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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



Form 10-Q

(Mark one)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended February 27, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                  to                  .


Commission file number 333-111407



NATIONAL BEEF PACKING COMPANY, LLC(Exact name of registrant as specified in its charter)

DELAWARE(State or other jurisdiction of
incorporation or organization)

48-1129505(I.R.S. employer
identification number)


12200 North Ambassador Drive
Kansas City, MO 64163(Address of principal executive offices)

Telephone: (800) 449-2333(Registrant's telephone number, including area code)



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small company. See
definition of "accelerated filer," "large accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a
smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes
o    No ý

There is no market for the Registrant's equity. As of April 9, 2010, there were 203,990,136 Class A units and 15,545,948 Class B units
outstanding.



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TABLE OF CONTENTS



PART I.

FINANCIAL INFORMATION

Page No.Item 1.

Financial Statements

1Item 2.

Management's Discussion and Analysis of Financial Condition
and Results of Operations

12Item 3.

Quantitative and Qualitative Disclosures About Market Risk

20Item 4T.

Controls and Procedures

21PART II.

OTHER INFORMATIONItem 1.

Legal Proceedings

22Item 1A.

Risk Factors

22Item 6.

Exhibits

22Signatures

23


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

ii

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Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements.

1

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Table of Contents

NATIONAL BEEF PACKING COMPANY, LLC        AND SUBSIDIARIES        Consolidated Balance Sheets        (in thousands)

February 27, 2010
(unaudited)

August 29, 2009AssetsCurrent assets:Cash and cash equivalents

$
11,059

$
17,373Accounts receivable, less allowance for returns and doubtful accounts of $2,289 and $1,511, respectively


171,678


172,420Due from affiliates


3,975


4,532Other receivables


7,364


7,165Inventories


188,552


175,300Other current assets


18,054


16,602Total current assets


400,682


393,392Property, plant and equipment, at cost


496,858


479,926Less accumulated depreciation


197,011


174,295Net property, plant and equipment


299,847


305,631Goodwill


81,242


81,242Other intangibles, net of accumulated amortization of $12,528 and $11,450, respectively


23,688


24,760Other assets


5,154


4,120Total assets

$
810,613

$
809,145Liabilities and Members' CapitalCurrent liabilities:Current installments of long-term debt

$
9,413

$
11,458Cattle purchases payable


52,068


49,806Accounts payabletrade


61,393


69,073Due to affiliates


1,048


1,042Accrued compensation and benefits


40,883


50,857Accrued insurance


16,123


16,344Other accrued expenses and liabilities


9,460


14,585Distributions payable


11,567


35,183Total current liabilities


201,955


248,348Long-term debt, excluding current installments


290,313


287,370Other liabilities


2,223


2,364Total liabilities


494,491


538,082Capital subject to redemption


228,056


183,407Members' capital:Members' capital attributable to NBP


85,381


85,290Accumulated other comprehensive (loss) / income attributable to NBP


17


(1
)Non-controlling interest in Kansas City Steak Company, LLC


2,668


2,367Total members' capital


88,066


87,656Commitments and contingencies





Total liabilities, capital subject to redemption and members' capital

$
810,613

$
809,145


See accompanying notes to consolidated financial statements.

2

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Table of Contents

NATIONAL BEEF PACKING COMPANY, LLC        AND SUBSIDIARIES        Consolidated Statements of Operations        (in thousands)

13 weeks ended
February 27, 2010
(unaudited)

13 weeks ended
February 28, 2009
(unaudited)

26 weeks ended
February 27, 2010
(unaudited)

26 weeks ended
February 28, 2009
(unaudited)Net sales

$
1,340,926

$
1,298,218

$
2,683,536

$
2,727,195Costs and expenses:Cost of sales


1,259,860


1,236,297


2,533,171


2,640,335Selling, general and administrative


12,063


10,341


23,293


21,204Depreciation and amortization


12,376


11,264


24,284


21,230Total costs and expenses


1,284,299


1,257,902


2,580,748


2,682,769Operating income


56,627


40,316


102,788


44,426Other income (expense):Interest income


6


50


34


106Interest expense


(3,519
)

(5,567
)

(8,051
)

(12,376
)Equity in loss of aLF Ventures, LLC





(24
)




(49
)Other, net


(3,784
)

(4,237
)

(3,776
)

(3,835
)Income before taxes


49,330


30,538


90,995


28,272Income tax (benefit) expense


(48
)

192


352


561Net income


49,378


30,346


90,643


27,711Net income attributable to the non-controlling interest


(568
)

(546
)

(791
)

(717
)Net income attributable to NBP

$
48,810

$
29,800

$
89,852

$
26,994


See
accompanying notes to consolidated financial statements.

3

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Table of Contents

NATIONAL BEEF PACKING COMPANY, LLC        AND SUBSIDIARIES        Consolidated Statements of Cash Flows        (in thousands)

26 weeks ended
February 27, 2010
(unaudited)

26 weeks ended
February 28, 2009
(unaudited)Cash flows from operating activities:Net income

$
90,643

$
27,711Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


24,284


21,230(Gain) / loss on disposal of property, plant and equipment


(120
)

132Write-off of debt issuance costs


418


Change in assets and liabilities:Accounts receivable


742


52,239Due from affiliates


557


4,183Other receivables


(199
)

(655
)Inventories


(13,252
)

24,950Other assets


(1,806
)

(15,755
)Cattle purchases payable


223


(561
)Accounts payable


(4,705
)

(11,735
)Due to affiliates


6


(523
)Accrued compensation and benefits


(9,974
)

(23,110
)Accrued insurance


(221
)

906Other accrued expenses and liabilities


(5,266
)

20,215Net cash provided by operating activities


81,330


99,227Cash flows from investing activities:Capital expenditures, including interest capitalized


(17,986
)

(17,969
)Proceeds from sale of property, plant and equipment


683


894Net cash used in investing activities


(17,303
)

(17,075
)Cash flows from financing activities:Net receipts under revolving credit lines


21,100


1,451Repayments of term note payable


(23,102
)

(25,713
)Borrowings of term note payable


75,000


Purchase and cancellation of senior notes


(66,855
)

Change in overdraft balances


(936
)

(17,383
)Repayments of other indebtedness


(5,245
)

(4,200
)Cash paid for financing costs


(1,103
)

Member distributions


(68,728
)

(45,242
)Distributions paid to non-controlling interest


(490
)

(272
)Net cash used in financing activities


(70,359
)

(91,359
)Effect of exchange rate changes on cash


18


(74
)Net decrease in cash


(6,314
)

(9,281
)Cash and cash equivalents at beginning of period


17,373


25,466Cash and cash equivalents at end of period

$
11,059

$
16,185Supplemental disclosures:Cash paid during the period for interest

$
8,154

$
12,008Cash paid / (received) during the period for taxes, net of $0 and $925 refunds, respectively

$
9

$
(798
)


See accompanying notes to consolidated financial statements.

