----

 

 

 

 **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 26, 2011** |
| **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 No o

 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 “largeaccelerated filer”, “accelerated filer” and “smaller reporting company” inRule 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 No þ

The registrant’s unitsare not traded on an exchange or in any public market.  As of December 31, 2011,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 (unaudited).                                                             | 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 4.               | 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.                                                                            | 19           |
|                  |                                                                                          |         |
| Item 6.               | Exhibits.                                                       | 19           |
|                  |                                                                                          |         |
|                  | Signatures.                                                                                   | 21           |

 

 

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. 

 

 

 

 

 

**                                                                                               **

| ii |
|----|

 

----

 

 

 

 

 

 

**PART I. FINANCIAL INFORMATION**

** **

**Item 1.  Financial Statements (unaudited).**

 

 

 

 

 

 

** **

 

 

 

 

 

 

 

| 1 |
|---|

                                                                                                

----

 
| **U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES**                       |
|--------------------------------------------------------------------------------------------|
| **Consolidated Balance Sheets**                                                  |
| (thousands of dollars, except unit data)                          |
|                                                                                       |   |   |   |   | **November 26,** |   | **August 27,** |
|                                                                                       |   |   |   | **Assets** | **2011** |   | **2011** |
|                                                                                       |   |   |   |   |   |   |   |
| Current assets:                                                                       |   |   |   |   |   |
|                                                                                       | Cash and cash equivalents |   | $ | 57,437  |   | $ | 78,567  |
|                                                                                       | Accounts receivable, less allowance for returns and doubtful accounts |   |   |   |
|                                                                                       |   | of $3,200 and $3,368, respectively | 179,109  |   | 200,254  |
|                                                                                       | Due from affiliates |   | 5,764  |   | 5,868  |
|                                                                                       | Other receivables |   | 9,986  |   | 7,448  |
|                                                                                       | Inventories |   |   | 302,329  |   | 276,783  |
|                                                                                       | Other current assets |   | 31,140  |   | 25,975  |
|                                                                                       |   | Total current assets |   | 585,765  |   | 594,895  |
| Property, plant, and equipment, at cost                           |   | 619,042  |   | 608,261  |
|                                                                                       | Less accumulated depreciation |   | 282,016  |   | 271,877  |
|                                                                                       |   | Net property, plant, and equipment | 337,026  |   | 336,384  |
| Goodwill                                                                                   |   |   | 86,251  |   | 86,251  |
| Other intangible assets, net of accumulated amortization     |   |   |   |
|                                                                                       | of $18,757 and $ 18,230, respectively | 55,995  |   | 56,520  |
| Other assets                                                                          |   |   | 8,342  |   | 8,119  |
|                                                                                       |   | Total assets |   | $ | 1,073,379  |   | $ | 1,082,169  |
|                                                                                       |   |   |   |   |   |   |   |
|                                                                                       |   |   | **Liabilities and Capital Shares and Equities** |   |   |   |
| Current liabilities:                                                                  |   |   |   |   |   |
|                                                                                       | Current installments of long-term debt | $ | 38,505  |   | $ | 38,486  |
|                                                                                       | Cattle purchases payable |   | 98,757  |   | 73,407  |
|                                                                                       | Accounts payable - trade |   | 85,866  |   | 81,245  |
|                                                                                       | Due to affiliates |   | 684  |   | 486  |
|                                                                                       | Accrued compensation and benefits |   | 33,218  |   | 83,124  |
|                                                                                       | Accrued insurance |   | 20,092  |   | 17,271  |
|                                                                                       | Other accrued expenses and liabilities | 18,805  |   | 19,946  |
|                                                                                       | Distributions payable |   | 629  |   | 8,199  |
|                                                                                       |   | Total current liabilities |   | 296,556  |   | 322,164  |
| Long-term liabilities:                                                                |   |   |   |   |
|                                                                                       | Long-term debt, excluding current installments | 340,617  |   | 321,926  |
|                                                                                       | Other liabilities |   | 1,871  |   | 1,954  |
|                                                                                       |   | Total long-term liabilities |   | 342,488  |   | 323,880  |
|                                                                                       |   | Total liabilities |   | 639,044  |   | 646,044  |
|                                                                                       | Non-controlling interest in NBP |   | 314,329  |   | 351,071  |
| Capital shares and equities:                                                |   |   |   |   |
|                                                                                       | Members' capital, 735,385 Class A units and 755,385 Class B units |   |   |   |
|                                                                                       |   | authorized, issued and outstanding | 74,681  |   | 39,768  |
|                                                                                       | Patronage notices |   | 42,122  |   | 42,130  |
|                                                                                       | Accumulated other comprehensive income | 40  |   | 68  |
|                                                                                       |   | Total capital shares and equities attributable to USPB | 116,843  |   | 81,966  |
|                                                                                       | Non-controlling interest in Kansas City Steak Company, LLC | 3,163  |   | 3,088  |
|                                                                                       |   | Total Capital Shares and Equities |   | 120,006  |   | 85,054  |
|                                                                                       |   | Total liabilities, noncontrolling interest in NBP and capital shares and equities | $ | 1,073,379  |   | $ | 1,082,169  |
|                                                                                       |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements. |   |   |   |

** **

| 2 |
|---|

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| **U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES**                                   |
|--------------------------------------------------------------------------------------------------------|
| **Consolidated Statements of Operations**                                               |
| (thousands of dollars, except per unit and per unit data) |
|                                                                                                   |   |   |   |   |   |   | **13 weeks ended** |   | **13 weeks ended** |
|                                                                                                   |   |   |   |   |   |   | **November 26, 2011** |   | **November 27, 2010** |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                                                         |   |   |   |   |   | $ | 1,775,715  |   | $ | 1,587,320  |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                                                                          |   |   |   |   |   |   |
|                                                                                                   | Cost of sales |   |   |   |   | 1,733,255  |   | 1,505,439  |
|                                                                                                   | Selling, general, and administrative expenses |   | 15,342  |   | 14,421  |
|                                                                                                   | Depreciation and amortization |   | 11,138  |   | 13,062  |
|                                                                                                   |   | Total costs and expenses |   | 1,759,735  |   | 1,532,922  |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   | Operating income |   | 15,980  |   | 54,398  |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                                                                      |   |   |   |   |   |   |
|                                                                                                   | Interest income |   |   |   |   | 8  |   | 12  |
|                                                                                                   | Interest expense |   |   |   |   | (2,300) |   | (2,609) |
|                                                                                                   | Other, net |   |   |   |   | 955  |   | 592  |
|                                                                                                   |   |   | Income before taxes |   | 14,643  |   | 52,393  |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Income tax expense                                                                           |   |   |   |   | (566) |   | (334) |
|                                                                                                   |   |   | Net income |   |   |   | 14,077  |   | 52,059  |
| Less: Net income attibutable to noncontrolling interest in:         |   |   |   |   |
|                                                                                                   | Kansas City Steak Company, LLC |   | (75) |   | (62) |
|                                                                                                   | National Beef Packing Company, LLC |   | (5,074) |   | (16,548) |
| Net income attributable to U.S. Premium Beef, LLC                   |   | $ | 8,928  |   | $ | 35,449  |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Earnings per unit:                                                                           |   |   |   |   |   |   |   |
|                                                                                                   | Basic |   |   |   |   |   |   |   |   |
|                                                                                                   |   | Class A units |   |   |   |   | $ | 1.21  |   | $ | 4.82  |
|                                                                                                   |   | Class B units |   |   |   |   | $ | 10.64  |   | $ | 42.24  |
|                                                                                                   | Diluted |   |   |   |   |   |   |   |   |
|                                                                                                   |   | Class A units |   |   |   |   | $ | 1.19  |   | $ | 4.75  |
|                                                                                                   |   | Class B units |   |   |   |   | $ | 10.64  |   | $ | 42.24  |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Outstanding weighted-average Class A and Class B units:             |   |   |   |   |
|                                                                                                   | Basic |   |   |   |   |   |   |   |   |
|                                                                                                   |   | Class A units |   |   |   |   | 735,385  |   | 735,385  |
|                                                                                                   |   | Class B units |   |   |   |   | 755,385  |   | 755,385  |
|                                                                                                   | Diluted |   |   |   |   |   |   |   |   |
|                                                                                                   |   | Class A units |   |   |   |   | 748,139  |   | 746,063  |
|                                                                                                   |   | Class B units |   |   |   |   | 755,385  |   | 755,385  |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.             |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |

