Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

 

For the quarterly period ended September 30, 2023

or

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 .
 

 

For the transition period from to .

Commission file number 333-115164

 

U. S. PREMIUM BEEF, LLC

(Exact name of registrant as specified in its charter)

 

delaware 20-1576986
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

 

12200 North Ambassador Drive

Kansas City, MO 64163

(Address of principal executive offices)

 

Telephone: ((866)866) 877-2525

(Registrant’s telephone number, including area code)

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

Title of each classTrading Symbol(s)Name of each exchange on which registered
N/AN/AN/A

 

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

 

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

 

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

 

Large accelerated Filer ☐Large Accelerated Filer ☐
Non-accelerated FilerþAccelerated Filer ☐Smaller reporting company þ
 Non-Accelerated FilerSmall Reporting Company
Emerging Growth Companygrowth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

The registrant’s units are not traded on an exchange or in any public market. As of October 28, 2023,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 INFORMATIONPage No.
PART I.FINANCIAL INFORMATION
   
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 about Market Risk.16
   
Item 4.Controls and Procedures.16
   
   
PART II.OTHER INFORMATION 
   
Item 1.Legal Proceedings.17
   
Item 1A.Risk Factors.18
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.18
   
Item 3.Defaults Upon Senior Securities.18
   
Item 4.Mine Safety Disclosures.18
   
Item 5.Other Information.18
   
Item 6.Exhibits.19
   
 Signatures.20

 

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.

 

 

 

 2 

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited).

 

U.S. Premium Beef,PREMIUM BEEF, LLC

Balance Sheets

(thousands of dollars, except unit information)

 

        
 September 30, 2023  December 31, 2022 
 (unaudited)           
Assets      March 30, 2024  December 30, 2023 
  (unaudited)     
Current assets:                
Cash and cash equivalents $75,849  $97,732  $34,396  $58,481 
Accounts receivable  168   9 
Due from members and associates  2,061   921 
Certificate of Deposit  40,000   20,000 
Accrued interest receivable  297   37 
Due from affiliates  251   283 
Other current assets  15   4   1,207   1,675 
Total current assets  78,093   98,666   76,151   80,476 
Property, plant, and equipment, at cost  265   266   274   274 
Less accumulated depreciation  226   212   234   231 
Net property, plant, and equipment  39   54   40   43 
Right of use assets, net  243   115   270   283 
Investment in National Beef Packing Company, LLC  181,344   179,556   161,915   162,597 
Other assets  1   2 
Total assets $259,719  $278,391  $238,377  $243,401 
Liabilities and Members' Capital                
Current liabilities:                
Accounts payable - trade $11  $36  $86  $28 
Due to National Beef Packing Company, LLC     1,132 
Due to members and associates  56   25 
Due to other affiliates  60   48 
Accrued compensation and benefits  995   2,667   1,920   3,225 
Lease obligations  48   57   57   56 
Other accrued expenses and liabilities  231   969   594   390 
Distributions payable     1   15    
Total current liabilities  1,341   4,887   2,732   3,747 
Long-term liabilities:                
Lease obligations  194   57   213   228 
Other liabilities  9,726   9,506   7,289   7,293 
Total long-term liabilities  9,920   9,563   7,502   7,521 
Total liabilities  11,261   14,450   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  248,458   263,941   228,143   232,133 
Total members' capital  248,458   263,941   228,143   232,133 
Total liabilities and members' capital $259,719  $278,391  $238,377  $243,401 

 

See accompanying notes to financial statements.

 

 

 3 

 

 

U.S. Premium Beef,PREMIUM BEEF, LLC

Statements of Operations

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

 

                        
 14 weeks ended  13 weeks ended  39 weeks ended  13 weeks ended  12 weeks ended 
 September 30, 2023  September 24, 2022  September 30, 2023  September 24, 2022  March 30, 2024  March 25, 2023 
 (unaudited) (unaudited) (unaudited) (unaudited)   (unaudited)   (unaudited) 
Net sales $  $  $  $  $  $ 
Costs and expenses:                        
Cost of sales                  
Selling, general, and administrative expenses  843   2,019   3,141   5,637   1,038   1,245 
Depreciation and amortization  5   6   15   14   4   5 
Total costs and expenses  848   2,025   3,156   5,651   1,042   1,250 
Operating loss  (848)  (2,025)  (3,156)  (5,651)  (1,042)  (1,250)
Other income:                        
Interest income  847   295   2,485   331   853   900 
Equity in income of National Beef Packing Company, LLC  14,755   44,509   37,060   159,894 
Equity in net (loss) income of National Beef Packing Company, LLC  (682)  7,600 
Other income, net  200   345   516   311   180   131 
Total other income  15,802   45,149   40,061   160,536   351   8,631 
Net income $14,954  $43,124  $36,905  $154,885 
Net (loss) income $(691) $7,381 
                        
