9, 2009. Other thanapproval of the minutes from the previous annual meeting, the members wereasked to consider a proposal to amend the LLC Agreement to eliminatedesignations of “Odd Slot Class A Members,” “Even Slot Class A Members,” and“Seedstock Class A Member,” as a director qualification and to consider the electionof two (2) directors to serve for three-year terms expiring after the 2012fiscal year.  

Anaffirmative vote of members holding a majority of the voting power of eachclass of units was required to approve the proposal to eliminate designationsof “Odd Slot Class A Members,” “Even Slot Class A Members,” and “SeedstockClass A Member,” as a director qualification . The members holding Class Aunits are each entitled to one vote per member, and the members holding Class Bunits are each entitled to one vote per Class B unit owned by such member. Members delivered 307 valid ballots to the Company; ballots that were notdelivered to the Company were considered a no vote.  Out of a potential of 449Class A unit votes, 303 voted for the amendment to the LLC Agreement. Out of755,385 potential Class B unit votes, 644,194 voted for the amendment to theLLC Agreement.

For the election of two directors to the Board ofDirectors, the three nominees who stood for election were incumbent director DuaneRamsey and new candidates Jerry Bohn and Greg Glunz.  Biographical informationregarding Messrs. Ramsey, Bohn and Glunz has previously been included in theCompany’s Annual Report on Form 10-K for the fiscal year ended August 29, 2009.  

At the Annual Meeting,under procedures established by the Company’s Nominating Committee, Messrs.Ramsey, Bohn and Glunz stood for election for the two open seats on the USPBBoard of Directors.  USPB’s members elected Messrs. Bohn and Ramsey to serve asdirectors on the Board of Directors for a term that will expire after fiscalyear 2012.  The election of the nominees was by a majority of the memberspresent and voting at the Annual Meeting, expressed by a written ballot.  Inthe election, out of 53 valid ballots, Mr. Bohn received a total of 48 votes,Mr. Glunz received a total of 7 votes, and Mr. Ramsey received a total of 49votes.  The other members of the Board of Directors, Messrs. Gardiner, Laue, McCloy,Morgan, and Sternberger continued in service as members of the USPB Board ofDirectors following the Annual Meeting.

**Item 5. Other Information.**

None.        

**Item 6. Exhibits.**

 

| (A)    | Exhibits |                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.1     | Amendment to the Limited  Liability Company of U.S. Premium Beef, LLC, dated as of November 2, 2009 (incorporated herein by reference to Exhibit 3.1 to  Form 8-K (File No. 333-115164) filed with the SEC on November 6, 2009).                                                                                                                                                                     |
|   |     |                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | 10.2     | Amendment to the Limited  Liability Company of U.S. Premium Beef, LLC, dated as of December 9, 2009 (incorporated herein by reference to Exhibit 3.1 to  Form 8-K (File No. 333-115164) filed with the SEC on December 14, 2009).                                                                                                                                                                    |
|   |     |                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | 10.3     | Amended and Restated  Limited Liability Company Agreement of U.S. Premium Beef, LLC, dated as of  December 9, 2009 (filed herewith).                                                                                                                                                                                                                                                                 |
|   |     |                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | 10.4     | First Amendment to Amended  and Restated Credit Agreement and Security Agreement dated as of December 7,  2009 by and among U.S. Premium Beef, LLC and CoBank, ACB, an agricultural credit bank, as Agent and as the sole  Syndication Party as of the date of the Amendment (filed herewith).                                                                                                       |
|   |     |                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | 10.5     | Third Amendment to the Sixth Amended and Restated  Credit Agreement dated as of October 8, 2009 by and among National Beef  Packing Company, LLC and certain agents, lenders and issuers (incorporated  herein by reference to Exhibit 10.9 (e) to National Beef, Inc.’s Amendment  No. 2 to Registration Statement on Form S-1  (File No. 333-162443) filed with the SEC on December 2, 2009). |

 

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|   | 10.6   | Fourth Amendment to the  Sixth Amended and Restated Credit Agreement dated as of November 24, 2009 by  and among National Beef Packing Company, LLC and certain agents, lenders and  issuers (incorporated herein by reference to Exhibit 10.1 to National Beef  Packing Company, LLC’s Current Report on Form 8-K (File No. 333-111407) filed  with the SEC on December 1, 2009). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                    |
|   | 10.7   | National Beef Packing  Company, LLC Management Incentive Program (incorporated herein by reference  to Exhibit 10.18 to National Beef, Inc.’s Registration Statement on Form S-1  (File No. 333-152443) filed with the SEC on October 13, 2009.)*                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                    |
|   | 31.1   | Certification of the Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002 (filed herewith).                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                    |
|   | 31.2   | Certification of the  Principal Financial and Accounting Officer pursuant to Section 302 of  the Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                    |
|   | 32.1   | Certification of the Chief  Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed  herewith).                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                    |
|   | 32.2   | Certification of the  Principal Financial and Accounting Officer pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                    |
|   | *      | Management contract.                                                                                                                                                                                                                                                                                                                                                                    |

 

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**SIGNATURES**

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 

 

                                                                                                              

 

|   | U.S. Premium Beef, LLC |
|--------|------------------------|
|   |                   |   |
|   |                   |   |
|   |                   |   |
| By:    |                   | /s/ Steven D. Hunt |
|   |                   |   |
|   |                   | Steven D. Hunt*Chief Executive Officer*

*(Principal Executive Officer)* |

 

|   |   |                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------|
| By:    |   | /s/ Scott J. Miller                                                                            |
|   |   |                                                                                           |
|   |   | Scott J. Miller* Chief Financial Officer*

*(Principal Financial and Accounting Officer)* |

 

 

 

Date:January 8, 2010

 

 

 

 

 

 

 

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