TABLE OF CONTENTS

Unless the context indicates or otherwise requires, the terms “USPB”, “the Company”, “we”, “our”, and “us” refer to U.S. Premium Beef, LLC. As used in this report, the terms “NBP” and “National Beef” refer to National Beef Packing Company, LLC, a Delaware limited liability company.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited).

U.S. PREMIUM BEEF, LLC

Balance Sheets

(thousands of dollars, except unit information)

See accompanying notes to financial statements.

U.S. PREMIUM BEEF, LLC

Statements of Operations

(thousands of dollars, except unit and per unit data)

See accompanying notes to financial statements.

U.S. PREMIUM BEEF, LLC

Statements of Cash Flows

(thousands of dollars)

See accompanying notes to financial statements.

U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES
Balance Sheets
(thousands of dollars, except unit information)

U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES
Statements of Operations
(thousands of dollars, except per unit and per unit data)

U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES
Statements of Cash Flows
(thousands of dollars)

U.S. PREMIUM BEEF, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

(1) Interim Financial Statements

Basis of Presentation

The accompanying unaudited 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 Financial Statements and Notes to Financial Statements, which are included in the Company’s Annual Report on Form 10-K on file with the Securities and Exchange Commission (SEC), for the fiscal year ended December 31, 2016.26, 2020. The results of operations for the interim periods presented are not necessarily indicative of the results for a full fiscal year.

(2) Accounting Policies

Accounting for Investment in NBP.USPB’s 15.0729%15.0729% investment in NBP is accounted for using the equity method of accounting as the Company has the ability to exercise significant influence but does not have financial or operational control.

Operating losses, diminished cash flows, economic and industry events, pandemics, such as coronavirus disease (COVID-19), and a variety of other factors may result in a decrease in the value of the investment, which is other than temporary. Such potential decreases in value, if deemed other than temporary, will cause the Company to record an impairment charge, which may have an impact on the trading values of USPB’s Class A and Class B units. However, NBP’s plants are all operational at the present time and its results of operations are highly profitable, as reflected in Note 6. As a result, we believe the fair value of our investment in NBP exceeds the carrying value.

Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of June 26, 2021, the Company’s balance sheet reflected Cash and cash equivalents of $62.5 62,484 million. Investments are not deposits and are not insured by the Federal Deposit Insurance Corporation or the Farm Credit System Insurance Corporation.

Distributions Payable. USPB utilizes a controlled disbursement account to fund cash distribution checks presented for payment by the holder. Checks that have been issued but have not cleared are reflected on the balance sheet as a reduction in cash. Amounts for checks that have not yet been issued are included in distributions payable and the change in the related balances are reflected in financing activities on the statement of cash flows. As of June 26, 2021 and December 26, 2020, the Company had distributions payable of $1.2 1,220 million and $0.0 2 million, respectively.

(2) Members’ Capital(3) Noncompetition Agreements

The former CEO’s employment agreement provided for him to receive noncompetition payments in connection with the Leucadia Transaction. He will receive noncompetition payments of approximately $0.4 million during the balance of fiscal year 2021. The amount is included in Accrued compensation and benefits on the balance sheet.

The current CEO’s employment agreement provides for him to receive noncompetition payments for a twelve-month period following table represents a reconciliationhis termination of Members’ Capital for the thirty-nine week period ended September 30, 2017 (thousands of dollars).employment with USPB.

As of June 26, 2021 and December 26, 2020, the Company had accrued $0.7 million and $1.2 million, respectively, for the noncompetition agreements. The current and long-term portion of the accrued amount is included in Accrued compensation and benefits and Other liabilities, respectively, on the balance sheet. The table below summarizes the current and long-term portions of the accrued non-compete amounts:

(3) (4) Employee Compensation Plans

In September 2010, USPB’s Board of Directors approved a management phantom unit plan and subsequently awarded phantom units in fiscal years 2010 and 2013. As of June 26, 2021 and December 26, 2020, the Company had accrued $5.9 million and $5.3 million, respectively, for the management phantom awards. The accrued amounts are included in Accrued compensation and benefits and Other liabilities on the balance sheet.