Income per unit:                
(Loss) income per unit:        
Basic and diluted                        
Class A units $2.03  $5.86  $5.02  $21.06  $(0.09) $1.00 
Class B units $17.82  $51.38  $43.97  $184.54  $(0.82) $8.79 
                        
Outstanding weighted-average Class A and Class B units:                        
Basic and diluted                        
Class A units  735,385   735,385   735,385   735,385   735,385   735,385 
Class B units  755,385   755,385   755,385   755,385   755,385   755,385 

 

See accompanying notes to financial statements.

 

 

 

 4 

 

 

U.S. Premium Beef,PREMIUM BEEF, LLC

Statements of Cash Flows

(thousands of dollars)

 

                
 39 weeks ended  39 weeks ended  13 weeks ended  12 weeks ended 
 September 30, 2023  September 24, 2022  March 30, 2024  March 25, 2023 
 (unaudited) (unaudited)   (unaudited)   (unaudited) 
Cash flows from operating activities:                
Net income $36,905  $154,885 
Adjustments to reconcile net income to net cash provided by operating activities:        
Net (loss) income $(691) $7,381 
Adjustments to reconcile net (loss) income to net cash used in operating activities:        
Depreciation and amortization  15   14   4   5 
Equity in net income of National Beef Packing Company, LLC  (37,060)  (159,894)
Distributions from National Beef Packing Company, LLC  35,271   162,980 
Equity in net loss (income) of National Beef Packing Company, LLC  682   (7,600)
Changes in assets and liabilities:                
Accounts receivable  (159)  39   (260)  9 
Due from affiliates  (1,140)  (603)  32   (175)
Other assets  (12)  (9)  469   (17)
Accounts payable  (25)  2   58   22 
Due to affiliates  (1,101)  1,146   12   102 
Accrued compensation and benefits  (1,452)  1,786   (1,309)  (2,290)
Other accrued expenses and liabilities  (737)  (392)  203   148 
Net cash provided by operating activities  30,505   159,954 
Net cash used in operating activities  (800)  (2,415)
Cash flows from investing activities:                
Investment in certificate of deposit  20,000      (20,000)   
Redemption of certificate of deposit  (20,000)   
Capital expenditures     (52)
Net cash used in investing activities     (52)  (20,000)   
Cash flows from financing activities:                
Member distributions  (52,388)  (195,241)  (3,285)   
Net cash used in financing activities  (52,388)  (195,241)  (3,285)   
Net decrease in cash  (21,883)  (35,339)  (24,085)  (2,415)
Cash and cash equivalents at beginning of period  97,732   130,400   58,481   97,732 
Cash and cash equivalents at end of period $75,849  $95,061  $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 (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, 2022.30, 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% investment in National Beef Packing Company, LLC (NBP) is accounted for using the equity method of accounting, becauseas the Company has the ability to exercise significant influence over NBP, 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 in NBP. If a decreaseNBP, which may be other than temporary. Such potential decreases in value, isif deemed other than temporary, would cause the Company wouldto record an impairment charge, which may have an impact on the trading values of USPB’s Class A and Class B units. NBP’s plants are currently operational and its results of operations are profitable, as reflected in Note 6. As a result, USPB believesWe believe the fair value of itsour 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 SeptemberMarch 30, 2024 and December 30, 2023, the Company’s balance sheet reflected cashCash and cash equivalents of $75.834.4 million.million and $58.5 million, respectively. The cash is invested in the CoBank, ACB (CoBank) overnight investment account and can be withdrawn at any time.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. On March 27, 2023, USPB invested $20 million of its available cash balance in a six-monthThe table below summarizes the certificate of deposit at CoBank, at a 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 

4.28Accrued Expenses% interest rate,. The Company accrues for expenses that maturedhave been incurred but have not been invoiced. As of March 30, 2024, the Company had $0.1 million accrued, the majority of which relates to accounting expenses. The accrued amount is included in Other accrued expenses and liabilities on September 25, 2023.the balance sheet.