4

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Table of Contents

NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) Interim Financial Statements

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting
principles (GAAP) for interim financial information; therefore, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have been included using management's best estimates and judgments where appropriate. These estimates and judgments affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported
amounts for certain revenues and expenses during the reporting period. Actual results could differ materially from these estimates and judgments. For further information, refer to the audited
Consolidated Financial Statements and Notes to Consolidated Financial Statements, which are included in NBP's Annual Report on Form 10-K on file with the Securities and Exchange
Commission (SEC) for the fiscal year ended August 29, 2009. The results of operations for the interim periods presented are not necessarily indicative of the results for a full fiscal year.

NB
Finance Corp., a wholly-owned finance subsidiary of NBP, is a co-issuer on a joint and several basis with NBP of the Senior Notes, which are our senior unsecured
obligations, ranking
equal in right of payment with all of our other senior unsecured obligations. The Senior Notes were retired on January 11, 2010. NB Finance Corp. has nominal assets and conducts no business or
operations. There are no significant restrictions on the ability of subsidiaries to transfer funds to NBP.

(2) New Accounting Pronouncements

On June 29, 2009, the Financial Accounting Standards Board ("FASB") issuedFASB Accounting Standards Codification(the "ASC")
under ASC 105-10 as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities. This pronouncement was effective for financial
statements issued for interim and annual periods ending after September 15, 2009 for most entities. On the effective date, all non-SEC accounting and reporting standards was
superseded. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative U.S. generally accepted accounting principles ("GAAP") for SEC
registrants. All other accounting literature is considered non-authoritative. The switch to ASC affects the manner in which companies refer to U.S. GAAP in financial statements and
note disclosures. The Company adopted this body of accounting for the quarterly period ended November 28, 2009, as required, and adoption did not have a material impact on our consolidated
financial statements taken as a whole.

In
December 2007, the FASB issuedBusiness Combinationsunder ASC 805. This statement requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date to be measured at their fair value as of that date. An acquirer is required to recognize
assets or liabilities arising from all other contingencies (contractual contingencies) as of the acquisition date, measured at their acquisition-date fair values, only if it is more likely
than not that they meet the definition of an asset or a liability in FASB Concepts Statement No. 6,Elements of Financial Statements.Any
acquisition-related costs are to be expensed instead of capitalized. The Company adopted ASC 805 on August 30, 2009 and the impact will depend on future acquisitions at the time.

5

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Table of Contents

NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(2) New Accounting Pronouncements (Continued)

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

In
February 2008, the FASB issuedFair Value Measurementsunder ASC 820-10 which deferred the effective date of fair value
measurement for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity's financial statements on a recurring basis, at least
annually. There was no impact when the Company adopted for these nonfinancial assets and nonfinancial liabilities on August 30, 2009. These assets and liabilities are measured at fair value on
an ongoing basis but are reported at fair value only in certain circumstances.

(3) Inventories

Inventories at February 27, 2010 and August 29, 2009 consisted of the following (in thousands):

February 27, 2010

August 29, 2009Dressed and boxed meat products

$
121,479

$
119,274Beef by-products


39,085


29,756Supplies and other


27,988


26,270Total inventory

$
188,552

$
175,300


(4) Comprehensive Income

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

13 weeks ended
February 27,
2010

13 weeks ended
February 28,
2009

26 weeks ended
February 27,
2010

26 weeks ended
February 28,
2009Net income

$
49,378

$
30,346

$
90,643

$
27,711Other comprehensive income / (loss):Foreign currency translation adjustments


(4
)

(8
)

18


(74
)Comprehensive income


49,374


30,338


90,661


27,637Comprehensive income attributable to the non-controlling interest


(568
)

(546
)

(791
)

(717
)Comprehensive income attributable to NBP

$
48,806

$
29,792

$
89,870

$
26,920


(5) Contingencies

National Beef Leathers LLC (NBL), a wholly-owned subsidiary of NBP, has been named as a defendant in seventeen currently pending lawsuits involving NBL's tannery
located in St. Joseph, Missouri. NBL purchased certain assets of the tannery from Prime Tanning in March 2009. The lawsuits

6

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Table of Contents

NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(5) Contingencies (Continued)

are
pending in the Circuit Courts of Buchanan County, Clinton County, Ray County, and DeKalb County, Missouri and in the U.S. District Court for the Western District of Missouri and were filed between
April 22, 2009 and March 12, 2010. The lawsuits allege that Prime and NBL spread wastewater sludge containing hexavalent chromium in four counties in northwest Missouri. The lawsuits
currently include fifteen actions filed by individual plaintiffs and two purported class actions. The plaintiffs are seeking an unspecified amount of damages for wrongful death, personal injury, pain
and suffering, economic damages, punitive damages, diminished property values and medical monitoring. NBL is vigorously defending the cases.

The
Company is a party to a number of other lawsuits and claims arising out of the operation of its business. Management believes the ultimate resolution of such matters should not have
a material adverse effect on the Company's financial condition, results of operations or liquidity.

(6) Fair Value Measurements

The Company determines fair value utilizing a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy gives
the highest
priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of inputs used to measure fair value are as
follows:



The
following table details the assets and liabilities measured at fair value on a recurring basis as of February 27, 2010 and August 29, 2009 and also the level within
the fair value hierarchy used to measure each category of assets (in thousands).

