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U.S. PREMIUM BEEF, LLC
(Exact name of registrant as specified in its charter)

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

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. Yes þ No o

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

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 June 30, 2007, there were 735,385 Class A units and 735,385 Class B units outstanding.

Unless the context indicates or otherwise requires, the terms “the Company”, “we”, “our” and “us” refer to U.S. Premium Beef, LLC (formerly known as U.S. Premium Beef, Ltd.) and its consolidated subsidiaries. As used in this report, the terms “NBP” and “National Beef” refer to National Beef Packing Company, LLC (formerly known as Farmland National Beef Packing Company, LP), a Delaware limited liability company, and “USPB” refers to U.S. Premium Beef, LLC (formerly known U.S. Premium Beef, Ltd.) prior to consolidation.

U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except unit data)
			May 26,		August 26,
Assets			2007		2006
			(unaudited)
Current assets:
	Cash and cash equivalents		$	60,494	$	58,434
	Accounts receivable, less allowance for returns and doubtful accounts
		of $2,161 and $2,412, respectively		191,232		173,233
	Due from affiliates			3,914		3,391
	Other receivables			7,596		5,943
	Inventories			175,707		145,009
	Other current assets			9,496		20,171
		Total current assets		448,439		406,181
Property, plant and equipment, at cost				361,875		331,500
	Less accumulated depreciation			(91,719)		(69,490)
		Net property, plant and equipment		270,156		262,010
Goodwill				79,542		79,411
Other intangible assets, net of accumulated amortization
	of $6,730 and $5,276, respectively			29,082		30,562
Other assets				6,476		6,594
		Total assets	$	833,695	$	784,758
Liabilities and Capital Shares and Equities
Current liabilities:
	Current installments of long-term debt		$	3,404	$	3,400
	Cattle purchases payable			67,238		58,320
	Accounts payable - trade			58,645		54,449
	Due to affiliates			398		878
	Accrued compensation and benefits			15,674		27,894
	Accrued insurance			12,744		17,651
	Other accrued expenses and liabilities			14,617		12,086
	Distributions payable			2,719		4,880
		Total current liabilities		175,439		179,558
Long-term liabilities:
	Long-term debt, excluding current installments			453,226		380,496
	Other liabilities			2,765		2,961
		Total long-term liabilities		455,991		383,457
		Total liabilities		631,430		563,015
Minority interest in National Beef Packing Company, LLC and Kansas City Steak, LLC				67,282		72,956
Capital shares and equities:
	Members' capital, 735,385 and 735,505 Class A units and 735,385 and 735,505
		Class B units authorized, issued and outstanding, respectively		84,279		98,092
	Patronage notices			50,642		50,642
	Accumulated other comprehensive income			62		53
		Total capital shares and equities		134,983		148,787
Commitments and contingencies				-		-
		Total liabilities and capital shares and equities	$	833,695	$	784,758
See accompanying notes to consolidated financial statements.

U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands)
				13 weeks ended		13 weeks ended		39 weeks ended		39 weeks ended
				May 26, 2007		May 27, 2006		May 26, 2007		May 27, 2006
				(unaudited)		(unaudited)		(unaudited)		(unaudited)