6

 

(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 SeptemberMarch 30, 20232024 and December 31, 2022,30, 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.

6

 

(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 SeptemberMarch 30, 20232024 and December 31, 2022,30, 2023, the Company had accrued $9.68.7 million and $10.4 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        
  September 30, 2023  December 31, 2022 
  (unaudited)    
Accrued compensation and benefits $166  $1,210 
Other liabilities  9,398   9,202 
Total phantom accrual $9,564  $10,412 
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 SeptemberMarch 30, 20232024 and December 31, 2022,30, 2023, the Company had accrued $0.80.2 million and $1.51.1 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 net income or net loss to Class A units and allocating the remainder is allocated to Class B units. For the quarterlythirteen-week period ended March 30, 2024 and year-to-date periodstwelve-week period ended September 30,March 25, 2023, and September 24, 2022, respectively, 10% of USPB’s net income was allocated to the Class A units and 90% to the Class B units. The net income allocated to the Class A units and Class B units were then divided by the weighted-average number of Class A units and Class B units outstanding for the period to determine the basic EPU for each respective unit class.class of unit.

 

Diluted EPU reflects the potential dilution that could occur if any securities or contracts to issue Class A units or Class B units were exercised. There are no such securities or rights outstanding.

Schedule of Reconciliation of earnings per unit                
Income Per Unit Calculation 14 weeks ended  13 weeks ended  39 weeks ended 
(thousands of dollars, except unit and per unit data) September 30, 2023  September 24, 2022  September 30, 2023  September 24, 2022 
  (unaudited)  (unaudited)  (unaudited)  (unaudited) 
Basic and diluted earnings per unit:                
                 
Income attributable to USPB available to unitholders (numerator)                
Class A $1,495  $4,312  $3,691  $15,489 
Class B $13,459  $38,812  $33,214  $139,396 
                 
Weighted average outstanding units (denominator)                
Class A  735,385   735,385   735,385   735,385 
Class B  755,385   755,385   755,385   755,385 
                 
Per unit amount                
Class A $2.03  $5.86  $5.02  $21.06 
Class B $17.82  $51.38  $43.97  $184.54 

 

 

 

 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.

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 
   (unaudited)   (unaudited) 
Basic and diluted (loss) earnings per unit:        
(Loss) income attributable to USPB available to members (numerator)        
Class A $(69) $738 
Class B $(622) $6,643 
         
Weighted average outstanding units (denominator)        
Class A  735,385   735,385 
Class B  755,385   755,385 
         
Per unit amount        
Class A $(0.09) $1.00 
Class B $(0.82) $8.79 

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

 

USPB’s 15.0729% investment in NBP is accounted for using the equity method of accounting, becauseas 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 fourteenthirteen-week period ended March 30, 2024 and thirty-nine week periodstwelve-week period ended September 30,March 25, 2023 and thirteen and thirty-nine week periods ended September 24, 2022 (unaudited) (thousands of dollars):

Schedule of Investment roll forward    
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 
Equity in net income for thirteen-week period  14,705 
Distributions  (10,464)
Investment at June 24, 2023  191,397 
Equity in net income for fourteen-week period  14,755 
Distributions  (24,808)
Investment at September 30, 2023 $181,344 
     
Investment at December 25, 2021 $213,290 
Equity in net income for thirteen-week period  62,606 
Distributions  (52,755)
Investment at March 26, 2022  223,141 
Equity in net income for thirteen-week period  52,779 
Distributions  (82,907)
Investment at June 25, 2022  193,013 
Equity in net income for thirteen-week period  44,509 
Distributions  (27,318)
Investment at September 24, 2022 $210,204 

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 earningsnet 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.

