**UNITED STATES SECURITIES ANDEXCHANGE COMMISSION**

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

**Form 10-Q**

**(Mark one)**

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

|                                                         |
|---------------------------------------------------------|
| **For the quarterly period ended****November 27, 2004** |
| **or**                                                  |

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

|                                                                                                                                                                    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **For the transition period from       ___      to       ___    .** |
| ** **                                                                                                                                                              |

**Commission file number 333-111407**

**NATIONAL BEEF PACKING COMPANY, LLC**

*(Exact name ofregistrant as specified in its charter)*

| **DELAWARE**                                                              |  | **48-1129505**                                     |
|---------------------------------------------------------------------------|--|----------------------------------------------------|
| **(State  or other jurisdiction of**

**incorporation  or organization)** |  | **(I.R.S.  employer**

**identification  number)** |

 

**12200  North Ambassador Drive******

**Kansas  City****,****MO********64163******

**(Addressof principal executive offices)**

**Telephone:(800) 449-2333**

**(Registrant'stelephone number, including area code)**

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. YesXNo __

Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act). Yes __ No X

There is no market for the Registrant's equity.  As of January 3, 2005, there were 121,849,626 Class A units and 18,810,045 Class B unitsoutstanding.     

----

**TABLE OF CONTENTS**

** **

| **PART I**   | **FINANCIAL INFORMATION**                                                                                       | **PAGE NO.** |
|--------------|-----------------------------------------------------------------------------------------------------------------|--------------|
|              |                                                                                                            |         |
| Item 1.      | Financial Statements.                                                                                           | 1            |
|              |                                                                                                            |         |
| Item 2.      | Management's Discussion and Analysis of Financial  Condition and Results of Operations.     | 12           |
|         |                                                                                                            |         |
| Item 3.      | Quantitative and Qualitative Disclosures About Market Risk                                                      | 21           |
|              |                                                                                                            |         |
| Item 4.      | Controls and Procedures.                                                                                        | 22           |
|              |                                                                                                                 |         |
|              |                                                                                                                 |         |
| **PART II.** | **OTHER INFORMATION**                                                                                           |         |
| ** **   | ** **                                                                                                      |         |
| Item 1.      | Legal Proceedings.                                                                                              | 22           |
|              |                                                                                                            |         |
| Item 2.      | Unregistered Sales of Equity Securities and Use of  Proceeds.                                                   | 22           |
|              |                                                                                                            |         |
| Item 3.      | Defaults Upon Senior Securities.                                                                                | 22           |
|              |                                                                                                            |         |
| Item 4.      | Submission of Matters to a Vote of Security Holders.                                                            | 23           |
|              |                                                                                                            |         |
| Item 5.      | Other Information.                                                                                              | 23           |
|              |                                                                                                            |         |
| Item 6.      | Exhibits.                                                                                                       | 23           |
|              |                                                                                                            |         |
|              | Signatures.                                                                                                     | 25           |

                               

Unless the context indicates or otherwise requires, theterms "National Beef," "NBP," "Company,""we," "our," and "us" refer to National BeefPacking Company, LLC and its consolidated subsidiaries.  As used in thisreport, the term "U.S. Premium Beef" refers to U.S. Premium Beef,LLC, a Delaware limited liability company.

**                                                                                               **

| ii |
|----|

----

**PART I.  FINANCIAL INFORMATION**

** **

**Item 1.  Financial Statements.****    **

1

----

**  NATIONALBEEF PACKING COMPANY, LLC****AND SUBSIDIARIES****Consolidated Balance Sheets(in thousands)**

|                                                                                                                                                                                                                | ** November  27, 2004(unaudited)**                                                                          |  | **August 28, 2004**                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|--|-----------------------------------------------------------------------------------------------|
| **Assets**                                                                                                                                                                                                     |                                                                                                                  |  |                                                                                               |
| Current assets:                                                                                                                                                                                                |                                                                                                                  |  |                                                                                               |
| Cash and cash equivalents                                                                                                                                                                                      | $                    29,710 |  | $               27,998            |
| Accounts receivable, less  allowance for returns and                     doubtful accounts of $5,803 and  $5,614, respectively | 162,088                                                                                                          |  | 177,614                                                                                       |
| Due from affiliates                                                                                                                                                                                            | 1,531                                                                                                            |  | 2,873                                                                                         |
| Other receivables                                                                                                                                                                                              | 2,920                                                                                                            |  | 3,288                                                                                         |
| Inventories                                                                                                                                                                                                    | 76,359                                                                                                           |  | 85,962                                                                                        |
| Other current assets                                                                                                                                                                                           | 12,287                                                                                                           |  | 10,782                                                                                        |
| Total current assets                                                                                                                                                                                           | 284,895                                                                                                          |  | 308,517                                                                                       |
|     Property, plant and equipment, at cost                                                                                                                                                      | 247,236                                                                                                          |  | 242,638                                                                                       |
| Less accumulated depreciation                                                                                                                                                                                  | 26,107                                                                                                           |  | 20,633                                                                                        |
|  Net property, plant, and  equipment                                                                                                                                                                      | 221,129                                                                                                          |  | 222,005                                                                                       |
| Goodwill                                                                                                                                                                                                       | 78,858                                                                                                           |  | 78,858                                                                                        |
| Other intangibles, net of  accumulated amortization of            $2,125 and $1,722,  respectively                                                                | 29,636                                                                                                           |  | 30,039                                                                                        |
| Other assets                                                                                                                                                                                                   | 7,084                                                                                                            |  | 7,102                                                                                         |
|                                                                                                                                                                                                                | $                  621,602                 |  | $             646,521                            |
| **Liabilities and  Members' Capital**                                                                                                                                                                          |                                                                                                                  |  |                                                                                               |
| Current liabilities:                                                                                                                                                                                           |                                                                                                                  |  |                                                                                               |
| Current installments of  long-term debt                                                                                                                                                                        | $                    10,196      |  | $                 9,453 |
| Cattle purchases payable                                                                                                                                                                                       | 52,875                                                                                                           |  | 49,569                                                                                        |
| Accounts payable - trade                                                                                                                                                                                       | 38,728                                                                                                           |  | 39,207                                                                                        |
| Due to affiliates                                                                                                                                                                                              | 353                                                                                                              |  | 416                                                                                           |
| Accrued compensation and  benefits                                                                                                                                                                             | 12,502                                                                                                           |  | 17,555                                                                                        |
| Accrued insurance                                                                                                                                                                                              | 15,290                                                                                                           |  | 13,903                                                                                        |
| Other accrued expenses and  liabilities                                                                                                                                                                        | 10,797                                                                                                           |  | 6,860                                                                                         |
| Distributions payable                                                                                                                                                                                          | 1,519                                                                                                            |  | 5,541                                                                                         |
|          Total current liabilities                                                                                                                                          | 142,260                                                                                                          |  | 142,504                                                                                       |
| Long-term debt, excluding  current installments                                                                                                                                                                | 307,158                                                                                                          |  | 325,634                                                                                       |
| Other liabilities                                                                                                                                                                                              | 4,934                                                                                                            |  | 5,237                                                                                         |
| Total liabilities                                                                                                                                                                                              | 454,352                                                                                                          |  | 473,375                                                                                       |
| Minority interest                                                                                                                                                                                              | 686                                                                                                              |  | 632                                                                                           |
| Capital subject to redemption                                                                                                                                                                                  | 59,648                                                                                                           |  | 62,476                                                                                        |
| Members' capital:                                                                                                                                                                                              |                                                                                                                  |  |                                                                                               |
| Members' capital                                                                                                                                                                                               | 106,887                                                                                                          |  | 110,025                                                                                       |
| Accumulated other comprehensive  income                                                                                                                                                                        | 29                                                                                                               |  | 13                                                                                            |
| Total Members' capital                                                                                                                                                                                         | 106,916                                                                                                          |  | 110,038                                                                                       |
| Commitments and contingencies                                                                                                                                                                                  | -                                                                                                                |  | -                                                                                             |
|                                                                                                                                                                                                                | $                 621,602                       |  | $            646,521                        |
|                                                                                                                                                                                                                |                                                                                                                  |  |                                                                                               |
| See accompanying notes to consolidated financial  statements.                                                                                                                                                  |                                                                                                                  |  |