** **

| 3 |
|---|

----

 

 

** **
| **U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES**                                        |
|-------------------------------------------------------------------------------------------------------------|
| **Consolidated Statements of Cash Flows**                                               |
| (thousands of dollars)                                                                            |
|                                                                                                        |   |   |   |   |   |   |   | **13 weeks ended** |   | **13 weeks ended** |
|                                                                                                        |   |   |   |   |   |   |   | **November 26, 2011** |   | **November 27, 2010** |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| Cash flows from operating activities:                                                   |   |   |   |   |   |
|                                                                                                        | Net income |   |   |   |   | $ | 14,077  |   | $ | 52,059  |
|                                                                                                        | Adjustments to reconcile net income to net cash (used in) provided by |   |   |   |
|                                                                                                        |   | operating activities: |   |   |   |   |   |   |
|                                                                                                        |   | Depreciation and amortization |   |   | 11,138  |   | 13,062  |
|                                                                                                        |   | Gain on disposal of property, plant, and equipment |   | (747) |   | (365) |
|                                                                                                        |   | Amortizaton of debt issuance costs |   | 318  |   | 345  |
|                                                                                                        |   | Changes in assets and liabilities: |   |   |   |   |   |
|                                                                                                        |   |   | Accounts receivable |   |   |   | 21,145  |   | 4,767  |
|                                                                                                        |   |   | Due from affiliates |   |   |   | 106  |   | 177  |
|                                                                                                        |   |   | Other receivables |   |   |   | (2,538) |   | (461) |
|                                                                                                        |   |   | Inventories |   |   |   | (25,546) |   | (7,868) |
|                                                                                                        |   |   | Other assets |   |   |   | (5,714) |   | (22,177) |
|                                                                                                        |   |   | Cattle purchases payable |   |   | 16,625  |   | 15,986  |
|                                                                                                        |   |   | Accounts payable |   |   |   | 2,693  |   | (608) |
|                                                                                                        |   |   | Due to affiliates |   |   |   | 196  |   | 202  |
|                                                                                                        |   |   | Accrued compensation and benefits |   | (49,906) |   | (48,431) |
|                                                                                                        |   |   | Accrued insurance |   |   |   | 2,821  |   | 2,793  |
|                                                                                                        |   |   | Other accrued expenses and liabilities |   | (1,224) |   | 7,993  |
|                                                                                                        |   |   |   | Net cash (used in) provided by operating activities | (16,556) |   | 17,474  |
| Cash flows from investing activities:                                                   |   |   |   |   |   |
|                                                                                                        | Capital expenditures, including interest capitalized |   | (12,415) |   | (13,407) |
|                                                                                                        | Proceeds from sale of property, plant, and equipment |   | 1,913  |   | 776  |
|                                                                                                        |   | Net cash used in investing activities |   | (10,502) |   | (12,631) |
| Cash flows from financing activities:                                                   |   |   |   |   |   |
|                                                                                                        | Net receipts under revolving credit lines |   | 28,242  |   | 37,991  |
|                                                                                                        | Payments of term notes payable |   |   |   | (9,250) |   | (5,258) |
|                                                                                                        | Repayments of other indebtedness / capital leases |   | (282) |   | (279) |
|                                                                                                        | Payments of patronage notices |   |   |   | (8) |   | -  |
|                                                                                                        | Change in overdraft balances |   |   |   | 10,653  |   | (882) |
|                                                                                                        | Distributions to noncontrolling interests in National Beef Packing Company, LLC | (10,720) |   | (10,132) |
|                                                                                                        | Member distributions |   |   |   | (12,679) |   | (13,417) |
|                                                                                                        |   |   |   | Net cash provided by financing activities |   | 5,956  |   | 8,023  |
|                                                                                                        | Effect of exchange rate changes on cash |   | (28) |   | 10  |
|                                                                                                        |   |   |   | Net (decrease) increase in cash |   | (21,130) |   | 12,876  |
| Cash and cash equivalents at beginning of the period                |   | 78,567  |   | 35,439  |
| Cash and cash equivalents at end of the period                      |   | $ | 57,437  |   | $ | 48,315  |
| Supplemental cash disclosures:                                                                    |   |   |   |   |   |   |
|                                                                                                        | Cash paid during the period for interest |   | $ | 2,163  |   | $ | 2,450  |
|                                                                                                        | Cash paid during the period for taxes, net of refunds |   | $ | 118  |   | $ | 14  |
| Supplemental non-cash disclosures of investing and financing activities: |   |   |   |
|                                                                                                        | Assets acquired through capital lease |   | $ | -  |   | $ | 52  |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.                  |   |   |   |

** **

| 4 |
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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 Financial Statementshave been prepared in accordance with U.S. generally accepted accountingprinciples (GAAP), for interim financial information; therefore, they do notinclude all of the information and footnotes required by GAAP for completefinancial statements. In the opinion of management, all adjustments considerednecessary for a fair presentation have been included using management’s bestestimates and judgments where appropriate.  These estimates and judgmentsaffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements.  Theestimates and judgments will also affect the reported amounts for certainrevenues and expenses during the reporting period.  Actual results could differmaterially from these estimates and judgments.  For further information, referto the audited Consolidated Financial Statements and Notes to ConsolidatedFinancial Statements, which are included in the Company’s Annual Report on Form 10-K on file with the Securities and Exchange Commission (SEC), forthe fiscal year ended August 27, 2011.  The results of operations for theinterim periods presented are not necessarily indicative of the results for afull fiscal year. 

**(2)New Accounting Pronouncements**

In May2011, the Financial Accounting Standards Board (FASB), issued *Amendments toAchieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAPand IFRS* under ASU 2011-04, or ASU 2011-04.  ASU 2011-04 amends ASC 820, *FairValue Measurements* (ASC 820), providing a consistent definition andmeasurement of fair value, as well as similar disclosure requirements betweenU.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changescertain fair value measurement principles, clarifies the application ofexisting fair value measurement and expands the ASC 820 disclosurerequirements, particularly for Level 3 fair value measurements. ASU 2011-04will be effective for the Company's third quarter of fiscal year 2012.  Theamendments in ASU 2011-04 are to be applied prospectively.  The adoption of ASU2011-04 is not expected to have a material effect on the Company's consolidatedfinancial statements, but may require certain additional disclosures.

In June 2011, the FASB issued *Presentation ofComprehensive Income* under ASU 2011-05 or ASU 2011-05.  ASU 2011-05requires the presentation of comprehensive income in either (1) acontinuous statement of comprehensive income or (2) two separate butconsecutive statements. ASU 2011-05 will be effective for the Company's firstquarter of fiscal year 2013.  The adoption of ASU 2011-05 may require a changein the presentation of the Company's comprehensive income from the statement ofcapital shares and equities to the presentation of comprehensive income ineither (1) a continuous statement of comprehensive income or (2) twoseparate but consecutive statements. The amendments in ASU 2011-05 are to beapplied retrospectively.   The adoption of ASU 2011-05 is not expected to havea material effect on the Company's consolidated financial statements.