 

8

Below is a summary of the results of operations for NBP for the quarterlythirteen and year-to-datetwelve-week periods ended SeptemberMarch 30, 20232024 and September 24, 2022March 25, 2023 (thousands of dollars): 

Schedule of Operations for NBP                
Schedule of operations for NBP        
 14 weeks ended  13 weeks ended  39 weeks ended  13 weeks ended  12 weeks ended 
 September 30, 2023  September 24, 2022  September 30, 2023  September 24, 2022  March 30, 2024  March 25, 2023 
 (unaudited) (unaudited) (unaudited) (unaudited)   (unaudited)   (unaudited) 
Net sales $3,374,888  $2,846,156  $8,896,989  $8,819,780  $2,830,002  $2,583,524 
Costs and expenses:                        
Cost of sales  3,208,887   2,492,127   8,453,249   7,587,149   2,752,743   2,472,292 
Selling, general, and administrative expenses  23,232   24,408   75,323   69,628   37,372   24,630 
Depreciation and amortization  36,278   30,945   98,835   90,254   34,538   29,581 
Total costs and expenses  3,268,397   2,547,480   8,627,407   7,747,031   2,824,653   2,526,503 
Operating income  106,491   298,676   269,582   1,072,749   5,349   57,021 
Other income (expense):                        
Interest income  4   23   47   90   41   37 
Interest expense  (8,105)  (1,121)  (19,266)  (4,809)  (9,111)  (4,960)
Income before taxes  98,390   297,578   250,363   1,068,030 
Net (loss) income before taxes  (3,721)  52,098 
Income tax expense  504   (1,285)  (1,491)  (4,225)  195   (676)
Net income $98,894  $296,293  $248,872  $1,063,805 
Net (loss) income $(3,526) $51,422 

As of September 30, 2023 and December 31, 2022, USPB’s balance sheet reflected receivables from affiliates of $2.1 million, which included $1.9 million due from NBP for Connecticut, New Jersey and Iowa income taxes, and $0.9 million, respectively. The balance relates to amounts due from USPB members for state income taxes. The balance sheet also reflects amounts due to members and associates for leasing delivery rights to other cattle deliverers.

 

(7)(8) Income Taxes

 

BecauseEffective August 29, 2004, the Company is a limited liability company taxed as a partnership,converted to an LLC, and under this structure, taxes are not assessed at the Company level andas the results of operations are included in the taxable income of the individual members.

 

Although income taxes are assessed to the individual members, USPB nonetheless is required to withhold state income taxes from the cash distributions it makes to its members. As of SeptemberMarch 30, 20232024 and December 31, 2022,30, 2023, Other accrued expenses and liabilities on the Company’s balance sheet reflected state taxes payable of $0.20.5 million and $0.90.3 million, respectively.

 

9

(8)(9) Long-term Debt and Loan Agreements

 

On July 13, 2020, USPB and CoBank entered into athat certain Credit Agreement an(Credit Agreement), Amended and Restated Revolving Term Promissory Note (“Promissory Note”)(Promissory Note), and an Affirmation of Pledge Agreement.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 Credit Agreement and Promissory NoteNew Loan Agreements provide for a $1.01.0 million revolving term commitment. That commitment carries a term of five years, maturing on June 30, 2025. All of the $1.01.0 million revolving credit commitment was available as of SeptemberMarch 30, 2023.2024. 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 Interestsmembership interests in, and Distributionsdistributions from, NBP.

 

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

 

9

(9)(10) Members’ Capital

 

The following table represents a reconciliation of Members’ Capital for the fourteenthirteen and thirty-ninetwelve week periods ended SeptemberMarch 30, 20232024 and the thirteen and thirty-nine week periods ended September 24, 2022March 25, 2023 (unaudited) (thousands of dollars).

Schedule of Reconciliation of members’ capital    
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 
Net income for the thirteen-week period ended June 24, 2023  14,570 
Member distributions    
Class A ($6.56 per Class A unit)  (4,877)
Class B ($58.17 per Class B unit)  (43,895)
Balance at June 24, 2023  237,120 
Net income for the fourteen-week period ended September 30, 2023  14,954 
Member distributions    
Class A ($0.49 per Class A unit)  (362)
Class B ($4.31 per Class B unit)  (3,254)
Balance at September 30, 2023 $248,458 
     
