| Basis of Presentation and Accounting Policies | NOTE 2. Basis of Presentation and Accounting
Policies Basis of Presentation USPB’s
investment in NBP is accounted for using the equity method of accounting as the Company has the ability to exercise significant
influence, but does not have financial or operational control. Fiscal Year The Company’s
fiscal year ends on the last Saturday in December. The Company files annual reports for each 52 week or 53 week period ended on
the last Saturday in December. Use of Estimates The financial
statements have been prepared in conformity with accounting principles generally accepted in the United States of America, using
management’s best estimates and judgments where appropriate. These estimates and judgments affect the reported amounts of
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. Cash and Cash Equivalents The Company
considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Investment in National Beef Packing Company, LLC USPB’s
15.0729% investment in NBP accounted for using the equity method of accounting as the Company has the ability to exercise significant
influence, but does not have financial or operational control. For fiscal
years 2018 and 2017, USPB conducted an evaluation to determine if its investment in NBP was impaired as of the end of the fiscal
year in accordance with Auditing Standards Codification (ASC) 323 Investments Equity Method and Joint Ventures USPB presents
the distributions received from its equity method investee within the Statement of Cash Flows in accordance with ASU 2016-15-Statement
of Cash Flows (Topic 230); Classification of Certain Cash Receipts and Cash Payments, under the cumulative earnings approach. Property, Plant, and Equipment Property,
plant, and equipment are recorded at cost. Property, plant, and equipment are depreciated principally on a straight-line basis
over the estimated useful life (based upon original acquisition date) of the individual asset by major asset class as follows:
Machinery and equipment 2 to 15 years
Furniture and fixtures 3 to 5 years
Trailers and automotive equipment 2 to 4 years Upon disposition
of these assets, any resulting gain or loss is included in other, net. Normal repairs and maintenance costs are charged to Selling,
general and administrative expenses, as incurred. A summary
of cost and accumulated depreciation for property, plant, and equipment as of December 29, 2018 and December 30, 2017 follows (thousands
of dollars):
December 29, December 30,
Machinery and equipment $ 24 $ 24
Furniture and fixtures 147 140
Trailers and automotive equipment 29 59
Total property, plant, and equipment, at cost 200 223
Accumulated depreciation 183 201
Property, plant, and equipment, net $ 17 $ 22 Depreciation
expense was immaterial for fiscal years ended December 29, 2018 and December 30, 2017. New Accounting Standard In February
2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02, Leases. The new standard
requires the recognition of all leases that are longer than one year on the balance sheet, which will result in the recognition
of a right-of-use asset and a corresponding lease liability. The right-of-use asset and lease liability will be measured initially
using the present value of the remaining lease payments. The new standard is effective for annual and interim periods beginning
after December 15, 2018. The new guidance will not have a material impact on our financial statements. In terms of practical expedients, USPB accepts:
· Its original determination of whether a contract contained a lease.
· That a subsequent review of existing contracts is not necessary.
· That USPB does not have to reassess the initial direct costs assigned to leases under previous leasing guidance as USPB
did not occur any initial direct costs for the leases subject to previous leasing guidance. Distributions Payable USPB utilizes
a controlled disbursement account to fund cash distribution checks presented for payment by the holder. Checks issued that have
not cleared are included in distributions payable and the change in the related balances are reflected in financing activities
on the statement of cash flows. Distributions payable totaled $5.7 million and $28.3 million as of December 29, 2018 and December
30, 2017, respectively. Income Taxes Effective
August 29, 2004, the Company converted to an LLC, and under this structure, taxes are not provided at the Company level because
the results of operations are included in the taxable income of the individual members. Selling, General, and Administrative Selling expenses
consist primarily of salaries, bonuses, phantom unit option expense, trade promotions, advertising, commissions and other marketing
costs. General and administrative costs consist primarily of general management, insurance and professional expenses. Noncompetition Payments The former
CEO’s employment agreement provided for him to receive noncompetition payments in connection with the Leucadia Transaction.
During fiscal years 2018 and 2017, the former CEO was paid $844,938 and $853,263, respectively, in noncompetition payments. He
will continue to receive noncompetition payments of approximately $845,000 per year during calendar years 2019 through 2021. The current
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 December
29, 2018 and December 30, 2017, the Company had accrued $2.7 million and $3.4 million, respectively, for the noncompetition agreements.
The current and long-term portion of the accrued amounts are included in Accrued compensation and benefits and Other liabilities,
respectively, on the balance sheet. Business Segments USPB is not
organized by multiple operating segments for the purpose of making operating decisions or assessing performance. Accordingly, USPB
has one reportable segment. Earnings Per Unit Under the
LLC structure, earnings of the Company are to be distributed to unitholders based on their proportionate share of underlying equity,
and, as a result, earnings per unit (EPU) has been presented in the accompanying Statement of Operations and in the table that
follows. Basic EPU
excludes dilution and is computed by first allocating 10% of net income or loss attributable to USPB to Class A units and the remaining
90% is allocated to Class B units. Net income or loss allocated to the Class A and Class B units is then divided by the weighted-average
number of Class A and Class B units outstanding for the period to determine the basic EPU for each respective class of unit. Diluted EPU
reflects the potential dilution that could occur to the extent that any outstanding dilutive Class A or Class B units were exercised.
There are no potentially dilutive Class A or Class B units outstanding.
Income Per Unit Calculation 52 weeks ended 52 weeks ended 53 weeks ended
(thousands of dollars, except unit and per unit data) December 29, December 30, December 31,
Basic and diluted earnings per unit:
Income attributable to USPB available to
unitholders (numerator)
Class A $ 8,659 $ 5,748 $ 4,637
Class B $ 77,929 $ 51,733 $ 41,731
Weighted average outstanding units (denominator)
Class A 735,385 735,385 735,385
Class B 755,385 755,385 755,385
Per unit amount
Class A $ 11.77 $ 7.82 $ 6.31
Class B $ 103.16 $ 68.49 $ 55.24 |