Description

February 27,
2010

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)Other current assetsderivatives

$
3,411

$
1,408

$
2,003

$
Other accrued expenses and liabilitiesderivatives

$
861

$
861

$


$
Capital subject to redemption

$
228,056

$


$
228,056

$



7

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Table of Contents

NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(6) Fair Value Measurements (Continued)



Description

August 29,
2009

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)Other current assetsderivatives

$
1,442

$
1,442

$


$
Other accrued expenses and liabilitiesderivatives

$
5,087

$
3,535

$
1,552

$
Capital subject to redemption

$
183,407

$


$
183,407

$



The
Company has not elected the option to report any of the selected financial assets and liabilities at fair value. Management has used certain agreed upon redemption prices in
measuring the fair value of the capital subject to redemption.

(7) Disclosure about Derivative Instruments and Hedging Activities

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



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

The
Company enters into certain commodity derivatives, primarily with a diversified group of highly rated counterparties. The maximum amount of loss due to the credit risk of the
counterparties, should the counterparties fail to perform according to the terms of the contracts, is deemed to be immaterial
as of February 27, 2010 as all derivatives in an asset position are exchange-traded contracts. The exchange-traded contracts have been entered into under a master netting agreement. None of the
derivatives entered into have credit-related contingent features. The Company has $3.2 million in cash collateral posted on its derivative liabilities.

8

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Table of Contents

NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(7) Disclosure about Derivative Instruments and Hedging Activities (Continued)

The
following table presents the fair values as discussed in Note 6 and other information regarding derivative instruments not designated as hedging instruments as of
February 27, 2010 and August 29, 2009 (in thousands of dollars):

Derivative Asset

Derivative LiabilityAs of February 27, 2010

As of February 27, 2010Balance Sheet Location

Fair Value

Balance Sheet Location

Fair ValueCommodity contracts

Other current assets

$
3,411

Other accrued expenses and liabilities

$
861Totals



$
3,411



$
861




Derivative Asset

Derivative LiabilityAs of August 29, 2009As of August 29, 2009Balance Sheet LocationFair Value

Balance Sheet Location

Fair ValueCommodity contracts

Other current assets

$
1,442

Other accrued expenses and liabilities

$
5,087Totals



$
1,442



$
5,087


The
following table presents the impact of derivative instruments on the Consolidated Statement of Operations for the thirteen and twenty-six week periods ended
February 27, 2010 (in thousands of dollars):

Amount of Gain or (Loss)
Recognized in
Income on DerivativesDerivatives Not Designated as
Hedging Instruments

Location of Gain or (Loss)
Recognized in Income
on Derivatives13 Weeks ended
February 27,
2010

26 Weeks ended
February 27,
2010Commodity contracts

Net sales

$
3,588

$
(3,169
)Commodity contracts

Cost of sales


4,393


7,937Totals



$
7,981

$
4,768


(8) Capital Subject to Redemption

At any time after certain dates, the earliest being July 31, 2010, the latest being July 31, 2011, our Chief Executive Officer, Timothy M. Klein (referred
to herein as
"Mr. Klein"), and/or NBPCo Holdings have the right to request that the Company repurchase their interests, the value of which is to be determined by a mutually agreed appraisal process. If the
Company is unable to effect the repurchase within a specified time, the requesting member(s) have the right to cause a sale process to commence.

Generally
accepted accounting principles require the Company to determine the fair value of the capital subject to redemption at the end of each reporting period. To the extent that
this value increases, this change in fair value is accreted over the redemption period as discussed above. Since the second quarter of fiscal year 2009, management has used certain agreed upon
redemption prices that were used in the Unit Redemption Agreements in measuring the fair value of the capital subject to redemption held by NBPCo Holdings. The Unit Redemption Agreement between the
Company and

9

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Table of Contents

NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(8) Capital Subject to Redemption (Continued)

Timothy
Klein and affiliates provides for a formula-based method of calculating their Class B interests which was used in valuing the interest of Timothy Klein and affiliates at
February 27, 2010.

The
Company accounts for changes in the redemption value of redeemable interests by accreting the change in value from the date of change through the earliest redemption date of the
respective interests. At February 27, 2010, the value of the capital subject to redemption was determined to be $264.2 million, which was in excess of its carrying value. Accordingly,
the carrying value of the capital subject to redemption increased by approximately $30.6 million through accretion during the twenty-six weeks ended February 27, 2010,
resulting in the $228.1 million carrying value, as reflected in the accompanying consolidated balance sheet as of February 27, 2010.

The
total value of the capital subject to redemption at February 27, 2010, increased by approximately $23.6 million compared to the value at August 29, 2009.
Offsetting the change in the value of the capital subject to redemption is a corresponding change in members' capital.

(9) Segments

The Company's operating segments are based on segment profit and evaluated by the Chief Executive Officer, who also serves as the Chief Operating Decision Maker
(CODM). Segment profit
is measured as operating income for NBP's two reporting segments, Core Beef and Other, based on the definitions provided in ASC 280,Disclosures about Segments of an Enterprise
and Related Information.

Core Beefthe majority of NBP's revenues 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 including hides to the variety meat, feed processing, fertilizer and pet food industries. Aggregation
criteria were applied to determine the constituents of the Core Beef segment.

Otherthe Other segment of NBP consists of the operations of National Carriers, Inc., a refrigerated and
livestock contract carrier company,
National Elite Transportation, LLC, a provider of transportation logistics services, and Kansas City Steak Company, LLC, a portion control steak cutting operation.

Eliminationsthis line item includes eliminations of inter-segment and intra-segment activity resulting from the
consolidation process.