Balance at December 25, 2021 $332,272 
Net income for the thirteen-week period ended March 26, 2022  61,047 
Member distributions    
Class A ($16.16 per Class A unit)  (11,888)
Class B ($141.64 per Class B unit)  (106,994)
Balance at March 26, 2022  274,437 
Net income for the thirteen-week period ended June 25, 2022  50,714 
Member distributions    
Class A ($9.03 per Class A unit)  (6,638)
Class B ($79.10 per Class B unit)  (59,752)
Balance at June 25, 2022  258,761 
Net income for the thirteen-week period ended September 24, 2022  43,124 
Member distributions    
Class A ($1.25 per Class A unit)  (917)
Class B ($10.93 per Class B unit)  (8,258)
Balance at September 24, 2022 $292,710 
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 

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(10)(11) Legal Proceedings

 

As of March 30, 2024, 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.

 

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NBP is a defendant in (i) five putative class action lawsuits in the United States District Court for the District of Minnesota District, alleging that itNBP 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 District, 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 filings,class action complaints were filed, certain putative class memberspurchasers of the Peterson casebeef products have opted out of the matterto file individual complaints and are proceedingto proceed with 23 individual 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 19,20, 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 19,20, 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 19,20, 2022 in the United States District Court, Southern District of Florida; Sherwood Food Distributors, L.L.C.LLC et al. vs.v. Cargill, Inc., et al., which was filed originally on March 7, 2023 in the United States District Court, EasternEaster District of New York; ALDIMcClane Company, Inc vsv. Cargill, Inc,.Inc., et al, al., which aswas 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 22,28. 2023 in the United States District Court, Northern District of Illinois; QuirchQuirich Foods, LLC et al. v. Cargill, Inc., et alal., which was filed originally on October 9, 2023 in the United States District Court, Northern District of Illinois; Conagra Brands, Inc Compass Group USA, Inc. v. Cargill, Inc., et al., which was filed originally on October 31, 2023 in the Western District of North Carolina; and 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.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 above 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 is cooperating with these investigationshas responded to the federal and is working with the DOJstate requests for information and the relevant states to provide information requested in connectioncooperated 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.

 

11

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 District on November 16, 2022, alleging1, 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 aindustry wage surveysurveys and a benchmarking service (i) fixed wages and benefits, and (ii) exchanged information regarding labor ratescompensation and benefits in an effort to depress and fix the rates ofstabilize wages and benefits in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief.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.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.

 

(11)(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.

 

 

 

 

 

 

 

 

 

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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”, “estimate”, and similar expressions.  Actual results could differ materially from those contemplated by these forward-looking statements as a result of many factors, including economic conditions generally and in our principal markets, the availability and prices of live cattle and commodities, food safety, livestock disease, including the identification of cattle with bovine spongiform encephalopathy (BSE), competitive practices and consolidation in the cattle production and processing industries, actions of domestic or foreign governments, hedging risk, changes in interest rates and foreign currency exchange rates, consumer demand and preferences, the cost of compliance with environmental and health laws, loss of key customers, loss of key employees, labor relations, and consolidation among our customers.

 

In light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking information contained in this report will in fact transpire. Readers are cautioned not to place undue reliance on these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors.  Please review Part II. Item 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.

 

OverviewProducts and Production

 

USPB provides an integrated cattle production, processing and marketing system for the benefit of our unitholdersits members and associates. As the basis of that system, ourUSPB’s Class A unitholdersmembers 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 athe 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, to improvethereby improving the product quality and enhance producer returns.subsequently enhancing the return to the producer.

 

USPBWe 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 NBP are partiesdesire to a First Amended and Restated Cattle Purchase and Sale Agreement June 10, 2019. Under this agreement, NBP must purchase through us from our Class A Members and associates, and we must sell and deliver from our Class A Members and associates to NBP, a base amount of head of cattle per yearbuy branded products that offer better value in other consumer product markets, with prices based on those published by the U.S. Department of Agriculture, subject to adjustments for cattle performance. NBP obtained approximately 26% and 24% of its cattle requirements under this agreement duringCertified Angus Beef® product line being an example in the thirty-nine week periods ended September 30, 2023 and September 24, 2022, respectively.

USPB’s results of operation depend substantially on the operations of NBP, in which we hold a 15.0729% interest. Our fiscal year ends on the last Saturday in December, which results in a 52-53 week year.beef industry.

