Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

                                                                (Mark(Mark one)

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2024
or

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

For the transition period from to .

þ  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017
or

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

For the transition period from ___to ___ .

Commission file number333-115164

U.S.U. S. PREMIUM BEEF, LLC

(Exact name of registrant as specified in its charter)

delaware20-1576986
DELAWARE20-1576986
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

 

12200 North Ambassador Drive

Kansas City, MO64163

(Address of principal executive offices)

Telephone: (866) 877-2525

Telephone: (866) 877-2525
(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. Yesþ No ¨

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). Yesþ No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “smaller reporting‘emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer¨      Accelerated Filer¨      Non-Accelerated Filerþ       Small Reporting Company¨

Large accelerated Filer ☐Accelerated Filer ☐
Non-accelerated FilerþSmaller reporting company þ
Emerging growth company

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

 

The registrant’s units are not traded on an exchange or in any public market. As of October 28, 2017,April 27, 2024, there were 735,385 Class A units and 755,385 Class B units outstanding.




Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered
N/AN/AN/A

TABLE OF CONTENTS

PART I.FINANCIAL INFORMATIONTABLE OF CONTENTSPage No.
 
PART I. FINANCIAL INFORMATION

Page No.

Item 1.Financial Statements (unaudited).3
Item 2.

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

13
Item 3.Quantitative and Qualitative Disclosures Aboutabout Market Risk.9
Item 4. Controls and Procedures. 16
 
PART II.OTHER INFORMATION  
Item 4.Controls and Procedures.16
PART II.OTHER INFORMATION
Item 1.Legal Proceedings.1017

Item 1A.

Risk Factors.1018
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.1018
Item 3.Defaults Upon Senior Securities.10
Item 4. Mine Safety Disclosures. 10
Item 5. Other Information. 10
Item 6. Exhibits. 1018
 
Item 4.Mine Safety Disclosures.18
Item 5.Other Information.18
Item 6.Exhibits.19
Signatures.1120

 

 

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.

 

 

ii


2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited).

 



U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES

Balance Sheets

(thousands of dollars, except unit information)

Assets  September 30, 2017  December 31, 2016 
Current assets:     

Cash and cash equivalents 

81,547 85,230 

Due from affiliates 

 259  48 

Other current assets 

 12  27 

Total current assets 

 81,818  85,305 
Property, plant, and equipment, at cost  224  223 

Less accumulated depreciation 

 198  188 

Net property, plant, and equipment 

 26  35 
Investment in National Beef Packing Company, LLC  163,536  143,446 
Other assets  102  146 

Total assets 

245,482 228,932 
Liabilities and Capital Shares and Equities     
Current liabilities:     

Accounts payable - trade 

13 66 

Due to affiliates 

 91  37 

Accrued compensation and benefits 

 1,745  1,690 

Other accrued expenses and liabilities 

 193  253 

Distributions and patronage notices payable 

 59  1,218 

Total current liabilities 

 2,101  3,264 
Long-term liabilities:     

Other liabilities 

 4,049  4,473 

Total long-term liabilities 

 4,049  4,473 

Total liabilities 

 6,150  7,737 
 
Capital shares and equities:     

Members' capital, 735,385 Class A units and 755,385 Class B units authorized, 

    

issued and outstanding 

 239,332  221,195 

Total capital shares and equities 

 239,332  221,195 

Total liabilities and capital shares and equities 

245,482 228,932 
 
See accompanying notes to financial statements. 

 



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

 14 weeks ended  13 weeks ended  39 weeks ended  39 weeks ended 
 September 30, 2017  September 24, 2016  September 30, 2017  September 24, 2016 
 (unaudited)  (unaudited)  (unaudited)  (unaudited) 
 
Sales 

- 

- 

- 

- 
 
Costs and expenses:             

Cost of sales 

 -  -  -  - 

Selling, general, and administrative expenses 

 859  726  2,760  2,281 

Depreciation and amortization 

 3  3  9  10 

Total costs and expenses 

 862  729  2,769  2,291 
 

Operating loss 

 (862 (729 (2,769 (2,291
 
Other income (expense):             

Interest income 

 113  11  184  35 

Interest expense 

 (3 (3 (9 (9

Equity interest in net income of National Beef Packing Company, LLC 

 26,226  16,270  46,601  28,800 

Other, net 

 27  21  25  367 

Other income (expense) 

 26,363  16,299  46,801  29,193 
 

Comprehensive income 

25,501 

15,570 

44,032 

26,902 
 
Earnings per unit:             

Basic 

            

Class A units 

3.47 

2.12 

5.99 

3.66 

Class B units 

30.38 

18.55 

52.46 

32.05 

Diluted 

            

Class A units 

3.47 

2.12 

5.99 

3.66 

Class B units 

30.38 

18.55 

52.46 

32.05 
 
Outstanding weighted-average Class A and Class B units:             

Basic 

            

Class A units 

 735,385  735,385  735,385  735,385 

Class B units 

 755,385  755,385  755,385  755,385 

Diluted 

            

Class A units 

 735,385  735,385  735,385  735,385 

Class B units 

 755,385  755,385  755,385  755,385 
 
See accompanying notes to financial statements. 
         