2
** **

** **

**NATIONAL BEEFPACKING COMPANY, LLC****AND SUBSIDIARIES****Consolidated Statement of Operations****(in thousands) **

**13 weeks ended**

** **

**13 weeks ended**

**November 27, 2004 (unaudited)**

** **

**November 29,  2003 (unaudited)**

Net sales

 $                 1,050,720 

 $               1,058,306 

Costs and expenses:

Cost of sales

1,034,189 

1,018,869 

Selling, general, and  administrative

8,099 

7,334 

Depreciation and amortization

6,028 

6,657 

     Total  costs and expenses

1,048,316 

1,032,860 

Operating income

2,404 

25,446 

Other income (expense):

Interest income

85 

156 

Interest expense

(6,694)

(6,244)

Minority owners' interest in  net          income of  Kansas City Steak, LLC

(54)

(8)

Equity in loss of aLF Ventures,  LLC

(122)

(311)

Other, net

473 

353 

(Loss) income before taxes

(3,908)

19,392 

Income tax expense

(538)

(349)

Net (loss) income

 $                       (4,446)

 $                    19,043 
      
See accompanying notes to consolidated financial  statements. 
                                                         
3
** **

** NATIONALBEEF PACKING COMPANY, LLC****AND SUBSIDIARIES**

**ConsolidatedStatement of Cash Flows****(in thousands)**

**13 weeks ended**

** **

**13 weeks ended**

**November 27, 2004**

** **

**November 29, 2003**

**(unaudited)**

** **

**(unaudited)**

Cash  flows from operating activities:

Net  (loss) income

 $

(4,446)

 $

19,043 

Adjustments  to reconcile net (loss) income to net cash                  provided by operating activities:

Depreciation  and amortization

6,028 

6,657 

(Gain)  loss on disposal of property, plant, and equipment

(102)

1 

Minority  interest

54 

8 

Change  in assets and liabilities:

Accounts  receivable

15,526 

(6,904)

Due  from affiliates

1,342 

(416)

Other  receivables

368 

322 

Inventories

9,603 

(15,498)

Other  assets

(1,487)

(546)

Accounts  payable

(1,149)

3,099 

Due  to affiliates

(63)

(76)

Accrued  compensation and benefits

(5,053)

(10,956)

Accrued  insurance

1,387 

(2,288)

Accrued  expenses and liabilities

3,634 

1,107 

Cattle  purchases payable

10,246 

8,971 

                                           Net cash provided by operating activities
 $
35,888 

 $

2,524 

   Cash flows from investing  activities:

Capital  expenditures, including interest capitalized

(5,166)

(6,774)

Proceeds  from sale of property, plant, and equipment

519 

239 

                                          Net  cash used in investing activities

 $

(4,647)

 $

(6,535)

Cash  flows from financing activities:

Net  (payments)/receipts under revolving credit lines and note         payable

(17,733)

16,104 

Change  in overdraft balances

(6,270)

7,982 

Member  distributions

(5,542)

(22,386)

                                           Net cash (used in)/provided by financing activities
 $
(29,545)
 $
1,700 

Effect  of exchange rate changes on cash

16 

7 

Net  increase (decrease) in cash

1,712 

(2,304)

Cash  and cash equivalents at beginning of period

27,998 

31,304 

Cash  and cash equivalents at end of period
 $
29,710 

 $

29,000 

Supplemental  information: 

           Cash paid during the period for interest

 $

1,975 
 $
250 

           Cash paid during the period for taxes, net of refunds

 $

4 
 $
281 

See accompanying notes to  consolidated financial statements. 

4
** **
****
**NATIONALBEEF PACKING COMPANY, LLC AND SUBSIDIARIES****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(1) Interim FinancialStatements**

**Basis of Presentation**

Theaccompanying unaudited Consolidated Financial Statements have been prepared inaccordance with accounting principles generally accepted in the United States  of America ("GAAP") for interim financial information; therefore,they do 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. For furtherinformation, refer to the audited Consolidated Financial Statements and Notesto Consolidated Financial Statements, which are included in NBP's Annual Reporton Form 10-K on file with the Securities and Exchange Commission("SEC") for the fiscal year ended August 28, 2004.  The resultsof operations for the interim periods presented are not necessarily indicativeof the results for a full fiscal year.  Certain prior year amounts havebeen reclassified in order to conform to the current year presentation.

NB FinanceCorp., a wholly-owned finance subsidiary of NBP, is a co-issuer on a joint andseveral basis with NBP of the Senior Notes, which are our senior unsecuredobligations, ranking equal in right of payment with all of our other seniorunsecured obligations.  NB Finance Corp. has nominal assets and conductsno business or operations. There are no significant restrictions on the abilityof subsidiaries to transfer funds to NBP.

**(2) Inventories**

Inventories at November 27, 2004 and August 28, 2004 consisted of the following (in thousands):

**November 27, 2004**

** **

**August 28, 2004**

  Dressed and boxed beef

 $

59,313 

** **

 $

67,801

Beef by-products

7,489 

** **

9,158 

Supplies

9,557 

** **

9,003 

    Total  inventory

 $

76,359 

** **

 $

85,962

** **

** (3) Comprehensive(Loss) Income**

Comprehensive(loss) income, which consists of net (loss) income and foreign currencytranslation adjustments, was as follows for the periods indicated (inthousands):

**13  weeks ended**

**13  weeks ended**

**November 27, 2004**

**November 29, 2003**

  Net (loss) income

 $

(4,446)

 $

19,043 

Other comprehensive income:

    Foreign currency  translation adjustments

16 

7 

  Comprehensive (loss)  income

 $

(4,430)

 $

19,050 

5

**(4) Contingencies**

On July 1, 2002, a lawsuit was filed againstFarmland National Beef Packing Company, L.P. ("FNBPC" or thepredecessor to NBP), ConAgra Beef Company, Tyson Foods, Inc. and ExcelCorporation in the United States District Court for the District of SouthDakota seeking certification of a class of all persons who sold cattle to thedefendants for cash, or on a basis affected by the cash price for cattle,during the period from April 2, 2001 through May 11, 2001 and for some periodup to two weeks thereafter. The case was filed by three named plaintiffs onbehalf of a putative nationwide class that plaintiffs estimate is comprised ofhundreds or thousands of members. The complaint alleges that the defendants, inviolation of the Packers and Stockyards Act of 1921, knowingly used, withoutcorrection or disclosure, incorrect and misleading boxed beef price informationgenerated by the USDA to purchase cattle offered for sale by the plaintiffs ata price substantially lower than was justified by the actual and correct priceof boxed beef during this period. Plaintiffs also seek recovery against alldefendants under a theory of unjust enrichment.  The plaintiffs seekdamages in excess of $50.0 million from all defendants as a group on behalf ofthe class.  FNBPC answered the complaint and joined with the three otherdefendants in moving to dismiss this action. An amended complaint was filed andFNBPC joined in the other defendants' motion to dismiss. The joint motion todismiss was denied, and the judge ruled that the plaintiffs adequately allegeda violation of the Packers and Stockyards Act of 1921. The case was certifiedas a class-action matter in June of 2004.  Accordingly, the lawsuit willproceed to trial. Management believes that FNBPC acted properly and lawfully indealings with cattle producers. Management is currently unable to evaluate theoutcome of this matter or to estimate the amount of potential loss, if any. Inaccordance with SFAS No. 5, Accounting for Contingencies, NBP has notestablished a loss accrual associated with this claim. 