USPB provides its employees the opportunity to earn cash incentives and bonuses. As of June 26, 2021 and December 26, 2020, the Company had accrued $0.7 million and $1.4 million, respectively, for the cash incentive and bonus plans. The accrued amounts are included in Accrued compensation and benefits on the balance sheet.

(5) Earnings Per Unit

Under the LLC structure, earnings of the Company are to be allocated to unitholders based on their proportionate share of underlying equity. Earnings Per Unit (EPU) has been presented in the accompanying Statements of Operations and in the table that follows.

Basic EPU excludes dilution and is computed by first allocating a portion of USPB’s comprehensivenet income or net loss to Class A units and the remainder is allocated to Class B units. For the fourteen weekthirteen and thirty-ninetwenty-six week periods ended September 30, 2017June 26, 2021 and the thirteen week and thirty-nine week periods ended September 24, 2016,June 27, 2020, 10% of USPB’s comprehensivenet income was allocated to the Class A’s and 90% to the Class B’s. The comprehensivenet income allocated to the Class A and Class B units were then divided by the weighted-average number of Class A and Class B units outstanding for the period to determine the basic EPU for each respective class of unit.

Diluted EPU reflects the potential dilution that could occur to the extent that any outstanding dilutive Class A or Class B units were exercised. There are no potentially dilutive Class A or Class B units outstanding.

(4)(6) Investment in National Beef Packing Company, LLC

USPB’s 15.0729% investment in NBP is accounted for using the equity method of accounting as the Company has the ability to exercise significant influence, but does not have financial or operational control. The table below summarizes the changes to USPB’s investment in NBP for the twenty-six week periods ended June 26, 2021 and June 27, 2020 (thousands of dollars): 

Below is a summary of the results of operations for NBP’s fourteen weekNBP for the thirteen-week and thirty-ninetwenty-six week periods ended SeptemberJune 26, 2021 and June 27, 2020 (thousands of dollars): 

(7) Income Taxes

Effective August 29, 2004, the Company converted to an LLC, and under this structure, taxes are not assessed at the Company level as the results of operations are included in the taxable income of the individual members.

Although income taxes are assessed to the individual members, USPB is required to withhold state income taxes from the cash distributions it makes to it members. As of June 26, 2021, Other accrued expenses and liabilities on the Company’s balance sheet reflected state taxes payable of $0.3 million.

(8) Long-term Debt and Loan Agreements

On July 13, 2020, USPB, and CoBank, ACB (“CoBank”), entered into a Credit Agreement, Amended and Restated Revolving Term Promissory Note (“Promissory Note”), and an Affirmation of Pledge Agreement.

The Credit Agreement and Promissory Note provide for a $1.0 million Revolving Term Commitment. That commitment carries a term of five years, maturing on June 30, 20172025. All of the $1.0 million revolving credit commitment was available as of June 26, 2021. The Promissory Note defines Interest as equal to the One-Month LIBOR Index Rate or if LIBOR quotes are no longer available, CoBank will replace the LIBOR Index Rate with a replacement benchmark rate. The Affirmation of Pledge Agreement provides CoBank with a first-priority security interest in USPB’s Membership Interests in, and Distributions from, National Beef Packing Company, LLC.

(9) Members’ Capital

The following table represents a reconciliation of Members’ Capital for the thirteen week and thirty-ninetwenty-six week periods ended September 24, 2016June 26, 2021 and June 27, 2020 (unaudited) (thousands of dollars):. 

(10) Legal Proceedings

USPB is not currently involved in any litigation. However, because its ownership interest in NBP is USPB’s largest asset and because of the cattle procurement and distribution relationship between USPB and NBP, litigation involving NBP may impact USPB.