Assets March 30, 2024  December 30, 2023 
   (unaudited)     
Current assets:        
Cash and cash equivalents $34,396  $58,481 
Certificate of Deposit  40,000   20,000 
Accrued interest receivable  297   37 
Due from affiliates  251   283 
Other current assets  1,207   1,675 
Total current assets  76,151   80,476 
Property, plant, and equipment, at cost  274   274 
Less accumulated depreciation  234   231 
Net property, plant, and equipment  40   43 
Right of use assets, net  270   283 
Investment in National Beef Packing Company, LLC  161,915   162,597 
Other assets  1   2 
Total assets $238,377  $243,401 
Liabilities and Members' Capital        
Current liabilities:        
Accounts payable - trade $86  $28 
Due to other affiliates  60   48 
Accrued compensation and benefits  1,920   3,225 
Lease obligations  57   56 
Other accrued expenses and liabilities  594   390 
Distributions payable  15    
Total current liabilities  2,732   3,747 
Long-term liabilities:        
Lease obligations  213   228 
Other liabilities  7,289   7,293 
Total long-term liabilities  7,502   7,521 
Total liabilities  10,234   11,268 
         
Commitments and contingencies      
         
Members' capital        
Members' contributed capital, 735,385 Class A units and 755,385 Class B units authorized, issued and outstanding  228,143   232,133 
Total members' capital  228,143   232,133 
Total liabilities and members' capital $238,377  $243,401 

 



U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES
Statements of Cash Flows
(thousands of dollars)See accompanying notes to financial statements.

  39 weeks ended  39 weeks ended 
  September 30, 2017  September 24, 2016 
  (unaudited)  (unaudited) 

Cash flows from operating activities: 

      

Comprehensive income 

44,032 26,902 

Adjustments to reconcile net income to net cash used in 

      

operating activities: 

      

Depreciation and amortization 

 9  10 

Equity in net income of National Beef Packing Company, LLC 

 (46,601 (28,800

Distribution from National Beef Packing Company, LLC 

 19,076  - 

Changes in assets and liabilities: 

      

Due from affiliates 

 (211 (9

Other assets 

 58  49 

Accounts payable 

 (53 (8

Due to affiliates 

 54  47 

Accrued compensation and benefits 

 (369 (172

Other accrued expenses and liabilities 

 (60 (89

Net cash provided by (used in) operating activities 

 15,935  (2,070

Cash flows from investing activities: 

      

Distribution from National Beef Packing Company, LLC 

 7,436  13,216 

Net cash provided by investing activities 

 7,436  13,216 

Cash flows from financing activities: 

      

Change in overdraft balances 

 (1,159 (71

Partnership distributions and redemptions 

 (25,895 - 

Net cash used in financing activities 

 (27,054 (71

Net (decrease) increase in cash 

 (3,683 11,075 
Cash and cash equivalents at beginning of the period  85,230  85,220 

Cash and cash equivalents at end of the period 

81,547 96,295 

 

 

 


3

U.S. PREMIUM BEEF, LLC

Statements of Operations

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

         
  13 weeks ended  12 weeks ended 
  March 30, 2024  March 25, 2023 
   (unaudited)   (unaudited) 
Net sales $  $ 
Costs and expenses:        
Cost of sales      
Selling, general, and administrative expenses  1,038   1,245 
Depreciation and amortization  4   5 
Total costs and expenses  1,042   1,250 
Operating loss  (1,042)  (1,250)
Other income:        
Interest income  853   900 
Equity in net (loss) income of National Beef Packing Company, LLC  (682)  7,600 
Other income, net  180   131 
Total other income  351   8,631 
Net (loss) income $(691) $7,381 
         
(Loss) income per unit:        
Basic and diluted        
Class A units $(0.09) $1.00 
Class B units $(0.82) $8.79 
         
Outstanding weighted-average Class A and Class B units:        
Basic and diluted        
Class A units  735,385   735,385 
Class B units  755,385   755,385 

See accompanying notes to financial statements.

4

U.S. PREMIUM BEEF, LLC

Statements of Cash Flows

(thousands of dollars)

         
  13 weeks ended  12 weeks ended 
  March 30, 2024  March 25, 2023 
   (unaudited)   (unaudited) 
Cash flows from operating activities:        
Net (loss) income $(691) $7,381 
Adjustments to reconcile net (loss) income to net cash used in operating activities:        
Depreciation and amortization  4   5 
Equity in net loss (income) of National Beef Packing Company, LLC  682   (7,600)
Changes in assets and liabilities:        
Accounts receivable  (260)  9 
Due from affiliates  32   (175)
Other assets  469   (17)
Accounts payable  58   22 
Due to affiliates  12   102 
Accrued compensation and benefits  (1,309)  (2,290)
Other accrued expenses and liabilities  203   148 
Net cash used in operating activities  (800)  (2,415)
Cash flows from investing activities:        
Investment in certificate of deposit  (20,000)   
Net cash used in investing activities  (20,000)   
Cash flows from financing activities:        
Member distributions  (3,285)   
Net cash used in financing activities  (3,285)   
Net decrease in cash  (24,085)  (2,415)
Cash and cash equivalents at beginning of period  58,481   97,732 
Cash and cash equivalents at end of period $34,396  $95,317 

See accompanying notes to financial statements.

5

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),(U.S. GAAP) for interim financial information; therefore, they do not include all of the information and footnotes required by U.S. 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, 2016.30, 2023. 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 NBPNational Beef Packing Company, LLC (NBP) is accounted for using the equity method of accounting, as the Company has the ability to exercise significant influence over NBP, but does not have financial or operational control.

(2) Members’ Capital

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 in NBP, which may be other than temporary. Such potential decreases in value, if deemed other than temporary, would 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. We believe the fair value of our investment in NBP exceeds the carrying value.

 

Cash and Cash Equivalents.The followingCompany considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of March 30, 2024 and December 30, 2023, the Company’s balance sheet reflected Cash and cash equivalents of $34.4 million and $58.5 million, respectively. The cash is invested in the CoBank, ACB (CoBank) overnight investment account. Investments are not deposits and are not insured by the Federal Deposit Insurance Corporation or the Farm Credit System Insurance Corporation.