In September 2011, the FASB issued *Testing Goodwillfor Impairment* under ASU 2011-08, which is intended to reduce the cost andcomplexity of the annual goodwill impairment test by providing entities withthe option of performing a qualitative assessment to determine whetherimpairment testing is necessary.  The revised standard will be effective forannual and interim goodwill impairment tests performed beginning in the firstquarter of fiscal year 2013, with early adoption permitted under certaincircumstances.  The Company is currently evaluating options related to earlyadoption.

**(3)Inventories**

Inventories at November 26, 2011 and August 27, 2011 consistedof the following (thousands of dollars):

| 5 |
|---|

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|                                                | **November 26, 2011** |         | **August 27, 2011** |
|-----------------------------------------------------|---------------------------------|--------------|-------------------------------|
|                                                |                            |         |                          |   |
| Dressed and boxed meat products |                            | $            | 184,970                  |   | $ | 173,853  |
| Beef by-products                               |                            | 56,595  |                          | 57,009  |
| Supplies and other                        |                            | 60,764  |                          | 45,921  |
|                                                |                            | $            | 302,329                  |   | $ | 276,783  |

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

Comprehensive income, which consists of net income andforeign currency translation adjustments, was as follows for the periodsindicated (thousands of dollars): 
|                                                                                          |                                                    |                      | **13 weeks ended**    |   | **13 weeks ended**    |
|-----------------------------------------------------------------------------------------------|---------------------------------------------------------|---------------------------|---------------------------------|--------|---------------------------------|
|                                                                                          |                                                    |                      | **November 26, 2011** |   | **November 27, 2010** |
| Net income                                                                               |                                                    | $                         | 14,077                     |   | $                               | 52,059  |
| Other comprehensive (loss) income:                                             |                                                    |                      |                            |   |
|                                                                                          | Foreign currency translation adjustments |                      | (28)                            |   | 10                         |
|                                                                                          |                                                    | Comprehensive income |                            | $      | 14,049                     |   | $ | 52,069  |
| Comprehensive income attibutable to noncontrolling interest in: |                                                    |                      |                            |   |
|                                                                                          | Kansas City Steak Company, LLC      |                      | (75)                            |   | (62)                            |
|                                                                                          | National Beef Packing Company, LLC  |                      | (5,074)                         |   | (16,548)                        |
| Comprehensive income attributable to USPB                                 |                                                    | $                         | 8,900                      |   | $                               | 35,459  |
|                                                                                          |                                                    |                      |                            |   |                            |   |

** **

**(5)Non-controlling Interests In NBP**

At any time after certain dates, the earliest beingJuly 31, 2010, the latest being July 31, 2011, certain affiliates of NBP’sChief Executive Officer, Timothy M. Klein (collectively referred to herein as“the Klein Affiliates”), and/or NBPCo Holdings, LLC (NBPCo Holdings) have theright to request that NBP repurchase their interests, the value of which is tobe determined by a specified formula or a mutually agreed appraisal process. If NBP is unable to effect the repurchase within a specified time, therequesting member(s) have the right to cause a sale process to commence. 

Generally accepted accounting principles require theCompany to determine the fair value of the non-controlling interest in NBP atthe end of each reporting period.  The carrying value of non-controllinginterest in NBP reflects fair value.  In determining the fair value of thenon-controlling interest in NBP held by NBPCo Holdings as of November 26, 2011 managementconsidered the negotiated equity value for the transaction with LeucadiaNational Corporation (Leucadia) (see Note 10); in determining the fair value asof August 27, 2011,management considered previous redemption prices, valuations of peer companiesand other factors.  The non-controlling interest in NBP held by the KleinAffiliates as of November 26, 2011 and August 27, 2011 was valued based upon acontractually stipulated valuation formula. 

At November 26, 2011, the value of the non-controllinginterest in NBP was determined to be $314.3 million, which was equal to itscarrying value.  The total value of the non-controlling interest in NBP atNovember 26, 2011, decreased by approximately $36.7 million compared to thevalue at August 27, 2011.  The carrying value of the non-controllinginterest in NBP decreased approximately $38.2 million through valuation changesduring the fiscal quarter ending November 26, 2011, resulting in the $314.3 million carrying value, asreflected in the accompanying consolidated balance sheet as of November 26,2011.  Offsetting the change in the value of the non-controlling interestin NBP is a corresponding change in the members’ capital.      

**(6)Contingencies**

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.

| 6 |
|---|

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**(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 liabilitiesin active markets; quoted prices for identical or similar assets andliabilities in markets that are not active; or other inputs that are observableor can be corroborated 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 26, 2011 and August27, 2011 and also the level within the fair value hierarchy used to measureeach category of assets (thousands of dollars).

 
|                                                                          |   |                            |        | **Quoted Prices in**   |    |                       |   |                           |
|-------------------------------------------------------------------------------|--------|---------------------------------|-------------|----------------------------------|---------|----------------------------|--------|--------------------------------|
|                                                                          |   |                            |        | **Active Markets for** |    | **Significant Other** |   | **Significant**                |
|                                                                          |   |                            |        | **Identical Assets**        |    | **Observable Inputs** |   | **Unobservable**               |
| **Description**                                                               |   | **November 26, 2011** |        | **(Level 1)**               |    | **(Level 2)**         |   | **Inputs (Level 3)** |
|                                                                          |   |                            |        |                             |    |                       |   |                           |
| Other current assets - derivatives                             |   | $                               | 5,085  |                             | $       | -                     |   | $                              | 5,085  |   | $ | -  |
|                                                                          |   |                            |        |                             |    |                       |   |                           |
| Other accrued expenses and liabilities - derivatives |   | $                               | 4,662  |                             | $       | 4,662                 |   | $                              | -  |   | $ | -  |
|                                                                          |   |                            |        |                             |    |                       |   |                           |
| Non-controlling interests in NBP                               | $      | 314,329                    |        | $                                | -  |                       | $      | 75,947                    |   | $ | 238,382  |
|                                                                          |   |                            |        |                             |    |                       |   |                           |
|                                                                          |   |                            |        | **Quoted Prices in**   |    |                       |   |                           |
|                                                                          |   |                            |        | **Active Markets for** |    | **Significant Other** |   | **Significant**                |
|                                                                          |   |                            |        | **Identical Assets**        |    | **Observable Inputs** |   | **Unobservable**               |
| **Description**                                                               |   | **August 27, 2011**   |        | **(Level 1)**               |    | **(Level 2)**         |   | **Inputs (Level 3)** |
|                                                                          |   |                            |        |                             |    |                       |   |                           |
| Other current assets - derivatives                             |   | $                               | 4,022  |                             | $       | -                     |   | $                              | 4,022  |   | $ | -  |
|                                                                          |   |                            |        |                             |    |                       |   |                           |
| Other accrued expenses and liabilities - derivatives |   | $                               | 5,860  |                             | $       | 5,860                 |   | $                              | -  |   | $ | -  |
|                                                                          |   |                            |        |                             |    |                       |   |                           |
| Non-controlling interests in NBP                               | $      | 351,071                    |        | $                                | -  |                       | $      | 75,922                    |   | $ | 275,149  |
|                                                                          |   |                            |        |                             |    |                       |   |                           |

 

Management has used certain agreed-upon contractualredemption prices in measuring the fair value of the Klein Affiliatesnon-controlling interest, which is included in Level 2 as of November 26, 2011and August 27, 2011.  

 

Management considered the negotiated equity value forthe transaction with Leucadia and other unobservable inputs in measuring thefair value of the NBPCo Holdings non-controlling interest in NBP, which isincluded in level 3 as of November 26, 2011.  As of August 27, 2011, NBPCoHoldings non-controlling interest was based upon unobservable inputs and wasincluded in Level 3.

