**UNITED STATES 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 May 26, 2007** |
|               |   |   | **                                                              or** |
|               |   |   |   |
|               | o |   | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF  	THE SECURITIES EXCHANGE ACT OF 1934** |
|               |   |   |   |
|               |   |   | **For the transition  period from               to             .** |

**Commissionfile number 333-111407**

**NATIONALBEEF PACKING COMPANY, LLC***(Exact name of registrant as specified in its charter)*

| **DELAWARE**                                                         |  | **48-1129505**                                |
|----------------------------------------------------------------------|--|-----------------------------------------------|
| **(State  or other jurisdiction of	incorporation  or organization)** |  | **(I.R.S.  employer	identification  number)** |

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

**Telephone:(800) 449-2333 (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 is a large accelerated filer, an accelerated filer,or a non-accelerated filer.  See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. 

LargeAccelerated Filer o            Accelerated Filer o             Non-AcceleratedFiler þ

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes o  No þ

There is no marketfor the Registrant’s equity.  As of June 30, 2007, there were 127,748,923 ClassA units and 19,474,520 Class B units outstanding.     

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|              | **TABLE OF CONTENTS**                                                                        |              |
|--------------|----------------------------------------------------------------------------------------------|--------------|
|         |                                                                                         |         |
| **PART I.**  | **FINANCIAL INFORMATION**                                                                    | **Page No.** |
|              |                                                                                         |              |
| Item 1.      | Financial Statements.                                                                        | 1            |
|              |                                                                                         |              |
| Item 2.      | Management’s  Discussion and Analysis of Financial Condition and Results of Operations. | 10           |
|              |                                                                                         |              |
| Item 3.      | Quantitative and Qualitative Disclosures About Market Risk.                                  | 19           |
|              |                                                                                         |              |
| Item 4.      | Controls and Procedures.                                                                     | 20           |
|              |                                                                                         |              |
|              |                                                                                         |              |
| **PART II.** | **OTHER INFORMATION**                                                                        |              |
|              |                                                                                         |              |
| Item 1.      | Legal Proceedings.                                                                           | 21           |
|              |                                                                                         |              |
| Item 1A.     | Risk Factors.                                                                                | 21           |
|              |                                                                                         |              |
| Item 2.      | Unregistered Sales of Equity Securities and Use of Proceeds.                                 | 21           |
|              |                                                                                         |              |
| Item 3.      | Defaults Upon Senior Securities.                                                             | 21           |
|              |                                                                                         |              |
| Item 4.      | Submission of Matters to a Vote of Security Holders.                                         | 21           |
|              |                                                                                         |              |
| Item 5.      | Other Information.                                                                           | 21           |
|              |                                                                                         |              |
| Item 6.      | Exhibits.                                                                               | 21           |
|              |                                                                                         |              |
|              | Signatures.                                                                                  | 22           |

 

 

Unless the context indicates orotherwise requires, the terms “National Beef,” “NBP,” “Company,” “we,” “our,”and “us” refer to National Beef Packing Company, LLC and its consolidatedsubsidiaries.  As used in this report, the term “U.S. Premium Beef” or “USPB” refersto U.S. Premium Beef, LLC, a Delaware limited liability company, formerly U.S.Premium Beef, Ltd., a Kansas cooperative, which owns a majority interest inNational Beef.  

 

ii

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**PART I.  FINANCIAL INFORMATION**

** **

**Item 1.  Financial Statements.**

 

 

 

 

 

 

 

 

 

1

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**NATIONAL BEEFPACKING COMPANY, LLCAND SUBSIDIARIES**

**Consolidated Balance Sheets(in thousands)**

| ** **                                                                                                                                                                                          | **May 26, 2007** |                          |                     |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|--------------------------|---------------------|
| ** **                                                                                                                                                                                          | **(unaudited)**  |      | **August 26, 2006** |
| **Assets**                                                                                                                                                                                          |                  |                          |                     |
| Current  assets:                                                                                                                                                                                    |                  |                          |                     |
| Cash  and cash equivalents                                                                                                                                                                          | $                | 31,525                   |                     | $ | 32,686 |
| Accounts  receivable, less allowance for returns and

         doubtful accounts of $2,161 and

         $2,412, respectively | 191,230          |                          | 173,233             |
| Due  from affiliates                                                                                                                                                                                | 3,888            |                          | 2,703               |
| Other  receivables                                                                                                                                                                                  | 7,596            |                          | 5,943               |
| Inventories                                                                                                                                                                                         | 175,707          |                          | 145,009             |
| Other  current assets                                                                                                                                                                               | 9,496            |                          | 20,171              |
| Total  current assets                                                                                                                                                                               | 419,442          |                          | 379,745             |
|                                                                                                                                                                                                     |                  |                          |                     |
|     Property, plant and  equipment, at cost                                                                                                                                          | 361,619          |                          | 331,271             |
| Less  accumulated depreciation                                                                                                                                                                      | 91,506           |                          | 69,270              |
|  Net  property, plant and equipment                                                                                                                                                            | 270,113          |                          | 262,001             |
| Goodwill                                                                                                                                                                                            | 79,542           |                          | 79,411              |
| Other  intangibles, net of accumulated amortization of

               $6,730 and $5,276, respectively                             | 29,082           |                          | 30,562              |
| Other  assets                                                                                                                                                                                       | 6,040            |                          | 6,191               |
|                            Total assets                                | $                | 804,219                  |                     | $ | 757,910 |
| **Liabilities and Members’ Capital**                                                                                                                                                           |                  |                          |                     |
| Current  liabilities:                                                                                                                                                                               |                  |                          |                     |
| Current  installments of long-term debt                                                                                                                                                             | $                | 2,374                    |                     | $ | 2,370 |
| Cattle  purchases payable                                                                                                                                                                           | 67,238           |                          | 58,320              |
| Accounts  payable – trade                                                                                                                                                                      | 58,607           |                          | 54,393              |
| Due  to affiliates                                                                                                                                                                                  | 383              |                          | 371                 |
| Accrued  compensation and benefits                                                                                                                                                                  | 13,229           |                          | 23,806              |
| Accrued  insurance                                                                                                                                                                                  | 12,744           |                          | 17,651              |
| Other  accrued expenses and liabilities                                                                                                                                                             | 13,433           |                          | 10,854              |
| Distributions  payable                                                                                                                                                                              | 6,429            |                          | 11,259              |
|          Total current liabilities                                                                                                                               | 174,437          |                          | 179,024             |
| Long-term  debt, excluding current installments                                                                                                                                                     | 449,880          |                          | 376,377             |
| Other  liabilities                                                                                                                                                                                  | 2,765            |                          | 2,961               |
| Total  liabilities                                                                                                                                                                                  | 627,082          |                          | 558,362             |
| Minority  interest                                                                                                                                                                                  | 901              |                          | 777                 |
| Capital  subject to redemption                                                                                                                                                                      | 66,381           |                          | 72,178              |
| Members’  capital:                                                                                                                                                                             |                  |                          |                     |
| Members’  capital                                                                                                                                                                              | 109,793          |                          | 126,540             |
| Accumulated  other comprehensive income                                                                                                                                                             | 62               |                          | 53                  |
| Total  members’ capital                                                                                                                                                                        | 109,855          |                          | 126,593             |
| Commitments  and contingencies                                                                                                                                                                      | -                |                          | -                   |
|                           Total liabilities and members’ capital       | $                | 804,219                  |                     | $ | 757,910 |
|                                                                                                                                                                                                     |                  |                          |                     |
| See accompanying notes to  consolidated financial statements.                                                                                                                                       |                  |                          |

 