Certificates of Deposit. Certificates of deposit held for investment with original maturities greater than three months and remaining maturities less than one year are classified as current assets. Certificates of deposit with remaining maturities greater than one year are classified as long-term assets. The table represents a reconciliationbelow summarizes the certificate of Members’ Capitaldeposit investments: 

Schedule of certificate of deposit investments          
Investment Date Maturity Date Interest Rate  Investment Amount 
12/14/2023 6/13/2024  4.75%  $10,000,000 
12/21/2023 6/20/2024  4.60%  $10,000,000 
3/14/2024 9/12/2024  3.70%  $10,000,000 
3/21/2024 9/19/2024  3.70%  $10,000,000 

Accrued Expenses. The Company accrues for expenses that have been incurred but have not been invoiced. As of March 30, 2024, the thirty-nine week period ended September 30, 2017 (thousandsCompany had $0.1 million accrued, the majority of dollars).which relates to accounting expenses. The accrued amount is included in Other accrued expenses and liabilities on the balance sheet.

Balance at December 31, 2016 221,195

Allocation of comprehensive income for the thirty-nine week period ended September 30, 2017 

44,032

Member distributions 

(25,895
Balance at September 30, 2017 239,3326 

 

(3) Noncompetition Agreement

The CEO’s employment agreement provides for him to receive noncompetition payments for a twelve-month period following his termination of employment with USPB.

As of March 30, 2024 and December 30, 2023, the Company had accrued $0.3 million and $0.3 million, respectively, for the noncompetition agreement. The accrued amount is included in Other liabilities on the balance sheet.

(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 March 30, 2024 and December 30, 2023, the Company had accrued $8.7 million and $9.0 million, respectively, for the management phantom awards. The accrued amounts are included in Accrued compensation and benefits and Other liabilities on the balance sheet. The table below summarizes the current and long-term portions of the accrued amounts (thousands of dollars): 

Schedule of accrued liabilities        
  March 30, 2024  December 30, 2023 
   (unaudited)     
Current phantom unit $1,730  $2,075 
Long-term phantom unit  6,921   6,972 
Total phantom accrual $8,651  $9,047 

USPB provides its employees the opportunity to earn cash incentives and bonuses. As of March 30, 2024 and December 30, 2023, the Company had accrued $0.2 million and $1.1 million, respectively, for the cash incentive and bonus plans. The accrued amounts are included in Accrued compensation and benefits and Other liabilities on the balance sheet.

(5) Delivery Right Lease Income

As of March 30, 2024, USPB realized Delivery Right Lease income of $0.2 million related to leasing company owned delivery rights to USPB’s members and associates. Delivery Right Lease income is included in “Other income” on the Statement of Operations.

(6) Earnings Per Unit

 

Under the LLC structure, earnings of the Company are to be allocated to unitholdersmembers 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-week period ended March 30, 2024 and thirty-nine week periodstwelve-week period ended September 30, 2017 and the thirteen week and thirty-nine week periods ended September 24, 2016,March 25, 2023, 10% of USPB’s comprehensivenet income was allocated to the Class A’sA units and 90% to the Class B’s.B units. 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.

 

7

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.



Earnings Per Unit Calculation

        
Schedule of reconciliation of earnings per unit        
(Loss) Income Per Unit Calculation 13 weeks ended  12 weeks ended 
(thousands of dollars, except unit and per unit data) March 30, 2024  March 25, 2023 

 

14 weeks ended 

 

13 weeks ended 

 

39 weeks ended 

 

39 weeks ended 

  (unaudited)   (unaudited) 

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

 

September 30, 2017 

 

September 24, 2016 

 

September 30, 2017 

 

September 24, 2016 

Basic and diluted earnings per unit

 

 

 

 

 

 

 

 

Comprehensive income attributable to USPB unitholders (numerator)

 

 

 

 

 

 

 

 

Basic and diluted (loss) earnings per unit:        
(Loss) income attributable to USPB available to members (numerator)        

Class A

2,550 

1,557 

4,403 

2,690 

 $(69) $738 

Class B

22,951 

14,013 

39,629 

24,212 

 $(622) $6,643 

        

Weighted average outstanding units (denominator)

 

 

 

 

 

 

 

 

        

Class A

 

735,385 

 

735,385 

 

735,385 

 

735,385 

  735,385   735,385 

Class B

 

755,385 

 

755,385 

 

755,385 

 

755,385 

  755,385   755,385 

        

Per unit amount

 

 

 

 

 

 

 

 

        

Class A

3.47 

2.12 

5.99 

3.66 

 $(0.09) $1.00 

Class B

30.38 

18.55 

52.46 

32.05 

 $(0.82) $8.79 

 

(4) (7) 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 over NBP, but does not have financial or operational control. The table below summarizes the changes to USPB’s investment in NBP for the thirteen-week period ended March 30, 2024 and twelve-week period ended March 25, 2023 (unaudited) (thousands of dollars):

Schedule of Investment roll forward    
Investment at December 30, 2023 $162,597 
Equity in net loss for thirteen-week period  (682)
Distributions   
Investment at March 30, 2024 $161,915 
     
Investment at December 31, 2022 $179,556 
Equity in net income for twelve-week period  7,600 
Distributions   
Investment at March 25, 2023 $187,156 

8

The difference between USPB’s percentage ownership share of NBP net loss or net income and the recorded amount of Equity in net loss or net income of NBP is attributable to the amortization of a basis difference related to the purchase accounting for NBP’s acquisition of Ohio Beef in 2019.