 

 

 

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The following table represents a reconciliation of non-controllinginterests in NBP measured at fair value on a recurring basis using significantunobservable inputs (Level 3) during the fiscal quarter ended November 26, 2011(thousands of dollars):

 
| **Fair Value Measurements Using Significant Unobservable Inputs (Level 3)** |
|---------------------------------------------------------------------------------------------------------------------|
|                                                                                                                |   | **Non-controlling Interest ** |
|                                                                                                                |   | **In NBP** |
|                                                                                                                |   |   |
| Balance at August 27, 2011                                                                      | $ | 275,149  |
|                                                                                                                | Allocation of year-to-date net income | 4,216  |
|                                                                                                                | Class A priority distribution | (736) |
|                                                                                                                | Class B distributions | (2,016) |
|                                                                                                                | Appraisal valuation adjustment | (38,231) |
| Balance at November 26, 2011                                                                    | $ | 238,382  |
|                                                                                                                |   |   |

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

As part of NBP’s ongoing operations, NBP is exposed tomarket risks such as changes in commodity prices.  To manage these risks, NBPmay enter into the following derivative instruments pursuant to its establishedpolicies:
    -  Forward purchase contracts forcattle for use in the beef plants
    -  Exchange traded futures contractsfor cattle 
    -  Exchange traded futures contractsfor 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 ofgoods sold in the period of change.  Certain firm commitments for live cattlepurchases and all firm commitments for boxed beef sales are treated as normalpurchases and sales and not recorded at fair value.

NBPenters into certain commodity derivatives, primarily with a diversified groupof highly rated counterparties.  The maximum amount of loss due to the creditrisk of the counterparties, should the counterparties fail to perform accordingto the terms of the contracts, is deemed to be immaterial as of November 26,2011.  The exchange-traded contracts have been entered into under a masternetting agreement.  None of the derivatives entered into have credit-relatedcontingent features.  NBP has $12.3 million and $14.5 million in cashcollateral posted on its derivative liabilities included in other assets on theconsolidated balance sheet as of November 26, 2011 and August 27, 2011,respectively.   

Thefollowing table presents the fair values as discussed in Note 7 and otherinformation regarding derivative instruments not designated as hedginginstruments as of November 26, 2011 and August 27, 2011 (thousands of dollars):
| **November 26, 2011** | **Derivative Asset** |                   | **Derivative Liability** |
|---------------------------------|---------------------------|------------------------|-------------------------------|
|                            |                      | **Balance Sheet** |                          |   |   | **Balance Sheet** |   |   |
|                            |                      | **Location**           |                          | **Fair Value** |   | **Location** |   | **Fair Value** |
|                            |                      |                   |                          |   |   |   |   |   |   |   |
|                            |                      |                   |                          |   |   |   |   | Other accrued |   |   |
|                            |                      | Other current     |                          |   |   | expenses and |   |   |
| Commodity contracts        | assets                    |                   | $                             | 5,085  |   | liabilities |   | $ | 4,662  |
|                            | Total                     |                   |                          |   |   | $ | 5,085  |   |   |   | $ | 4,662  |
| **August 27, 2011**   | **Derivative Asset** |                   | **Derivative Liability** |
|                            |                      | **Balance Sheet** |                          |   |   | **Balance Sheet** |   |   |
|                            |                      | **Location**           |                          | **Fair Value** |   | **Location** |   | **Fair Value** |
|                            |                      |                   |                          |   |   |   |   |   |   |   |
|                            |                      |                   |                          |   |   |   |   | Other accrued |   |   |
|                            |                      | Other current     |                          |   |   | expenses and |   |   |
| Commodity contracts        | assets                    |                   | $                             | 4,022  |   | liabilities |   | $ | 5,860  |
|                            | Total                     |                   |                          |   |   | $ | 4,022  |   |   |   | $ | 5,860  |
|                            |                      |                   |                          |   |   |   |   |   |   |   |

 

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Thefollowing table presents the impact of derivative instruments on the ConsolidatedStatement of Operations for the thirteen week periods ended November 26, 2011 andNovember 27, 2010 (thousands of dollars):

 
| **Derivatives Not**            |   | **Location of Gain (Loss)** |   |   |                                                             |        |                        |
|-------------------------------------|--------|--------------------------------------------|--------|--------|------------------------------------------------------------------|-------------|-----------------------------|
| **Designated as Hedging** |   | **Recognized in Income on** |   |   | **Amount of Gain (Loss) Recognized in** |
| **Instruments**                     |   | **Derivatives**                            |   |   | **Income On Derivatives**                              |
|                                |   |                                       |   |   |                                                             |        | 13 weeks ended    |   | 13 weeks ended |
|                                |   |                                       |   |   |                                                             |        | November 26, 2011 |   | November 27, 2010 |
|                                |   |                                       |   |   |                                                             |        |                        |   |   |   |
| Commodity contracts            |   | Net sales                             |   |   | $                                                                | 3,390  |                        | $ | 6,970  |
| Commodity contracts            |   | Cost of sales                    |   |   | (5,014)                                                          |        | (6,489)                     |
|                                | Total  |                                       |   |   |                                                             | $           | (1,624)                     |   | $ | 481  |

** **

**(9)Income 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 attributable to USPB per unit (EPU)has been presented in the accompanying Consolidated Statements of Operationsand in the table that follows.

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.  For the thirteen week periods ended November 26,2011 and November 27, 2010, income was allocated 10% to the Class A’s and 90%to the Class B’s.  Income (loss) allocated to the Class A and Class B units isthen 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 the CEO or agreement by the Board ofthe Company and the CEO for the CEO to purchase or convert contractual rightsto the maximum 20,000 Class A units at $55 per unit for the periods as providedin the CEO employment agreement.  

 

 

 

 

 

 

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| **Income Per Unit Calculation**                                                |                            |          |                            |
|-----------------------------------------------------------------------------------------------|---------------------------------|---------------|---------------------------------|
|                                                                                          |                            |          | **13 weeks ended**    |   | **13 weeks ended** |
| (thousands of dollars, except unit and per unit data) | **November 26, 2011** |          | **November 27, 2010** |
|                                                                                          |                            |          | (unaudited)                     |   | (unaudited) |
| **Basic income per unit**                                                      |                            |          |                            |
| Income attributable to USPB available to                             |                            |          |                            |
|                                                                                          | unitholders (numerator)    |          |                            |   |
|                                                                                          |                            | Class A  | $                               | 893  |   | $ | 3,545  |
|                                                                                          |                            | Class B  | $                               | 8,035  |   | $ | 31,904  |
|                                                                                          |                            |          |                            |   |   |
| Weighted average outstanding units (denominator)                          |                            |          |                            |
|                                                                                          | Class A                    | 735,385  |                            | 735,385  |
|                                                                                          | Class B                    | 755,385  |                            | 755,385  |
|                                                                                          |                            |          |                            |   |   |
| Per unit amount                                                                     |                            |          |                            |
|                                                                                          | Class A                    | $             | 1.21                       |   | $ | 4.82  |
|                                                                                          | Class B                    | $             | 10.64                      |   | $ | 42.24  |
|                                                                                          |                            |          |                            |   |   |
| **Diluted income per unit:**                                                   |                            |          |                            |
| Income attributable to USPB available to                             |                            |          |                            |
|                                                                                          | unitholders (numerator)    |          |                            |   |
|                                                                                          |                            | Class A  | $                               | 893  |   | $ | 3,545  |
|                                                                                          |                            | Class B  | $                               | 8,035  |   | $ | 31,904  |
|                                                                                          |                            |          |                            |   |   |
| Weighted average outstanding Class A units                           | 735,385                    |          | 735,385                    |
| Effect of dilutive securities - Class A unit options  | 12,754                     |          | 10,678                     |
|                                                                                          | Units (denominator)        | 748,139  |                            | 746,063  |
|                                                                                          |                            |          |                            |   |   |
| Weighted average outstanding Class B units                           | 755,385                    |          | 755,385                    |
| Effect of dilutive securities - Class B unit options  | -                          |          | -                          |
|                                                                                          | Units (denominator)        | 755,385  |                            | 755,385  |
|                                                                                          |                            |          |                            |   |   |
| Per unit amount                                                                     |                            |          |                            |
|                                                                                          | Class A                    | $             | 1.19                       |   | $ | 4.75  |
|                                                                                          | Class B                    | $             | 10.64                      |   | $ | 42.24  |

 

**(10)Subsequent Events**

On December 5, 2011, USPB andthe other members of NBP entered into a Membership Interest Purchase Agreementwith Leucadia National Corporation (Leucadia) (Purchase Agreement), pursuant towhich Leucadia agreed to purchase from USPB and NBPCo Holdings a substantialportion of the issued and outstanding membership interests in NBP.  