Net sales				$	1,479,676	$	1,134,514	$	4,066,020	$	3,310,278
Costs and expenses:
	Cost of sales				1,436,361		1,085,946		3,993,987		3,241,210
	Selling, general and administrative expenses				12,491		9,980		33,726		28,575
	Depreciation and amortization				8,249		7,095		24,066		20,569
		Total costs and expenses			1,457,101		1,103,021		4,051,779		3,290,354
			Operating income		22,575		31,493		14,241		19,924
Other income (expense):
	Interest income				475		317		1,569		867
	Interest expense				(10,632)		(8,040)		(29,788)		(23,210)
	Minority owners' interest in net (income) loss
		of National Beef Packing Co., LLC			(5,827)		(11,617)		6,497		644
	Minority owners' interest in net loss (income)
		of Kansas City Steak, LLC			90		(52)		(262)		(120)
	Equity in loss of aLF Ventures, LLC				(23)		(39)		(77)		(119)
	Other, net				935		718		1,606		1,962
			Income (loss) before taxes		7,593		12,780		(6,214)		(52)
Income tax (expense) benefit					(558)		128		(1,443)		(1,048)
			Net income (loss)	$	7,035	$	12,908	$	(7,657)	$	(1,100)
Net income (loss) per linked unit:
	Basic			$	9.57	$	18.66	$	(10.41)	$	(1.59)
	Diluted			$	9.42	$	18.33	$	(10.41)	$	(1.59)
Outstanding weighted-average Class A and Class B units:
	Basic				735,425		691,845		735,478		691,845
	Diluted				746,946		704,016		735,478		691,845
See accompanying notes to consolidated financial statements.

U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
					39 weeks ended		39 weeks ended
					May 26, 2007		May 27, 2006
					(unaudited)		(unaudited)
Cash flows from operating activities:
	Net loss				$	(7,657)	$	(1,100)
	Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
		Depreciation and amortization				24,066		20,569
		Gain on disposal of property, plant and equipment				(137)		(138)
		Minority interest				(6,373)		(660)
		Changes in assets and liabilities:
			Accounts receivable			(17,999)		17,498
			Due from affiliates			(523)		1,636
			Other receivables			(2,901)		(668)
			Inventories			(30,698)		(29,601)
			Other assets			10,688		(974)
			Cattle purchases payable			1,853		2,804
			Accounts payable			(1,620)		1,291
			Due to affiliates			(480)		(1,078)
			Accrued compensation and benefits			(12,220)		(1,228)
			Accrued insurance			(4,907)		(1,751)
			Other accrued expenses and liabilities			2,335		7,409
				Net cash (used in) provided by operating activities		(46,573)		14,009
Cash flows from investing activities:
	Capital expenditures, including interest capitalized					(31,003)		(22,758)
	Acquisition of business, final purchase price adjustment					1,248		-
	Acquistion of intangible assets					-		(675)
	Proceeds from sale of property, plant and equipment					381		832
				Net cash used in investing activities		(29,374)		(22,601)
Cash flows from financing activities:
	Net receipts under revolving credit lines					42,854		7,274
	Borrowings of term note payable					40,000		-
	Repayments of other indebtedness / capital leases					(1,963)		(764)
	Payments of notes payable and fees					(8,157)		(772)
	Change in overdraft balances					12,881		1,814
	Distributions to minority interest owners in National Beef Packing Company, LLC					(5,862)		(2,689)
	Member distributions					(1,755)		(1,197)
				Net cash provided by financing activities		77,998		3,666
Effect of exchange rate changes on cash						9		19
				Net increase (decrease) in cash		2,060		(4,907)
Cash and cash equivalents at beginning of the period						58,434		54,428
Cash and cash equivalents at end of the period					$	60,494	$	49,521
Supplemental cash disclosures:
	Cash paid during the period for interest				$	25,419	$	17,595
	Cash paid during the period for taxes, net				$	756	$	172
Supplemental non-cash disclosures of investing activities:
	Assets acquired through capital lease				$	49	$	8,697
See accompanying notes to consolidated financial statements.

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information; therefore, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included using management’s best estimates and judgments where appropriate. These estimates and judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ materially from these estimates and judgments. For further information, refer to the audited Consolidated Financial Statements and Notes to Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K on file with the Securities and Exchange Commission (SEC) for the fiscal year ended August 26, 2006. The results of operations for the interim periods presented are not necessarily indicative of the results for a full fiscal year.

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

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes”, to address uncertainty in income taxes recognized in an enterprise’s financial statements. Specifically, FIN 48 prescribes (a) a consistent recognition threshold and (b) a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides related guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 will apply to fiscal years beginning after December 15, 2006, with earlier adoption permitted. The Company is evaluating the impact FIN 48 may have, if any, on its Consolidated Financial Statements.