Below is a summary of the results of operations for NBP’s fourteen weekNBP for the thirteen and thirty-ninetwelve-week periods ended March 30, 2024 and March 25, 2023 (thousands of dollars): 

Schedule of operations for NBP        
  13 weeks ended  12 weeks ended 
  March 30, 2024  March 25, 2023 
   (unaudited)   (unaudited) 
Net sales $2,830,002  $2,583,524 
Costs and expenses:        
Cost of sales  2,752,743   2,472,292 
Selling, general, and administrative expenses  37,372   24,630 
Depreciation and amortization  34,538   29,581 
Total costs and expenses  2,824,653   2,526,503 
Operating income  5,349   57,021 
Other income (expense):        
Interest income  41   37 
Interest expense  (9,111)  (4,960)
Net (loss) income before taxes  (3,721)  52,098 
Income tax expense  195   (676)
Net (loss) income $(3,526) $51,422 

(8) 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 its members. As of March 30, 2024 and December 30, 2023, Other accrued expenses and liabilities on the Company’s balance sheet reflected state taxes payable of $0.5 million and $0.3 million, respectively.

9

(9) Long-term Debt and Loan Agreements

On July 13, 2020, USPB and CoBank entered into that certain Credit Agreement (Credit Agreement), Amended and Restated Revolving Term Promissory Note (Promissory Note), and an Affirmation of Pledge Agreement (together, the New Loan Agreements). The New Loan Agreements replace, amend and restate the arrangements between CoBank and USPB contained in that certain Master Loan Agreement, Revolving Term Loan Supplement to the Master Loan Agreement, Pledge Agreement, and Security Agreement dated July 26, 2011, as amended.

The New Loan Agreements provide for a $1.0 million revolving term commitment. That commitment carries a term of five years, maturing on June 30, 2025. All of the $1.0 million revolving credit commitment was available as of March 30, 2024. On July 6, 2023, USPB and CoBank amended the Promissory Note to provide for an interest rate equal to the Daily Simple SOFR Margin (as defined in the amendment) plus the higher of 0.00% and Daily Simply SOFR (as defined in the agreement). The Affirmation of Pledge Agreement provides CoBank with a first-priority security interest in USPB’s membership interests in, and distributions from, NBP.

USPB was in compliance with the financial covenant under its Credit Agreement as of March 30, 2024.

(10) Members’ Capital

The following table represents a reconciliation of Members’ Capital for the thirteen and twelve week periods ended SeptemberMarch 30, 20172024 and the thirteen week and thirty-nine week periods ended September 24, 2016March 25, 2023 (unaudited) (thousands of dollars):

Schedule of reconciliation of members’ capital    
Balance at December 30, 2023 $232,133 
Net loss for the thirteen-week period ended March 30, 2024  (691)
Member distributions    
Class A ($0.45 per Class A unit)  (330)
Class B ($3.93 per Class B unit)  (2,969)
Balance at March 30, 2024 $228,143 
     
Balance at December 31, 2022 $263,941 
Net income for the twelve-week period ended March 25, 2023  7,381 
Balance at March 25, 2023 $271,322 

  

14 weeks ended

  

13 weeks ended

  

39 weeks ended

  

39 weeks ended

 
  

September 30, 2017

  

September 24, 2016

  

September 30, 2017

  

September 24, 2016

 
  

(unaudited)

  

(unaudited)

  

(unaudited)

  

(unaudited)

 
 

Net sales 

2,038,823

 

1,746,839

 

5,472,340

 

5,175,592

 

 

Costs and expenses: 

 

 

  

 

  

 

  

 

 

Cost of sales 

 

1,816,473

  

1,595,672

  

5,030,882

  

4,856,046

 

Selling, general, and administrative expenses 

 

19,974

  

17,035

  

56,085

  

51,929

 

Depreciation and amortization 

 

26,664

  

23,100

  

73,522

  

68,511

 

Total costs and expenses 

 

1,863,111

  

1,635,807

  

5,160,489

  

4,976,486

 

 

Operating income 

 

175,712

  

111,032

  

311,851

  

199,106

 

 

Other income (expense): 

 

 

  

 

  

 

  

 

 

Interest income 

 

57

  

51

  

230

  

114

 

Interest expense 

 

(1,710

 

(2,965

 

(5,780

 

(10,728

Other, net 

 

418

  

149

  

3,705

  

4,040

 

Income before taxes 

 

174,477

  

108,267

  

310,006

  

192,532

 

 

Income tax benefit (expense) 

 

(482

 

(327

 

(833

 

(1,462

Net income 

173,995

 

107,940

 

309,173

 

191,070

 
 

NBP's net income attributable to USPB 

26,226

 

16,270

 

46,601

 