10

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NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(9) Segments (Continued)

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

13 weeks ended
February 27,
2010

13 weeks ended
February 28,
2009

26 weeks ended
February 27,
2010

26 weeks ended
February 28,
2009Net sales:Core beef

$
1,367,189

$
1,300,714

$
2,730,320

$
2,738,573Other


65,088


61,715


120,008


119,469Eliminations


(91,351
)

(64,211
)

(166,792
)

(130,847
)Total net sales

$
1,340,926

$
1,298,218

$
2,683,536

$
2,727,195Operating income:Core beef

$
54,931

$
38,095

$
99,659

$
40,505Other


1,696


2,221


3,129


3,921Total operating income


56,627


40,316


102,788


44,426Interest income


6


50


34


106Interest expense


(3,519
)

(5,567
)

(8,051
)

(12,376
)Other expense, net


(3,784
)

(4,261
)

(3,776
)

(3,884
)Total income before taxes

$
49,330

$
30,538

$
90,995

$
28,272




February 27,
2010

February 28,
2009Assets:Core beef

$
769,251

$
757,124Other


43,534


41,078Eliminations


(2,172
)

(830
)Total assets

$
810,613

$
797,372


11

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Table of Contents

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

The following discussion should be read in conjunction with our consolidated financial statements and related notes and other
financial information appearing elsewhere in this report.

Disclosure Regarding Forward-Looking Statements

This report contains "forward-looking statements," which are subject to a number of risks and uncertainties, many of which are beyond
our control. Forward-looking statements are typically identified by the words "believe," "expect," "anticipate," "intend," "estimate" and similar
expressions. Actual results could differ materially from those contemplated by these forward-looking statements as a result of many factors, including economic conditions generally and in our
principal markets, the availability and prices of live cattle and commodities, food safety, livestock disease, including the identification of cattle with Bovine Spongiform Encephalopathy (BSE),
competitive practices and consolidation in the cattle production and processing industries, actions of domestic or foreign governments, hedging risk, changes in interest rates and foreign currency
exchange rates, consumer demand and preferences, the cost of compliance with environmental and health laws, loss of key customers, loss of key employees, labor relations, and consolidation among our
customers.

In
light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking information contained in this report will in fact
transpire. Readers are cautioned not to place undue reliance on these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements. All subsequent
written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. See also Part II. Item 1A, Risk Factors,included in this report, and Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year
ended August 29, 2009 on Form 10-K filed with the Securities and Exchange Commission for other important factors that could cause actual results to differ materially from
those in any such forward-looking statements, and which should be read in conjunction with this report.

Industry Outlook

Beef prices have responded positively since the beginning of 2010 due to weather related carcass weight declines, fewer cattle on
feed, improved beef exports and smaller beef imports. The smaller than expected domestic beef supply has also found modest support from a economy working its way slowly out of recession. Meanwhile,
competing meat supplies do not appear burdensome which should keep the overall protein supply in check and continue to support stronger year on year cattle and beef prices. We believe that global beef
and beef by-product demand will continue to improve on gradual economic gains and smaller global protein and by-product production. For the remainder of 2010 and beyond, we
expect that the cattle industry will continue to struggle with the long term implications of a herd reduction.

Recent Developments

On November 3, 2009, the United Food and Commercial Workers Union (the "UFCWU") filed a petition with the Regional Office of
the National Labor Relations Board (the "NLRB") in Kansas City, Missouri seeking to represent approximately 2,200 employees who work at our Dodge City, Kansas facility. On January 8, 2010, the
UFCWU withdrew its petition for an election.

Beef Export Markets

Export markets for U.S. beef products remain constrained since the discovery of a single case of BSE in the State of Washington in
December 2003, as well as other isolated cases. In July 2006, Japan agreed to reopen its market to U.S. beef from cattle aged 20 months and younger. In April 2008, our Brawley facility was
suspended from shipping beef to Japan following the discovery of a short loin

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which
included a portion of a spinal column, a specified risk material, prohibited by Japan. Our Brawley facility was subsequently cleared to resume shipments to Japan on September 19, 2008.
South Korea announced a provisional opening of its border to U.S. beef from animals 30 months and younger in September 2006 but subsequently closed its border again in October 2007. South Korea
reopened its border and started inspecting U.S. beef near the end of June 2008. Our Dodge City facility was removed for two days from the eligible supplier list to Mexico beginning on
December 23, 2008 for an alleged issue that arose in September of 2008 on a basis which we believe to be untrue and unfounded. These constraints and uncertainties have historically had a
negative impact on beef margins during the periods in which they occurred.

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

Results of Operations

Thirteen weeks ended February 27, 2010 compared to thirteen weeks ended February 28, 2009

General.Net income for the thirteen weeks ended February 27, 2010 was approximately
$49.4 million compared to a net income of
approximately $30.3 million for the thirteen weeks ended February 28, 2009, an improvement of approximately $19.1 million. Total costs and expenses of approximately
$1,284.3 million and $1,257.9 million for the thirteen weeks ended February 27, 2010 and February 28, 2009, respectively, were 95.8% as a percent of sales for the thirteen
weeks ended February 27, 2010 compared to 96.9% for the thirteen weeks ended February 28, 2009. Continued stable demand for beef products and relative stability in cattle prices during
the second quarter of fiscal 2010 as compared to the same period of fiscal 2009 allowed the sales prices to cover the cost of the cattle we processed.

Net Sales.Net sales were approximately $1,340.9 million for the thirteen weeks ended
February 27, 2010 compared to approximately
$1,298.2 million for the thirteen weeks ended February 28, 2009, an increase of approximately $42.7 million, or 3.3%. The increase in net sales resulted primarily from a 3.1%
increase in the number of cattle processed as well as a 1.9% increase in the sales prices per head in the thirteen weeks ended February 27, 2010 compared to the same period in the prior year.

Cost of Sales.Cost of sales was approximately $1,259.9 million for the thirteen weeks ended
February 27, 2010 compared to
approximately $1,236.3 million for the thirteen weeks ended February 28, 2009, an increase of approximately $23.6 million, or 1.9%. The increase was primarily a result of a 3.1%
increase in the number of live cattle processed as well as a 0.4% increase in average cattle prices.

Selling, General and Administrative Expenses.Selling, general and administrative expenses were
approximately $12.1 million for the thirteen
weeks ended February 27, 2010 compared to approximately $10.3 million for the thirteen weeks ended February 28, 2009, an increase of approximately $1.8 million, or 17.5%.
The increase reflects an increase in advertising and promotion expense of approximately $0.5 million, an increase in salaries of approximately $0.3 million, an increase in consulting
expenses of approximately $0.3 million and an increase in travel and related expenses of approximately $0.3 million.