NBP is a defendant in four class action lawsuits in the United States District Court, Minnesota District alleging that it violated the Sherman Antitrust Act, the Packers and Stockyards Act, the Commodity Exchange Act, and various state laws (the “Antitrust Cases”).  The Antitrust Cases are entitled In re Cattle Antitrust Litigation, which was filed originally on April 23, 2019; Peterson et al. v. JBS USA Food Company Holdings, et al., which was filed originally on April 26, 2019; In re DPP Beef Litigation, which was filed originally on April 26, 2019; and Erbert & Gerbert’s, Inc. v. JBS USA Food Company Holdings, et al., which was filed originally on June 18, 2020.  The plaintiffs in the Antitrust Cases seek treble damages and other relief under the Sherman Antitrust Act, the Packers & Stockyards Act, the Commodities Exchange Act and attorneys’ fees.  NBP is also a defendant in two class action lawsuits filed on January 7, 2020, alleging that it misrepresented the origin of its products in violation of the New Mexico Unfair Practices Act (the “Labelling Cases”).  The Labelling Cases are entitled Thornton v. Tyson Foods, Inc., et al., filed in the New Mexico Second Judicial District Court, Bernalillo County, and Lucero v. Tyson Foods, et al., filed in the New Mexico Thirteenth Judicial District Court, Sandoval County.  The Labelling Cases were subsequently removed to the United States District Court, New Mexico District.  The plaintiffs in the Labelling Cases seek treble damages and other relief and attorneys’ fees.  NBP believes it has meritorious defenses to the claims in the Antitrust Cases and the Labelling Cases and intends to defend these cases vigorously, although there can be no assurance as to the outcome of these cases or the impact on NBP’s consolidated financial position, results of operations and cash flows.

In addition to the antitrust litigation, NBP is subject to investigations by the United States Department of Justice and approximately 30 state attorneys general regarding industry cattle procurement practices.  NBP is cooperating with these investigations and is working with the Department of Justice and the relevant states to provide information requested in connection with the investigations. NBP believes it has meritorious defenses to any potential claims that might arise out of these government investigations, although there can be no assurance as to the outcome of these investigations or the impact on NBP’s consolidated financial position, results of operations and cash flows.

NBP is a party to various 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 NPB’s financial condition, results of operations or liquidity.

USPB is not able to assess what impact, if any, the actions described above will have on NBP or USPB.

(11) Subsequent Events

USPB has evaluated subsequent events through the date the financial statements were issued and determined there were no such events to report.

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

The following discussion should be read in conjunction with our 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,”“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, issues, livestock disease, including the identification of cattle with Bovine Spongiform Encephalopathy, product contamination and recall concerns,bovine spongiform encephalopathy (BSE), competitive practices and consolidation in the cattle production and processing industries, and among our customers, actions of domestic or foreign governments, hedging risk, changes in interest rates and foreign currency exchange rates, trade barriers and exchange controls, 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.  Please review Part II. Item 1A, 1A. Risk Factors, included in this report, for other important factors that could cause actual results to differ materially from those in any such forward-looking statements.

Investment in National Beef Packing Company, LLC

NBP processes and markets a comprehensive line of fresh and chilled boxed beef, ground beef,case-ready products, and beef by-products consumer-ready beef and pork, and wet blue leather for domestic and international markets.  The largest share of NBP’s revenue is generated from the sale of boxed beef and beef by-products. 

NBP has two beef slaughter and processing facilities located in southwest Kansas and a third located in central Iowa.  In addition, NBP operates two beef processinga leather tannery, three case-ready manufacturing facilities, three further processing facilitiesa fresh and a wet blue tanningfrozen hamburger manufacturing facility all located in the U.S. NBP operates one of the largest wet blue tanning facilities in the world that sells processed hides to tanners that produce finished leather for the automotive, luxury goods, apparel and furniture industries. NBP owns Kansas City Steak Company, LLC, which sells portioned beef and other products directly to customers through the internet, direct mail and direct response television. NBP also owns a refrigerated and livestock transportation and logistics company that provides transportation servicesrefrigerated and livestock trucking across the U.S.  