In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108 (SAB 108), “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” Traditionally there have been two widely recognized methods for quantifying the effects of financial statement misstatements: the “roll-over” method and the “iron-curtain” method. The roll-over method focuses primarily on the impact of a misstatement on the income statement, including the reversing effect of prior year misstatements. The iron-curtain method focuses primarily on the effect of correcting the period-end balance sheet with less emphasis on the reversing effects of prior year errors on the income statement. In SAB 108, the SEC staff established an approach that is commonly referred to as a “dual approach” as the SEC now requires quantification of errors under both the iron-curtain and the roll-over methods. SAB 108 was adopted by the Company during the first quarter of fiscal year 2007. The adoption of SAB 108 did not have any effect on the Company’s financial position, net earnings or prior year financial statements

.In September 2006, the FASB issued Statement of Financial Accounting Standard No. 157 (SFAS 157), “Fair Value Measurements”. This statement establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements. SFAS 157 defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” SFAS 157 will apply to fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the impact SFAS 157 may have, if any, on its Consolidated Financial Statements.

In February 2007, the FASB issued Statement of Financial Accounting Standard No. 159 (SFAS 159), “The Fair Value Option for Financial Assets and Financial Liabilities”. This statement provides companies with an option to report selected financial assets and liabilities at fair value. SFAS 159 will apply to fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact SFAS 159 may have, if any, on its Consolidated Financial Statements.

Inventories at May 26, 2007 and August 26, 2006 consisted of the following (in thousands):

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

			13 weeks ended		13 weeks ended		39 weeks ended		39 weeks ended
			May 26, 2007		May 27, 2006		May 26, 2007		May 27, 2006
Net income (loss)			$	7,035	$	12,908	$	(7,657)	$	(1,100)
Other comprehensive income:
	Foreign currency translation adjustments		2		4		9		19
		Comprehensive income (loss)	$	7,037	$	12,912	$	(7,648)	$	(1,081)

At any time after certain dates, the earliest being July 31, 2008, the latest being July 31, 2011, certain members of NBP management and/or NBPCo Holdings, LLC have the right to request that NBP repurchase their interests, the value of which is to be determined by a mutually agreed appraisal process. If NBP is unable to effect the repurchase within a specified time, the requesting member(s) have the right to cause a sale process to commence. The Company accounts for changes in the redemption value of these interests by accreting the change in value over the current period through the earliest redemption date of the respective interests. At May 26, 2007, the minority interest in National Beef was revalued by an independent appraisal process, and the value was determined to be $72.1 million, which was in excess of its carrying value. Accordingly, the carrying value of the minority interest in National Beef increased by approximately $0.9 million through accretion during the thirteen weeks ended May 26, 2007, resulting in a carrying value of $66.4 million, which is included in the accompanying Consolidated Balance Sheet as of May 26, 2007.

Schumacher v. Tyson Foods, et al. On July 1, 2002, a lawsuit was filed against Farmland National Beef Packing Company, L.P. (FNBPC or the predecessor to NBP), ConAgra Beef Company, Tyson Foods, Inc. and Excel Corporation in the United States District Court for the District of South Dakota seeking certification of a class of all persons who sold cattle to the defendants for cash, or on a basis affected by the cash price for cattle, during the period from April 2, 2001 through May 11, 2001 and for some period up to two weeks thereafter. The case was filed by three named plaintiffs on behalf of a putative nationwide class that plaintiffs estimate is comprised of hundreds or thousands of members. The complaint alleged that the defendants, in violation of the Packers and Stockyards Act of 1921, knowingly used, without correction or disclosure, incorrect and misleading boxed beef price information generated by the USDA to purchase cattle offered for sale by the plaintiffs at a price substantially lower than was justified by the actual and correct price of boxed beef during this period. Plaintiffs also sought recovery against all defendants under a theory of unjust enrichment. The case was certified as a class-action matter in June of 2004. The plaintiffs claimed damages against FNBPC in the amount of approximately $4.5 million plus prejudgment interest, attorneys’ fees and court costs. The claim is subject to reduction in an unknown amount by the number of class members who have opted out of the class. Trial began March 31, 2006. On April 13, 2006, the jury returned a verdict in favor of FNBPC but against the other defendants. The court has not yet entered a final judgment or appealable order as to FNBPC and, until it does, the time for plaintiffs to file an appeal against FNBPC does not begin to run. However, the court did enter a final order granting judgments against the other three defendants on the jury’s verdict and those defendants have filed an appeal in the United States Court of Appeals for the Eighth Circuit.