Depreciation and Amortization Expense.Depreciation and amortization expenses were approximately
$12.4 million for the thirteen weeks ended
February 27, 2010 compared to approximately $11.3 million for the thirteen weeks ended February 28, 2009, an increase of approximately $1.1 million, or 9.7%. Depreciation
expense increased due to assets being placed into service, primarily at our three beef plants and two case ready plants, during fiscal year 2010.

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Operating Income/Loss.Operating income was approximately $56.6 million for the thirteen weeks
ended February 27, 2010 compared to an
operating income of approximately $40.3 million for the thirteen weeks ended February 28, 2009, an improvement of approximately $16.3 million. The increased operating income
resulted from an increase in sales price per head for beef products and relatively steady cattle prices.

Interest Expense.Interest expense was approximately $3.5 million for the thirteen weeks ended
February 27, 2010 compared to
$5.6 million for the thirteen weeks ended February 28, 2009, a decrease of $2.1 million or 37.5%. The decrease in interest expense during the thirteen weeks ended
February 27, 2010 as compared to the same period last year was due primarily to a reduction in average daily borrowings of approximately 22.7% as well as the purchase and cancellation of our
Senior Notes of approximately $27.1 million during the second quarter of fiscal 2010 which contributed to a decrease of approximately 165 basis points in our average borrowing rate during the
thirteen weeks ended February 27, 2010 as compared to the same period of last year.

Other, net.Other, net non-operating expense was approximately $3.8 million for the thirteen
weeks ended February 27, 2010
compared to other, net non-operating expense of approximately $4.2 million for the thirteen weeks ended February 28, 2009, a decrease of approximately $0.4 million.
During the thirteen weeks ended February 27, 2010, we expensed costs we incurred in connection with the attempted IPO by National Beef, Inc. in December 2009 of $2.2 million as well as
expensing the remaining senior notes issuance fees of $0.2 million compared to the write-off of approximately $3.6 million of legal fees related to the termination of the
Membership Interest Purchase Agreement (MIPA) and the approximate $0.7 million write-off of obsolete parts at our case ready facilities during the same period of the prior year.

Income Tax Expense/Benefit.Income tax benefit was $0.1 million for the thirteen weeks ended
February 27, 2010 compared to
$0.2 million expense for the same period of fiscal year 2009, a decrease of $0.3 million, or 50.0%. A decrease in income taxes for the period was primarily related to our subsidiary,
National Carriers. Income tax expense is recorded on income from National Carriers, which is organized as a C Corporation.

Twenty-six weeks ended February 27, 2010 compared to twenty-six weeks ended February 28, 2009

General.Net income for the twenty-six weeks ended February 27, 2010 was approximately
$90.6 million compared to a net
income of approximately $27.7 million for the twenty-six weeks ended February 28, 2009, an improvement of approximately $62.9 million. Net sales were lower in the
twenty-six weeks ended February 27, 2010 compared to those of the prior period primarily due to an average decrease in sales prices per head of approximately 0.4%. The number of
cattle processed during the current twenty-six week period was 0.1% more than the same period of last year.

Total
costs and expenses of approximately $2,580.8 million and $2,682.8 million for the twenty-six weeks ended February 27, 2010 and February 28,
2009, respectively, were 96.2% as a percent of sales for the twenty-six weeks ended February 28, 2009 compared to 98.4% for the twenty-six weeks ended
February 28, 2009. A relatively stable demand for beef products and lower cattle prices allowed for increased sales prices to cover the cost of the live cattle that we processed during the
twenty-six week period of fiscal 2010 as compared to the same period of fiscal 2009.

Net Sales.Net sales were approximately $2,683.6 million for the twenty-six weeks ended
February 27, 2010 compared to
approximately $2,727.2 million for the twenty-six weeks ended February 28, 2009, a decrease of approximately $43.6 million, or 1.6%. The slight decrease in net sales
resulted primarily from an average decrease in sales prices per head of 0.4% in the twenty-six weeks ended February 27, 2010 as compared to the same period in the prior year while
the volume of cattle processed increased by approximately 0.1%.

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Cost of Sales.Cost of sales was approximately $2,533.2 million for the twenty-six weeks ended
February 27, 2010 compared
to approximately $2,640.3 million for the twenty-six
weeks ended February 28, 2009, a decrease of approximately $107.1 million, or 4.1%. The decrease was primarily a result of decreased live cattle prices that were approximately 5.4% lower
than the twenty-six week period of last year. Partially offsetting this decrease was a slight increase in cattle processed of approximately 0.1% for the current twenty-six week
period ended February 27, 2010 as compared to the same period of fiscal 2009.

Selling, General and Administrative Expenses.Selling, general and administrative expenses were
approximately $23.3 million for the
twenty-six weeks ended February 27, 2010 compared to approximately $21.2 million for the twenty-six weeks ended February 28, 2009, an increase of
approximately $2.1 million, or 9.9%. The increase for this period is primarily due to an approximate $0.7 million increase in advertising and marketing expenses, an increase in legal
expense of approximately $0.5 million, an increase in consulting expense of approximately $0.4 million and an increase in salary expenses of approximately $0.4 million during the
current period as compared to the same period of last year.

Depreciation and Amortization Expense.Depreciation and amortization expenses were approximately
$24.3 million for the twenty-six
weeks ended February 27, 2010 compared to approximately $21.2 million for the twenty-six weeks ended February 28, 2009, an increase of approximately
$3.1 million, or 14.6%. Depreciation expense increased due to assets being placed into service, primarily at our three beef plants and two case ready plants, during fiscal year 2010.

Operating Income.Operating income was approximately $102.8 million for the twenty-six weeks
ended February 27, 2010
compared to operating income of approximately $44.4 million for the twenty-six weeks ended February 28, 2009, an improvement of approximately $58.4 million. The
improved operating income resulted from a relatively stable demand for beef products and lower cattle prices which increased the margin of the live cattle we processed in the current
twenty-six week period as compared to the same period of last year.