NBP’s profitability typically fluctuates seasonally as well as cyclically, based on the availability of fed cattle and the demand for NBPbeef and third parties.

     NBP’sbeef by-products.  Its profitability is dependent, in large part, on the spread between its cost for live cattle, the primary raw material for its business, and the value received from selling boxed beef and other products coupled with its overall volume.  NBP operates in a large and liquidfast-moving commodity market and it does not have much influence over the price it pays for cattle or the selling price it receives for the products it produces. NBP’s profitability typically fluctuates seasonally, with relatively higher margins in the spring and summer months and during times of ample cattle availability. NBP's fiscal year consists of 52 or 53 weeks, ending on the last Saturday in December and its quarters range from twelve to fourteen weeks ending on the last Saturday of March, June, September or December.

Revenues in the three monthsthirteen-week period ended September 30, 2017June 26, 2021 increased 10.1% in comparison to the same period in 2016,2020, primarily due to an increase in the numberincreased volume of cattle processed and higher selling prices.processed. Cost of sales increased 13.5% for the three monthsthirteen-week period ended September 30, 2017June 26, 2021, as compared to the same period in 2016. The increase is2020, primarily due to higher expenditures for cattle resulting from the additional volume and from increased per unit costs.  Despite higher costs, the increased volume led to an increase in volume, partially offset by a small decrease in the price of fed cattle. Revenue and expense comparisons were also impacted by the third quarter of 2017 being a fourteen-week period for NBP as compared to a thirteen-week period in the third quarter of 2016. The combined effects of increased margin per head, an increase in volume and the extra week led to higheroverall profitability in the 20172021 period, as compared to the 20162020 period.

Revenues in the nine monthstwenty-six week period ended September 30, 2017June 26, 2021 increased 8.2% in comparison to the sametwenty-six week period in 2016,2020, primarily due increased volume. Cost of sales increased 6.0% for the twenty-six week period ended June 26, 2021, as compared to the first half of fiscal year 2020, primarily due to higher expenditures for cattle resulting from the additional volume and from increased per unit costs.  Despite higher costs, the increased volume led to an increase in the number of cattle processed. Cost of sales increased for the nine months ended September 30, 2017 as compared to the same period in 2016. The increase is also due to an increase in the number of cattle processed, partially offset by a decrease in the price of fed cattle. The combined effects of increased margin per head and an increase in volume led to higheroverall profitability in the 20172021 period, as compared to the 20162020 period.

Operating losses, diminished cash flows, economic and industry events, pandemics, and a variety of other factors may result in a decrease in the value of the investment, which is other than temporary. Such potential decreases in value, if deemed other than temporary, will cause the Company to record an impairment charge, which may have an impact on the trading values of USPB’s Class A and Class B units. However, NBP’s plants are all operational at the present time and its results of operations are highly profitable, as reflected in Note 6. As a result, we believe the fair value of our investment in NBP exceeds the carrying value.

On June 10, 2019, USPB and NBP entered into the First Amended and Restated Cattle Purchase and Sale Agreement (A&R Agreement) with USPB. The terms and conditions of the A&R Agreement are substantially the same as those of the Cattle Purchase and Sale Agreement dated December 30, 2011. Per the terms and conditions of the A&R Agreement, NBP is required to purchase through USPB from its owners and associates, and USPB is required to sell and deliver from its owners and associates to NBP, a base amount of 735,385 (subject to adjustment) head of cattle per year with prices based on those published by the U.S. Department of Agriculture, subject to adjustments for cattle performance.  NBP obtained approximately 25% and 24% of its cattle requirements under this agreement during the twenty-six week periods ended June 26, 2021 and June 27, 2020, respectively.