 

 

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Following approval of thePurchase Agreement and the related transactions by the Company’s members onDecember 29, 2011, the transactions contemplated by the Purchase Agreement werecompleted on December 30, 2011.  Pursuant to the Purchase Agreement, Leucadiapurchased 56.2415% of the membership interests in NBP (National Interests) fromthe Company for approximately $646.8 million and 19.8775% of the NationalInterests from NBPCo Holdings for approximately $228.6 million.  Ascontemplated by the Purchase Agreement and pursuant to pre-existing put rights,NBP purchased from TKK Investments, LLC (TKK) and TMKCo, LLC (TMKCo) allNational Interests owned by TKK and TMKCo for approximately $75.9 million. Simultaneously, Leucadia sold to TMK Holdings, LLC 0.6522% of the NationalInterests for $7.5 million.  Following consummation of the various transactionscontemplated by the Purchase Agreement, the parties now own the followingpercentage membership interests in NBP: Leucadia 78.9477%; the Company15.0729%; NBPCo Holdings 5.3272%; and TMK Holdings, LLC 0.6522%.

When thetransaction closed, the Company received consideration of approximately $646.8million; of that amount approximately $609.8 million was immediately paid toUSPB in cash.  The remaining amount of approximately $37.0 million wasdeposited in an escrow account to satisfy potential indemnification claims fromLeucadia under the Purchase Agreement.  If no indemnification claims ariseduring a period of two years after the closing of the Purchase Agreement, thoseremaining funds (or any portion remaining after payment of any indemnificationclaims) will be distributed to USPB.  USPB will distribute a portion of thecash consideration received at closing to each unitholder in the amount ofapproximately $70 (before applicable tax withholding, if any) for each USPBClass A unit and $617 for each USPB Class B unit held by such unitholder.  Thetotal distribution to Class A and Class B unitholders will be approximately$517.7 million.  The Company also will repay all outstanding patronage notices,which total approximately $42.1 million.  In addition, the Company’s fiscalyear has been changed to the last Saturday in December.  

As part of the transactions withLeucadia, the Company entered into a Cattle Purchase and Sale Agreement with NBP,pursuant to which the Company will facilitate the delivery of cattle from theCompany’s unitholders and associates to NBP.  NBP, in the aggregate, willpurchase on an annual basis, a base amount of 735,385 head of cattle annually,subject to an adjustment of plus or minus ten percent (10%).  The CattlePurchase and Sale Agreement will remain in effect for an initial term of fiveyears.  

In connection with completion ofthe transactions governed by the Purchase Agreement, the Company entered into aPledge Agreement with NBP (Pledge Agreement).  The Pledge Agreement was enteredinto in order to secure the payment and performance of the Company’sobligations under the Cattle Purchase and Sale Agreement. Under the terms ofthe Pledge Agreement, the Company has granted NBP a perfected security interestin and to the Company’s Membership Interests in NBP (Collateral), subject onlyto the prior first priority security interest in the Collateral held by CoBank,ACB (CoBank), up to a maximum principal amount of $15.0 million plus feesand expenses, pursuant to Pledge Agreement dated July 26, 2011 by and betweenthe Company and CoBank.  

On December 2, 2011, NBP and its subsidiaries National  Beef California, LP and National Carriers, Inc. entered into the Third  Amendment to the Amended and Restated Credit Agreement and Limited Consent  with CoBank, ACB and various other lenders (Third Amendment). The Third  Amendment amends the Amended and Restated Credit Agreement dated as of June  4, 2010 (Credit Facility). The Third Amendment became effective  contemporaneously with the closing of the Purchase Agreement. The primary  purpose of the Third Amendment was to amend the Credit Facility to (i)  consent to the Purchase Agreement, (ii) take into account the formation of  National Beef Pennsylvania, LLC (National Beef PA) and the corresponding  contribution by NBP of certain assets to National Beef PA, (iii) provide for  the addition of National Beef PA as a borrower under the Credit Facility, and  (iv) permit NBP’s fiscal year to change to a fifty-two or fifty-threeweek period ending on the last Saturday in December. The principal provisions ofthe Credit Facility are unchanged by the Third Amendment. 

11

 

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**Item 2. Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

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 the identificationof cattle with Bovine Spongiform Encephalopathy, or BSE, product contaminationand recall concerns, competitive practices and consolidation in the cattleproduction and processing industries and among our customers, actions ofdomestic or foreign governments, hedging risk, changes in interest rates andforeign currency exchange rates, trade barriers and exchange controls, consumerdemand and preferences, the cost of compliance with environmental and healthlaws, loss of key customers, loss of key employees, labor relations, andconsolidation among our customers. 

In light of these risks anduncertainties, there can be no assurance that the results and eventscontemplated by the forward-looking information contained in this report willin fact transpire. Readers are cautioned not to place undue reliance on theseforward-looking statements. We do not undertake any obligation to update orrevise any forward-looking statements. All subsequent written or oralforward-looking statements attributable to us or persons acting on our behalfare expressly qualified in their entirety by these factors.  Please review PartII. Item 1A, *Risk Factors*, included in this report, for other importantfactors that could cause actual results to differ materially from those in anysuch forward-looking statements.

**Recent Events **

On December 5, 2011, USPB andthe other members of NBP entered into a Membership Interest Purchase Agreementwith Leucadia National Corporation (Purchase Agreement), pursuant to which Leucadiaagreed to purchase from USPB and NBPCo Holdings a substantial portion of theissued and outstanding membership interests in NBP.  

Following approval of thePurchase Agreement and the related transactions by the Company’s members onDecember 29, 2011, the transactions contemplated by the Purchase Agreement werecompleted on December 30, 2011.  Pursuant to the Purchase Agreement, Leucadiapurchased 56.2415% of the membership interests in NBP (National Interests) fromthe Company for approximately $646.8 million and 19.8775% of the NationalInterests from NBPCo Holdings for approximately $228.6 million.  Ascontemplated by the Purchase Agreement and pursuant to pre-existing put rights,NBP purchased from TKK Investments, LLC (TKK) and TMKCo, LLC (TMKCo) allNational Interests owned by TKK and TMKCo for approximately $75.9 million. Simultaneously, Leucadia sold to TMK Holdings, LLC 0.6522% of the NationalInterests for $7.5 million.  Following consummation of the various transactionscontemplated by the Purchase Agreement, the parties now own the followingpercentage membership interests in NBP: Leucadia 78.9477%; the Company15.0729%; NBPCo Holdings 5.3272%; and TMK Holdings, LLC 0.6522%.

When the transaction closed, theCompany received consideration of approximately $646.8 million; of that amountapproximately $609.8 million was immediately paid to USPB in cash.  Theremaining amount of approximately $37.0 million was deposited in an escrowaccount to satisfy potential indemnification claims from Leucadia under the PurchaseAgreement.  If no indemnification claims arise during a period of two yearsafter the closing of the Purchase Agreement, those remaining funds (or anyportion remaining after payment of any indemnification claims) will bedistributed to USPB.  USPB will distribute a portion of the cash consideration receivedat closing to each unitholder in the amount of approximately $70 (beforeapplicable tax withholding, if any) for each USPB Class A unit and $617 foreach USPB Class B unit held by such unitholder.  The total distribution toClass A and Class B unitholders will be approximately $517.7 million.  TheCompany also will repay all outstanding patronage notices, which totalapproximately $42.1 million.  In addition, the Company’s fiscal year has been changedto the last Saturday in December.  

| 12 |
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As part of the transactions withLeucadia, the Company entered into a Cattle Purchase and Sale Agreement with NBP,pursuant to which the Company will facilitate the delivery of cattle from theCompany’s unitholders and associates to NBP.  NBP, in the aggregate, willpurchase on an annual basis, a base amount of 735,385 head of cattle annually,subject to an adjustment of plus or minus ten percent (10%).  The CattlePurchase and Sale Agreement will remain in effect for an initial term of fiveyears.  