Interest Expense.Interest expense was approximately $8.1 million for the twenty-six weeks
ended February 27, 2010
compared to $12.4 million for the twenty-six weeks ended February 28, 2009, a decrease of approximately $4.3 million or 34.7%. The decrease in interest expense during
the twenty-six weeks ended February 27, 2010 as compared to the same period last year was due primarily to a reduction in average daily borrowings of approximately 23.5%. In
addition, we purchased and cancelled the remaining $66.9 million of our Senior Notes during the twenty-six weeks ended February 27, 2010.

Income Tax Expense.Income tax expense was $0.4 million for the twenty-six weeks ended
February 27, 2010 compared to
$0.6 million for the same period of fiscal year 2009, a decrease of $0.2 million, or 33.3%. A decrease in income taxes for the period was primarily related to our subsidiary, National
Carriers. Income tax expense is recorded on income from National Carriers, which is organized as a C Corporation.

Segment Results

The Company's operating segments are based on segment profit and evaluated by the Chief Executive Officer, who also serves as the
Chief Operating Decision Maker (CODM). Segment profit is measured as operating income for NBP's two reporting segments, Core Beef and Other, based on the definitions provided in ASC 280, Disclosures about Segments of an
Enterprise and Related Information.

Core Beefthe majority of NBP's revenues 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 including hides to the variety meat, feed processing, fertilizer

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and
pet food industries. Aggregation criteria were applied to determine the constituents of the Core Beef segment.

Otherthe Other segment of NBP consists of the operations of National Carriers, Inc., a refrigerated and
livestock contract carrier company,
National Elite Transportation, LLC, a provider of transportation logistics services, and Kansas City Steak Company, LLC, a portion control steak cutting operation.

Eliminationsthis line item includes eliminations of inter-segment and intra-segment activity resulting from the
consolidation process.

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

13 weeks ended
February 27,
2010

13 weeks ended
February 28,
2009

26 weeks ended
February 27,
2010

26 weeks ended
February 28,
2009Net sales:Core beef

$
1,367,189

$
1,300,714

$
2,730,320

$
2,738,573Other


65,088


61,715


120,008


119,469Eliminations


(91,351
)

(64,211
)

(166,792
)

(130,847
)Total net sales

$
1,340,926

$
1,298,218

$
2,683,536

$
2,727,195Operating income:Core beef

$
54,931

$
38,095

$
99,659

$
40,505Other


1,696


2,221


3,129


3,921Total operating income


56,627


40,316


102,788


44,426Interest income


6


50


34


106Interest expense


(3,519
)

(5,567
)

(8,051
)

(12,376
)Other expense, net


(3,784
)

(4,261
)

(3,776
)

(3,884
)Total income before taxes

$
49,330

$
30,538

$
90,995

$
28,272




February 27,
2010

February 28,
2009Assets:Core beef

$
769,251

$
757,124Other


43,534


41,078Eliminations


(2,172
)

(830
)Total assets

$
810,613

$
797,372


Thirteen weeks ended February 27, 2010 compared to thirteen weeks ended February 28, 2009

Core Beef

Net Sales.Net sales for Core Beef were approximately $1,367.2 million for the thirteen weeks
ended February 27, 2010 compared to
approximately $1,300.7 million for the thirteen weeks ended February 28, 2009, an increase of approximately $66.5 million, or 5.1%. The increase in net sales resulted primarily
from a 3.1% increase in the number of cattle processed as well as an average increase in sales prices per head of 1.9% for the current thirteen week period as compared to the same period of last year.

Operating Income.The operating income for Core Beef was approximately $54.9 million for the
thirteen weeks ended February 27, 2010
compared to an operating income of approximately $38.1 million for the thirteen weeks ended February 28, 2009, an improvement of approximately

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$16.8 million.
The increased operating income resulted from an increase in sales price per head for beef products and relatively steady cattle prices.

Other

Net Sales.Net sales for Other were approximately $65.1 million for the thirteen weeks ended
February 27, 2010 compared to
approximately $61.7 million for the thirteen weeks ended February 28, 2009, an increase of approximately $3.4 million, or 5.5%. The increase was primarily due to increased sales
volume in our portion control beef facility which was somewhat offset by a reduction in sales in our transportation operations during the thirteen week period of fiscal 2010 as compared to the same
period of last year.

Operating Income.Operating income for Other was approximately $1.7 million for the thirteen
weeks ended February 27, 2010 compared to
approximately $2.2 million for the thirteen weeks ended February 28, 2009, a decrease of approximately $0.5 million, or 22.7%. The decrease was due primarily to a reduction of
operating income of our transportation operations during the thirteen week period of fiscal 2010 as compared to the same period of last year.

Twenty-six weeks ended February 27, 2010 compared to twenty-six weeks ended February 28, 2009

Core Beef

Net Sales.Net sales for Core Beef were approximately $2,730.3 million for the twenty-six weeks
ended February 27, 2010
compared to approximately $2,738.6 million for the twenty-six weeks ended February 28, 2009, a decrease of approximately $8.2 million, or 0.3%. The slight decrease in
net sales resulted primarily from an average decrease in sales prices per head of 0.4% for the twenty-six weeks ended February 27, 2010 as compared to the same period of last year,
partially offset by a 0.1% increase in the number of cattle slaughtered.

Operating Income.Operating income for Core Beef was approximately $99.7 million for the
twenty-six weeks ended
February 27, 2010 compared to operating income of approximately $40.5 million for the twenty-six weeks ended February 28, 2009, an
improvement of approximately $59.2 million. The improved operating income resulted from an increase in sales price per head for beef products and relatively steady cattle prices

Other

Net Sales.Net sales for Other were approximately $120.0 million for the twenty-six weeks ended
February 27, 2010 compared
to approximately $119.5 million for the twenty-six weeks ended February 28, 2009, an increase of approximately $0.5 million, or 0.4%. The slight increase in net sales
was primarily due to increased sales volume in our portion control facility offset by lower sales in our transportation operations during the twenty-six week period of fiscal 2010 as
compared to the same period of last year.