2

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**NATIONAL BEEFPACKING COMPANY, LLCAND SUBSIDIARIES**

**Consolidated Statements of Operations(in thousands)**

** **

|                                                                                                                                   | **13 weeks ended** |       | **13 weeks ended** |    | **39 weeks ended** |    | **39 weeks ended** |
|----------------------------------------------------------------------------------------------------------------------------------------|--------------------|-----------------|--------------------|--------------|--------------------|--------------|--------------------|
|                                                                                                                                   | **May 26, 2007**   |       | **May 27, 2006**   |    | **May 26, 2007**   |    | **May 27, 2006**   |
|                                                                                                                                   | **(unaudited)**    |            | **(unaudited)**    |         | **(unaudited)**    |         | **(unaudited)**    |
| Net  sales                                                                                                                             | $                  | 1,479,676  |                    | $            | 1,134,514     |              | $                  | 4,066,020  |  | $ | 3,310,278  |
| Costs  and expenses:                                                                                                                   |                    |                 |                    |              |                    |              |                    |
| Cost  of sales                                                                                                                         | 1,436,361     |                 | 1,085,946     |              | 3,993,987     |              | 3,241,210     |
| Selling,  general and administrative                                                                                                   | 11,517        |                 | 8,926         |              | 31,097        |              | 25,987        |
| Depreciation  and amortization                                                                                                         | 8,245         |                 | 7,091         |              | 24,056        |              | 20,555        |
|       Total costs and expenses                                                                                     | 1,456,123     |                 | 1,101,963     |              | 4,049,140     |              | 3,287,752     |
| Operating  income                                                                                                                      | 23,553        |                 | 32,551        |              | 16,880        |              | 22,526        |
| Other  income/(expense):                                                                                                               |                    |                 |                    |              |                    |              |                    |
| Interest  income                                                                                                                       | 136           |                 | 106           |              | 506           |              | 288           |
| Interest  expense                                                                                                                      | (10,543)           |            | (7,938)            |         | (29,505)           |              | (22,909)           |
| Minority  owners' interest in net 

      loss/(income) of  Kansas City

      Steak, LLC | 90            |                 | (52)               |         | (262)              |              | (120)              |
| Equity  in loss of aLF Ventures, LLC                                                                                                   | (23)               |            | (39)               |         | (77)               |              | (119)              |
| Other,  net                                                                                                                            | 884           |                 | 686           |              | 1,561         |              | 1,923         |
| Income/(loss)  before taxes                                                                                                            | 14,097        |                 | 25,314        |              | (10,897)           |              | 1,589         |
| Income tax expense/(benefit)                                                                                                           | 536           |                 | (128)              |         | 1,421         |              | 1,048         |
| Net  income/(loss)                                                                                                                     | $                  | 13,561     |                    | $            | 25,442        |              | $                  | (12,318) |  | $ | 541  |
|                                                                                                                                   |                    |                 |                    |              |                    |              |
|                                                                                                                                   |                    |                 |                    |              |                    |              |
| See accompanying notes to consolidated financial  statements.                                                                          |                    |                 |                    |              |                    |              |

** **

** **

 3

** **

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** NATIONAL BEEFPACKING COMPANY, LLCAND SUBSIDIARIES**

**Consolidated Statements of Cash Flows(in thousands)**

** **

|                                                                                                                                                                                                                                                                                                                                                                            | **39 weeks ended** |                          | **39 weeks ended** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------------|--------------------|
|                                                                                                                                                                                                                                                                                                                                                                            | **May 26, 2007**   |                          | **May 27, 2006**   |
|                                                                                                                                                                                                                                                                                                                                                                            | **(unaudited)**    |      | **(unaudited)**    |
| Cash  flows from operating activities:                                                                                                                                                                                                                                                                                                                                     |                    |                          |                    |
|  Net (loss)/income                                                                                                                                                                                                                                                                                                                                                    | $                  | (12,318 )                |                    | $ | 541  |
| Adjustments to reconcile net (loss)/income to net  cash (used 	in)/ provided by operating activities:                                                                                                                                                                                                                                                                      |                    |                          |                    |
|  Depreciation and amortization                                                                                                                                                                                                                                                                                                                                        | 24,056        |                          | 20,555        |
|  Gain on disposal of property, plant and equipment                                                                                                                                                                                                                                                                                                                    | (137)              |                          |  (138)        |
|  Minority interest                                                                                                                                                                                                                                                                                                                                                    | 124           |                          | (16)               |
|  Change in assets and liabilities:                                                                                                                                                                                                                                                                                                                                    |                    |                          |                    |
|        Accounts receivable                                                                                                                                                                                                                                                                                                                   | (17,997)           |                          | 17,535        |
|        Due from affiliates                                                                                                                                                                                                                                                                                                                   | (1,185)            |                          | 1,204         |
|        Other receivables                                                                                                                                                                                                                                                                                                                     | (2,901)            |                          | (668)              |
|        Inventories                                                                                                                                                                                                                                                                                                                           | (30,698)           |                          | (29,601)           |
|        Other assets                                                                                                                                                                                                                                                                                                                          | 10,722        |                          | (951)              |
|        Cattle purchases payable                                                                                                                                                                                                                                                                                                              | 1,853         |                          | 2,804         |
|        Accounts payable                                                                                                                                                                                                                                                                                                                      | (1,602)            |                          | 1,297         |
|        Due to affiliates                                                                                                                                                                                                                                                                                                                     | 12            |                          | 29            |
|        Accrued compensation and benefits                                                                                                                                                                                                                                                                                                     | (10,577)           |                          | (1,419)            |
|        Accrued insurance                                                                                                                                                                                                                                                                                                                     | (4,907)            |                          | (1,751)            |
|        Other accrued expenses and liabilities                                                                                                                                                                                                                                                                                                | 2,383         |                          | 7,441         |
|            Net cash (used in)/provided by operating  activities                                                                                                                                                                                                                                                          | (43,172)           |                          | 16,862        |
|                                                                                                                                                                                                                                                                                                                                                             |                    |                          |                    |
| Cash flows from investing activities:                                                                                                                                                                                                                                                                                                                                      |                    |                          |                    |
| Capital expenditures, including interest capitalized                                                                                                                                                                                                                                                                                                                       | (30,959)           |                          | (22,758)           |
| Acquisition of businesses, final purchase price  adjustment                                                                                                                                                                                                                                                                                                                | 1,248         |                          | -             |
| Acquisition of intangible assets                                                                                                                                                                                                                                                                                                                                           | -             |                          | (675)              |
| Proceeds from sale of property, plant and equipment                                                                                                                                                                                                                                                                                                                        | 381           |                          | 832           |
|                 Net cash used in investing activities                                                                                                                                                                                                                                           | (29,330)           |                          | (22,601)           |
|                                                                                                                                                                                                                                                                                                                                                                       |                    |                          |                    |
| Cash flows from financing activities:                                                                                                                                                                                                                                                                                                                                      |                    |                          |                    |
| Net receipts under revolving credit lines                                                                                                                                                                                                                                                                                                                                  | 42,854        |                          | 7,274         |
| Repayments of term note payable                                                                                                                                                                                                                                                                                                                                            | (7,384)            |                          | -             |
| Borrowings under term note payable                                                                                                                                                                                                                                                                                                                                         | 40,000        |                          | -             |
| Change in overdraft balances                                                                                                                                                                                                                                                                                                                                               | 12,881        |                          | 1,814         |
| Net repayments of other indebtedness                                                                                                                                                                                                                                                                                                                                       | (1,963)            |                          | (764)              |
| Member distributions                                                                                                                                                                                                                                                                                                                                                       | (15,056)           |                          | (7,653)            |
|                 Net cash provided by financing  activities                                                                                                                                                                                                                                      | 71,332        |                          | 671           |
|                                                                                                                                                                                                                                                                                                                                                                       |                    |                          |                    |
| Effect of exchange rate changes on cash                                                                                                                                                                                                                                                                                                                                    | 9             |                          | 19            |
|                      Net decrease in cash                                                                                                                                                                                                                              | (1,161)            |                          | (5,049)            |
| Cash and cash equivalents at beginning of period                                                                                                                                                                                                                                                                                                                           | 32,686        |                          | 33,872        |
| Cash and cash equivalents at end of period                                                                                                                                                                                                                                                                                                                                 | $                  | 31,525              |                    | $ | 28,823  |
|                                                                                                                                                                                                                                                                                                                                                                       |                    |                          |                    |
| Supplemental disclosures:                                                                                                                                                                                                                                                                                                                                                  |                    |                          |                    |
| Cash paid during the period for interest                                                                                                                                                                                                                                                                                                                                   | $                  | 25,125              |                    | $ | 17,295 |
| Cash  paid during the period for taxes                                                                                                                                                                                                                                                                                                                                     |                    | 734                 |                    |  | 137 |
| Supplemental non-cash disclosure of investing  activities:                                                                                                                                                                                                                                                                                                                 |                    |                          |                    |
|         Assets acquired  through capital lease                                                                                                                                                                                                                                                                                          |                    | 49                  |                    |  | 8,697 |
|                                                                                                                                                                                                                                                                                                                                                                       |                    |                          |                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                       |                    |                          |                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                       |                    |                          |
|                                                    See accompanying notes to consolidated financial  statements. |                    |                          |