28,800

 
10

(11) Legal Proceedings

As of March 30, 2024, USPB is not 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 (i) five putative class action lawsuits in the United States District Court for the District of Minnesota alleging that NBP violated some combination of the Sherman Antitrust Act, the Packers and Stockyards Act, the Commodity Exchange Act, and various state laws and (ii) putative class action lawsuits in the Supreme Court of British Columbia and the Superior Court of Quebec for the district of Montreal alleging that it violated the Canadian Competition Act and various provincial laws (the “Beef Class Actions”).  The Beef Class Actions 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; Erbert & Gerbert’s, Inc. v. JBS USA Food Company Holdings, et al., which was filed originally on June 18, 2020; Specht v. Tyson Foods, Inc., et al., which was filed originally on October 31, 2022; Giang Bui v. Cargill, Incorporated, et al. which was filed originally on February 18, 2022; and Sylvie De Bellefeuille v. Cargill, Inc. et al., which was filed originally on March 24, 2022.  Since the original class action complaints were filed, certain purchasers of beef products have opted to file individual complaints and to proceed with direct actions making similar claims (the “Opt-Out Cases”), and others may do so in the future. The Opt-Out Cases are entitled Winn-Dixie Stores, Inc. and Bi-Lo Holding, LLC v. Cargill, Inc., et al., which was filed on August 2, 2021 in the United States District Court, Minnesota; Cheney Brothers, Inc. v. Cargill, Inc., et al., which was filed on January 31, 2022 in the United States District Court, Southern District of Florida; Subway v. Cargill, Inc. et al., which was filed on February 22, 2022 in the United States District Court, Connecticut; Amory Investments LLC v. Cargill, Inc. et al., which was filed originally on March 8, 2022 in the United States District Court, Northern District of New York; Associated Grocers, Inc., et al. v. Cargill, Inc., et al., which was filed originally on May 12, 2022 in the United States District Court, Northern District of Illinois; Giant Eagle, Inc. v. Cargill, Inc., et al., which was filed originally on June 8, 2022 in the United States District Court, Northern District of Illinois; Sysco Corporation v. Cargill, Inc., et al., which was filed originally on June 24, 2022 in the United States District Court, Southern District of Texas; John Soules Foods, Inc. v. Cargill, Inc., et al., which was filed originally on August 5, 2022 in the United States District Court, Eastern District of Texas; Associated Grocers of the South et al. v. Cargill, Inc., et al., which was filed originally on September 15, 2022 in the United States District Court, District of Montana; The Kroger Co. et al. v. Cargill, Inc., et al., which was filed originally on September 15, 2022 in the United States District Court, District of Montana; Spartannash Co vs. Cargill, Inc. et al, which was filed originally on September 21, 2022 in the United States District Court, Northern District of Illinois; Kraft Heinz Food Company v. Cargill Inc., et al., which was filed originally on September 30, 2022 in the United States District Court, Eastern District of New York; Aramark Food and Support Services Group., Inc. v. Cargill Inc., et al., which was filed originally on September 30, 2022 in the United States District Court, Eastern District of New York; ARCOP, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; CKE Restaurant Holdings, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; Sonic Industries Services Inc. v. Cargill, Inc. et al., which was filed originally on December 20, 2022 in the United States District Court, Southern District of Florida; Restaurant Services, Inc. v. Cargill, Inc., et al., which was filed originally on December 20, 2022 in the United States District Court, Southern District of Florida; Whatabrands LLC et al. vs. Cargill, Inc., et al. which was filed originally on December 20, 2022 in the United States District Court, Southern District of Florida; Sherwood Food Distributors, LLC et al.v. Cargill, Inc., et al., which was filed originally on March 7, 2023 in the United States District Court, Easter District of New York; McClane Company, Inc v. Cargill, Inc., et al., which was filed originally on April 3, 2023 in the United States District Court, Southern District of Florida; Aldi, Inc v. Cargill, Inc., et al., which was filed originally on August 28. 2023 in the United States District Court, Northern District of Illinois; Quirich Foods, LLC et al. v. Cargill, Inc., et al., which was filed originally on October 9, 2023 in the United States District Court, Northern District of Illinois; Conagra Brands, Inc v. Cargill, Inc., et al., which was filed originally on October 31, 2023 in the United States District Court, Northern District of Illinois; Compass Group USA, Inc v. Cargill, Inc., et al., which was filed originally on October 31, 2023 in the United States District Court, Western District of North Carolina; Target Corp v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York; BJ’s Wholesale Club, Inc v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York; Glazier Foods Co et al. v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York; Jetro Holdings, Inc v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York; and Quality Supply Chain Co-Op, Inc. v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York. On October 4, 2022, the United States Beef Class Actions and Opt-Out Cases were consolidated for pretrial proceedings in the United States District Court, Minnesota District under the style In re: Cattle and Beef Antitrust Litigation. The plaintiffs in these cases seek treble damages and other relief under various laws including the Sherman Antitrust Act, the Canadian Competition Act, the Packers & Stockyards Act, and/or the Commodities Exchange Act and various state and provincial laws and attorneys’ fees.  NBP believes it has meritorious defenses to the claims in these cases and intends to defend them vigorously. There can be no assurances, however, as to the outcome of these matters or the impact on NBP’s consolidated financial position, results of operations and cash flows.

11

In addition to the antitrust litigation, NBP is subject to an investigation by the United States Department of Justice (“DOJ”) and approximately 30 state attorneys general regarding fed cattle and beef packing markets.  NBP has responded to the federal and state requests for information and cooperated 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 defendant in a putative class action lawsuit entitled Brown, et al. v. JBS USA Food Company et al. and filed in the United States District Court for the District of Colorado on November 1, 2022. The defendants filed motions to dismiss, which the court denied except as to NBP’s subsidiary, Iowa Premium. The plaintiffs filed an amended complaint on January 12, 2024. The amended complaint alleges that the defendants directly and through industry wage surveys and a benchmarking service (i) fixed wages and benefits, and (ii) exchanged information regarding compensation and benefits in an effort to depress and stabilize wages and benefits in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, pre- and post-judgment interest, declaratory and injunctive relief and the costs of the suit (including attorney fees). NBP believes it has meritorious defenses to the claims in this case and intends to defend the case vigorously; however, NBP is negotiating a settlement of the class action with respect to employee wages and benefits and has made an accrual for a potential settlement. There can be no assurances, however, as to the outcome of this case or the impact on the 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 of NBP believes the ultimate resolution of such matters should not have a material adverse effect on NBP’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.

(12) Subsequent Events

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

12

 

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.

Products and Production

USPB provides an integrated cattle production, processing and marketing system for the benefit of its members and associates. As the basis of that system, USPB’s Class A members have a guaranteed right plus an obligation (on a one head per Class A unit per delivery year basis) to deliver cattle to USPB, pursuant to the Uniform Cattle Delivery and Marketing Agreement. USPB facilitates the delivery of cattle to NBP for processing and subsequent product distribution and marketing. Shortly after the cattle are processed, cattle suppliers receive, at no extra charge, individual animal carcass data previously considered proprietary by many processors. This carcass data assists producers in refining production methodologies, thereby improving the product quality and subsequently enhancing the return to the producer.