NBP’s wholly owned subsidiary, National Carriers, Inc., has various independent contractor drivers who are involved in accidents from time to time, which in the aggregate could result in a material liability for the Company.

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

On December 23, 2003, it was announced by the United States Department of Agriculture (USDA) that a single Holstein dairy cow was discovered in the state of Washington to have tested positive for bovine spongiform encephalopathy (BSE). The origin of the animal was subsequently traced to a farm in Canada. Shortly after the announcement, several countries, including Japan, representing a substantial share of NBP’s export business, closed their borders to the importation of edible beef products from the United States. Certain by-products have been classified as Specified Risk Materials (SRMs), and have been banned from use in feedstocks and the human food chain. Some of these products previously enjoyed a market in foreign countries. The closure of most foreign markets to U.S. beef following the discovery of this cow in Washington state, and lack of alternative U.S. markets for many products which previously were exported, negatively impacted the revenue per head realized by the U.S. beef packing industry.

The reopening of U.S. export markets was further hampered by discovery in 2005 of a second case of BSE in the U.S. as well as additional precautions required by some other importing countries. In December 2005, Japan opened their border to U.S. beef but subsequently closed it a short time later as a result of a U.S. packer erroneously shipping a product not approved for export to Japan. On July 26, 2006, Japan agreed to reopen its market to U.S. beef aged 20 months and younger after an inspection of U.S. beef processing plants. Shipments of U.S. beef to Japan commenced in August 2006. In September 2006, Korea announced a provisional opening of their border to U.S. beef, but restrictions imposed with the reopening have created uncertainty regarding amounts of beef that may qualify.

Neither USPB nor NBP can presently assess the full economic impact of the consequences of BSE on the U.S. beef packing industry or on the Company’s operations. Existing or new import restrictions or additional regulatory restrictions or disruptions in domestic consumer demand for beef may continue to have a material adverse affect on the Company’s revenues and net income.

Basic EPU excludes dilution and is computed by dividing income or loss available to unitholders by the weighted-average number of linked Class A and Class B units outstanding for the period. Class A units and Class B units shall be issued, redeemed, and transferred together on a one for one basis until the Board of Directors determines the extent and conditions under which Class A units and Class B units may be issued, redeemed, and transferred separately.

Diluted EPU reflects the potential dilution that could occur if potential unit purchase rights were exercised or contractual appreciation rights were converted into units. Upon termination of the CEO employment agreement, at the election of the CEO, or upon mutual agreement of the Board of the Company and the CEO, the CEO may purchase up to 20,000 Class A and Class B units, or upon agreement of the CEO and the Board of Directors, the CEO may convert the contractual unit appreciation rights to up to 20,000 Class A and Class B units. The diluted EPU reflects the circumstances of termination of the CEO employment agreement, and the election of CEO or agreement by the Board of the Company and the CEO for the CEO to purchase or convert contractual rights to the maximum 20,000 units at $55 per linked Class A and Class B unit for the periods as provided for in the CEO employment agreement.

The diluted income (loss) per linked unit calculation in the following table excludes the effect of the 20,000 unit purchase rights noted above for the 39 week periods ending May 26, 2007 and May 27, 2006, respectively, as the effect of including them would have been anti-dilutive to the loss per linked unit calculation.