** **

4

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**NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

** **

**(1)Interim Financial Statements**

**Basisof Presentation**

The accompanying unaudited Consolidated FinancialStatements have been prepared in accordance with U.S. generally acceptedaccounting principles (GAAP) for interim financial information; therefore, theydo not include all of the information and footnotes required by GAAP forcomplete financial statements. In the opinion of management, all adjustmentsconsidered necessary for a fair presentation have been included usingmanagement’s best estimates and judgments where appropriate.  These estimatesand judgments affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financialstatements.  The estimates and judgments will also affect the reported amountsfor certain revenues and expenses during the reporting period.  Actual resultscould differ materially from these estimates and judgments.  For furtherinformation, refer to the audited Consolidated Financial Statements and Notesto Consolidated Financial Statements, which are included in NBP’s Annual Report on Form 10-K on file with the Securities and Exchange Commission (SEC) forthe fiscal year ended August 26, 2006.  The results of operations for theinterim periods presented are not necessarily indicative of the results for afull fiscal year. 

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

**(2)New Accounting Pronouncements**

                InJune 2006, the Financial Accounting Standards Board (FASB) issued FASBInterpretation No. 48 (FIN 48), *Accounting for Uncertainty in Income Taxes*,to address uncertainty in income taxes recognized in an enterprise’s financialstatements.  Specifically, FIN 48 prescribes (a) a consistent recognitionthreshold and (b) a measurement attribute for the financial statementrecognition and measurement of a tax position taken or expected to be taken ina tax return, and provides related guidance on derecognition, classification,interest and penalties, accounting in interim periods, disclosure, andtransition.  FIN 48 will apply to fiscal years beginning after December 15,2006, with earlier adoption permitted.  NBP is evaluating the impact FIN 48 mayhave, if any, on its Consolidated Financial Statements.

                InSeptember 2006, the SEC staff issued Staff Accounting Bulletin No. 108 (SAB108), *Considering the Effects of Prior Year Misstatements when QuantifyingMisstatements in Current Year Financial Statements*.  Traditionally therehave been two widely recognized methods for quantifying the effects offinancial statement misstatements:  the “roll-over” method and the “iron-curtain”method.  The roll-over method focuses primarily on the impact of a misstatementon the income statement, including the reversing effect of prior yearmisstatements.  The iron-curtain method focuses primarily on the effect ofcorrecting the period-end balance sheet with less emphasis on the reversingeffects of prior year errors on the income statement.  In SAB 108, the SECstaff established an approach that is commonly referred to as a “dual approach”as the SEC now requires quantification of errors under both the iron-curtainand the roll-over methods.  SAB 108 was adopted by NBP during the first quarterof fiscal 2007.  The adoption of SAB 108 did not have any effect on NBP’sfinancial position, net earnings or prior year financial statements.

                InSeptember 2006, the FASB issued Statement of Financial Accounting Standard No.157 (SFAS 157), *Fair Value Measurements*.  This statement establishes asingle authoritative definition of fair value, sets out a framework formeasuring fair value, and requires additional disclosures about fair valuemeasurements.  SFAS 157 defines fair value as “the price that would be receivedto sell an asset or paid to transfer a liability in an orderly transactionbetween market participants at the measurement date.”  SFAS 157 will apply tofiscal years beginning after November 15, 2007, and interim periods withinthose fiscal years.  NBP is currently evaluating the impact SFAS 157 may have,if any, on its Consolidated Financial Statements.

 

5

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                InFebruary 2007, the FASB issued Statement of Financial Accounting Standard No.159 (SFAS 159), *The Fair Value Option for Financial Assets and Financial Liabilities*. This statement provides companies with an option to report selected financialassets and liabilities at fair value.  SFAS 159 will apply to fiscal yearsbeginning after November 15, 2007.  NBP is currently evaluating the impact SFAS159 may have, if any, on its Consolidated Financial Statements.

**(3)Inventories**

Inventories at May 26, 2007 and August 26, 2006consisted of the following (in thousands):

|                                     | **May 26, 2007** | ** ** | **August 26, 2006** |
|-------------------------------------|------------------|------------|---------------------|
| Dressed  and boxed beef             | $                | 137,857    |                     | $ | 117,712 |
| Beef  by-products                   |                  | 24,696     | ** **          | ** ** | 15,180 |
| Supplies                            |                  | 13,154     | ** **          | ** ** | 12,117 |
|      Total inventory | $                | 175,707    |                     | $ | 145,009 |

** **

** (4)Comprehensive Income/(Loss)**

Comprehensive income/(loss), which consists of net income/(loss)and foreign currency translation adjustments, was as follows for the periodsindicated (in thousands):

|                                                                                 | **13 weeks ended** | ** ** | **13 weeks ended** | ** ** | **39 weeks ended** | ** ** | **39 weeks ended** |
|---------------------------------------------------------------------------------|--------------------|------------|--------------------|------------|--------------------|------------|--------------------|
|                                                                                 | **May 26, 2007**   | ** ** | **May 27, 2006**   | ** ** | **May 26, 2007**   | ** ** | **May 27, 2006**   |
| Net  income/(loss)                                                              | $                  | 13,561     |                    | $          | 25,442             |            | $                  | (12,318) |  | $ | 541 |
| Other  comprehensive income:                                                    |                    |            |                    |            |                    |            |                    |
|    Foreign currency translation

     adjustments | 2                  |            | 4                  |            | 9             |            | 19                 |
| Comprehensive  income/(loss)                                                    | $                  | 13,563     |                    | $          | 25,446             |            | $                  | (12,309) |  | $ | 560 |
|                                                                                 |                    |            |                    |            |                    |            |                    |

**(5)Capital Subject to Redemption  **

At any time after certain dates, the earliest beingJuly 31, 2008, the latest being July 31, 2011, certain members of managementand/or NBPCo Holdings, LLC have the right to request that NBP repurchase theirinterests, the value of which is to be determined by a mutually agreedappraisal process. If NBP is unable to effect the repurchase within a specifiedtime, the requesting member(s) have the right to cause a sale process tocommence.  NBP accounts for changes in the redemption value of these interestsby accreting the change in value over the current period through the earliest redemptiondate of the respective interests. At May 26, 2007, the “Capital subject toredemption” was revalued by an independent appraisal process, and the value wasdetermined to be $72.1 million, which was in excess of its carrying value. Accordingly, the carrying value of the “Capital subject to redemption”increased by approximately $0.9 million through accretion during the thirteenweeks ended May 26, 2007, resulting in the $66.4 million carrying value, asreflected in the accompanying Consolidated Balance Sheet as of May 26, 2007.