We believe the primary advantage of USPB’s ownership in NBP is USPB’s ability to provide NBP with a consistent supply of quality beef from a known source, allowing NBP to target higher margin value-added markets. Consumers have historically demonstrated their willingness and desire to buy branded products that offer better value in other consumer product markets, with the Certified Angus Beef® product line being an example in the beef industry.

Investment in National Beef Packing Company, LLC

 

NBP processes and marketssells 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 refrigerated and livestock transportation services for NBP and third parties.across the U.S.

 

13

NBP’s profitability typically fluctuates seasonally as well as cyclically, based on the availability of fed cattle and the demand for beef and beef 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 SeptemberMarch 30, 20172024, increased approximately 9.5% in comparison to the sametwelve-week period in 2016,ended March 25, 2023, primarily due to an increaseincreased production volume as a result of one more week in the number of cattle processedquarter and higher average selling prices.prices for many boxed beef and beef by-products. Cost of salesSales increased by approximately 11.3% for the three monthsthirteen-week period ended SeptemberMarch 30, 20172024, as compared to the sametwelve week period in 2016. The increase isended March 25, 2023, primarily due to an increasehigher prices for fed cattle, increased production volume and increased costs related to one additional week in volume, partially offset by a smallthe period.  Lower per unit beef processing margins was the key driver of the 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 20172024 period, as compared to the 20162023 period.

 Revenues in

On June 10, 2019, USPB and NBP entered into the nine months ended September 30, 2017 increased in comparison toFirst 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 period in 2016, primarily dueas 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 an increase in the numberpurchase 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 processed. Costper year with prices based on those published by the U.S. Department of sales increasedAgriculture, subject to adjustments for cattle performance.  NBP obtained approximately 23% and 27% of its cattle requirements under this agreement during the nine monthsthirteen and twelve week periods ended SeptemberMarch 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 head2024 and an increase in volume led to higher profitability in the 2017 period as compared to the 2016 period.March 25, 2023, respectively.

USPB Results of Operations

Thirteen-weeks ended March 30, 2024 compared to twelve-weeks ended March 25, 2023

Fourteen weeks ended September 30, 2017 compared to thirteen weeks ended September 24, 2016

Net Sales. There were no Net Salesnet sales in the fourteen weekthirteen-week period ended SeptemberMarch 30, 20172024 and thirteen weektwelve-week period ended September 24, 2016.March 25, 2023.  

Cost of Sales. There were no Costcost of Salessales in the fourteen weekthirteen-week period ended SeptemberMarch 30, 20172024 and thirteen weektwelve-week period ended September 24, 2016.March 25, 2023.  

 

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $0.9approximately $1.0 million for the fourteen weeksthirteen-weeks ended SeptemberMarch 30, 20172024 compared to $0.7approximately $1.2 million for the thirteen weekstwelve-week period ended September 24, 2016.March 25, 2023, a decrease of approximately $0.2 million. The increasedecrease was primarily related to higher compensation relatedthe result of lower phantom plan and bonus expenses.

 

Operating Loss.Operating loss was $0.9approximately $1.0 million for the fourteen weeksthirteen-weeks ended SeptemberMarch 30, 20172024 compared to $0.7approximately $1.3 million for the thirteen weekstwelve-week period ended September 24, 2016.March 25, 2023.  

 



Equity Interest in Net Income (Loss) of National Beef Packing Company, LLC. Equity in NBP net incomeloss was $26.2$0.7 million for the fourteen weeksthirteen-weeks ended SeptemberMarch 30, 20172024 compared to $16.3net income of $7.6 million for the thirteen weekstwelve-week period ended September 24, 2016. The improvement in fiscal year 2017 is due to higher gross margins, an increase in volumes, and an extra week in the period at NBP.March 25, 2023. USPB carries its 15.0729% investment in NBP under the equity method of accounting.

 

Comprehensive Income.Interest IncomeNet. Interest income for the fourteen week period ended September 30, 2017 was $25.5 million compared to $15.6$0.9 million for the thirteen week periodthirteen-weeks ended September 24, 2016.

Thirty-nine weeks ended SeptemberMarch 30, 20172024 compared to thirty-nine weeks ended September 24, 2016

Sales. There were no Net Sales in the thirty-nine week periods ended September 30, 2017 and September 24, 2016.

Cost of Sales. There were no Cost of Sales in the thirty-nine week periods ended September 30, 2017 and September 24, 2016.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $2.8approximately $0.9 million for the thirty-nine weekstwelve-week period ended September 30, 2017 compared to $2.3March 25, 2023.

Other, net. Other income was $0.2 million for the thirty-nine weeksthirteen-week period ended September 24, 2016. The increase was primarily due to higher compensation related expenses.

Operating Loss.Operating loss was $2.8 million for the thirty-nine weeks ended SeptemberMarch 30, 2017 compared to $2.3 million for the thirty-nine weeks ended September 24, 2016.

Equity Interest in Net Income of National Beef Packing Company, LLC. Equity in NBP net income was $46.6 million for the thirty-nine weeks ended September 30, 2017 compared to $28.8 million for the thirty-nine weeks ended September 24, 2016. The improvement in fiscal year 2017 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.

Other, net.Other income was immaterial for the thirty-nine weeks ended September 30, 20172024 compared to other income of $0.4$0.1 million for the thirty-nine weekstwelve-week period ended September 24, 2016, a decrease of $0.3 million.March 25, 2023, respectively. The decreaseincome in both periods was primarily due to lowerdelivery right lease income on Company owned cattle delivery rights.income.