NBP is also aparty to a number of other lawsuits and claims arising out of the operation ofour business. Management believes the ultimate resolution of such mattersshould not have a material adverse effect on our financial condition, resultsof operations or liquidity.**(5) Capital Subject to Redemption**

At any timeafter certain dates, the earliest being July 31, 2008, the latest being July31, 2011, certain members of management and/or NBPCo Holdings, LLC have theright to request that NBP repurchase their interests, the value of which is tobe determined pursuant to a mutually agreed appraisal process. If NBP is unableto effect the repurchase within a specified time, the requesting member(s) havethe right to cause a sale process to commence.  NBP accounts for changesin the redemption value of these interests by accreting the change over theperiod from the date of issuance to the earliest redemption date of therespective interests. At November 27, 2004, the "Capital subject to redemption"was revalued by an independent appraisal process, and the value was determinedto be $59.1 million.  Accordingly, the carrying value of the "Capitalsubject to redemption" has been reduced by accretion of approximately $0.03million during the thirteen weeks ended November 27, 2004, resulting in the $59.6 million carrying value, as reflected in the accompanyingConsolidated Balance Sheet as of November 27, 2004.**(6)  Segments**

The Company's operating segmentsare based on segment profit and evaluated by the Chief Executive Officer, whoalso 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*. In the fourth quarter of fiscal year 2004, the Company revised its method oftransfer pricing between its two segments related to the price charged fortransportation services.  The effect of restating this change for thethirteen weeks ended November 29, 2003 was to increase operating income of theCore Beef segment and decrease operating income of the Other segment byapproximately $1.1 million.  Certain reclassifications have been made tothe prior periods' reporting segment presentation to conform to the currentpresentation.  

 *Core Beef*-the majority of NBP'srevenues are generated from the sale 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 beef by-products to the variety meat, feedprocessing, fertilizer and pet food industries.  Aggregation criteria wereapplied to determine the constituents of the Core Beef segment.

6

*Other*-the Other segment of NPB consists ofthe operations of National Carriers, Inc., a refrigerated and livestockcontract carrier company, and Kansas City Steak Company, LLC, a portion controlsteak cutting operation. 

 *Eliminations*-this line item includeseliminations of inter-segment and intra-segment activity resulting from theconsolidation process.

** **The following table representssegment results for the periods indicated (in thousands):

**13 weeks ended**

** **

**13 weeks  ended**

**November 27, 2004**

** **

**November 29, 2003**

 Net sales

  Core Beef

 $

1,053,536 

 $

1,082,900 

Other

45,678 

39,567 

Eliminations

(48,494)

(64,161)

 Total

 $

1,050,720 

 $

1,058,306 

 Operating income

Core Beef

823 

25,506 

Other

1,581 

(60)

Total

2,404 

25,446 

  Interest income

85 

156 

  Interest expense

(6,694)

(6,244)

  Other income 

350 

42 

  Minority interest

(53)

(8)

 Total (loss) income    before taxes

 $

(3,908)

 $

19,392 

**November 27, 2004**

**November 29, 2003**

 Total assets

  Core Beef

 $

592,744 

 $

630,458 

Other

30,450 

22,654 

Eliminations

(1,592)

(2,675)

 Total

 $

621,602 

 $

650,437 

 

**(7) ****United  States****BSE Outbreak**

On December 23, 2003, it was announced by the United States Department of Agriculture (USDA)that a single Holstein dairy cow was discovered in the state of Washington tohave tested positive for bovine spongiform encephalopathy (BSE).  Theorigin of the animal was subsequently traced to a farm in Canada.  Shortlyafter the announcement, several countries representing a substantial share ofNBP's export business closed their borders to the importation of edible beefproducts from the United States.  Responding to the loss of exportmarkets, live cattle prices in the United States declined by approximately 18%within 3 days.  In FYE 2004, NBP's total export sales were approximately10% of total net sales.

7

During thesecond quarter of FYE 2004, NBP recorded charges to earnings totalingapproximately $18.8 million due to the market impacts of the closure ofinternational borders as a result of the BSE discovery in late December. These charges, recorded in sales and cost of sales in the Company's secondquarter of FYE 2004 Consolidated Statement of Operations, reflect:  (1)volatility in the U.S. markets for finished goods and live cattle, with animpact noted in immediate margin erosion resulting from a rapid fall in cutoutor sales values; (2)  some product already destined for foreign marketsre-routed for resale in the U.S., generally at prices lower than their originalexport value; and (3) lower value for certain inventory items which had been inthe production pipeline and had not yet left the U.S. as they had no comparabledomestic market.  Certain by-products have been classified as SpecifiedRisk Materials ("SRMs"), and have been banned from use in feedstocksand the human food chain. Some of these products previously enjoyed a market inforeign countries.  The impacts of BSE were positively offset, in part, bystrong domestic demand for beef products.  

In addition,the USDA and the Food Safety Inspection Service (FSIS) published newregulations in response to the discovery of BSE in the state of Washington. These new regulations, among other things, govern the removal of SRMs duringslaughter, cover the ban on the slaughtering of non-ambulatory animals forhuman food use, set forth the prohibition on the production of mechanicallyseparated meat and ban certain techniques used in the slaughter process. The USDA also issued a notice announcing that FSIS inspectors will not markambulatory cattle that have been targeted for BSE surveillance testing as"inspected and passed" until negative test results areobtained.  NBP does not anticipate that these new regulations,individually or in the aggregate, will have a material adverse effect on itsbusiness.

While exportsof some beef products have commenced once again to Mexico, NBP cannotanticipate the duration of other continuing beef import bans or whetheradditional countries may impose similar restrictions.  Thus far, theeffect of resumed export of beef products to Mexico has been marginal on the United  States beef packing industry.  Fed cattle slaughter levels in the United  States for the FYE 2004 fell approximately 8.9% below year-ago levels,reflecting constrained cattle supplies and reduced demand for export products.

The closure ofU.S. borders to the importation of Canadian feeder and fattened (ready forslaughter) animals which occurred in May 2003 following the discovery of BSE inAlberta that same month tightened the U.S. cattle supply; and, although theU.S. border opened to Canadian produced boxed beef in September 2003, theentire U.S. beef packing industry continued at a price disadvantage while theban on importation of Canadian livestock was maintained.   Thiscontinued closure of the U.S. border to Canadian livestock has resulted inhigher overall feeder and fed cattle prices in the U.S., negatively impactingraw material prices, and increased imports of boxed beef, negatively affectingboxed beef prices.

TheUSDA has published a proposed rule revising its policy to keep the U.S.border closed to live animals for processing in the U.S.  The commentperiod for this proposed rule closed on April 7, 2004 and publication of afinal rule was anticipated within a reasonable time following closure of thecomment period.  In the interim, Ranchers Cattlemen Action Legal FundUnited Stockgrowers of America ("R-CALF" -  a northern statescattle producer's organization) was successful in obtaining an injunctionagainst the USDA allowing importation of certain beef products produced inCanada pursuant to this rule, because the USDA did not follow the "AdministrativeProcedures Act" prior to issuing its order allowing such action.  

On December 29, 2004, the USDA announced it had established conditions under which it willallow imports of live cattle under 30 months of age and certain othercommodities from regions with effective bovine spongiform encephalopathy (BSE)prevention and detection measures.  Prior to being able to import to the U.S.,each country must undergo a thorough risk assessment to be recognized as a"minimal-risk region."  Canada will be the first countryrecognized as a minimal-risk region and, as such, will be eligible to export tothe U.S. live cattle under 30 months of age (subject to certain restrictions),as well as certain other animals and products.  The final rule was publishedin the January 4, 2005 *Federal Register* and will be effective March 7, 2005 unless delayed by litigation, legislation or other reasons.  The USDAestimates that up to two million live Canadian cattle under 30 months of agecould be exported to the U.S. in the first twelve months after the rule takeseffect.

8
 
On January 2, 2005, the Canadian Food Inspection Agency confirmed that an older dairy cowfrom Alberta has tested positive for BSE.  The infected animal was born in1996, prior to the introduction of the 1997 feed ban.  As stated in theUSDA press release of December 30, 2004, the U.S. would not alter theimplementation of its rule to resume trade with Canada, although NBP canprovide no assurance regarding this statement.  On January 3, 2005, theUSDA issued a statement expressing confidence in the animal and public healthmeasures that Canada has in place, noting that the risk assessment, conductedby the USDA as part of the rulemaking process to determine Canada's status as aminimal-risk region, included the consideration of the possibility that Canadacould experience additional cases of BSE.