Operating Income.Operating income for Other was approximately $3.1 million for the twenty-six
weeks ended February 27,
2010 compared to approximately $3.9 million for the twenty-six weeks ended February 28, 2009, a decrease of approximately $0.8 million. The decrease was due primarily
to a reduction of operating income of our transportation operations due to decreased total sales which was partially offset by improved operating income of our portion control beef facility during the
current twenty-six week period of fiscal 2010 as compared to the same period of last year.

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Liquidity and Capital Resources

As of February 27, 2010, we had net working capital of approximately $198.7 million, which included $11.6 million
in distributions payable and cash and cash equivalents of $11.1 million. As of August 29, 2009, we had net working capital of approximately $145.0 million, which included
$35.2 million in distributions payable and cash and cash equivalents of $17.4 million. Our primary sources of liquidity are cash flows from operations and available borrowings under our
amended and restated credit facility (Credit Facility).

As
of February 27, 2010, we had $299.7 million of long-term debt, of which $9.4 million was classified as a current liability. As of February 27,
2010, our Credit Facility consisted of a $228.8 million term loan, all of which was outstanding, and a $225.0 million revolving line of credit loan, which had outstanding borrowings of
$50.3 million, outstanding letters of credit of $25.2 million and available borrowings of $137.9 million, based on the most restrictive financial covenant calculations. Cash flows
from operations and borrowings under our Credit Facility have funded our working capital requirements, acquisitions, capital expenditures and other general corporate purposes. We were in compliance
with all of our financial covenants under our Credit Facility as of February 27, 2010.

In
addition to outstanding borrowings under our Credit Facility, we had outstanding borrowings under industrial revenue bonds of $12.2 million and capital leases and other
obligations of $8.4 million as of February 27, 2010. During the quarter ended February 27, 2010, we redeemed the entire outstanding borrowings under our Senior Notes in the amount
of $27.1 million.

We
believe that available borrowings under our Credit Facility and cash provided by operating activities will be sufficient to support our working capital, capital expenditures and debt
service requirements for the foreseeable future. Our ability to generate sufficient cash, however, is subject to certain general economic, financial, industry, legislative, regulatory and other
factors beyond our control. For a review of our obligations that affect liquidity, please see the "Cash Payment Obligations" table in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended August 29, 2009.

Operating Activities

Net cash provided by operating activities in the twenty-six weeks ended February 27, 2010 was approximately
$81.3 million compared to net cash provided by operating activities of approximately $99.2 million in the twenty-six weeks ended February 28, 2009. The
$17.9 million change was primarily due to net cash being used in inventory, less cash being used in accounts receivable, offset by $62.9 million provided by additional net income for the
twenty-six week period of fiscal 2010 compared to the same period of the prior year.

Investing Activities

Net cash used in investing activities was approximately $17.3 million in the twenty-six weeks ended
February 27, 2010 compared to approximately $17.1 million in the twenty-six weeks ended February 28, 2009.

Financing Activities

Net cash used in financing activities was approximately $70.4 million in the twenty-six weeks ended
February 27, 2010 compared to net cash used in financing activities of approximately $91.4 million in the twenty-six weeks ended February 28, 2009. The change was
primarily attributed to the $66.9 million purchase and cancellation of our senior notes and an approximate $23.5 million increase in member distributions, partially offset by
$75.0 million in borrowings under our term note payable, an increase of approximately $19.6 million in net revolving credit borrowings, and a

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$16.4 million
change in the impact of overdraft balances during the current twenty-six week period as compared to the same period of last year.

Amended and Restated Senior Credit Facility

Effective April 13, 2009, our Credit Facility was amended to permit the redemption of our membership interests in the amount of
$125.5 million, including the authorization and issuance of Class A1 Units to help fund the redemption. In addition, the terms of our Credit Facility were amended to: (1) increase the
borrowings under our Credit Facility by up to $100.0 million; (2) increase the applicable margin on the rates of interest of the term loan and revolving line of credit; (3) revise
the payment schedule of the term loan; (4) shorten the maturity date of the term loan; (5) remove the restrictions on purchasing our Senior Notes and require the repurchase or redemption
of $100 million of our Senior Notes; (6) increase the amount of capital expenditures we can make in any fiscal year from $50 million to $60 million, or $65 million
if we expend less than $55 million in the immediately preceding fiscal year; and (7) add a financial covenant requiring us to maintain a Funded Debt to EBITDA ratio.

The
borrowings under the Credit Facility bear interest at LIBOR or the Base Rate, plus the applicable margin. The applicable margin for the revolving line of credit and the term loan
will be based on borrowing base availability with grids greater than $150.0 million, $50.0 to $150.0 million and less than $50.0 million. As of February 27, 2010, the
interest rates for the revolving loan and the term loan were approximately 4.45% and 3.48%, respectively.

Our
funded debt to EBITDA ratio is not to be more than 3.75 to 1.00 at the end of each fiscal quarter. If the borrowing base availability is less than $50.0 million for five
consecutive business days or less than $35.0 million on any single business day during any fiscal quarter, a fixed charge ratio of 1:15 to 1:00
must be maintained at the end of each subsequent fiscal quarter until the borrowing base availability has been greater than or equal to $50.0 million for 90 consecutive days. As of
February 27, 2010, we had met this borrowing base availability requirement under our Credit Facility. The advance rates under the borrowing base are 90% on eligible accounts and 70% on eligible
inventory.

The
borrowings under the revolving loan are available for our working capital requirements, capital expenditures and other general corporate purposes. The Credit Facility is secured by
a first priority lien on substantially all of the Company's assets. The principal amount outstanding under the term loan is due and payable in equal installments of approximately $2.5 million
on the last business day of each June and December commencing December 2009 through December 2010 after which payments increase to approximately $4.8 million. All outstanding amounts of the
term loan are due and payable on July 25, 2012. Prepayment is allowed at any time.

The
Credit Facility contains customary affirmative covenants, including, without limitation, conduct of business, the maintenance of insurance, compliance with laws, maintenance of
properties, keeping of books and records, and the furnishing of financial statements. The facility also contains customary negative covenants, including without limitation, restrictions on the
following: distributions, mergers, sale of assets, investments and acquisitions, encumbrances, indebtedness, affiliate transactions, and ERISA matters.