In connection with completion ofthe transactions governed by the Purchase Agreement, the Company entered into aPledge Agreement with NBP (Pledge Agreement).  The Pledge Agreement was enteredinto in order to secure the payment and performance of the Company’sobligations under the Cattle Purchase and Sale Agreement.  Under the terms ofthe Pledge Agreement, the Company has granted NBP a perfected security interestin and to the Company’s Membership Interests in NBP (Collateral), subject onlyto the prior first priority security interest in the Collateral held by CoBank,ACB (CoBank), up to a maximum principal amount of $15.0 million plus feesand expenses, pursuant to Pledge Agreement dated July 26, 2011 by and betweenthe Company and CoBank.

The events described in this“Recent Events” section were disclosed by USPB in reports on Form 8-K filedwith the Securities and Exchange Commission on December 6, 2011 and December30, 2011, respectively.  

**Overall Industry Outlook**

Growingglobal demand and a positive net beef trade continues to provide strongunderlying support for record cattleandbeef prices. Cattle on feed continue to be higher than prior year led bydrought related placements out of the SouthernPlains and Southwest. The drought has kept herd liquidation active,although slowing during the winter months, and will be akey area of focus going into 2012 in this veryimportant cow-calf region. As inventory levels remain restricted and globaltradepositive, we expect cattle and beefprices to remain at record levels through at least 2012.  

**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.  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.  These constraints and uncertainties have historicallyhad a negative impact on beef demand during the periods in which they occurred.

We cannot presently assess the full economic impact ofthe consequences of BSE on the U.S. beef packing industry or on ouroperations.  Existing or new import restrictions or additional regulatoryrestrictions or disruptions in domestic and foreign consumer demand for beefmay have a material adverse effect on our revenues and net income.

InDecember 2010, the United States Department of Agriculture (USDA) announcedthat China has agreed to resume talks with the Unites States regarding beefmarket access and that technical talks will resume with the goal of re-openingChina’s market for U.S. beef under the age of 30 months in early 2011.  Wecannot presently assess the full economic impact of the re-opening of China’smarket to age verified beef on the U.S. beef packing industry or our operationsand there can be no assurance that such talks will occur or result inre-opening of China’s market to U.S. beef products.  

In March 2011, a major earthquake followed by a tsunami hit theeast coast of Japan and caused significant damage to parts of thecountry.  A portion of our export sales are delivered to Japan, andwhile we cannot presently assess the full long-term economic impact of theearthquake and tsunami on our operations, so far there have been fewinterruptions.

**Results of Operations**

***Thirteen weeks ended November 26, 2011 compared to thirteen weeks endedNovember 27, 2010***

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*General.*  Net income for the thirteen weeks ended November 26, 2011 wasapproximately $14.1 millioncompared to net income of approximately $52.1 million for the thirteen weeksended November 27, 2010,a decrease of approximately $38.0million, or 72.9%.  

Total costs and expenses of approximately$1,759.7 million for the thirteenweeks ended November 26, 2011,were 99.1% of net sales comparedto approximately $1,532.9 millionfor the thirteen weeks ended November 27, 2010,or 96.6% of netsales.  Continued stable demand for beef products and increases incattle prices during the first quarter of fiscal year 2012 as compared to thesame period of fiscal year 2011 resulted in an increase in the percentage oftotal costs to net sales during the period. 

*Net Sales*.  Net sales were approximately $1,775.7 million for the thirteenweeks ended November 26, 2011compared to approximately $1,587.3million for the thirteen weeks ended November 27, 2010, anincrease of approximately $188.4million, or 11.9%.  Theincrease in net sales resulted primarily from a 16.3% increase in the net salesper head during the thirteen weeks ended November 26, 2011 comparedto the same period in the prior year, as the demand for beef products remainedstrong, and price of beef products increased during the period.  

*Cost of Sales*. Cost of sales was approximately $1,733.3 million for the thirteen weeksended November 26, 2011compared to approximately $1,505.4million for the thirteen weeks ended November 27, 2010, anincrease of approximately $227.9million, or 15.1%.   Theincrease was primarily a result of an approximately 21.3% increase in averagecattle prices during the period compared to the prior period, partially offsetby an approximately 2.4% decrease in the total amount of cattle processedduring the period.  

*Selling, General and Administrative Expenses*.  Selling, general andadministrative expenses were approximately $15.3 million for the thirteen weeksended November 26, 2011compared to approximately $14.4million for the thirteen weeks ended November 27, 2010, anincrease of approximately $0.9 million,or 6.3%.  This increase is primarilyrelated to a $0.7 million increase in legal expenses and a $0.6 millionincrease in salaries expense.     

*Depreciation and Amortization Expense*.  Depreciation andamortization expenses were approximately $11.1 million for the thirteen weeksended November 26, 2011compared to approximately $13.1million for the thirteen weeks ended November 27, 2010, adecrease of approximately $2.0 million,or 15.3%.  Depreciationexpense decreased primarily due to approximately $102.1 million of machineryand equipment that was put into service in prior periods becoming fullydepreciated during the period.   

*Operating Income.*  Operating income was approximately $16.0 million for the thirteen weeksended November 26, 2011compared to operating income of approximately $54.4 million for the thirteen weeksended November 27, 2010,a decrease of approximately $38.4million, or 70.6%.  Thedecreased operating income primarily resulted from an approximately 21.3%increase in average cattle prices during the period.  

*Interest Expense*.  Interest expense was $2.3 million for the thirteen weeks ended November26, 2011 compared to $2.6 million for the thirteen weeks ended November 27,2010, a decrease of $0.3 million, or 11.5%.   

*Income Tax Expense*.  Income tax expense was $0.6 million and $0.3 million for thethirteen weeks ended November 26, 2011 and November 27, 2010,respectively.  Income tax expense is recorded on taxable income from NationalCarriers, which is organized as a C Corporation and the apportioned taxableincome of NBP by certain states which impose privilege taxes.  

*Net Income.* As a result of the factors described above, net income for the thirteen-weekperiod ended November 26, 2011 was approximately $14.1 million compared tonet income of approximately $52.1 million for the thirteen-week periodended November 27, 2010, a decrease of approximately $38.0 million, or 72.9%.

*Net Income Attributable to Noncontrolling Interest in NBP.*  Noncontrolling interest in the net income of NBP for the thirteen weeks ended November 26, 2011 was $5.1million compared to $16.5 million in the same period a year ago, a decrease of $11.4 million. The noncontrollinginterest in NBP represents the minority owners’ interest in NBP’s earnings.

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*Net Income Attributable to USPB*.  Net income attributable to USPB for thethirteen-week period ended November 26, 2011 was approximately $8.9 millioncompared to net income of approximately $35.4 million for the thirteen-weekperiod ended November 27, 2010, a decrease of approximately $26.5 million,or 74.9%.

**Liquidityand Capital Resources**

As of November 26, 2011, we had net working capital ofapproximately $289.2 million, which included $0.6 million in distributionspayable, and cash and cash equivalents of$57.4 million.  As of August 27, 2011, we had net working capital ofapproximately $272.7 million, which included cash and cash equivalents of $78.6million, with $8.2 million in distributions payable.  NBP’s primary sources of liquidity are cash flow fromoperations and available borrowings under its amended and restated creditfacility (Credit Facility).