A UnitedStates/Japanese Commission was formed to look at the optimal "sciencebased" approach to resolving the issues between the U.S. and Japan. The commission held its last meeting in July 2004.  Following thismeeting, trade representatives from the United States and Japan continued theirdiscussions on reopening of the Japanese market to imported beef products fromthe United States.  

On October 23, 2004, the USDA announced that Japan and the U.S. had reached an agreement onopening the border for export to Japan.  Over the coming months, manydetails will have to be worked out by both governments.  Part of theagreement involves the tracking of animals of known age from the ranch so thatonly meat from animals less than 21 months of age can be shipped to Japan. It may require considerable effort and resources for NBP to develop andimplement such a system over the coming months.  It is expected that themarkets will begin to open for some products mid-year in calendar 2005,although no assurance can be given that this will occur.  

Announcementsof inconclusive, preliminary test results for BSE can be expected from time totime as a result of the sensitivity of the new screening regime.  Theimpact on the market created by such uncertainty is not possible to predict. 

NBP cannotpresently assess the full economic impact of the consequences of BSE on the U.S.beef packing industry or on its operations.  The Company's revenues andnet income may be materially adversely affected in the event existing importrestrictions continue indefinitely, additional countries announce similarrestrictions, additional regulatory restrictions are put into effect ordomestic consumer demand for beef declines substantially. 

**(8)  Bank CovenantCompliance**

Effective November 19, 2004, our amended credit facility was further amended to reflect changes infinancial covenants.  The amended credit facility, as amended, containedthe following financial covenants, as of November 27, 2004:

•         Maximum funded debt tofour quarter rolling EBITDA (as defined in the credit agreement) ratio of                     7.25x;           •         Maximum senior securedfunded debt to four quarter rolling EBITDA ratio of 4.50x;           •         Minimum four quarterrolling EBITDA of $50 million;           •         Minimum working capitalof $92.25 million;           •         Maximum annual capitalexpenditures of $30 million.

As defined inthe amended credit facility, EBITDA contains specified adjustments.  On November 27, 2004, the Company was in compliance with all financial covenants.

9

Effective December 30, 2004, NBP amended and restated its existing senior credit facility with aconsortium of banks.  The facility now consists of a $120.0 million termloan that matures in December 2014 and a $140.0 million revolving line ofcredit loan that matures in December 2009 that is subject to certain borrowingbase limitations.  The amendment and restatement is within the scope ofthe Emerging Issues Task Force ("EITF") 96-19, *Debtor's Accountingfor a Modification or Exchange of Debt Instruments* as well as EITF 98-14, *Debtor'sAccounting for Changes in Line-of-Credit or Revolving-Debt Arrangements*. In accordance with that guidance, a portion of the unamortized loan costs ofapproximately $2.5 million from the previous credit facility as well asadditional finance and legal charges associated with the new amended andrestated credit facility of approximately $0.6 million will be written off during theCompany's second quarter of fiscal year 2005.  At the closing of thetransaction, NBP borrowed $120.0 million under the term loan and $4.6 millionunder the revolving loan with an additional $43.0 million of the revolving loanused in the form of letters of credit.

The borrowingsunder the revolving loan are available for the Company's working capitalrequirements, capital expenditures and other general corporate purposes. The amended and restated credit facility is secured by a first priority lien onsubstantially all of the Company's assets.  The principal amountoutstanding under the term loan is due and payable in equal quarterlyinstallments of $6.0 million on the last business day of each March, June,September and December commencing on March 31, 2010 and ending on December 29,2014.  Prepayment is allowed at any time.

The Company'samended and restated credit facility contains covenants that limit its abilityto incur additional indebtedness, sell or dispose of assets, pay certaindividends and prepay or amend certain indebtedness among other matters. The amended and restated credit facility also contains a provision for aconversion to more favorable interest rates and more restrictive financialcovenants on the earlier of (a) June 1, 2006 or (b) the election ofthe Company (the "Conversion Date").  Currently the interestrate for the term loan is either the greater of (a) the Base Rate (as definedin the credit agreement) plus 75 basis points or (b) LIBOR plus 275 basispoints.  Currently the interest rate for the revolving loan is either thegreater of (a) the Base Rate plus 50 basis points or (b) LIBOR plus 250 basispoints.  After the Conversion Date the interest rate for the term loan andrevolving loan is determined by reference to a matrix of rates keyed to the Company'sfunded debt to EBITDA ratio.

The amended andrestated credit facility imposes certain financial covenants.  FromDecember 30, 2004 until the Conversion Date, NBP is required to (i) have as of the end of each fiscal quarter a minimum four-quarterrolling EBITDA of $50.0 million and (ii) maintain at all times a minimumBorrowing Base Availability (as defined in the credit agreement) of at least$25.0 million.  After the Conversion Date, the Company is required tomaintain at all times a specified maximum funded debt to EBITDA ratio, amaximum senior secured funded debt to EBITDA ratio, a minimum four-quarterrolling EBITDA and a minimum four-quarter rolling debt service coverageratio.  In addition, NBP's annual net capital expenditures are limited toamounts ranging from $32 million in fiscal 2005 to $40 million in fiscal 2008and fiscal years thereafter.**(9)  Subsequent Events**

*Industrial Revenue Bonds*

In conjunctionwith the amendment and restatement of the Company's credit facility, effective December 30, 2004, the Company entered into a transaction with the City of DodgeCity, Kansas, in order to provide the Company property tax savings.  Underthe transaction, the City purchased the Company's Dodge City facility (the"facility") by issuing $102.3 million in bonds due in December 2014,and leased the facility to the Company for an identical term under a capitallease.  The City's bonds were purchased by the Company using proceeds ofits term loan under the amended and restated credit facility.  Because theCity has assigned the lease to the bond trustee for the benefit of the Companyas the sole bondholder, the Company, in effect, controls enforcement of thelease against itself.  As a result of the capital lease treatment, thefacility will remain a component of property, plant and equipment in theCompany's consolidated balance sheet.  As a result of the legal right ofoffset, the capital lease obligation and the corresponding bond investments willbe eliminated in consolidation.  The transaction provides the Company withproperty tax exemptions for the leased facility, which, after netting paymentsto the City and local school district under payments in lieu of tax agreements,results in an annual savings of approximately 25% in property taxes.  Thefacility remains subject to a prior mortgage and security interest in favor ofthe lenders under the senior credit facility.  Additional revenue bondsmay be issued to cover the costs of certain improvements to thisfacility.  The total amount of revenue bonds authorized for issuance is$120.0 million.

10

*Utilities Commitment*

EffectiveDecember 30, 2004, NBP finalized an agreement with the City of Dodge City,Kansas, whereby in consideration of certain improvements made to the City waterand wastewater systems, NBP has committed to make a series of service chargepayments totaling $19.3 million over a 20 year period.  Payments under thecommitment will be $0.8 million in fiscal year 2005, $1.2 million in fiscal year2006, $1.4 million in fiscal year 2007, $1.4 million in fiscal year 2008, $1.4million in fiscal year 2009, with the balance of $13.1 million to be paid insubsequent years.  

 

<back to Table of Contents>

11

**Item 2.  Management's Discussion and Analysis ofFinancial Condition and Results of Operations.    **

**Disclosure RegardingForward-Looking Statements**

This report contains"forward-looking statements," which are subject to a number of risksand uncertainties, many of which are beyond our control. Forward-lookingstatements are 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, competitive practices and consolidation in thecattle production and processing industries, actions of domestic or foreigngovernments, hedging risk, changes in interest rates and foreign currencyexchange rates, consumer demand and preferences, the cost of compliance withenvironmental and health laws, loss of key customers, loss of key employees,labor relations and consolidation among our customers. In light of these risksand uncertainties, 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 behalf areexpressly qualified in their entirety by these factors.  Please review the"Risk Factors" in "Item 1. Business" of NBP's AnnualReport on Form 10-K filed with the Securities and Exchange Commission on November 23, 2004 for other important factors that could cause actual results to differmaterially from those in any such forward-looking statements, and which shouldbe read in conjunction with this report.