Income (Loss) Per Linked Unit Calculation
(In thousands, except unit and per unit data)	13 Weeks Ended				39 Weeks Ended
	May 26, 2007		May 27, 2006		May 26, 2007		May 27, 2006
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Basic income (loss) per unit
Income available to unitholders (numerator)	$	7,035	$	12,908	$	(7,657)	$	(1,100)
Outstanding units (denominator)		735,425		691,845		735,478		691,845
Per unit amount	$	9.57	$	18.66	$	(10.41)	$	(1.59)
Diluted income (loss) per unit
Income available to unitholders (numerator)	$	7,035	$	12,908	$	(7,657)	$	(1,100)
Outstanding units		735,425		691,845		735,478		691,845
Effect of dilutive securities - unit options		11,521		12,171		-		-
Units (demoninator)		746,946		704,016		735,478		691,845
Per unit amount	$	9.42	$	18.33	$	(10.41)	$	(1.59)

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 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, consolidation among our customers and the potential inability to receive the anticipated benefits from the acquisition of the processing facility in Brawley, CA.

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 the Risk Factors in Item 1. Business of the Company’s Annual Report for the year ended August 26, 2006 on Form 10-K filed with the Securities and Exchange Commission for other important factors that could cause actual results to differ materially from those in any such forward-looking statements, and which should be read in conjunction with this report.

Continued relatively high fed cattle prices, along with limited access to key export markets, has resulted in a difficult environment for beef industry participants. In general, domestic cattle supplies have been anticipated to improve over the next two to three years, however, recent increases in feeding costs have threatened the speed and magnitude at which the cattle supply is expected to grow. With uncertainty regarding international market access and the realization of improved cattle supplies, the timing of margin improvements remains uncertain.

Thirteen weeks ended May 26, 2007 compared to thirteen weeks ended May 27, 2006

General. Net income for the thirteen weeks ended May 26, 2007 was $7.0 million compared to net income of $12.9 million for the thirteen weeks ended May 27, 2006, a reduction of $5.9 million. Sales were higher in the thirteen weeks ended May 26, 2007 compared to those of the prior period due to an increase in the number of cattle processed of approximately 20.4%, of which 15.2% came as a result of the acquisition of Brawley Beef, LLC during the fourth quarter of fiscal year 2006.

Total costs and expenses of $1,457.1 million and $1,103.0 million for the thirteen weeks ended May 26, 2007 and May 27, 2006, respectively, were 98.5% as a percent of sales for the thirteen weeks ended May 26, 2007 compared to 97.2% for the thirteen weeks ended May 27, 2006. An increase of approximately 15.6% in live cattle prices put pressure on gross margins, which resulted in operating income that was $8.9 million less for the current thirteen week period than operating income for the same period of the prior year.

Net Sales. Net sales were $1,479.7 million for the thirteen weeks ended May 26, 2007 compared to $1,134.5 million for the thirteen weeks ended May 27, 2006, an increase of $345.2 million, or 30.4%. The increase in net sales resulted primarily from a 20.4% increase in the number of cattle processed, of which 15.2% was due to the acquisition of Brawley Beef, LLC, at average weights equal to the same period of the prior year.

Cost of Sales. Cost of sales was $1,436.4 million for the thirteen weeks ended May 26, 2007 compared to $1,085.9 million for the thirteen weeks ended May 27, 2006, an increase of $350.5 million, or 32.3%. The increase resulted primarily from an increase of approximately 20.4% in the number of live cattle purchased, of which approximately 15.2% came as a result of the acquisition of Brawley Beef, LLC, of approximately 20.4% and an approximate 15.6% increase in live cattle prices.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $12.5 million for the thirteen weeks ended May 26, 2007 compared to $10.0 million for the thirteen weeks ended May 27, 2006, an increase of $2.5 million, or 25.0%. The increase primarily reflects an increase in payroll and related expenses of approximately $1.3 million, an increase in legal expense of approximately $0.7 million associated mostly with acquisition due diligence expenses, an increase of approximately $0.4 million in bad debt expense, and an approximate $0.2 million increase in repairs and maintenance. The acquisition of Brawley Beef, LLC on May 30, 2006 has contributed to the increased selling, general and administrative expenses incurred during the current thirteen week period as compared to the same period of last year.