 

Comprehensive Income.Net income for the thirty-nine week period ended September 30, 2017(loss) income. Net loss was $44.0 million compared to $26.9$0.7 million for the thirty-nine weekthirteen-week period ended September 24, 2016.March 30, 2024 compared to net income of $7.4 million twelve-week period ended March 25, 2023, respectively.

14

Liquidity and Capital Resources

 

As of SeptemberMarch 30, 2017,2024, we had net working capital (the excess of current assets over current liabilities) of $79.7approximately $73.4 million, which included cash and cash equivalents of $81.5$34.4 million. As of December 31, 2016,30, 2023, we had net working capital of $82.0approximately $76.7 million, which included cash and cash equivalents of $85.2$58.5 million. Our primary sourcesources of liquidity for the first three quartersquarter of fiscal years 2017year 2024 and 2016 wasfiscal year 2023 were cash and available borrowings under the Master Loan Agreement.Agreement with CoBank.

 

As of SeptemberMarch 30, 2017,2024, 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 SeptemberMarch 30, 2017.2024.

 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 2016.2023.

 



Operating Activities

Net cash provided byused in operating activities in the thirty-nine weeksthirteen-weeks ended SeptemberMarch 30, 20172024 was $15.9approximately $0.8 million compared to net cash used of $2.1approximately $2.4 million in the thirty-nine weekstwelve-weeks ended September 24, 2016.March 25, 2023.  The $18.0$1.6 million change was primarily due to the distributions received from NBP.a $1.0 million decrease in compensation and benefits.

Investing Activities

Net cash provided byused in investing activities was $7.4approximately $20.0 million in the thirty-nine weeksthirteen-weeks ended SeptemberMarch 30, 20172024 compared to $13.2$0.0 million in the thirty-nine weekstwelve-week period ended September 24, 2016.March 25, 2023. The decreasechange was due to new investments in Certificates of Deposit in the result of lower distributions received from NBP in fiscal year 2017.current period.

Financing Activities

Net cash used in financing activities was $27.1$3.3 million in the thirty-nine weeksthirteen-weeks ended SeptemberMarch 30, 20172024 compared to an immaterial amount$0.0 million in the thirty-nine weekstwelve week period ended September 24, 2016.March 25, 2023. The change$3.3 million increase was primarily the result of member distributions madedue a distribution in the first quarter of fiscal year 2017.current 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, 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. The Revolving Term Loan Supplementand Promissory Note provides for a $5$1.0 million revolving creditterm 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 SeptemberMarch 30, 2017. Borrowings under2024. On July 6, 2023, USPB and CoBank amended the revolving credit commitment bearPromissory Note to provide for an interest atrate equal to the LIBOR rateDaily Simple SOFR Margin (as defined in the amendment) plus applicable margin.the higher of 0.00% and Daily Simply SOFR (as defined in the agreement). The Affirmation of Pledge Agreement provides CoBank with a first-priority security interest in USPB’s Membership Interests in, and Distributions from, NBP.

15

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 SeptemberMarch 30, 2017,2024, 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 the 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 fourteen weeksthirteen-weeks ended SeptemberMarch 30, 20172024 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.