USPB Results of Operations

Fourteen weeksThirteen-weeks ended September 30, 2017June 26, 2021 compared to thirteen weeksthirteen-weeks ended September 24, 2016June 27, 2020

Net Sales. There were no Net Sales in the fourteen week periodthirteen-week periods ended September 30, 2017June 26, 2021 and thirteen week period ended September 24, 2016.June 27, 2020.

Cost of Sales. There were no Cost of Sales in the fourteen week periodthirteen-week periods ended September 30, 2017June 26, 2021 and thirteen week period ended September 24, 2016.June 27, 2020.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $0.9approximately $1.1 million for the fourteen weeksthirteen-weeks ended September 30, 2017June 26, 2021 compared to $0.7approximately $1.2 million for the thirteen weeksthirteen-weeks ended September 24, 2016.June 27, 2020, a decrease of approximately $0.1 million. The increasedecrease was primarily related to higher compensation relatedthe result of lower phantom plan, non-compete and accounting expenses.

Operating Loss.Operating loss was $0.9approximately $1.1 million for the fourteen weeksthirteen-weeks ended September 30, 2017June 26, 2021 compared to $0.7approximately $1.2 million for the thirteen weeksthirteen-weeks ended September 24, 2016.June 27, 2020.  

Equity Interest in Net Income of National Beef Packing Company, LLC. Equity in NBP net income was $26.2$103.2 million for the fourteen weeksthirteen-weeks ended September 30, 2017June 26, 2021 compared to $16.3$102.4 million for the thirteen weeksthirteen-weeks ended September 24, 2016.June 27, 2020. The improvementincrease in fiscal year 20172021 is primarily due to higher gross margins an increase in volumes, and an extra week in the period at NBP. USPB carries its 15.0729% investment in NBP under the equity method of accounting.

Comprehensive Income.Other, net.Net Other income for the fourteen week period ended September 30, 2017 was $25.5$0.2 million compared to $15.6and approximately $0.0 million for the thirteen week periodthirteen-week periods ended September 24, 2016.June 26, 2021 and June 27, 2020, respectively.

Net income. Net income was $102.3 million and $101.2 million for the thirteen-week periods ended June 26, 2021 and June 27, 2020, respectively.

Thirty-nineTwenty-six weeks ended September 30, 2017June 26, 2021 compared to thirty-ninetwenty-six weeks ended September 24, 2016June 27, 2020

Net Sales. There were no Net Sales in the thirty-ninetwenty-six week periods ended September 30, 2017June 26, 2021 and September 24, 2016.June 27, 2020.

Cost of Sales. There were no Cost of Sales in the thirty-ninetwenty-six week periods ended September 30, 2017June 26, 2021 and September 24, 2016.June 27, 2020.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $2.8approximately $2.5 million for the thirty-ninetwenty-six weeks ended September 30, 2017June 26, 2021 compared to approximately $2.3 million for the thirty-ninetwenty-six weeks ended September 24, 2016.June 27, 2020, an increase of approximately $0.2 million. The increase was primarily due tothe result of higher phantom plan compensation relatedexpense, which was partially offset by lower non-compete expenses.

Operating Loss.Operating loss was $2.8approximately $2.6 million for the thirty-ninetwenty-six weeks ended September 30, 2017June 26, 2021 compared to $2.3approximately $2.4 million for the thirty-ninetwenty-six weeks ended September 24, 2016.June 27, 2020.  

Equity Interest in Net Income of National Beef Packing Company, LLC. Equity in NBP net income was $46.6$139.8 million for the thirty-ninetwenty-six weeks ended September 30, 2017June 26, 2021 compared to $28.8$115.5 million for the thirty-ninetwenty-six weeks ended September 24, 2016.June 27, 2020. The improvementincrease in fiscal year 20172021 is primarily due to higher gross margins and an increase in volumes at NBP. USPB carries its 15.0729% investment in NBP under the equity method of accounting.

Interest Income. Interest income was approximately $0.0 million for the twenty-six weeks ended June 26, 2021 compared to $0.2 million for the twenty-six weeks ended June 27, 2020.