** **

6

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**(6)Contingencies**

*Schumacher v. Tyson Foods, et al. *On July 1, 2002, a lawsuit was filed against FarmlandNational Beef Packing Company, L.P. (FNBPC or the predecessor to NBP), ConAgraBeef Company, Tyson Foods, Inc. and Excel Corporation in the United StatesDistrict Court for the District of South Dakota seeking certification of aclass of all persons who sold cattle to the defendants for cash, or on a basisaffected by the cash price for cattle, during the period from April 2, 2001through May 11, 2001 and for some period up to two weeks thereafter. The casewas filed by three named plaintiffs on behalf of a putative nationwide classthat plaintiffs estimate is comprised of hundreds or thousands of members. Thecomplaint alleged that the defendants, in violation of the Packers andStockyards Act of 1921, knowingly used, without correction or disclosure,incorrect and misleading boxed beef price information generated by the USDA topurchase cattle offered for sale by the plaintiffs at a price substantiallylower than was justified by the actual and correct price of boxed beef duringthis period. Plaintiffs also sought recovery against all defendants under atheory of unjust enrichment.  The case was certified as a class-action matterin June of 2004. The plaintiffs claimed damages against FNBPC in the amount ofapproximately $4.5 million plus prejudgment interest, attorneys’ fees and courtcosts.  The claim is subject to reduction in an unknown amount by the number ofclass members who have opted out of the class.  Trial began March 31, 2006.  OnApril 13, 2006, the jury returned a verdict in favor of FNBPC but against theother defendants.  The court has not yet entered a final judgment or appealableorder as to FNBPC and, until it does, the time for plaintiffs to file an appealagainst FNBPC does not begin to run.  However, the court did enter a finalorder granting judgments against the other three defendants on the jury’sverdict and those defendants have filed an appeal in the United States Court ofAppeals for the Eighth Circuit.  

**               **The Company’s wholly owned subsidiary, NationalCarriers, Inc., has various independent contractor drivers who are involved inaccidents from time to time, which in the aggregate, could result in a materialliability for the Company.

NBP is also a party to a number of lawsuits and claimsarising out of the operation of our business. Management believes the ultimateresolution of such matters should not have a material adverse effect on our financialcondition, results of operations or liquidity.

**(7) Segments**

TheCompany’s operating segments are based on segment profit and evaluated by the ChiefExecutive Officer, who also serves as the Chief Operating Decision Maker (CODM). Segment profit is measured as operating income for NBP’s two reportingsegments, Core Beef and Other, based on the definitions provided in SFAS No.131, *Disclosures about Segments of an Enterprise and Related Information*.

*Core Beef*—the majority of NBP’s revenues are generated from thesale of fresh meat, which include chuck cuts, rib cuts, loin cuts, round cuts,thin meats, ground beef, and other products. In addition, we also sell beefby-products to the variety meat, feed processing, fertilizer and pet foodindustries.  Aggregation criteria were applied to determine the constituents ofthe Core Beef segment.

*Other*—the Other segment of NBP consists of the operationsof National Carriers, Inc., a refrigerated and livestock contract carriercompany, and Kansas City Steak Company, LLC, a portion control steak cuttingoperation. 

*Eliminations*—this line item includes eliminations of inter-segmentand intra-segment activity resulting from the consolidation process.

** **

 

7

----

The following table represents segment results for theperiods indicated (in thousands):

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **13 weeks ended** | ** **      | **13 weeks ended** | ** **   | **39 weeks ended** | ** **   | **39 weeks ended** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|-----------------|--------------------|--------------|--------------------|--------------|--------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **May 26, 2007**   |       | **May 27, 2006**   |    | **May 26, 2007**   |    | **May 27, 2006**   |
| Net sales:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                    |                 |                    |              |                    |              |                    |
| Core  beef                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      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| Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 55,390        |                 | 52,034        |              | 169,651       |              | 155,315       |
| Eliminations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | (55,980)           |                 | (45,172)           |              | (160,902)          |              | (136,035)          |
|       Total net sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           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| Operating income:

Core  beef

 $

21,705 

 $

32,627 

 $

10,240 

 $

19,240 

Other

1,848 

(76)

6,640 

3,286 

      Total operating

        income

23,553 

32,551 

16,880 

22,526 

Interest income

136 

106 

506 

288 

Interest expense

(10,543)

(7,938)

(29,505)

(22,909)

Other income, net

861 

647 

1,484 

1,804 

Minority interest

90 

(52)

(262)

(120)

      Total income/(loss)

        before taxes

 $

14,097 

 $

25,314 

 $

(10,897)

 $

1,589 

**May 26, 2007 **

** **

**May 27, 2006 **

** **

** **

** **

** **

Assets:

Core  beef

 $

774,311 

 $

617,077 

Other

30,314 

36,233 

Eliminations

(406)

(320)

      Total assets

 $

804,219 

 $

652,990 

** **

**(8) United States BSE Outbreak**

On December 23, 2003, it was announced by the UnitedStates Department of Agriculture (USDA) that a single Holstein dairy cow wasdiscovered in the state of Washington to have tested positive for bovinespongiform encephalopathy (BSE).  The origin of the animal was subsequentlytraced to a farm in Canada.  Shortly after the announcement, several countries,including Japan, representing a substantial share of NBP’s export business,closed their borders to the importation of edible beef products from the UnitedStates.  Certain by-products have been classified as Specified Risk Materials(SRMs), and have been banned from use in feedstocks and the human food chain.Some of these products previously enjoyed a market in foreign countries.  Theclosure of most foreign markets to U.S. beef following the discovery of thiscow in Washington state, and lack of alternative U.S. markets for many productswhich previously were exported, negatively impacted the revenue per headrealized by the U.S. beef packing industry.

The reopening of U.S. export markets was furtherhampered by discovery in 2005 of a second case of BSE in the U.S. as well asadditional precautions required by some other importing countries.  In December2005, Japan opened their border to U.S. beef but subsequently closed a shorttime later as a result of a U.S. packer erroneously shipping a product notapproved for export to Japan.  On July 26, 2006, Japan agreed to reopen itsmarket to U.S. beef aged 20 months and younger after an inspection of U.S. beefprocessing plants.  Shipments of U.S. beef to Japan commenced in August 2006. In September 2006, Korea announced a provisional opening of their border toU.S. beef, but restrictions imposed with the reopening have created uncertaintyregarding amounts of beef that may qualify.

 

8

NBP cannot presently assess the full economic impactof the consequences of BSE on the U.S. beef packing industry or on itsoperations.  Existing or new import restrictions or additional regulatoryrestrictions or disruptions in domestic consumer demand for beef may continueto have a material adverse affect on the Company’s revenues and net income.

 

 

 

 

 

 

 

9
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**Item 2.  Management’s Discussion and Analysis of Financial Condition andResults of Operations.**

**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-looking statementsare typically identified by the words “believe,” “expect,” “anticipate,”“intend,” “estimate” and similar expressions. Actual results could differmaterially from those contemplated by these forward-looking statements as aresult of many factors, including economic conditions generally and in ourprincipal markets, the availability and prices of live cattle and commodities,food safety, livestock disease, including the identification of cattle withBSE, competitive practices and consolidation in the cattle production andprocessing industries, actions of domestic or foreign governments, hedgingrisk, changes in interest rates and foreign currency exchange rates, consumerdemand and preferences, the cost of compliance with environmental and healthlaws, loss of key customers, loss of key employees, labor relations, consolidationamong our customers and the potential inability to receive the anticipatedbenefits from the Brawley Beef acquisition. 

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 the“Risk Factors” in “Item 1. Business” of NBP’s Annual Report for the yearended August 26, 2006 on Form 10-K filed with the Securities and ExchangeCommission for other important factors that could cause actual results todiffer materially from those in any such forward-looking statements, and whichshould be read in conjunction with this report.

**IndustryOutlook**

Continued relatively high fed cattle prices, alongwith limited access to key export markets, has resulted in a difficultenvironment for beef industry participants.  In general, domestic cattlesupplies have been anticipated to improve over the next two to three years,however, recent increases in feeding costs have threatened the speed andmagnitude at which the cattle supply is expected to grow.  With uncertaintyregarding international market access and the realization of improved cattlesupplies, the timing of margin improvements in the Core Beef segment remainsuncertain.

**RecentDevelopments**

On December 23, 2003, it was announced by the UnitedStates Department of Agriculture (USDA) that a single Holstein dairy cow was discoveredin the state of Washington to have tested positive for bovine spongiformencephalopathy (BSE).  The origin of the animal was subsequently traced to afarm in Canada.  Shortly after the announcement, several countries, includingJapan, representing a substantial share of NBP’s export business, closed theirborders to the importation of edible beef products from the United States. Certain by-products have been classified as Specified Risk Materials (SRMs),and have been banned from use in feedstocks and the human food chain. Some ofthese products previously enjoyed a market in foreign countries.  The closureof most foreign markets to U.S. beef following the discovery of this cow inWashington state, and lack of alternative U.S. markets for many products whichpreviously were exported, negatively impacted the revenue per head realized bythe U.S. beef packing industry.