The
Credit Facility contains customary events of default, including without limitation, failure to make payment when due, materially incorrect representations and warranties, breach of
covenants, events of bankruptcy, default of other indebtedness that would permit acceleration of such indebtedness, the occurrence of one or more unstayed or undischarged judgments in excess of
$3.0 million, changes in custody or control of the Company's property, changes in control of the Company, the failure of any of the loan documents to remain in full force, and the Company's
failure to properly fund its employee benefit plans. The facility also includes customary provisions protecting

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the
lenders against increased cost or loss of yield resulting from changes in tax, reserve, capital adequacy and other requirements of law.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

The principal market risks affecting our business are exposure to changes in prices for commodities, such as livestock and boxed beef,
and interest rate risk.

Commodities.We use various raw materials, many of which are commodities. Raw materials are
generally available from several different sources, and
we presently believe that we can obtain them as needed. Commodities are subject to price fluctuations that may create price risk. When appropriate, we may hedge commodities in order to mitigate this
price risk. While this may tend 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 prices. To the extent
the contracts are not designated as normal purchases, we reflect commodity contract gains and losses as adjustments to the basis of underlying commodities purchased; gains or losses are recognized in
the statement of operations as a component of costs of goods sold.

We
purchase cattle for use in our processing businesses. From time to time, we enter into forward purchase contracts at prices determined prior to the delivery of the cattle. The
commodity price risk associated with these activities can be hedged by selling (or buying) the underlying commodity, or by using an appropriate commodity derivative instrument. The particular hedging
instrument we use depends on a number of factors, including availability of appropriate derivative instruments.

We
sell commodity beef products in our business. Commodity beef products are subject to price fluctuations that may create price risk. From time to time, we enter into forward sales
contracts at prices determined prior to shipment. We may hedge the commodity price risk associated with these activities in order to mitigate this price risk. While this may tend 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. To the extent the contracts are not designated as normal
sales, we reflect commodity contract gains and losses as adjustments to the basis of underlying commodities sold; gains or losses are recognized in the statement of operations as a component of net
sales.

From
time to time, we purchase cattle futures and options contracts. Our primary use of these contracts is to partially fix our future input costs when we have committed forward sales
purchase orders from customers at a specified fixed price. The longest duration futures contract owned is thirteen months. In accordance with ASC Topic 815,Accounting for
Derivative Instruments and Hedging Activities, as amended, we account for futures contracts and their related firm purchase commitments at fair value. Certain firm commitments
for live cattle purchases and all firm commitments for boxed beef sales are treated as "normal purchases and sales" and not marked to market. ASC Topic 815 imposes extensive recordkeeping requirements
in order to treat a derivative instrument as a hedge for accounting purposes. Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the
instrument and the related change in fair value of the underlying commitment. For derivatives that qualify as effective hedges, the change in fair value has no net effect on earnings until the hedged
transaction affects earnings. For derivatives that are not designated as hedging instruments, or for the ineffective portion of a hedging instrument, the change in fair value does affect current
period net earnings.

While
management believes each of these instruments help mitigate various market risks, they are not designated and accounted for as hedges as a result of the extensive recordkeeping
requirements of this statement. Accordingly, the gains and losses associated with the change in fair value of the instrument and the offsetting gains and losses associated with changes in the market
value of certain of

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the
firm purchase commitments related to the futures contracts are recorded to income and expense in the period of change.

We
use a sensitivity analysis to evaluate the effect that changes in the market value of commodities will have on these commodity derivative instruments. We feel the sensitivity
analysis appropriately reflects the potential market value exposure associated with the use of derivative instruments. As of February 27, 2010, the potential change in the fair value of
applicable commodity prices, assuming a hypothetical 10% decrease in the underlying commodity price in each year, was $7.3 million. As of August 29, 2009, the potential change in fair
value of applicable commodity prices, assuming a hypothetical 10% decrease in the underlying commodity price, was $16.4 million. This change was primarily due to the cattle futures contracts
that we entered into during the first quarter of fiscal 2009 to offset the risk of fixed-price sales commitments.

Foreign Operations.Transactions denominated in a currency other than an entity's functional
currency may expose that entity to currency risk.
Although we operate in international markets including Japan and South Korea, product sales are predominately made in United States dollars, and therefore, currency risks are limited.

Interest Rates.As a result of our normal borrowing and leasing activities, our operating results
are exposed to fluctuations in interest rates,
which we manage primarily through our regular financing activities. We generally maintain limited investments in cash and cash equivalents.

We
have long-term debt with variable interest rates. Short-term debt is primarily comprised of the current portion of long-term debt maturing twelve
months from the balance sheet date. Our variable interest expense is sensitive to changes in the general level of interest rates. As of February 27, 2010, the weighted average interest rate on
our $291.3 million of variable rate debt was approximately 3.5%.

We
had total interest expense of approximately $8.1 million during the twenty-six week period ending February 27, 2010. The estimated increase in interest
expense from a hypothetical 200
basis point increase in applicable variable interest rates would have been approximately $2.5 million in the twenty-six week period ending February 27, 2010.

Item 4T.    Controls and Procedures

We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the Consolidated
Financial Statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. We evaluated the effectiveness of the design and operation of
our disclosure controls and procedures as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e) under supervision and with the participation of
management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q,
our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in alerting them, in a timely manner, to material information required to
be included in our periodic Securities and Exchange Commission filings. There have been no changes in our internal controls over financial reporting during the thirteen weeks ended February 27,
2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The design of any system of controls and procedures is based in part
upon certain assumptions about the likelihood of future events.

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PART II. OTHER INFORMATION

Item 1.    Legal Proceedings.

For information regarding legal proceedings, see Note 5, "Contingencies" to our Consolidated Financial Statements included in
Part I, Item 1 of this Form 10-Q.

Item 1A.    Risk Factors.

The risk factors set forth in our Annual Report on Form 10-K for the year ended August 29, 2009 have not
materially changed.

Item 6.    Exhibits.

31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

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


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SIGNATURES

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

NATIONAL BEEF PACKING COMPANY, LLCBy:

/s/ TIMOTHY M. KLEIN Timothy M. Klein 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: April 9, 2010

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