As of November 26, 2011, we had $379.1 million of long-term debt, ofwhich $38.5 million was classifiedas a current liability.  As of November 26, 2011, ourCredit Facility consisted of a term loan, of which $333.0 million wasoutstanding, and a $250.0 million revolving line of credit loan, which hadoutstanding borrowings of $28.2 million, outstanding letters of credit of $22.2million and available borrowings of $199.6 million, based on the mostrestrictive financial covenant calculations.  We also had a $15.0million revolving term loan with CoBank all of which was available.  Cash flowsfrom operations and borrowings under NBP’s Credit Facility have funded itsworking capital requirements, acquisitions,capital expenditures and other general corporate purposes.  USPB and NBP werein compliance with all of the financial covenants under the Credit Facilities asof November 26, 2011.

In addition to outstanding borrowings under NBP CreditFacility, NBP had outstanding borrowings under industrial revenue bonds of $12.2million and capital lease and other obligations of $5.7 million as of November26, 2011.

We believe that available borrowings under NBP’s CreditFacility and cash provided by operating activities will be sufficient tosupport its working capital, capital expenditures and debt service requirementsfor the foreseeable future.  NBP’sability to generate sufficient cash, however, is subject to certain general economic, financial, industry, legislative, regulatoryand other factors beyond its control.  For a review of our obligations thataffect liquidity, please see the “Cash Payment Obligations” table in “Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations”of our Annual Report on Form 10-K for the fiscal year ended August 27, 2011.

*OperatingActivities*

Net cash used in operating activities inthe thirteen weeks ended November 26, 2011 wasapproximately $16.6 millioncompared to net cash provided by operating activities of approximately $17.5 million in the thirteen weeks ended November 27, 2010.  The$34.1 million change was primarilydue to an approximately $38.0 milliondecrease in net income during the period.  The remaining difference is the resultof various working capital changes during the period.  

*InvestingActivities*

Net cash used in investing activities wasapproximately $10.5 million in thethirteen weeks ended November 26, 2011 comparedto approximately $12.6 million inthe thirteen weeks ended November 27, 2010.  Thischange in cash used was primarily attributable to an approximate $1.0 million decrease in expendituresfor property, plant and equipment during the thirteen weeks ended November 26, 2011 ascompared to the thirteen weeks endedNovember 27, 2010.

*FinancingActivities*

Net cash provided by financing activitieswas approximately $6.0 million inthe thirteen weeks ended November 26, 2011 comparedto net cash provided by financing activities of approximately $8.0 million in the thirteen weeks ended November 27, 2010.  Therewere various financing activity changes during the period, including anadditional $4.0 million paid onthe term loan during the thirteenweeks ended November 26, 2011compared to the prior year period.  In addition, net receipts underrevolving credit lines decreased approximately $9.8 million during the thirteen weeks ended November 26,2011, compared to the prior year.  These increases in cash providedby financing activities were partially offset by an $11.5 million change in overdraftbalances during the thirteen weeksended November 26, 2011compared to the thirteen weeksended November 27, 2010.  

 

 

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*Amendedand Restated Senior Credit Facility*

Effectiveas of June 4, 2010, NBP’s Credit Facility was amended and restated to: (1)increase the borrowings under the Credit Facility by providing for a term loanfacility of up to $375 million and a revolving line of credit of up to $250million; (2) reduce the applicable margin on the rates of interest of the termloan and revolving line of credit; (3) revise the payment schedule of the termloan; (4) extend the maturity date of the Credit Facility to June 4, 2015; (5)remove limitations on capital expenditures; (6) add new financial covenantsregarding adjusted net worth and a fixed charge coverage ratio; and (7) add twowholly owned subsidiaries, National Beef California, LP and National Carriers,Inc., as loan parties and guarantors. The lender financing charges for theamended and restated Credit Facility of approximately $4.2 million are beingamortized over the life of the loan. 

OnJune 10, 2011, NBP’s Credit Facility was amended andrestated to: (1) reduce the applicable margin by up to 0.75% for “LIBOR Rate”advances and “Base Rate” advances, (2) revise the “fixed charge coverage ratio”covenant provisions to provide NBP credit of up to $30 million for maintainingnet asset borrowing base levels that exceed the lenders' aggregate creditcommitments under the Credit Facility and (3) extend the maturity date of theCredit Facility to June 4, 2016.  The related financing charges of approximately $0.8 million willbe amortized over the life of the loan.

OnDecember 2, 2011, NBP and its subsidiaries National Beef California, LP andNational Carriers, Inc. entered into the Third Amendment to the Amended andRestated Credit Agreement and Limited Consent with CoBank, ACB and variousother lenders (Third Amendment). The Third Amendment amends the Amended andRestated Credit Agreement dated as of June 4, 2010 (Credit Facility). The ThirdAmendment became effective contemporaneously with the closing of the PurchaseAgreement. The primary purpose of the Third Amendment was to amend the CreditFacility to (i) consent to the Purchase Agreement, (ii) take into account theformation of National Beef Pennsylvania, LLC (National Beef PA) and thecorresponding contribution by NBP of certain assets to National Beef PA, (iii)provide for the addition of National Beef PA as a borrower under the CreditFacility, and (iv) permit NBP’s fiscal year to change to a fifty-two orfifty-three week period ending on the last Saturday in December. The principalprovisions of the Credit Facility are unchanged by the Third Amendment.

The borrowings under the Credit Facility bear interest at LIBOR orthe Base Rate, plus the applicable margin. The applicable margin for therevolving line of credit and the term loan will be as set forth on a grid basedon different ratios of funded debt to EBITDA. As of November 26, 2011, theinterest rates for the term loan and revolving loan were approximately 2.00%and 4.00%, respectively. 

Theborrowings under the revolving loan are available for NBP’s working capitalrequirements, capital expenditures and other general corporate purposes. Theadvance rates under the borrowing base are 90% on eligible accounts and 70% oneligible inventory. The Credit Facility is secured by a first priority lien onsubstantially all of NBP’s assets and the assets of its subsidiaries.

Effective as of the June 10, 2011 amendment, the principal amountoutstanding under the term loan is due and payable in equal quarterlyinstallments of $9.25 million. All outstanding loan amounts are due and payableon June 4, 2016. Prepayment of the loans is allowed at any time.

TheCredit Facility contains customary affirmative covenants relating to NBP LLCand its subsidiaries, including, without limitation, conduct of business,maintenance of insurance, compliance with laws, maintenance of properties,keeping of books and records, and the furnishing of financial statements. Thefacility also contains customary negative covenants relating to NBP and itssubsidiaries, including, without limitation, restrictions on: distributions,mergers, asset sales, investments and acquisitions, encumbrances, affiliate transactions,and ERISA matters. The ability of NBP and its subsidiaries to engage in otherbusiness, incur debt or grant liens is also restricted. 

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The Credit Facility contains customaryevents of default, including, without limitation, failure to make payment whendue, 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, failure of any of the loandocuments to remain in full force, and NBP’s failure to properly fund itsemployee benefit plans. The Credit Facility also includes customary provisionsprotecting the lenders against increased costs or loss of yield resulting fromchanges in tax, reserve, capital adequacy and other requirements of law.

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

Theprincipal market risks affecting NBP’s business are exposure to changes inprices for commodities, such as livestock and boxed beef, and interest raterisk. 

*Commodities.* NBP uses various raw materials, many of which are commodities.Raw materials are generally available from several different sources, and NBPpresently believes that it can obtain them as needed.  Commoditiesare subject to price fluctuations that may create price risk. When appropriate,NBP may hedge commodities in order to mitigate this price risk. While this maytend to limit NBP’s ability to participate in gains from commodity pricefluctuations, it also tends to reduce the risk of loss from changes incommodity prices.  To the extent the contracts are not designated asnormal purchases, NBP reflects commodity contract gains and losses asadjustments to the basis of underlying commodities purchased; gains or lossesare recognized in the statement of operations as a component of costs of goodssold. 