The reopening of U.S. export markets was furtherhampered by discovery in 2005 of a second case of BSE in the U.S. as well asadditional precautions required by some other importing countries.  In December2005, Japan opened their border to U.S. beef but subsequently closed a shorttime later as a result of a U.S. packer erroneously shipping a product notapproved for export to Japan.  On July 26, 2006, Japan agreed to reopen itsmarket to U.S. beef aged 20 months and younger after an inspection of U.S. beefprocessing plants.  Shipments of U.S. beef to Japan commenced in August 2006. In September 2006, Korea announced a provisional opening of their border toU.S. beef, but restrictions imposed with the reopening have created uncertaintyregarding amounts of beef that may qualify.

 

10
****
NBP cannot presently assess the full economic impactof the consequences of BSE on the U.S. beef packing industry or on itsoperations.  Existing or new import restrictions or additional regulatoryrestrictions or disruptions in domestic consumer demand for beef may continueto have a material adverse affect on the Company’s revenues and net income.

** **

**Resultsof Operations**

***Thirteen weeks ended May 26, 2007 compared to thirteen weeks ended May 27,2006***

*General.* Net income for the thirteen weeks ended May 26, 2007 was $13.6 million comparedto $25.4 million for the thirteen weeks ended May 27, 2006, a decrease of $11.8million.  Sales were higher in the thirteen weeks ended May 26, 2007 comparedto those of the prior period due to an increase in the number of cattleprocessed of approximately 20.4%, of which 15.2% came as a result of the acquisitionof Brawley Beef, LLC during the fourth quarter of fiscal 2006.  

Total costs and expenses of $1,456.1 million and $1,102.0million for the thirteen weeks ended May 26, 2007 and May 27, 2006,respectively, were 98.4% as a percent of sales for the thirteen weeks ended May26, 2007 compared to 97.1% for the thirteen weeks ended May 27, 2006.  Higher livecattle prices by approximately 15.6% put pressure on gross margins resulting inless operating income of $9.0 million for this thirteen week period of fiscal2007 as compared to the same period of last year. 

*Net Sales*. Net sales were $1,479.7 million for the thirteen weeks ended May 26, 2007compared to $1,134.5 million for the thirteen weeks ended May 27, 2006, an increaseof $345.2 million, or 30.4%.  The increase in net sales resulted primarily froma 20.4% increase in the number of cattle processed, of which 15.2% was due tothe acquisition of Brawley Beef, LLC, at average weights equal to the sameperiod of last year.  

                *Costof Sales*.  Cost of sales was $1,436.4 million for the thirteen weeks ended May26, 2007 compared to $1,085.9 million for the thirteen weeks ended May 27, 2006,an increase of $350.5 million, or 32.3%.  The increase resulted primarily from anincrease of approximately 20.4% in the number of live cattle purchased, ofwhich approximately 15.2% came as a result of the acquisition of Brawley Beef,LLC, and an approximate 15.6% increase in live cattle prices.

                *Selling,General and Administrative Expenses*.  Selling, general and administrativeexpenses were $11.5 million for the thirteen weeks ended May 26, 2007 comparedto $8.9 million for the thirteen weeks ended May 27, 2006, an increase of $2.6million, or 29.2%.  The increase primarily reflects an increase in payroll andrelated expenses of approximately $1.2 million, an increase in legal expense ofapproximately $0.6 million associated mostly with acquisition due diligenceexpenses, an increase of approximately $0.4 million in bad debt expense, and anapproximate $0.2 million increase in repairs and maintenance.  The acquisitionof Brawley Beef, LLC on May 30, 2006 has contributed to the increased selling,general and administrative expenses incurred during the current thirteen weekperiod as compared to the same period of last year. 

                *Depreciationand Amortization Expense*.  Depreciation and amortization expenses were $8.2million for the thirteen weeks ended May 26, 2007 compared to $7.1 million forthe thirteen weeks ended May 27, 2006, an increase of $1.1 million, or 15.5%.  Theacquisition of Brawley Beef, LLC contributed $0.6 million to the increase indepreciation expense for this period.  Depreciation expense also increased dueto assets being placed into service, primarily at the Dodge City and Liberalbeef plants, during the fourth quarter of fiscal year 2006 and the first,second and third quarters of fiscal year 2007.

 

11
****
*Operating Income/Loss*.  Operating income was $23.6 million for the thirteenweeks ended May 26, 2007 compared to $32.6 million for the thirteen weeks endedMay 27, 2006, a decrease of $9.0 million.  The lower operating income resulted primarilyfrom higher live cattle prices during the third quarter of fiscal 2007 ascompared to the same period of last year without similar increases in theselling prices of beef products.  

                *InterestExpense*.  Interest expense was $10.5 million for the thirteen weeks ended May26, 2007 compared to $7.9 million for the thirteen weeks ended May 27, 2006, anincrease of $2.6 million, or 32.9%.  The increase in interest expense was dueprimarily to an increase in the weighted average amounts outstanding ofvariable rate debt of approximately $111.6 million for the thirteen weeks endedMay 26, 2007, as compared to the same period in fiscal 2006, mostly as a resultof the Brawley Beef, LLC acquisition.  Interest expense also increased due tohigher interest rates on our variable rate debt, an increase of approximately 64basis points, for the thirteen weeks May 26, 2007 as compared to the sameperiod of last year.

                *Other,net. *Other, net non-operating income was $0.9 million for the thirteenweeks ended May 26, 2007 compared to $0.7 million for the thirteen weeks ended May27, 2006, an increase of $0.2 million.  

                *IncomeTax Expense/Benefit*.  Income tax expense was $0.5 million for the thirteenweeks ended May 26, 2007 compared to an income tax benefit of $0.1 million forthe thirteen weeks ended May 27, 2006, an increase in expense of $0.6 million. Income tax expense increased due to more income recorded by National Carriers,Inc., which is organized as a C Corporation, in the current period compared tothe same period last year.

***Thirty-nine weeks ended May 26, 2007 compared to thirty-nine weeksended May 27, 2006***

*General.* Net loss for the thirty-nine weeks ended May 26, 2007 was $12.3 millioncompared to net income of $0.5 million for the thirty-nine weeks ended May 27,2006, a decrease of $12.8 million.  Sales and cost of sales were both higher inthe thirty-nine weeks ended May 26, 2007 than those of the prior year period primarilydue to an increase of approximately 19.2% in the number of cattle processed, ofwhich approximately 12.6% came as a result of the acquisition of Brawley Beef,LLC during the fourth quarter of fiscal 2006.  

Total costs and expenses of $4,049.1 million and $3,287.8million for the thirty-nine weeks ended May 26, 2007 and May 27, 2006,respectively, were 99.6% as a percent of sales for the thirty-nine weeks ended May26, 2007 compared to 99.3% for the thirty-nine weeks ended May 27, 2006.  Higherlive cattle prices put pressure on the gross margin for the current thirty-nineweek period as compared to the same period of last year.  In addition, interestexpense increased as a result of increased borrowings at higher interest rates.

*Net Sales*. Net sales were $4,066.0 million for the thirty-nine weeks ended May 26, 2007compared to $3,310.3 million for the thirty-nine weeks ended May 27, 2006, anincrease of $755.7 million, or 22.8%.  The increase resulted primarily from anincrease of approximately 19.2% in the number of cattle processed, of whichapproximately 12.6% came as a result of the acquisition of Brawley Beef, LLC, inthe thirty-nine weeks ended May 26, 2007 at weights that averaged approximately1.1% higher than the same period in the prior year.  Improved customer demandof beef products also contributed to the increase in net sales for the thirty-nineweek period ended May 26, 2007 as compared to the same period of last year.