**Industry Outlook**

The USDA hasestablished conditions which allow the Canadian border to become eligible forre-opening in early March 2005 for importation of live cattle under 30 monthsof age, subject to certain restrictions.  Also, while there is a frameworkof an agreement for the resumption of trade with Japan, it appears trade willnot resume for several months.  Currently live weights of cattle beingslaughtered are considerably higher than last year, implying supplies of cattlein the near term will be larger; however, until international market access isrestored and live cattle are permitted from Canada, margins in the Core Beefsegment can be expected to be negatively impacted.  

**Recent Developments**

Effective December 30, 2004, our amended credit facility was further amended and restated to reflectchanges in loan amounts, interest rates and financial covenants.  Inconjunction with the amendment and restatement of our credit facility, the Cityof Dodge City, Kansas issued $102.3 million of industrial revenue bonds at thesame time that effectively results in our annual savings of approximately 25%in property taxes.  These transactions are more fully described in"Liquidity and Capital Resources" below.

On December 23, 2003, it was announced by the United States Department of Agriculture (USDA)that a single Holstein dairy cow was discovered in the state of Washington tohave tested positive for bovine spongiform encephalopathy (BSE).  Theorigin of the animal was subsequently traced to a farm in Canada.  Shortlyafter the announcement, several countries representing a substantial share ofNBP's export business closed their borders to the importation of edible beefproducts from the United States.  Responding to the loss of exportmarkets, live cattle prices in the United States declined by approximately 18%within 3 days.  In the FYE 2003, NBP's total export sales wereapproximately 17% of total sales, including sales of non-food beef productssuch as hides.  In FYE 2004, NBP's total export sales were approximately10% of total net sales.

12

During thesecond quarter of FYE 2004, we recorded charges to earnings totalingapproximately $18.8 million due to the market impacts of the closure ofinternational borders as a result of the BSE discovery in late December. These charges, recorded in sales and cost of sales in our second quarter of FYE2004 Consolidated Statement of Operations, reflect:  (1) volatility in theU.S. markets for finished goods and live cattle, with an impact noted inimmediate margin erosion resulting from a rapid fall in cutout or sales values;(2)  some product already destined for foreign markets re-routed forresale in the U.S., generally at prices lower than their original export value;and (3) lower value for certain inventory items which had been in theproduction pipeline and had not yet left the U.S. as they had no comparabledomestic market.  Certain by-products have been classified as SpecifiedRisk Materials ("SRMs"), and have been banned from use in feedstocksand the human food chain. Some of these products previously enjoyed a market inforeign countries.  The impacts of BSE were positively offset, in part, bystrong domestic demand for beef products.  

               In addition, the USDA and the Food Safety Inspection Service (FSIS) publishednew regulations in response to the discovery of BSE in the state of Washington. These new regulations, among other things, govern the removal of SRMs duringslaughter, cover the ban on the slaughtering of non-ambulatory animals forhuman food use, set forth the prohibition on the production of mechanicallyseparated meat and ban certain techniques used in the slaughter process. The USDA also issued a notice announcing that FSIS inspectors will not markambulatory cattle that have been targeted for BSE surveillance testing as"inspected and passed" until negative test results areobtained.  We do not anticipate that these new regulations, individuallyor in the aggregate, will have a material adverse effect on our business.

While exportsof some beef products have commenced once again to Mexico, we cannot anticipatethe duration of other continuing beef import bans or whether additionalcountries may impose similar restrictions.  Thus far, the effect ofresumed export of beef products to Mexico has been marginal on the United  States beef packing industry.  Fed cattle slaughter levels in the United  States for the FYE 2004 fell approximately 8.9% below year-ago levels,reflecting constrained cattle supplies and reduced demand for export products.

The closure ofU.S. borders to the importation of Canadian feeder and fattened (ready forslaughter) animals which occurred in May 2003 following the discovery of BSE inAlberta that same month tightened the U.S. cattle supply; and, although theU.S. border opened to Canadian produced boxed beef in September 2003, theentire U.S. beef packing industry continued at a price disadvantage while theban on importation of Canadian livestock was maintained.   Thiscontinued closure of the U.S. border to Canadian livestock has resulted inhigher overall feeder and fed cattle prices in the U.S., negatively impactingraw material prices, and increased imports of boxed beef, negatively affectingboxed beef prices.

TheUSDA has published a proposed rule revising its policy to keep the U.S.border closed to live animals for processing in the U.S.  The commentperiod for this proposed rule closed on April 7, 2004 and publication of afinal rule was anticipated within a reasonable time following closure of thecomment period.  In the interim, Ranchers Cattlemen Action Legal FundUnited Stockgrowers of America ("R-CALF" -  a northern statescattle producer's organization) was successful in obtaining an injunctionagainst the USDA allowing importation of certain beef products produced inCanada pursuant to this rule, because the USDA did not follow the"Administrative Procedures Act" prior to issuing its order allowingsuch action.  

On December 29, 2004, the USDA announced it had established conditions under which it willallow imports of live cattle under 30 months of age and certain othercommodities from regions with effective bovine spongiform encephalopathy (BSE)prevention and detection measures.  Prior to being able to import to the U.S.,each country must undergo a thorough risk assessment to be recognized as a"minimal-risk region."  Canada will be the first countryrecognized as a minimal-risk region and, as such, will be eligible to export tothe U.S. live cattle under 30 months of age (subject to certain restrictions),as well as certain other animals and products.  The final rule waspublished in the January 4, 2005 *Federal Register* and will be effective March 7, 2005 unless delayed by litigation, legislation or other reasons.  The USDAestimates that up to two million live Canadian cattle under 30 months of agecould be exported to the U.S. in the first twelve months after the rule takeseffect. 

13

On January 2, 2005, the Canadian Food Inspection Agency confirmed that an older dairy cowfrom Alberta has tested positive for BSE.  The infected animal was born in1996, prior to the introduction of the 1997 feed ban.  As stated in theUSDA press release of December 30, 2004, the U.S. would not alter theimplementation of its rule to resume trade with Canada, although NBP canprovide no assurance regarding this statement.  On January 3, 2005, theUSDA issued a statement expressing confidence in the animal and public healthmeasures that Canada has in place, noting that the risk assessment, conductedby the USDA as part of the rulemaking process to determine Canada's status as aminimal-risk region, included the consideration of the possibility that Canadacould experience additional cases of BSE.

A UnitedStates/Japanese Commission was formed to look at the optimal "sciencebased" approach to resolving the issues between the U.S. and Japan. The commission held its last meeting in July 2004.  Following thismeeting, trade representatives from the United States and Japan continued theirdiscussions on reopening of the Japanese market to imported beef products fromthe United States.  

On October 23, 2004, the USDA announced that Japan and the U.S. had reached an agreement onopening the border for export to Japan.  Over the coming months, manydetails will have to be worked out by both governments.  Part of theagreement involves the tracking of animals of known age from the ranch so thatonly meat from animals less than 21 months of age can be shipped to Japan. It may require considerable effort and resources for NBP to develop andimplement such a system over the coming months.  It is expected that themarkets will begin to open for some products mid-year in calendar 2005,although no assurance can be given that this will occur.  

Announcementsof inconclusive, preliminary test results for BSE can be expected from time totime as a result of the sensitivity of the new screening regime.  Theimpact on the market created by such uncertainty is not possible to predict. 

We cannotpresently assess the full economic impact of the consequences of BSE on the U.S.beef packing industry or on our operations.  Our revenues and net incomemay be materially adversely affected in the event existing import restrictionscontinue indefinitely, additional countries announce similar restrictions,additional regulatory restrictions are put into effect or domestic consumerdemand for beef declines substantially.

**Results of Operations**

***Thirteen weeks ended******November 27, 2004******compared to thirteen weeks ended******November 29, 2003*********

*General.* Net loss for the thirteen weeks ended November 27, 2004 was $4.4 millioncompared to net income of $19.0 million for the thirteen weeks ended November 29, 2003, a decrease of $23.4 million.  Sales were lower in the thirteenweeks ended November 27, 2004 than those of the prior year period due to adecrease in boxed beef and beef product prices of approximately 8.1%, offset inpart by an increase in the number of cattle processed.  The loss of keyexport markets due to BSE continued to pressure beef margins.