Other, net.Other income was immaterial for the thirty-nine weeks ended September 30, 2017 compared to other income of $0.4$0.3 million and $0.1 million for the thirty-nine weekstwenty-six week periods ended September 24, 2016, a decrease of $0.3 million. The decrease was primarily due to lower lease income on Company owned cattle delivery rights.June 26, 2021 and June 27, 2020, respectively.

Comprehensive Income.Net income.Net income for the thirty-nine week period ended September 30, 2017 was $44.0$137.5 million compared to $26.9and $113.4 million for the thirty-ninetwenty-six week periodperiods ended September 24, 2016.June 26, 2021 and June 27, 2020, respectively.

Liquidity and Capital Resources

As of September 30, 2017,June 26, 2021, we had net working capital (the excess of current assets over current liabilities) of $79.7approximately $60.7 million, which included cash and cash equivalents of $81.5$62.5 million. As of December 31, 2016,26, 2020, we had net working capital of $82.0approximately $74.3 million, which included cash and cash equivalents of $85.2$76.8 million. Our primary sourcesources of liquidity for the first threetwo quarters of fiscal years 2017year 2021 and 2016 wasfiscal year 2020 were cash and available borrowings under the Master Loan Agreement.Agreement with CoBank.

As of September 30, 2017,June 26, 2021, USPB had no long-term debt outstanding. We had a $5.0$1.0 million revolving term loancredit commitment with CoBank, all of which was available. USPB was in compliance with all of the financial covenantscovenant under its Master Loan Agreement as of September 30, 2017.June 26, 2021.

 USPB believes available borrowings under the Master Loan Agreement and cash will be sufficient to support its working capital and cash flow requirements.

We believe our cash and available borrowings under our Master Loan Agreement will be sufficient to support our cash needs for the foreseeable future. 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 fiscal year 2016.2020.

Operating Activities

Net cash provided by operating activities in the thirty-ninetwenty-six weeks ended September 30, 2017June 26, 2021 was $15.9approximately $78.7 million compared to net cash used of $2.1approximately $4.1 million in the thirty-ninetwenty-six weeks ended September 24, 2016.June 27, 2020. The $18.0$74.6 million change was primarily due to thea $74.7 million increase in distributions received from NBP.

Investing Activities

Net cash provided byused in investing activities in the twenty-six week periods ended June 26, 2021 was $7.4$0.0 million compared to less than $0.0 million in the thirty-nine weekstwenty-six week period ended September 30, 2017 compared to $13.2 million in the thirty-nine weeks ended September 24, 2016. The decrease was the result of lower distributions received from NBP in fiscal year 2017.June 27, 2020.

Financing Activities

Net cash used in financing activities was $27.1$93.0 million in the thirty-ninetwenty-six weeks ended September 30, 2017June 26, 2021 compared to an immaterial amount$50.1 million in the thirty-ninetwenty-six weeks ended September 24, 2016. The change was primarily the result ofJune 27, 2020 due to an increase in member distributions made in the first quarter of fiscal year 2017.2021 period.

Master Loan Agreement

On December 30, 2011, in connection with the closing of the transaction with Leucadia, the Company and CoBank entered into the Consent and First Amendment to Pledge Agreement and Security Agreement, by which CoBank agreed to (i) consent to the Membership Interest Sale and the PA Distribution, (ii) release its security interest in, and liens on, the Membership Interests being sold pursuant to the Membership Interest Sale, (iii) consent to the NBP Pledge and (iv) consent to the amendments and restatements of the NBP Operating Agreement and the PA Newco Operating Agreement. The NBP Pledge grants NBP a perfected security interest in and to USPB’s membership interests in, and distributions from, NBP, subject only to the prior first priority security interest held by CoBank.

     On JuneJuly 13, 2017,2020, USPB, and CoBank, ACB (“CoBank”), entered into a Credit Agreement, Amended and Restated Revolving Term Loan Supplement to the Master LoanPromissory Note (“Promissory Note”), and an Affirmation of Pledge Agreement.