                *Costof Sales*.  Cost of sales was $3,994.0 million for the thirty-nine weeksended May 26, 2007 compared to $3,241.2 million for the thirty-nine weeks endedMay 27, 2006, an increase of $752.8 million, or 23.2%.  The increase resultedprimarily from an increase in the number of cattle purchased of approximately19.2%, of which 12.6% was due to the acquisition of Brawley Beef, LLC, duringthis thirty-nine week period of 2007 at average cattle weights approximately 1.1%higher, and an approximate 3.8% increase in live cattle prices as compared tothe same period of 2006.

 

12
****
                *Selling,General and Administrative Expenses*.  Selling, general and administrativeexpenses were $31.1 million for the thirty-nine weeks ended May 26, 2007compared to $26.0 million for the thirty-nine weeks ended May 27, 2006, anincrease of $5.1 million, or 19.6%.  The increase for this period is primarilydue to an increase in payroll and benefit expenses of approximately $2.3million, an increase in advertising expense of approximately $0.5 million, anapproximate $0.7 million increase in bad debt expense, an increase in legalfees of approximately $0.7 million associated mostly with acquisition duediligence expenses, and an approximate $0.3 million increase in repairs andmaintenance.  The acquisition of Brawley Beef, LLC on May 30, 2006 hascontributed to the increased selling, general and administrative expensesincurred during the current thirty-nine week period as compared to the sameperiod of last year.

                *Depreciationand Amortization Expense*.  Depreciation and amortization expenses were $24.1million for the thirty-nine weeks ended May 26, 2007 compared to $20.6 millionfor the thirty-nine weeks ended May 27, 2006, an increase of $3.5 million, or 17.0%. The addition of the Brawley plant contributed $1.8 million to the increase indepreciation expense for this thirty-nine week period as compared to the sameperiod of last year.  Depreciation expense also increased due to assets beingplaced into service, primarily at the Dodge City and Liberal beef plants, duringthe fourth quarter of fiscal year 2006 and the first, second and third quartersof fiscal year 2007.

*Operating Income*.  Operating income was $16.9 million for the thirty-nine weeks ended May26, 2007 compared to $22.5 million for the thirty-nine weeks ended May 27, 2006,a decrease of $5.6 million.  The decline in operating income during the currentthirty-nine week period resulted primarily from higher live cattle prices ascompared to the same period of last year without similar increases in theselling price of beef products.

                *InterestExpense*.  Interest expense was $29.5 million for the thirty-nine weeksended May 26, 2007 compared to $22.9 million for the thirty-nine weeks ended May27, 2006, an increase of $6.6 million, or 28.8%.  The increase was dueprimarily to an increase in the weighted average amounts outstanding ofvariable rate debt of approximately $81.8 million, mostly as a result of theBrawley Beef, LLC acquisition, for the thirty-nine weeks ended May 26, 2007, ascompared to the same period in fiscal 2006.  Interest expense also increaseddue to higher interest rates on our variable rate debt, an increase ofapproximately 105 basis points, during the thirty-nine weeks of fiscal 2007 ascompared to the same period of last year.

                *Other,net.*  Other, net non-operating income was $1.6 million for the thirty-nineweeks ended May 26, 2007 compared to non-operating income of $1.9 million forthe thirty-nine weeks ended May 27, 2006, a decrease of $0.3 million.  The thirty-nineweeks ended May 27, 2006 included $0.6 million in income resulting from thesettlement of a lawsuit related to corrugated packaging materials.

                *IncomeTax Expense/Benefit*.  Income tax expense was $1.4 million for the thirty-nineweeks ended May 26, 2007 compared to $1.0 million for the thirty-nine weeksended May 27, 2006, an increase of $0.4 million, or 40.0%.  Income tax expenseis recorded on income from National Carriers, Inc., which is organized as a CCorporation.

** **

**SegmentResults**

Ouroperating segments are based on segment profit and evaluated by the ChiefExecutive Officer, who also serves as the Chief Operating Decision Maker(CODM).  Segment profit is measured as operating income for our two reportingsegments, Core Beef and Other, based on the definitions provided in Statementof Financial Accounting Standard (SFAS) No. 131, *Disclosures about Segmentsof an Enterprise and Related Information*.  

*Core Beef*—the majority of our revenues are generated from thesale of fresh meat, which include chuck cuts, rib cuts, loin cuts, round cuts,thin meats, ground beef, and other products. In addition, we also sell beefby-products to the variety meat, feed processing, fertilizer and pet foodindustries.  Aggregation criteria were applied to determine the constituents ofthe Core Beef segment.

 

13
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*Other*—our Other segment consists of the operations ofNational Carriers, Inc., a refrigerated and livestock contract carrier company,and Kansas City Steak Company, LLC, a portion control steak cutting operation.

*Eliminations*—this line item includes eliminations of inter-segmentand intra-segment activity resulting from the consolidation process.

The following table represents segment results for theperiods indicated (in thousands):

**13 weeks ended**

** **

**13 weeks ended**

** **

**39 weeks ended**

** **

**39 weeks ended**

**May 26, 2007**
      
**May 27, 2006**
      
**May 26, 2007**
      
**May 27, 2006**

Net sales:

Core  beef

 $

1,480,266 

 $

1,127,652 

 $

4,057,271 

 $

3,290,998 

Other

55,390 

52,034 

169,651 

155,315 

Eliminations

(55,980)

(45,172)

(160,902)

(136,035)

      Total net sales

 $

1,479,676 

 $

1,134,514 

 $

4,066,020 

 $

3,310,278 

Operating income/(loss):

Core  beef

 $

21,705 

 $

32,627 

 $

10,240 

 $

19,240 

Other

1,848 

(76)

6,640 

3,286 

      Total operating

        Income

23,553 

32,551 

16,880 

22,526 

Interest income

136 

106 

506 

288 

Interest expense

(10,543)

(7,938)

(29,505)

(22,909)

Other income, net

861 

647 

1,484 

1,804 

Minority interest

90 

(52)

(262)

(120)

      Total income/(loss)

        before taxes

 $

14,097 

 $

25,314 

 $

(10,897)

 $

1,589 

**May 26, 2007 **

** **

**May 27, 2006 **

** **

** **

** **

** **

Assets:

Core  beef

 $

774,311 

 $

617,077 

Other

30,314 

36,233 

Eliminations

(406)

(320)  

      Total assets

 $

804,219 

 $

652,990 

** **

***Thirteen weeks ended May 26, 2007 compared to thirteen weeks ended May27, 2006***

***Core Beef***

*Net Sales*. Net sales for Core Beef were $1,480.3 million for the thirteen weeks ended May26, 2007 compared to $1,127.7 million for the thirteen weeks ended May 27, 2006,an increase of $352.6 million, or 31.3%.  The increase resulted primarily froman approximate 20.4% increase in the number of cattle processed, of whichapproximately 15.2% came as a result of the acquisition of Brawley Beef, LLC, ataverage weights equal to the same period of last year.

*Operating Income*.  Operating income for Core Beef was $21.7 million for the thirteenweeks ended May 26, 2007 compared to $32.6 million for the thirteen weeks endedMay 27, 2006, a decline of $10.9 million.  The decreased operating income resultedprimarily from higher live cattle prices in the current quarter as compared tothe same period of last year without similar increases in the selling prices ofbeef products.  

 

14
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***Other***

                *NetSales*.  Net sales for Other were $55.4 million for the thirteen weeks endedMay 26, 2007 compared to $52.0 million for the thirteen weeks ended May 27, 2006,an increase of $3.4 million, or 6.5%.  The increase was primarily due to increasesin sales in our portion control beef facility.

                *OperatingIncome/Loss*.  Operating income for Other was $1.8 million for the thirteenweeks ended May 26, 2007 compared to an operating loss of $0.1 million for the thirteenweeks ended May 27, 2006, an increase of $1.9 million. The increase was dueprimarily to improved operating income of our portion control beef facility.

***Thirty-nine weeks ended May 26, 2007 compared to thirty-nine weeksended May 27, 2006***

***Core Beef***

*Net Sales*. Net sales for Core Beef were $4,057.3 million for the thirty-nine weeks ended May26, 2007 compared to $3,291.0 million for the thirty-nine weeks ended May 27,2006, an increase of $766.3 million, or 23.3%.  The increase resulted primarilyfrom an increase of approximately 19.2% in the number of cattle processed, ofwhich 12.6% came as a result of the acquisition of Brawley Beef, LLC, in the thirty-nineweeks ended May 26, 2007 at weights that averaged approximately 1.1% higherthan the same period in the prior year.  