Total costs andexpenses as a percent of sales were 99.8% for the thirteen weeks ended November 27, 2004 compared to 97.6% for the thirteen weeks ended November 29, 2003.  Costs were higher due to a 5.9% increase in the number of cattle processedfrom 2004, offset in part by lower live cattle prices.  Operating incomedecreased $23.0 million due to lower boxed beef and beef product prices and toa continuing unfavorable pricing environment for products traditionallymarketed outside the U.S. 

*Net Sales*. Net sales were $1,050.7 million for the thirteen weeks ended November 27, 2004 compared to $1,058.3 million for the thirteen weeks ended November 29, 2003, a decrease of $7.6 million or 0.7%.  The decrease resultedprimarily from a decrease in boxed beef and beef product prices ofapproximately 8.1%, mostly offset by a 5.9% increase in the number of cattleprocessed in 2005.  Boxed beef and beef product prices continued to bepressured by the loss of key export markets closed to U.S. beef products due toBSE.

14
 
           *Cost of Sales*.  Cost of sales was $1,034.2 million for the thirteenweeks ended November 27, 2004 compared to $1,018.9 million for the thirteenweeks ended November 29, 2003, an increase of $15.3 million or 1.5%.  Theincrease resulted primarily from an increase in the number of cattle processedfrom 2004 of 5.9%, offset by lower live cattle prices.

         *Selling, General and Administrative Expenses*.  Selling, general andadministrative expenses were $8.1 million for the thirteen weeks ended November 27, 2004 compared to $7.3 million for the thirteen weeks ended November 29, 2003, an increase of $0.8 million or 11.0%.  The current year reflectsan expense for state franchise taxes of approximately $0.3 million due to therestructuring of the company as a limited liability company, and increases inpayroll and related expenses and professional services of $0.5 million.

         *Depreciation and Amortization Expense*.  Depreciation andamortization expenses were $6.0 million for the thirteen weeks ended November 27, 2004 compared to $6.7 million for the thirteen weeks ended November 29, 2003, a decrease of $0.7 million or 10.4%.  The decrease is attributableto revised estimates that had previously been utilized in the calculations fordepreciation expense in the thirteen weeks ended November 29, 2003 relative to assets acquired when U.S. Premium Beef acquired a controlling interest inFarmland National Beef Packing Company, L.P. on August 7, 2003 and formed National Beef Packing Company, LLC.

*OperatingIncome*.  Operating income was $2.4 million for the thirteen weeksended November 27, 2004 compared to $25.4 million for the thirteen weeks ended November 29, 2003, a decrease of $23.0 million.  The decrease resulted from the lowerboxed beef and beef product prices due in part to the loss of key exportmarkets closed to U.S. beef products due to BSE.  The continued closure ofthe U.S. border to Canadian livestock and the corresponding reduction in thenumber of live cattle available for processing, along with the loss of keyexport markets, has resulted in compressed margins in the U.S. beef packingindustry.  Operating income, as a percentage of net sales, was 0.2% forthe thirteen weeks ended November 27, 2004 and 2.4% for the thirteen weeksended November 29, 2003.

         *Interest Expense*.  Interest expense was $6.7 million for thethirteen weeks ended November 27, 2004 compared to $6.2 million for thethirteen weeks ended November 29, 2003, an increase of $0.5 million or8.1%.  The increase was due primarily to higher interest rates in thethirteen weeks ended November 27, 2004 as compared to the same period in fiscal2004.

         *Income Tax Expense*.  Income tax expense of $0.5 million for thethirteen weeks ended November 27, 2004 compared to $0.3 million for thethirteen weeks ended November 29, 2003, an increase of $0.2 million.  Theincrease was primarily due to higher income for the period for NationalCarriers, Inc. and the associated income tax expense on income from thatentity, which is organized as a C Corporation.

**Segment Results**

The Company's operating segmentsare based on segment profit and evaluated by the Chief Executive Officer, whoalso 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*. In the fourth quarter of fiscal year 2004, the Company revised its method oftransfer pricing between its two segments related to the price charged fortransportation services.  The effect of restating this change for thethirteen weeks ended November 29, 2003 was to increase operating income of theCore Beef segment and decrease operating income of the Other segment byapproximately $1.1 million.  Certain reclassifications have been made tothe prior periods' reporting segment presentation to conform to the currentpresentation.  

 *Core Beef*-the majority of NBP'srevenues are generated from the sale 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 beef by-products to the variety meat, feedprocessing, fertilizer and pet food industries.  Aggregation criteria wereapplied to determine the constituents of the Core Beef segment.

15
 
* Other*-theOther segment of NPB consists of the operations of National Carriers, Inc., arefrigerated and livestock contract carrier company, and Kansas City SteakCompany, LLC, a portion control steak cutting operation. 

 *Eliminations*-this line item includeseliminations of inter-segment and intra-segment activity resulting from theconsolidation process.

** **The following table representssegment results for the periods indicated (in thousands):

**13 weeks ended**

** **

**13 weeks  ended**

**November 27, 2004**

** **

**November 29, 2003**

Net sales

  Core Beef

 $

1,053,536 

 $

1,082,900 

Other

45,678 

39,567 

Eliminations

(48,494)

(64,161)

Total

 $

1,050,720 

 $

1,058,306 

 Operating income

Core Beef

823 

25,506 

Other

1,581 

(60)

Total

2,404 

25,446 

  Interest income

85 

156 

  Interest expense

(6,694)

(6,244)

  Other income 

350 

42 

  Minority interest

(53)

(8)

 Total (loss) income     before taxes

 $

(3,908)

 $

19,392 

**November 27, 2004**

**November 29, 2003**

 Total assets

  Core Beef

 $

592,744 

 $

630,458 

Other

30,450 

22,654 

Eliminations

(1,592)

(2,675)

 Total

 $

621,602 

 $

650,437 

***Thirteen weeks endedNovember 27, 2004 compared to thirteen weeks ended November 29, 2003***

***Core Beef***

*Net Sales*. Net sales for Core Beef were $1,053.5 million for the thirteen weeks endedNovember 27, 2004 compared to $1,082.9 million for the thirteen weeks endedNovember 29, 2003, a decrease of $29.4 million or 2.7%.  The decreaseresulted primarily from a decrease in boxed beef and beef product prices ofapproximately 8.1%, mostly offset by a 5.9% increase in the number of cattleprocessed in fiscal 2005.  Boxed beef and beef product prices continued tobe pressured by the loss of key export markets closed to U.S. beef products dueto BSE.

16

*Operatingincome*.  Operating income for Core Beef was $0.8 million for thethirteen weeks ended November 27, 2004 compared to $25.5 million for thethirteen weeks ended November 29, 2003, a decrease of $24.7 million.  Thedecrease resulted from the lower boxed beef and beef product prices due in partto the loss of key export markets closed to U.S. beef products due toBSE.  The continued closure of the U.S. border to Canadian livestock andthe corresponding reduction in the number of live cattle available forprocessing, along with the loss of key export markets, has resulted incompressed margins in the U.S. beef packing industry.

***Other***

            *Net Sales*.  Net sales for Other were $45.7 million for the thirteenweeks ended November 27, 2004 compared to $39.6 million for the thirteen weeksended November 29, 2003, an increase of $6.1 million or 15.4%.  Theincrease was primarily due to market conditions in the transportation industrywhere freight capacity has been exceeding truck availability, allowing rateincreases in our transportation operations, as well as improved sales in ourportion control facility.

            *Operating income*.  Operating income for Other was $1.6 million forthe thirteen weeks ended November 27, 2004 compared to an operating loss of $.1million for the thirteen weeks ended November 29, 2003, an increase of $1.7million.  The increase was due primarily to the rate increases andimproved operating efficiencies in our transportation operations.