The Credit Agreement dated July 26, 2011. Theand Promissory Note provide for a $1.0 million Revolving Term Loan Supplement provides for a $5 million revolving credit commitment.Commitment. The new commitment carries a term of threefive years, maturing on June 30, 2020.

2025. All of the $5$1.0 million revolving credit commitment was available as of September 30, 2017. Borrowings underJune 26, 2021. The Promissory Note defines Interest as equal to the revolving credit commitment bear interest atOne-Month LIBOR Index Rate or if LIBOR quotes are no longer available, CoBank will replace the LIBOR rate plus applicable margin.Index Rate with a replacement benchmark rate. The Affirmation of Pledge Agreement provides CoBank with a first-priority security interest in USPB’s Membership Interests in, and Distributions from, National Beef Packing Company, LLC.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The principal market risks affecting USPB’s business are exposure to interest rate risk, to the extent the companyCompany has debt outstanding. As of September 30, 2017,June 26, 2021, the Company did not have any outstanding debt.

Item 4. Controls and Procedures.

We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the 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 fourteentwenty-six weeks ended September 30, 2017June 26, 2021 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.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

USPB is not currently involved in any litigation. However, because its ownership interest in NBP is USPB’s largest asset and because of the cattle procurement and distribution relationship between USPB and NBP, litigation involving NBP may impact USPB.

NBP is a defendant in four class action lawsuits in the United States District Court, Minnesota District alleging that it violated the Sherman Antitrust Act, the Packers and Stockyards Act, the Commodity Exchange Act, and various state laws (the “Antitrust Cases”). The Antitrust Cases are entitled In re Cattle Antitrust Litigation, which was filed originally on April 23, 2019; Peterson et al. v. JBS USA Food Company Holdings, et al., which was filed originally on April 26, 2019; In re DPP Beef Litigation, which was filed originally on April 26, 2019; and Erbert & Gerbert’s, Inc. v. JBS USA Food Company Holdings, et al., which was filed originally on June 18, 2020.  The plaintiffs in the Antitrust Cases seek treble damages and other relief under the Sherman Antitrust Act, the Packers & Stockyards Act, the Commodities Exchange Act and attorneys’ fees. NBP is also a defendant in two class action lawsuits filed on January 7, 2020, alleging that it misrepresented the origin of its products in violation of the New Mexico Unfair Practices Act (the “Labelling Cases”).  The Labelling Cases are entitled Thornton v. Tyson Foods, Inc., et al., filed in the New Mexico Second Judicial District Court, Bernalillo County, and Lucero v. Tyson Foods, et al., filed in the New Mexico Twenty-sixth Judicial District Court, Sandoval County. The Labelling Cases were subsequently removed to the United States District Court, New Mexico District.  The plaintiffs in the Labelling Cases seek treble damages and other relief and attorneys’ fees. NBP believes it has meritorious defenses to the claims in the Antitrust Cases and the Labelling Cases and intends to defend these cases vigorously, although there can be no assurance as to the outcome of these cases or the impact on NBP’s consolidated financial position, results of operations and cash flows.

In addition to the antitrust litigation, NBP is subject to investigations by the United States Department of Justice and approximately 30 state attorneys general regarding industry cattle procurement practices.  NBP is cooperating with these investigations and is working with the Department of Justice and the relevant states to provide information requested in connection with the investigations. NBP believes it has meritorious defenses to any potential claims that might arise out of these government investigations, although there can be no assurance as to the outcome of these investigations or the impact on NBP’s consolidated financial position, results of operations and cash flows.

NBP is a party to various 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 NPB’s financial condition, results of operations or liquidity.

USPB is not able to assess what impact, if any, the actions described above will have on NBP or USPB.

Item 1A. Risk Factors.

The risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 201626, 2020 have not materially changed. Please refer to the Company’s report on Form 10-K for the fiscal year ended December 31, 201626, 2020 to consider those risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.