*Operating Income*.  Operating income for Core Beef was $10.2 million for the thirty-nineweeks ended May 26, 2007 compared to $19.2 million for the thirty-nine weeksended May 27, 2006, a decrease of $9.0 million.  The decline in operatingincome resulted primarily from higher live cattle prices during the thirty-nineweek period as compared to the same period of last year.  

***Other***

                *NetSales*.  Net sales for Other were $169.7 million for the thirty-nine weeksended May 26, 2007 compared to $155.3 million for the thirty-nine weeks ended May27, 2006, an increase of $14.4 million, or 9.3%.  The increase was primarily dueto increases in sales in our portion control beef facility.

                *OperatingIncome*.  Operating income for Other was $6.6 million for the thirty-nineweeks ended May 26, 2007 compared to $3.3 million for the thirty-nine weeksended May 27, 2006, an increase of $3.3 million.  The increase was dueprimarily to improved operating income in our portion control beef facility.

**Liquidityand Capital Resources**

As of May 26, 2007, we had net working capital of $245.0million, which included $6.4 million in distributions payable, and cash andcash equivalents of $31.5 million, including $4.2 million restricted to IRBapproved expenditures. As of August 26, 2006, we had net working capital of $200.7million, which included $11.3 million in distributions payable, and cash andcash equivalents of $32.7 million, including $4.0 million restricted to IRBapproved expenditures. Our primary sources of liquidity are cash flows fromoperations and available borrowings under our amended and restated creditfacility.

As of May 26, 2007, we had $452.3 million of long-termdebt, of which $2.4 million was classified as a current liability. As of May 26,2007, our amended and restated credit facility consisted of a $202.6 millionterm loan and a $170.0 million revolving line of credit loan, which hadoutstanding borrowings of $61.7 million, outstanding letters of credit of $56.2million and available borrowings of $52.0 million, based on the mostrestrictive financial covenant calculations.  Cash flows from operations andborrowings under our amended and restated credit facility have funded ourworking capital requirements, acquisitions, capital expenditures and othergeneral corporate purposes.  We were in compliance with all of our financialcovenants under our amended and restated credit facility as of May 26, 2007.

 

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In addition to outstanding borrowings under our amendedand restated credit facility, we had outstanding borrowings under industrialrevenue bonds of $20.7 million, senior notes of $160.0 million and capitalleases and other obligations of $7.3 million as of May 26, 2007.  

We believe that available borrowings under our amendedand restated credit facility and cash provided by operating activities will besufficient to support our working capital, capital expenditures and debtservice requirements for the foreseeable future. Our ability to generatesufficient cash, however, is subject to certain general economic, financial,industry, legislative, regulatory and other factors beyond our control.  For areview of our obligations that affect liquidity, please see the “Cash PaymentObligations” table in “Item 7. Management’s Discussion and Analysis ofFinancial Condition and Results of Operations” of our Annual Report on Form10-K for the year ended August 26, 2006.

*OperatingActivities*

                Netcash used in operating activities in the thirty-nine weeks ended May 26, 2007was $43.2 million compared to net cash provided by operating activities of $16.9million in the thirty-nine weeks ended May 27, 2006. The increase in net cashused in operating activities was primarily due to an increase in workingcapital requirements in the current period resulting from the acquisition ofthe Brawley plant, higher beef inventory volumes and higher accounts receivablebalances combined with a net loss in the current year compared to a net gain inthe same period last year.

*InvestingActivities*

Net cash used in investing activities was $29.3million in the thirty-nine weeks ended May 26, 2007 compared to $22.6 millionin the thirty-nine weeks ended May 27, 2006.  This increase in cash used was primarilyattributable to an increase in expenditures for property, plant and equipment relatedto improving operating efficiencies, primarily at our Liberal, Dodge City andBrawley facilities in the current year.

*FinancingActivities*

                Netcash provided by financing activities was $71.3 million in the thirty-nineweeks ended May 26, 2007 compared to $0.7 million in the thirty-nine weeksended May 27, 2006.  The change was primarily attributed to a $35.6 million differencein revolving credit borrowings and to a $40.0 million increase in our term noteborrowings, partially offset by $7.4 million in repayments of our term note andan increase of $7.4 million paid as member distributions in the thirty-nineweek change of fiscal 2007 as compared to the thirty-nine week change in fiscal2006.

*Amendedand Restated Senior Credit Facility*

Effective June 1, 2006, we amended and restated ourexisting senior credit facility with a consortium of banks consisting of a$170.0 million term loan that matures in May 2016 and a $160.0 millionrevolving line of credit loan that matures in May 2011 that is subject tocertain borrowing base limitations.   Our term loan contains a provisionwhereby a portion of annual unallocated cash flow proceeds will be used to paydown certain outstanding borrowings under the facility.  In December 2006, thisamount was calculated to be $7.4 million, and accordingly, this amount was usedto reduce the amount outstanding under the term loan.  On March 21, 2007, weamended our credit facility to increase the available credit under the facilityby $50.0 million.  Our term loan was increased by $40.0 million to $202.6million and the revolving line of credit was increased by $10.0 million to$170.0 million. 

The borrowings under the revolving loan are availablefor our working capital requirements, acquisitions, capital expenditures andother general corporate purposes.  Our amended and restated credit facility issecured by a first priority lien on substantially all of our assets.  Theprincipal amount outstanding under the term loan is payable in semi-annualinstallments on the last business day of each June and December commencing June30, 2011 in equal installments of approximately $3.5 million, with any and allremaining principal outstanding being due and payable on the maturity date. Prepayment is allowed at any time.

 

16
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Our amended and restated credit facility containscovenants that limit our ability to incur additional indebtedness, sell ordispose of assets, pay certain dividends and prepay or amend certainindebtedness among other matters.  Our amended and restated credit facilityalso contains a provision for a conversion to more favorable interest rates andmore restrictive financial covenants on the earlier of (a) August 25, 2007or (b) our election (Conversion Date).  Currently the interest rate forthe term loan is (a) the Base Rate (as defined in the credit agreement) plus 75basis points or (b) the LIBOR Rate (as defined in the credit agreement) plus275 basis points, or a combination of these rates at our election.  As of May26, 2007, the interest rate for the term loan was equal to 8.125%.  Currentlythe interest rate for the revolving loan is (a) the Base Rate plus 50 basispoints or (b) the LIBOR Rate plus 250 basis points, or a combination of theserates at our election.  As of May 26, 2007, the interest rate for the revolvingloan was equal to 8.013%.  After the Conversion Date, the interest rate for theterm loan and revolving loan will be determined by reference to a matrix ofrates keyed to our funded debt to EBITDA (as defined in the credit agreement)ratio.

Our amended and restated credit facility imposescertain financial covenants.  Until the Conversion date, we are required to (i)have as of the end of each fiscal quarter a minimum four-quarter rolling EBITDAof $60.0 million and (ii) maintain at all times a minimum Borrowing BaseAvailability of at least $25.0 million.  After the Conversion Date, we arerequired to maintain at all times a specified maximum funded debt to EBITDAratio, a maximum senior secured funded debt to EBITDA ratio, a minimumfour-quarter rolling EBITDA and a minimum four-quarter rolling debt servicecoverage ratio.  In addition, our annual net capital expenditures are limitedto $50 million in each fiscal year.

Our amended and restated credit facility containscustomary affirmative covenants, including furnishing financial statements,maintenance of insurance, conduct of business, maintenance of properties, andcompliance with laws.  The facility also contains customary negative covenants,including covenants restricting our ability to pay certain distributions, incuradditional indebtedness, merge with another entity, sell or dispose assets, andmake investments or acquire assets, among other restrictions.