 

Investment in National Beef Packing Company, LLC

 

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

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NBP has two beef slaughter and processing facilities located in southwest Kansas and a third located in central Iowa.  In addition, NBP operates a leather tannery, three case-ready manufacturing facilities, a fresh and frozen hamburger manufacturing facility and a transportation and logistics company that provides refrigerated and livestock transportation 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 fedlive 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 dynamicfast-moving commodity market and 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 revenuesRevenues in the fourteen-week period ended September 30, 2023 increased approximately 18.6% compared to the thirteen-week period ending September 24, 2022.ended March 30, 2024, increased approximately 9.5% in comparison to the twelve-week period ended March 25, 2023, primarily due to increased production volume as a result of one more week in the quarter and higher average selling prices for many boxed beef and beef by-products. Cost of Sales increased by approximately 28.8%11.3% for the fourteen-week period ended September 30, 2023, compared to the thirteen-week period ended September 24, 2022,March 30, 2024, as compared to the twelve week period ended March 25, 2023, primarily due to higher prices for fed cattle, pricesincreased production volume and the extraincreased costs related to one additional week of operations in the 2023 period.  Lower per unit beef processing margins led to awas the key driver of the decrease in overall profitability in the 20232024 period, as compared to the 20222023 period.

 

NBP’s revenues inOn June 10, 2019, USPB and NBP entered into the thirty-nine-week periodFirst 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 23% and 27% of its cattle requirements under this agreement during the thirteen and twelve week periods ended SeptemberMarch 30, 2024 and March 25, 2023, increase approximately 0.9% compared to the thirty-nine-week period ending September 24, 2022. Cost of Sales increased by approximately 11.4% for the thirty-nine-week period ended September 30, 2023, compared to the thirty-nine-week period ending September 24, 2022, primarily due to higher fed cattle prices offset, in part, by lower volume and reduced incentive expense. Lower per unit beef processing margins, along with a decrease in volume, led to a decrease in overall profitability in the 2023 period, compared to the 2022 period.respectively.

 

USPB Results of Operations

 

Fourteen-weeksThirteen-weeks ended SeptemberMarch 30, 20232024 compared to thirteen-weekstwelve-weeks ended September 24, 2022March 25, 2023

 

Net Sales. There were no Net Salesnet sales in the fourteen-week period ended September 30, 2023 and thirteen-week period ended September 24, 2022.March 30, 2024 and twelve-week period ended March 25, 2023.  

 

Cost of Sales. There were no Costcost of Salessales in the fourteen-weekthirteen-week period ended SeptemberMarch 30, 20232024 and thirteen-week-periodtwelve-week period ended September 24, 2022.March 25, 2023.  

 

Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses were approximately $0.8 million for the fourteen-weeks ended September 30, 2023 compared to approximately $2.0$1.0 million for the thirteen-weeks ended September 24, 2022,March 30, 2024 compared to approximately $1.2 million for the twelve-week period ended March 25, 2023, a decrease of approximately $1.2$0.2 million. The decrease was primarily the result of lower phantom plan and bonus expenses.

Operating Loss. Operating loss was approximately $0.8 million for the fourteen-weeks ended September 30, 2023 compared to approximately $2.0$1.0 million for the thirteen-weeks ended September 24, 2022, primarily dueMarch 30, 2024 compared to reduced SG&A expenses inapproximately $1.3 million for the 2023 period.twelve-week period ended March 25, 2023.  

 

Equity in Net Income (Loss) of National Beef Packing Company, LLC. Equity in NBP net incomeloss was $14.8 million for the fourteen-weeks ended September 30, 2023 compared to $44.5$0.7 million for the thirteen-weeks ended September 24, 2022. The decrease was primarily due to lower per unit beef processing margins along with a decrease in volume, asMarch 30, 2024 compared to net income of $7.6 million for the 2022 period. twelve-week period ended March 25, 2023. USPB carries its 15.0729% investment in NBP under the equity method of accounting.

Interest Income. Interest income was $0.8 million for the fourteen-weeks ended September 30, 2023 compared to approximately $0.3$0.9 million for the thirteen-weeks ended September 24, 2022.March 30, 2024 compared to approximately $0.9 million for the twelve-week period ended March 25, 2023.