**Liquidity and CapitalResources**

As of November27, 2004, we had net working capital of $142.6 million, which included $1.5million in distributions payable, and cash and cash equivalents of $29.7million. At August 28, 2004, we had net working capital of $166.0 million,which included $5.5 million in distributions payable, and cash and cashequivalents of $28.0 million. Our primary sources of liquidity are cash flowsfrom operations and available borrowings under our amended credit facility.

As of November27, 2004, we had $317.4 million of long-term debt, of which $10.2 million wasclassified as a current liability. As of November 27, 2004, there wereoutstanding borrowings of $24.4 million, outstanding letters of credit of $43.0million and available borrowings of $57.8 million under our $140.0 millionamended credit facility. Cash flow from operations and borrowings under ouramended credit facility have funded our working capital requirements, capitalexpenditures and other general corporate purposes.  We were in compliancewith all of our financial covenants under the amended credit facility as ofNovember 27, 2004.

In addition tooutstanding borrowings under our amended credit facility, we had outstandingborrowings under industrial revenue bonds of $13.8 million, senior notes of$160.0 million, term loans of $118.8 million and capital leases and otherobligations of $0.4 million as of November 27, 2004.

17

 *Amended Senior CreditFacility*

Effective December 30, 2004, NBP amended and restated its existing senior credit facility with aconsortium of banks. The facility now consists of a $120.0 million term loanthat matures in December 2014 and a $140.0 million revolving line of creditloan that matures in December 2009 that is subject to certain borrowing baselimitations.  The amendment and restatement is within the scope of theEmerging Issues Task Force ("EITF") 96-19, *Debtor's Accounting fora Modification or Exchange of Debt Instruments* as well as EITF 98-14, *Debtor'sAccounting for Changes in Line-of-Credit or Revolving-Debt Arrangements*. In accordance with that guidance, a portion of the unamortized loan costs ofapproximately $2.5 million from the previous credit facility as well asadditional finance and legal charges associated with the new amended andrestated credit facility of approximately $0.6 million will be written off during the Company's secondquarter of fiscal year 2005.  At the closing of the transaction, NBPborrowed $120.0 million under the term loan and $4.6 million under therevolving loan with an additional $43.0 million of the revolving loan used inthe form of letters of credit.

The borrowingsunder the revolving loan are available for the Company's working capitalrequirements, capital expenditures and other general corporate purposes. The amended and restated credit facility is secured by a first priority lien onsubstantially all of the Company's assets.  The principal amountoutstanding under the term loan is due and payable in equal quarterlyinstallments of $6.0 million on the last business day of each March, June,September and December commencing on March 31, 2010 and ending on December 29,2014.  Prepayment is allowed at any time.

The Company'samended and restated credit facility contains covenants that limit its abilityto incur additional indebtedness, sell or dispose of assets, pay certaindividends and prepay or amend certain indebtedness among other matters. The amended and restated credit facility also contains a provision for aconversion to more favorable interest rates and more restrictive financialcovenants on the earlier of (a) June 1, 2006 or (b) the election ofthe Company (the "Conversion Date").  Currently the interestrate for the term loan is either the greater of (a) the Base Rate (as definedin the credit agreement) plus 75 basis points or (b) LIBOR plus 275 basispoints.  Currently the interest rate for the revolving loan is either thegreater of (a) the Base Rate plus 50 basis points or (b) LIBOR plus 250 basispoints.  After the Conversion Date the interest rate for the term loan andthe revolving loan is determined by reference to a matrix of rates keyed to theCompany's funded debt to EBITDA (as defined in the credit agreement) ratio.

The amended andrestated credit facility imposes certain financial covenants.  FromDecember 30, 2004 until the Conversion Date, NBP is required to (i) have as of the end of each fiscal quarter a minimum four-quarterrolling EBITDA of $50.0 million and (ii) maintain at all times a minimumBorrowing Base Availability (as defined in the credit agreement) of at least$25.0 million.  After the Conversion Date, the Company is required tomaintain at all times a specified maximum funded debt to EBITDA ratio, amaximum senior secured funded debt to EBITDA ratio, a minimum four-quarterrolling EBITDA and a minimum four-quarter rolling debt service coverageratio.  In addition, our annual net capital expenditures are limited toamounts ranging from $32 million in fiscal 2005 to $40 million in fiscal 2008and fiscal years thereafter.

*Industrial Revenue Bonds*

In conjunctionwith the amendment and restatement of the Company's credit facility, effectiveDecember 30, 2004, the Company entered into a transaction with the City ofDodge City, Kansas, in order to provide the Company property tax savings. Under the transaction, the City purchased the Company's Dodge City facility(the "facility") by issuing $102.3 million in bonds due in December2014, and leased the facility to the Company for an identical term under acapital lease.  The City's bonds were purchased by the Company usingproceeds of its term loan under the amended and restated credit facility. Because the City has assigned the lease to the bond trustee for the benefit ofthe Company as the sole bondholder, the Company, in effect, controls enforcementof the lease against itself.  As a result of the capital lease treatment,the facility will remain a component of property, plant and equipment in theCompany's consolidated balance sheet.  As a result of the legal right ofoffset, the capital lease obligation and the corresponding bond investmentswill be eliminated in consolidation.  The transaction provides the Companywith property tax exemptions for the leased facility, which, after nettingpayments to the City and local school district under payments in lieu of taxagreements, results in an annual savings of approximately 25% in propertytaxes.  The facility remains subject to a prior mortgage and securityinterest in favor of the lenders under the senior credit facility. Additional revenue bonds may be issued to cover the costs of certainimprovements to this facility.  The total amount of revenue bondsauthorized for issuance is $120.0 million.

Capitalspending through November 27, 2004 was approximately $5.2 million.  Weexpect to spend approximately $30 million in total on capital expendituresduring fiscal year 2005, primarily for plant expansion, renewals andimprovements.

18

We believe thatavailable borrowings under our amended and restated credit facility and cashprovided by operating activities will be sufficient to support our workingcapital, capital expenditures and debt service requirements for the foreseeablefuture. Our ability to generate sufficient cash, however, is subject to certaingeneral economic, financial, industry, legislative, regulatory and otherfactors beyond our control.

The followingis a reconciliation of EBITDA to net income for the specified periods (inthousands):

**13 weeks ended**

**13 weeks ended**

**November 27,  2004**

**November 29,  2003**

  Net (loss) income

 $

(4,446)

 $

19,043     

Interest income

(85)

(156)

Interest expense

6,694 

6,244 

Depreciation and   amortization    

6,028 

6,657 

Income taxes 

538 

349 

  EBITDA(1)

 $

8,729 

 $

32,137     

(1)EBITDA represents earnings before net interest, taxes, depreciation andamortization. EBITDA is presented because management believes that it ishelpful to investors, securities analysts and other interested parties inevaluating our performance as compared to the performance of other companies inour industry. EBITDA, with adjustments specified in our amended creditfacility, is also the basis for calculating our financial debt covenants underour amended credit facility and for calculating whether we may incur additionalindebtedness under the indenture governing our senior notes.  Accordingly,management believes that EBITDA is a useful indicator of our ability to incurand service debt obligations.  EBITDA is not a measurement of financialperformance under generally accepted accounting principles in the United Statesof America. It should not be considered an alternative to net income or incomefrom operations or any other measure of performance derived in accordance withgenerally accepted accounting principles. Our computation of EBITDA may not becomparable to other similarly titled measures computed by other companiesbecause all companies do not calculate EBITDA in the same fashion.

*Operating Activities*

           Netcash provided by operating activities in the thirteen weeks ended November 27,2004 increased to $35.9 million compared to $2.5 million in the thirteen weeksended November 29, 2003, primarily the result of a decrease in working capitalrequirements, offset by the decrease in net earnings in the current yearperiod.

*Investing Activities*

           Netcash used in investing activities was $4.6 million in the thirteen weeks endedNovember 27, 2004 compared to $6.5 million in the thirteen weeks ended November29, 2003.  This decrease in cash used was primarily attributable to $1.6million less in expenditures for property, plant and equipment in the currentyear.