Depreciation and Amortization Expense. Depreciation and amortization expenses were $8.2 million for the thirteen weeks ended May 26, 2007 compared to $7.1 million for the thirteen weeks ended May 27, 2006, an increase of $1.1 million, or 15.5%. The acquisition of Brawley Beef, LLC contributed $0.6 million to the increase in depreciation expense for this period. Depreciation expense also increased due to assets being placed into service, primarily at the Dodge City and Liberal beef plants, during the fourth quarter of fiscal year 2006 and the first, second and third quarters of fiscal year 2007.

Operating Income (Loss). Operating income was $22.6 million for the thirteen weeks ended May 26, 2007 compared to income of $31.5 million for the thirteen weeks ended May 27, 2006, a decrease of $8.9 million. The lower operating income resulted primarily from higher live cattle prices during the third quarter of fiscal year 2007 as compared to the same period of the prior year without similar increases in the selling prices of beef products.

Interest Expense. Interest expense was $10.6 million for the thirteen weeks ended May 26, 2007 compared to $8.0 million for the thirteen weeks ended May 27, 2006, an increase of $2.6 million, or 32.5%. The increase in interest expense was due primarily to an increase in the weighted average amounts outstanding of variable rate debt of approximately $111.3 million for the thirteen weeks ended May 26, 2007, as compared to the same period in fiscal year 2006, mostly as a result of the Brawley Beef, LLC acquisition. Interest expense also increased due to higher interest rates on our variable rate debt, an increase of approximately 64 basis points, for the thirteen weeks May 26, 2007 as compared to the same period of the prior year.

Other, net. Other, net non-operating income was $0.9 million for the thirteen weeks ended May 26, 2007 compared to $0.7 million for the thirteen weeks ended May 27, 2006, an increase of $0.2 million.

Income Tax (Expense) Benefit. Income tax expense was $0.6 million for the thirteen weeks ended May 26, 2007 compared to income tax benefit of $0.1 million for the thirteen weeks ended May 27, 2006, an increase in expense of $0.7 million. Income tax expense increased due to more income recorded by National Carriers, Inc., which is organized as a Subchapter C Corporation, in the current period compared to the same period last year.

Thirty-nine weeks ended May 26, 2007 compared to thirty-nine weeks ended May 27, 2006

General. Net loss for the thirty-nine weeks ended May 26, 2007 was $7.7 million compared to a net loss of $1.1 million for the thirty-nine weeks ended May 27, 2006, an increased loss of $6.6 million. Sales and cost of sales were higher in the thirty-nine weeks ended May 26, 2007 than those of the prior year period primarily due to an increase of approximately 19.2% in the number of cattle processed, of which approximately 12.6% came as a result of the acquisition of Brawley Beef, LLC during the fourth quarter of fiscal year 2006.

Total costs and expenses of $4,051.8 million and $3,290.4 million for the thirty-nine weeks ended May 26, 2007 and May 27, 2006, respectively, were 99.7% as a percent of sales for the thirty-nine weeks ended May 26, 2007 compared to 99.4% for the thirty-nine weeks ended May 27, 2006. Higher live cattle prices put pressure on gross margins for the current thirty-nine week period as compared to the same period of the prior year. In addition, interest expense increased as a result of increased borrowings at higher interest rates.