Other, net. Other income was $0.2 million for the thirteen-week period ended March 30, 2024 compared to other income of $0.1 million for the twelve-week period ended March 25, 2023, respectively. The increaseincome in fiscal yearboth periods was primarily delivery right lease income.

Net (loss) income. Net loss was $0.7 million for the thirteen-week period ended March 30, 2024 compared to net income of $7.4 million twelve-week period ended March 25, 2023, was due to higher interest rates on USPB’s overnight investment account and an investment in a certificate of deposit at CoBank.respectively.

 

 

 

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Other, net. Other income was $0.2 million for the fourteen-week period ended September 30, 2023 compared to other income of $0.3 million for the thirteen-week period ended September 24, 2022. The change was the result of higher state and local taxes in the 2023 period. 

Net income. Net income was $15.0 million and $43.1 million for the fourteen-week period ended September 30, 2023 and thirteen-week period ended September 24, 2022, respectively. The decrease was primarily due to lower per unit beef processing margins along with a decrease in volume, as compared to the 2022 period.

Thirty-nine weeks ended September 30, 2023 compared to thirty-nine weeks ended September 24, 2022

Net Sales. There were no Net Sales in the thirty-nine weeks periods ended September 30, 2023 and September 24, 2022, respectively.

Cost of Sales. There were no Cost of Sales in the thirty-nine weeks periods ended September 30, 2023 and September 24, 2022, respectively.

Selling, General and Administrative Expenses. SG&A expenses were approximately $3.1 million for the thirty-nine weeks ended September 30, 2023 compared to approximately $5.6 million for the thirty-nine weeks ended September 24, 2022, a decrease of approximately $2.5 million. The decrease was primarily the result of lower phantom plan expenses.

Operating Loss. Operating loss was approximately $3.2 million for the thirty-nine weeks ended September 30, 2023 compared to approximately $5.7 million for the thirty-nine weeks ended September 24, 2022.

Equity in Net Income of National Beef Packing Company, LLC. Equity in NBP net income was $37.1 million for the thirty-nine weeks ended September 30, 2023 compared to $159.9 million for the thirty-nine weeks ended September 24, 2022. The decrease was primarily due to lower per unit beef processing margins along with a decrease in volume, as compared to the 2022 period.

Interest Income. Interest income was $2.5 million for the thirty-nine weeks ended September 30, 2023 compared to $0.3 million for the thirty-nine weeks ended September 24, 2022. The increase in fiscal year 2023 was due to higher interest rates on USPB’s overnight investment account and an investment in a certificate of deposit at CoBank.

Other, net. Other income was $0.5 million compared to $0.3 million for the thirty-nine weeks periods ended September 30, 2023 and September 24, 2022, respectively. The change from the prior period was primarily due to higher delivery right lease income.

Net income. Net income was $36.9 million and $154.9 million for the thirty-nine week periods ended September 30, 2023 and September 24, 2022, respectively. The decrease was primarily for the same reasons that caused the decrease in net income of NBP.

Liquidity and Capital Resources

 

As of SeptemberMarch 30, 2023,2024, we had net working capital (the excess of current assets over current liabilities) of approximately $76.8$73.4 million, which included cash and cash equivalents of $75.8$34.4 million. As of December 31, 2022,30, 2023, we had net working capital of approximately $93.8$76.7 million, which included cash and cash equivalents of $97.7$58.5 million. Our primary sources of liquidity for the first three quartersquarter of fiscal yearsyear 2024 and fiscal year 2023 and 2022 were cash and available borrowings under our Creditthe Master Loan Agreement with CoBank.

 

As of SeptemberMarch 30, 2023, we2024, USPB had no long-term debt outstanding. We had a $1.0 million revolving term credit commitment with CoBank, all of which was available. USPB was in compliance with the financial covenant under Creditits Master Loan Agreement as of SeptemberMarch 30, 2023.2024.

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We believe our cash 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 2022.2023.

 

Operating Activities

Net cash provided byused in operating activities in the thirty-nine weeksthirteen-weeks ended SeptemberMarch 30, 20232024 was approximately $30.5$0.8 million compared to net cash provided by operating activities of approximately $160.0$2.4 million in the thirty-nine weekstwelve-weeks ended September 24, 2022.March 25, 2023.  The $129.5$1.6 million change was primarily due to a $1.0 million decrease in distributions received from NBP.compensation and benefits.