 

 

 

 

17

The following is a reconciliation of EBITDA to net income/(loss)for the specified periods (in thousands):

** **

**13 weeks ended**

**13 weeks ended**

** **

**39 weeks ended**

** **

**39 weeks ended**

** **

**May 26, 2007**
     
**May 27, 2006**

**  **

**May 26, 2007**

**  **

**May 27, 2006**

Net income/(loss)

$

13,561 

$

25,442 

$

(12,318)

$

541 

Interest income

(136)

(106)

(506)

(288)

Interest expense

10,543 

7,938 

29,505 

22,909 

Depreciation and  amortization                    	

8,245 

7,091 

24,056 

20,555 

Income taxes/(benefit) 

536 

(128)

1,421 

1,048 

   EBITDA(1)

$

32,749 

$

40,237 

$

42,158 

$

44,765 

                                        

(1) EBITDArepresents earnings before net interest, taxes, depreciation and amortization.EBITDA is presented because management believes that it is helpful toinvestors, securities analysts and other interested parties in evaluating ourperformance as compared to the performance of other companies in our industry.EBITDA, with adjustments specified in our amended credit facility, is also thebasis for calculating our financial debt covenants under our amended creditfacility and for calculating whether we may incur additional indebtedness underthe indenture governing our senior notes.  Accordingly, management believesthat EBITDA is a useful indicator of our ability to incur and service debtobligations.  EBITDA is not a measurement of financial performance undergenerally accepted accounting principles in the United States of America. Itshould not be considered an alternative to net income or income from operationsor any other measure of performance derived in accordance with generallyaccepted accounting principles. Our computation of EBITDA may not be comparableto other similarly titled measures computed by other companies because allcompanies do not calculate EBITDA in the same fashion.
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**Item 3. Quantitative andQualitative Disclosures About Market Risk.**

The principal market risks affecting our business areexposure to changes in prices for commodities, such as livestock and boxedbeef, and interest rate risk.

*Commodities.*Weuse various raw materials, many of which are commodities. Raw materials aregenerally available from several different sources, and we presently believethat we can obtain them as needed.  Commodities are subject to pricefluctuations that may create price risk. When appropriate, we may hedgecommodities in order to mitigate this price risk. While this may tend to limitour ability to participate in gains from commodity price fluctuations, it alsotends to reduce the risk of loss from changes in commodity prices. We reflectcommodity contract gains and losses as adjustments to the basis of underlyingcommodities purchased; gains or losses are recognized in the statement ofoperations as a component of costs of goods sold.

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

We sell commodity beef products in our business.Commodity beef products are subject to price fluctuations that may create pricerisk. When appropriate, we enter into forward sales contracts at pricesdetermined prior to shipment. We may hedge the commodity price risk associatedwith these activities in order to mitigate this price risk.  While this maytend to limit our ability to participate in gains from commodity pricefluctuations, it also tends to reduce the risk of loss from changes incommodity beef prices. We reflect commodity contract gains and losses asadjustments to the basis of underlying commodities sold; gains or losses arerecognized in the statement of operations as a component of net sales.

We may use futures contracts in order to reduceexposure associated with entering into firm commitments to purchase live cattleat prices determined prior to delivery of the cattle as well as firmcommitments to sell certain beef products at sales prices determined prior toshipment.  In accordance with SFAS No. 133, *Accounting for DerivativeInstruments and Hedging Activities*, as amended, we account for futurescontracts and their related firm purchase commitments at fair value. Certainfirm commitments for live cattle purchases and all firm commitments for boxedbeef sales are treated as “normal purchases and sales” and not marked tomarket.  SFAS No. 133 imposes extensive recordkeeping requirements in order totreat a derivative instrument as a hedge for accounting purposes. Derivativesqualify for treatment as hedges when there is a high correlation between thechange in fair value of the instrument and the related change in fair value ofthe underlying commitment. For derivatives that qualify as effective hedges,the change in fair value has no net effect on earnings until the hedgedtransaction affects earnings. For derivatives that are not designated ashedging instruments, or for the ineffective portion of a hedging instrument,the change in fair value does affect current period net earnings.

While management believes each of these instrumentshelp mitigate various market risks, they are not designated and accounted foras hedges under SFAS No. 133 as a result of the extensive recordkeepingrequirements of this statement. Accordingly, the gains and losses associatedwith the change in fair value of the instrument and the offsetting gains andlosses associated with changes in the market value of certain of the firmcommitments related to the futures contracts are recorded to income and expensein the period of change.

Weuse a sensitivity analysis to evaluate the effect that changes in the marketvalue of commodities will have on these commodity derivative instruments.  Asof May 26, 2007, the potential change in fair value of applicable commodityprices, assuming a hypothetical 10% decrease in the underlying commodity price,was $0.5 million.  As of August 26, 2006, the potential change in fair value ofapplicable commodity prices, assuming a hypothetical 10% decrease in theunderlying commodity price, was $1.4 million. 

 

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                *ForeignOperations.*  Transactions denominated in a currency other than an entity’sfunctional currency may expose that entity to currency risk.  Although weoperate in international markets including Japan, South Korea and China,product sales are predominately made in United States dollars, and therefore,currency risks are limited.

*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.  

We have long-term debt with variable interest rates.Short-term debt is primarily comprised of the current portion of long-term debtmaturing twelve months from the balance sheet date.  Our variable interestexpense is sensitive to changes in the general level of interest rates.  As ofMay 26, 2007, the weighted average interest rate on our $285.0 million ofvariable rate debt was approximately 7.9%.

We had total interest expense of approximately $29.5million during the thirty-nine week period ending May 26, 2007.  The estimatedincrease in interest expense from a hypothetical 200 basis point increase inapplicable variable interest rates would have been approximately $3.6 millionin the thirty-nine week period ending May 26, 2007. 

**Item 4.  Controls and Procedures.**

We maintain a systemof controls and procedures designed to provide reasonable assurance as to thereliability of the Consolidated Financial Statements and other disclosuresincluded in this report, as well as to safeguard assets from unauthorized useor disposition. We evaluated the effectiveness of the design and operation ofour disclosure controls and procedures as defined in the Securities ExchangeAct of 1934 Rules 13a-15(e) and 15d-15(e) under supervision and with theparticipation of management, including our Chief Executive Officer and ChiefFinancial Officer. Based upon that evaluation, as of the end of the period coveredby this Quarterly Report on Form 10-Q, our Chief Executive Officer and ChiefFinancial Officer concluded that our disclosure controls and procedures wereeffective in alerting them, in a timely manner, to material informationrequired to be included in our periodic Securities and Exchange Commissionfilings.  There have been no changes in our internal controls over financialreporting during the thirteen weeks ended May 26, 2007 that have materiallyaffected, or are reasonably likely to materially affect, our internal controlover financial reporting.  The design of any system of controls and proceduresis based in part upon certain assumptions about the likelihood of futureevents. 

 

 

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**PARTII. OTHER INFORMATION**

**Item 1. Legal Proceedings.**

                Forinformation regarding legal proceedings, see Note 6, “Contingencies” to our ConsolidatedFinancial Statements included in Part I, Item 1 of this Form 10-Q. 

**Item 1A. Risk Factors.**

                Therisk factors set forth in our Annual Report on Form 10-K for the year endedAugust 26, 2006 have not materially changed. 

**Item 2. Unregistered Sales of EquitySecurities and Use of Proceeds.**

                None.

**Item 3. Defaults UponSenior Securities.**

                None.

**Item 4. Submission ofMatters to a Vote of Security Holders.**

                None.

**Item 5. Other Information.**

                TheCompany may purchase a portion of its outstanding Senior Notes from time totime in accordance with the limits imposed under its senior credit facility.

**Item 6. Exhibits.**

(A)
          
Exhibits
                            
31.1 

Certification of the Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002.
      
31.2 

Certification of the Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002.
      
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.
      
32.2 

Certification of the Chief  Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

** **

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**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

                                                                                                   
   National Beef Packing Company, LLC         
By: 

/s/ John R. Miller

John R. Miller*Chief Executive Officer and Manager	(Principal Executive Officer)*
      
By: 

/s/ Jay D. Nielsen

Jay D. Nielsen*Chief Financial Officer	(Principal Financial and Accounting Officer)*

Date: July 10, 2007 

 

 

 

 

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