Net Sales. Net sales were $4,066.0 million for the thirty-nine weeks ended May 26, 200 7 compared to $3,310.3 million for the thirty-nine weeks ended May 27, 2006, an increase of $755.7 million, or 22.8%. The increase resulted primarily from an increase of approximately 19.2% in the number of cattle processed, of which approximately 12.6% came as a result of the acquisition of Brawley Beef, LLC, in the thirty-nine weeks ended May 26, 2007 at weights that averaged approximately 1.1% higher than the same period in the prior year. Improved customer demand for beef products also contributed to the increase in net sales for the thirty-nine week period ended May 26, 2007 as compared to the same period of the prior year.

Cost of Sales. Cost of sales was $3,994.0 million for the thirty-nine weeks ended May 26, 2007 compared to $3,241.2 million for the thirty-nine weeks ended May 27, 2006, an increase of $752.8 million, or 23.2%. The increase resulted primarily from an increase in the number of cattle purchased of approximately 19.2%, of which 12.6% was due to the acquisition of Brawley Beef, LLC, during this thirty-nine week period of 2007 at average cattle weights approximately 1.1% higher than in the same period of the prior year, and an approximate 3.8% increase in live cattle prices as compared to the same period of 2006.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $33.7 million for the thirty-nine weeks ended May 26, 2007 compared to $28.6 million for the thirty-nine weeks ended May 27, 2006, an increase of $5.1 million, or 17.8%. The increase for this period is primarily due to an increase in payroll and benefit expenses of approximately $2.4 million, an approximate $0.7 million increase in bad debt expense, an increase in legal fees of approximately $0.7 million associated mostly with acquisition due diligence expenses, an increase in advertising expense of approximately $0.5 million, and an approximate $0.3 million increase in repairs and maintenance, partially offset by a decrease in expenses related to the CEO’s options of $0.5 million. The acquisition of Brawley Beef, LLC on May 30, 2006 has contributed to the increased selling, general and administrative expenses incurred during the current thirty-nine week period as compared to the same period of the prior year.

Depreciation and Amortization Expense. Depreciation and amortization expenses were $24.1 million for the thirty-nine weeks ended May 26, 2007 compared to $20.6 million for the thirty-nine weeks ended May 27, 2006, an increase of $3.5 million, or 17.0%. The addition of the Brawley plant contributed $1.8 million to the increase in depreciation expense for this thirty-nine week period as compared to the same period of the prior year. Depreciation expense also increased due to assets being placed into service, primarily at the Dodge City and Liberal beef plants, during the fourth quarter of fiscal year 2006 and the first, second and third quarters of fiscal year 2007.

Operating Income. Operating income was $14.2 million for the thirty-nine weeks ended May 26, 2007 compared to $19.9 million for the thirty-nine weeks ended May 27, 2006, a decrease of $5.7 million. The decline in operating income during the current thirty-nine week period resulted primarily from higher live cattle prices as compared to the same period of the prior year without similar increases in the selling price of beef products.

Interest Expense. Interest expense was $29.8 million for the thirty-nine weeks ended May 26, 2007 compared to $23.2 million for the thirty-nine weeks ended May 27, 2006, an increase of $6.6 million, or 28.4%. The increase was due primarily to an increase in the weighted average amounts outstanding of variable rate debt of approximately $80.8 million, mostly as a result of the Brawley Beef, LLC acquisition, for the thirty-nine weeks ended May 26, 2007, as compared to the same period in fiscal year 2006. Interest expense also increased due to higher interest rates on our variable rate debt, an increase of approximately 105 basis points, during the thirty-nine weeks of fiscal year 2007 as compared to the same period of the prior year.

Other, net. Other, net non-operating income was $1.6 million for the thirty-nine weeks ended May 26, 2007 compared to non-operating income of $2.0 million for the thirty-nine weeks ended May 27, 2006, a decrease of $0.4 million. The thirty-nine weeks ended May 27, 2006 included $0.6 million in income resulting from the settlement of a lawsuit related to corrugated packaging materials.