 

Investing Activities

Net cash fromused in investing activities was approximately $20.0 million in the thirteen-weeks ended March 30, 2024 compared to $0.0 million in the thirty-nine weekstwelve-week period ended September 30, 2023 comparedMarch 25, 2023. The change was due to $0.1new investments in Certificates of Deposit in the thirty-nine weeks ended September 24, 2022.current period.

 

Financing Activities

Net cash fromused in financing activities was approximately $52.4$3.3 million in the thirty-nine weeksthirteen-weeks ended SeptemberMarch 30, 20232024 compared to net cash used of approximately $195.2$0.0 million in the thirty-nine weekstwelve week period ended September 24, 2022.March 25, 2023. The change$3.3 million increase was due to a lower level of member distributions madedistribution in the thirty-nine weeks of 2023.current period.

 

CreditMaster Loan Agreement

On July 13, 2020, USPB, and 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 provides for a $1.0 million revolving term commitment. The 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 SeptemberMarch 30, 2023.2024. 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.

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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 Company has debt outstanding. As Septemberof March 30, 2023,2024, 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. Each quarter, we evaluateWe 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 last fiscal quarterthirteen-weeks ended March 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events.

 

 

 

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PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

As of March 30, 2024, 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 (i) five putative class action lawsuits in the United States District Court for the District of Minnesota District, alleging that itNBP 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 District, 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 filings,class action complaints were filed, certain putative class memberspurchasers of the Peterson casebeef products have opted out of the matterto file individual complaints and are proceedingto proceed with 23 individual 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 19,20, 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 19,20, 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 19,20, 2022 in the United States District Court, Southern District of Florida; Sherwood Food Distributors, L.L.C.LLC et al. vs.v. Cargill, Inc., et al., which was filed originally on March 7, 2023 in the United States District Court, EasternEaster District of New York; ALDIMcClane Company, Inc vsv. Cargill, Inc,.Inc., et al, al., which aswas 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 22,28. 2023 in the United States District Court, Northern District of Illinois; QuirchQuirich Foods, LLC et al. v. Cargill, Inc., et alal., which was filed originally on October 9, 2023 in the United States District Court, Northern District of Illinois; Conagra Brands, Inc Compass Group USA, Inc. v. Cargill, Inc., et al., which was filed originally on October 31, 2023 in the Western District of North Carolina; and 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.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 above 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 is cooperating with these investigationshas responded to the federal and is working with the DOJstate requests for information and the relevant states to provide information requested in connectioncooperated 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 District on November 16, 2022, alleging1, 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 aindustry wage surveysurveys and a benchmarking service (i) fixed wages and benefits, and (ii) exchanged information regarding labor ratescompensation and benefits in an effort to depress and fix the rates ofstabilize wages and benefits in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief.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.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, 202230, 2023 have not materially changed. Please refer to the Company’s report on Form 10-K for the fiscal year ended December 31, 202230, 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.

 

3.1 Certificate 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).
3.2 Amended and Restated Limited Liability Company Agreement of U.S. Premium Beef, LLC, dated as of January 17, 2012 (incorporated herein by reference to Exhibit 3 to Form 8-K (File No. 333-115164) filed with the SEC on January 18, 2012). Amendment to Amended and Restated Limited Liability Company Agreement of U.S. Premium Beef, LLC, effective March 1, 2023 (incorporated herein by reference to Exhibit 3.2(d) to Form 8-K (File N. 333-115164) filed with the SEC on March 3, 2023.

3.3

Amended and Restated Limited Liability Company Agreement of U.S. Premium Beef, LLC, dated as of November 10, 2023 (filed herewith).

10.1Amendment to the Amended and Restated Revolving Term Promissory Note Revolving Term Loan Supplement between U.S. Premium Beef, LLC and CoBank, ACB, executed July 10, 2023(incorporated herein by reference to Exhibit 10.13.3 to Form 8-K10-Q (File No. 333-115164) filed with the SEC on July 10,November 13, 2023).
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101.INS Inline 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.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover 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)

 

 By:/s/ Scott J. Miller
   
  

Scott J. Miller
Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

 

Date: November 13, 2023

May 10, 2024

 

 

 

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