16

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

As of March 30, 2024, USPB is not 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 (i) five putative class action lawsuits in the United States District Court for the District of Minnesota alleging that NBP violated some combination of the Sherman Antitrust Act, the Packers and Stockyards Act, the Commodity Exchange Act, and various state laws and (ii) putative class action lawsuits in the Supreme Court of British Columbia and the Superior Court of Quebec for the district of Montreal alleging that it violated the Canadian Competition Act and various provincial laws (the “Beef Class Actions”).  The Beef Class Actions 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; Erbert & Gerbert’s, Inc. v. JBS USA Food Company Holdings, et al., which was filed originally on June 18, 2020; Specht v. Tyson Foods, Inc., et al., which was filed originally on October 31, 2022; Giang Bui v. Cargill, Incorporated, et al. which was filed originally on February 18, 2022; and Sylvie De Bellefeuille v. Cargill, Inc. et al., which was filed originally on March 24, 2022.  Since the original class action complaints were filed, certain purchasers of beef products have opted to file individual complaints and to proceed with direct actions making similar claims (the “Opt-Out Cases”), and others may do so in the future. The Opt-Out Cases are entitled Winn-Dixie Stores, Inc. and Bi-Lo Holding, LLC v. Cargill, Inc., et al., which was filed on August 2, 2021 in the United States District Court, Minnesota; Cheney Brothers, Inc. v. Cargill, Inc., et al., which was filed on January 31, 2022 in the United States District Court, Southern District of Florida; Subway v. Cargill, Inc. et al., which was filed on February 22, 2022 in the United States District Court, Connecticut; Amory Investments LLC v. Cargill, Inc. et al., which was filed originally on March 8, 2022 in the United States District Court, Northern District of New York; Associated Grocers, Inc., et al. v. Cargill, Inc., et al., which was filed originally on May 12, 2022 in the United States District Court, Northern District of Illinois; Giant Eagle, Inc. v. Cargill, Inc., et al., which was filed originally on June 8, 2022 in the United States District Court, Northern District of Illinois; Sysco Corporation v. Cargill, Inc., et al., which was filed originally on June 24, 2022 in the United States District Court, Southern District of Texas; John Soules Foods, Inc. v. Cargill, Inc., et al., which was filed originally on August 5, 2022 in the United States District Court, Eastern District of Texas; Associated Grocers of the South et al. v. Cargill, Inc., et al., which was filed originally on September 15, 2022 in the United States District Court, District of Montana; The Kroger Co. et al. v. Cargill, Inc., et al., which was filed originally on September 15, 2022 in the United States District Court, District of Montana; Spartannash Co vs. Cargill, Inc. et al, which was filed originally on September 21, 2022 in the United States District Court, Northern District of Illinois; Kraft Heinz Food Company v. Cargill Inc., et al., which was filed originally on September 30, 2022 in the United States District Court, Eastern District of New York; Aramark Food and Support Services Group., Inc. v. Cargill Inc., et al., which was filed originally on September 30, 2022 in the United States District Court, Eastern District of New York; ARCOP, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; CKE Restaurant Holdings, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; Sonic Industries Services Inc. v. Cargill, Inc. et al., which was filed originally on December 20, 2022 in the United States District Court, Southern District of Florida; Restaurant Services, Inc. v. Cargill, Inc., et al., which was filed originally on December 20, 2022 in the United States District Court, Southern District of Florida; Whatabrands LLC et al. vs. Cargill, Inc., et al. which was filed originally on December 20, 2022 in the United States District Court, Southern District of Florida; Sherwood Food Distributors, LLC et al.v. Cargill, Inc., et al., which was filed originally on March 7, 2023 in the United States District Court, Easter District of New York; McClane Company, Inc v. Cargill, Inc., et al., which was filed originally on April 3, 2023 in the United States District Court, Southern District of Florida; Aldi, Inc v. Cargill, Inc., et al., which was filed originally on August 28. 2023 in the United States District Court, Northern District of Illinois; Quirich Foods, LLC et al. v. Cargill, Inc., et al., which was filed originally on October 9, 2023 in the United States District Court, Northern District of Illinois; Conagra Brands, Inc v. Cargill, Inc., et al., which was filed originally on October 31, 2023 in the United States District Court, Northern District of Illinois; Compass Group USA, Inc v. Cargill, Inc., et al., which was filed originally on October 31, 2023 in the United States District Court, Western District of North Carolina; Target Corp v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York; BJ’s Wholesale Club, Inc v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York; Glazier Foods Co et al. v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York; Jetro Holdings, Inc v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York; and Quality Supply Chain Co-Op, Inc. v. Cargill, Inc., et al., which was filed originally on December 29, 2023 in the United States District Court, Eastern District of New York. On October 4, 2022, the United States Beef Class Actions and Opt-Out Cases were consolidated for pretrial proceedings in the United States District Court, Minnesota District under the style In re: Cattle and Beef Antitrust Litigation. The plaintiffs in these cases seek treble damages and other relief under various laws including the Sherman Antitrust Act, the Canadian Competition Act, the Packers & Stockyards Act, and/or the Commodities Exchange Act and various state and provincial laws and attorneys’ fees.  NBP believes it has meritorious defenses to the claims in these cases and intends to defend them vigorously. There can be no assurances, however, as to the outcome of these matters or the impact on NBP’s consolidated financial position, results of operations and cash flows.

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In addition to the antitrust litigation, NBP is subject to an investigation by the United States Department of Justice (“DOJ”) and approximately 30 state attorneys general regarding fed cattle and beef packing markets. NBP has responded to the federal and state requests for information and cooperated 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 defendant in a putative class action lawsuit entitled Brown, et al. v. JBS USA Food Company et al. and filed in the United States District Court for the District of Colorado on November 1, 2022. The defendants filed motions to dismiss, which the court denied except as to NBP’s subsidiary, Iowa Premium. The plaintiffs filed an amended complaint on January 12, 2024. The amended complaint alleges that the defendants directly and through industry wage surveys and a benchmarking service (i) fixed wages and benefits, and (ii) exchanged information regarding compensation and benefits in an effort to depress and stabilize wages and benefits in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, pre- and post-judgment interest, declaratory and injunctive relief and the costs of the suit (including attorney fees). NBP believes it has meritorious defenses to the claims in this case and intends to defend the case vigorously; however, NBP is negotiating a settlement of the class action with respect to employee wages and benefits and has made an accrual for a potential settlement. There can be no assurances, however, as to the outcome of this case or the impact on the 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 of NBP believes the ultimate resolution of such matters should not have a material adverse effect on NBP’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, 201630, 2023 have not materially changed. Please refer to the Company’s report on Form 10-K for the fiscal year ended December 31, 201630, 2023 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.

Insider trading arrangements.

During the quarter ended March 30, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits.

3.1Certificate of Formation of U.S. Premium Beef, LLC (incorporated herein by reference to Appendix C to the voting materials – prospectus contained in U.S. Premium Beef, Inc. Registration Statement on Form S-4 (File No. 333-115164) filed with the SEC on August 5, 2004).
31.13.2Amended and Restated Limited Liability Company Agreement of U.S. Premium Beef, LLC, dated as of November 10, 2023 (incorporated herein by reference to Exhibit 3.3 to Form 10-Q (File No. 333-115164) filed with the SEC on November 13, 2023).
31.1Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2Certification 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 (filed herewith).
101.INSInline XBRL Instance Document ** (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCHInline XBRL Taxonomy Extension Schema Document ** 
101.CALInline XBRL Taxonomy Extension Calculation Linkbase ** Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document ** 
101.LABInline XBRL Taxonomy Extension Label Linkbase Document ** 
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document ** 
104Cover Page Interactive Data File (formatted in inline XBRL, and included in exhibit 101).

** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

  


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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.

U.S. Premium Beef, LLC
 
 

By:

/s/ Stanley D. Linville

 Stanley D. Linville 
Chief Executive Officer
(Principal Executive Officer)
 
 

Stanley D. Linville
Chief Executive Officer

(Principal Executive Officer)

By: By:/s/ Scott J. Miller
 Scott J. Miller 
 

Scott J. Miller
Chief Financial Officer

(Principal Financial and Accounting Officer)

 

Date: November 9, 2017May 10, 2024

 

 

 

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