NBPpurchases cattle for use in its processing businesses. From time to time, NBPenters into forward purchase contracts at prices determined prior to thedelivery of the cattle. The commodity price risk associated with theseactivities can be hedged by selling (or buying) the underlying commodity, or byusing an appropriate commodity derivative instrument. The particular hedginginstrument NBP uses depends on a number of factors, including availability ofappropriate derivative instruments. 

NBPsells commodity beef products in its business. Commodity beef products aresubject to price fluctuations that may create price risk. From time to time,NBP enters into forward sales contracts at prices determined prior to shipment.NBP may hedge the commodity price risk associated with these activities in orderto mitigate this price risk. While this may tend to limit its ability toparticipate in gains from commodity price fluctuations, it also tends to reducethe risk of loss from changes in commodity beef prices. To the extent thecontracts are not designated as normal sales, NBP reflects commodity contractgains and losses as adjustments to the basis of underlying commodities sold;gains or losses are recognized in the statement of operations as a component ofnet sales. 

Fromtime to time, NBP purchases cattle futures and optionscontracts.   Its primary use of these contracts is to partiallyfix its future input costs when NBP has committed forward sales purchase ordersfrom customers at a specified fixed price.   The longestduration futures contract owned is sixteen months.   Inaccordance with ASC Topic 815, *Accounting for Derivative Instruments andHedging Activities*, as amended, NBP accounts for futures contracts andtheir related firm purchase commitments at fair value. Certain firm commitmentsfor live cattle purchases and all firm commitments for boxed beef sales aretreated as “normal purchases and sales” and not marked tomarket.  ASC Topic 815 imposes extensive recordkeeping requirementsin order to treat a derivative instrument as a hedge for accounting purposes.Derivatives qualify for treatment as hedges when there is a high correlationbetween the change in fair value of the instrument and the related change infair value of the underlying commitment. For derivatives that qualify aseffective hedges, the change in fair value has no net effect on earnings untilthe hedged transaction affects earnings. For derivatives that are notdesignated as hedging instruments, or for the ineffective portion of a hedginginstrument, the change in fair value does affect current period netearnings. 

WhileNBP’s management believes each of these instruments help mitigate variousmarket risks, they are not designated and accounted for as hedges as a resultof the extensive recordkeeping requirements of this statement. Accordingly, thegains and losses associated with the change in fair value of the instrument andthe offsetting gains and losses associated with changes in the market value ofcertain of the firm purchase commitments related to the futures contracts arerecorded to income and expense in the period of change. 

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NBP uses a sensitivity analysis to evaluate the effect thatchanges in the market value of commodities will have on these commodityderivative instruments.  NBP feels the sensitivity analysis appropriatelyreflects the potential market value exposure associated with the use ofderivative instruments.  As of November 26, 2011 and August 27, 2011, thepotential change in the fair value of the derivative instruments NBP holds thatare not designated as normal purchases or sales, assuming a hypothetical 10%decrease in the underlying commodity price in each year, was $2.0 million and$11.6 million, respectively. 

*Interest Rates.* As a result of our normal borrowing and leasing activities, ouroperating results are exposed to fluctuations in interest rates, which wemanage primarily through our regular financing activities. We generallymaintain limited investments in cash and cash equivalents. 

NBPhas long-term debt with variable interest rates. Short-term debt is primarilycomprised of the current portion of long-term debt maturing twelve months fromthe balance sheet date.  NBP’s variable interest expense is sensitiveto changes in the general level of interest rates.  As of November 26, 2011, the weighted average interest rate on NBP’s$373.5 million of variable rate debt was approximately 2.12%. As of August 27, 2011, theweighted average interest rate on NBP’s $254.5 million of variable interestdebt was approximately 1.90%. 

NBPhad total interest expense of approximately $2.3million during the thirteen week period ending November 26, 2011.  Theestimated increase in interest expense from a hypothetical 200 basis pointincrease in applicable variable interest rates would have been approximately$1.8 million in the thirteen weekperiod ending November 26, 2011. 

*ForeignOperations.*  Transactionsdenominated in a currency other than an entity’s functional currency may exposethat entity to currency risk.  Although NBP operates in internationalmarkets including Japan and South Korea, product sales are predominately madein United States dollars, and therefore, currency risks are limited.

**Item4.  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 November26, 2011 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 Proxy Statement filed with the Securities and Exchange Commissionon December 6, 2011, which was filed as Exhibit 20.1 to our report on Form 8-K,have not materially changed.  Please refer to the Company’s Proxy Statement withrespect to the Leucadia transaction 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.**

ASpecial Meeting of Members of the Company was held on December 29, 2011. December 5, 2011 was fixed as the record date for determining those members ofthe Company entitled to vote at the Special Meeting and any adjournments orpostponements of the meeting.  Two proposals were presented for memberconsideration.  The first was to consider and vote upon a proposal to adopt andapprove the Purchase Agreement and the various transactions contemplated by thePurchase Agreement.  The second proposal was to grant the persons named asproxies discretionary authority to vote to adjourn the Special Meeting, ifnecessary, for the purpose of soliciting additional proxies to vote in favor ofthe approval and adoption of the Purchase Agreement and approval of the proposedtransaction.

Under the Company’sCertificate of Formation, Limited Liability Company Agreement (as amended) andapplicable Delaware law, the affirmative vote of members holding a majority ofthe voting power of each class of units was required to approve the PurchaseAgreement and the contemplated transactions.  The Company’s members holdingClass A units are each entitled to one vote per member, and the Company’smembers holding Class B units are each entitled to one vote per Class B unitowned by such member.  For the Class A members, out of 451 votes, 428 membersvoted for the first proposal and 427 members voted for the second proposal. For the Class B units, out of 754,230 votes, 748,061 units were voted for thefirst proposal and 747,861 units voted for the second proposal.  Therefore eachproposal was adopted by the Company’s members.

**Item 5. Other Information.**

None.         

**Item 6. Exhibits.**

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| (A)  |   | Exhibits                                                                                                                                                                                                                                                        |
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| 10.1 |   | Second Amendment to CEO  Employment Agreement between U.S. Premium Beef, LLC and Steven D. Hunt (incorporated  herein by reference to Exhibit 10.1 to Company’s Current Report on Form 8-K (File  No. 333-115164) filed with the SEC on December 6, 2011). |            10.2   Escrow Agreement dated  December 30, 2011 between and among the Company, Leucadia National  Corporation, NBPCo Holdings, LLC, and Marshall & Ilsley Trust Company,  N.A. (incorporated herein by reference to Exhibit 10.1 to Company’s Current  Report on Form 8-K (File No. 333-115164) filed with the SEC on December 30,  20111).           10.3   Cattle Purchase and Sale  Agreement dated December 30, 2011  between the Company and National Beef  Packing Company, LLC(incorporated herein by reference to Exhibit 10.2 to  Company’s Current Report on Form 8-K (File No. 333-115164) filed with the SEC  on December 30, 2011).           10.4   
Pledge Agreement dated  December 30, 2011 between the Company and National Beef Packing Company, LLC,  with attached Consent and First Amendment to Pledge Agreement and Security  Agreement dated December 30, 2011 between the Company and CoBank, ACB(incorporated  herein by reference to Exhibit 10.3 to Company’s Current Report on Form 8-K (File  No. 333-115164) filed with the SEC on December 30, 2011).
           20.1   Proxy Statement regarding proposed transaction	sent by U.S. Premium Beef, LLC to it members on or about December 5,	2011(incorporated herein by reference to Exhibit 20.1 to Company's Current	Report on Form 8-K (File No. 333-111407) filed with the SEC on December 6,	2011).           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).

 
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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 10, 2012

 

 

 

 

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