19

*Financing Activities*

           Net cash used in financing activities was $29.5 million in the thirteen weeksended November 27, 2004 compared to net cash provided by financing activitiesof $1.7 million in the thirteen weeks ended November 29, 2003.  The changewas attributed to a $33.8 million decrease in revolving credit borrowings and a$14.2 million reduction in the overdraft balance, offset by a $16.8 milliondecrease in cash distributions for member taxes.

*Utilities Commitment*

EffectiveDecember 30, 2004, NBP finalized an agreement with the City of Dodge City,Kansas, whereby in consideration of certain improvements made to the City waterand wastewater systems, NBP has committed to make a series of service chargepayments totaling $19.3 million over a 20 year period.  Payments under thecommitment will be $0.8 million in fiscal year 2005, $1.2 million in fiscalyear 2006, $1.4 million in fiscal year 2007, $1.4 million in fiscal year 2008,$1.4 million in fiscal year 2009, with the balance of $13.1 million to be paidin subsequent years.  

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20

**Item 3. Quantitative and Qualitative Disclosures AboutMarket Risk.    **

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

*Commodities.*We use various raw materials, many of which are commodities. Raw materialsare generally available from several different sources, and we presentlybelieve that we can obtain them as needed.  Commodities are subject toprice fluctuations 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 purchasecattle for use in our processing businesses. When appropriate, we enter intoforward purchase contracts at prices determined prior to the delivery of thecattle. The commodity price risk associated with these activities can be hedgedby selling (or buying) the underlying commodity, or by using an appropriatecommodity derivative instrument. The particular hedging instrument we usedepends on a number of factors, including availability of appropriatederivative instruments.

We sellcommodity beef products in our business. Commodity beef products are subject toprice fluctuations that may create price risk. When appropriate, we enter intoforward sales contracts at prices determined prior to shipment. While this maytend to limit our ability to participate in gains from commodity price fluctuations,it also tends to reduce the risk of loss from changes in commodity beef prices.We reflect commodity contract gains and losses as adjustments to the basis ofunderlying commodities sold; gains or losses are recognized in the statement ofoperations as a component of net sales.

We may usefutures contracts in order to reduce exposure associated with entering intofirm commitments to purchase live cattle at prices determined prior to deliveryof the cattle as well as firm commitments to sell certain beef products atsales prices determined prior to shipment. In accordance with SFAS No. 133, *Accountingfor Derivative Instruments and Hedging Activities*, as amended, we accountfor futures contracts and their related firm commitments at fair value. Mostfirm commitments are treated as "normal purchases and sales" and notmarked to market.  SFAS No. 133 imposes extensive recordkeepingrequirements in order to treat a derivative instrument as a hedge foraccounting purposes. Derivatives qualify for treatment as hedges when there isa high correlation between the change in fair value of the instrument and therelated change in fair value of the underlying commitment. For derivatives thatqualify as effective hedges, the change in fair value has no net effect onearnings until the hedged transaction affects earnings. For derivatives thatare not designated as hedging instruments, or for the ineffective portion of ahedging instrument, the change in fair value does affect current period netearnings.

While managementbelieves each of these instruments help mitigate various market risks, they arenot designated and accounted for as hedges under SFAS No. 133 as a result ofthe extensive recordkeeping requirements of this statement. Accordingly, thegains and losses associated with the change in fair value of the instrument andthe offsetting gains and losses associated with changes in the market value ofcertain of the firm commitments related to the futures contracts are recordedto income and expense in the period of change.

21

 The following table describesthe number of futures positions and the fair value of those positions andrelated firm commitments at November 27, 2004 and August 28, 2004.  A position in live cattle consists of 40,000 pounds.  Firm commitments forpurchase are for live cattle and firm commitments for sales are for boxed beef (dollars in thousands).

** **

**November 27, 2004**

**Positions  expiring within 1 year**

**Fair Value**

Live Cattle

  Futures long 

582 

 $

475 

Futures  short 

1,442 

(1,437)

Firm  Commitments Purchase 

1,203 

Firm  Commitments Sale . 

-
            
**August 28, 2004**

Live Cattle

     Futures long 

-

-

       Futures short

55 

 $

96 

     Firm Commitments Purchase 

(96)

     Firm Commitments Sale 

-

 *Interest Rates.*Asa result of our normal borrowing and leasing activities, our operating resultsare exposed to fluctuations in interest rates, which we manage primarilythrough our regular financing activities. We generally maintain limitedinvestments in cash and cash equivalents.  

 We haveshort-term and long-term debt with variable interest rates. Short-term debt isprimarily comprised of the current portion of long-term debt maturing twelvemonths from the balance sheet date. 

Our exposure tointerest rate risk has not materially changed since August 28, 2004.           <back to Table of Contents>

**Item 4.  Controls and Procedures    **  

We maintain a system of controls and proceduresdesigned to provide reasonable assurance as to the reliability of theconsolidated financial statements and other disclosures included in thisreport, as well as to safeguard assets from unauthorized use or disposition. Weevaluated the effectiveness of the design and operation of our disclosurecontrols and procedures as defined in the Securities Exchange Act of 1934Rules 13a-15(e) and 15d-15(e) under supervision and with the participationof management, including our Chief Executive Officer and Chief FinancialOfficer. Based upon that evaluation, as of the end of the period covered bythis 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 overfinancial reporting during the thirteen weeks ended November 27, 2004 that havematerially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.  The design of any system ofcontrols and procedures is based in part upon certain assumptions about thelikelihood of future events.            <back to Table of Contents>

**PART II. OTHER INFORMATION**

**Item 1. Legal Proceedings    **  

     For information regarding legal proceedings,see Note 4, "Contingencies" to our consolidated financial statementsincluded in Part I- Item 1 of this Form 10-Q.    <back to Table of Contents>

**Item 2. Unregistered Sales of Equity Securities and Useof Proceeds    **

     None.            <back to Table of Contents>

**Item 3. Defaults Upon Senior Securities    **

     None.            <back to Table of Contents>

22
 
**Item 4. Submission of Matters to a Vote of Security Holders    **

     None.            <back to Table of Contents>

**Item 5. Other Information    **

     None.            <back to Table of Contents>

**Item 6. Exhibits    **

23

(A)

Exhibits                  

10.1 

Waiver and Consent dated as of October 6, 2004 to the Third Amended and Restated Credit Agreement (incorporated by reference to Exhibit  10.4(d) to the Company's Annual Report on Form 10-K filed with the Commission  on November 23, 2004).

10.2 

Third Amendment dated as of November 19, 2004 to the Third Amended and Restated Credit Agreement (incorporated by reference to Exhibit  10.4(e) to the Company's Annual Report on Form 10-K filed with the Commission  on November 23, 2004).

10.3 

Aircraft Lease dated as of December 9, 2004 by and among John R. Miller Enterprises, L.L.C. and National Beef Packing Company, LLC  (incorporated by reference to Exhibit 10.1 to the Company's Current Report on  Form 8-K filed with the Commission on December 9, 2004).

10.4 

Fourth Amended and Restated Credit Agreement dated as of December 29, 2004 by and between National Beef Packing Company, LLC and certain agents,   lenders and issuers (incorporated by reference to Exhibit 10.1 to the  Company's Current Report on Form 8-K filed with the Commission on January 6, 2005).

10.5(a)

Lease dated as of December 1, 2004 between City of Dodge  City, Kansas and National Beef Packing Company, LLC securing $102,300,000  City of Dodge City, Kansas Industrial Development Revenue Bonds, Series 2004  (National Beef Packing Company, LLC Project) (incorporated by reference to  Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the  Commission on January 6, 2005).

10.5(b)

Trust Indenture dated as of December 1, 2004 between City  of Dodge City, Kansas and Commerce Bank, N.A., as trustee, securing  $102,300,000 City of Dodge City, Kansas Industrial Development Revenue Bonds,  Series 2004 (National Beef Packing Company, LLC Project) (incorporated by  reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed  with the Commission on January 6, 2005).

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    **

Pursuant to the requirements ofthe Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

NationalBeef 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: January 10, 2005 

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