Income Tax (Expense) Benefit. Income tax expense was $1.4 million for the thirty-nine weeks ended May 26, 2007 compared to $1.0 million for the thirty-nine weeks ended May 27, 2006, an increase of $0.4 million, or 40.0%. Income tax expense is recorded on income from National Carriers, Inc., which is organized as a Subchapter C Corporation.

As of May 26, 2007, we had net working capital of $273.0 million, which included $2.7 million in distributions payable, and cash and cash equivalents of $60.5 million, including $4.2 million restricted to IRB approved expenditures. As of August 26, 2006 we had net working capital of $226.6 million, which included $4.9 million in distributions payable, and cash and cash equivalents of $58.4 million, including $4.0 million restricted to IRB approved expenditures. NBP’s primary sources of liquidity are cash flow from operations and available borrowings under its amended and restated credit facility.

As of May 26, 2007, we had $456.6 million of long-term debt, of which $3.4 million was classified as a current liability. As of May 26, 2007, NBP’s amended and restated credit facility consisted of $202.6 million term loan and a $170.0 million revolving line of credit loan, which had outstanding borrowings of $61.7 million, outstanding letters of credit of $56.2 million and available borrowings of $52.0 million, based on the most restrictive financial covenant calculations. Cash flow from operations and borrowings under NBP’s amended and restated credit facility have funded its working capital requirements, acquisitions, capital expenditures and other general corporate purposes. NBP was in compliance with all of the financial covenants under its amended and restated credit facility as of May 26, 2007.

In addition to outstanding borrowings under the amended and restated credit facility, the Company had outstanding senior notes of $160.0 million, borrowings under industrial revenue bonds of $20.7 million, a term loan with CoBank, of which approximately $4.3 million was outstanding, and capital leases and other obligations of $7.3 million as of May 26, 2007.

Net cash used in operating activities in the thirty-nine weeks ended May 26, 2007 was $46.6 million compared to net cash provided by operating activities of $14.0 million in the thirty-nine weeks ended May 27, 2006. The increase in net cash used in operating activities was primarily due to an increase in working capital requirements in the current period resulting from the acquisition of the Brawley plant, higher beef inventory volumes and higher accounts receivable balances combined with a larger net loss in the current year compared to the same period last year.

Net cash used in investing activities was $29.4 million in the thirty-nine weeks ended May 26, 2007 compared to $22.6 million in the thirty-nine weeks ended May 27, 2006. This increase in cash used was primarily attributable to an increase in expenditures for property, plant and equipment related to improving operating efficiencies, primarily at our Liberal, Dodge City, and Brawley facilities in the current year.

Net cash provided by financing activities was $78.0 million in the thirty-nine weeks ended May 26, 2007 compared to $3.7 million in the thirty-nine weeks ended May 27, 2006. The change was primarily attributed to a $35.6 million increase in revolving credit borrowings and a $40.0 million increase in our term note borrowings in the thirty-nine week change of fiscal year 2007 as compared to the thirty-nine week change in fiscal year 2006.

Effective June 1, 2006, NBP amended and restated its existing senior credit facility with a consortium of banks. The senior credit facility consists of a $170.0 million term loan that matures in May 2016 and a $160.0 million revolving line of credit loan that matures in May 2011 that is subject to certain borrowing base limitations. The term loan contains a provision whereby a portion of annual unallocated cash flow proceeds will be used to pay down certain outstanding borrowings under the facility. In December 2006, this amount was calculated to be $7.4 million, and accordingly, this amount was used to reduce the amount outstanding under the term loan. On March 21, 2007, NBP amended its credit facility further to exercise a provision to expand the available credit under the facility by $50.0 million. NBP’s term loan was increased by $40.0 million to $202.6 million and the revolving line of credit was increased by $10.0 million to $170.0 million.

The borrowings under the revolving loan are available for NBP’s working capital requirements, acquisitions, capital expenditures and other general corporate purposes. NBP’s amended and restated credit facility is secured by a first priority lien on substantially all of NBP’s assets. The principal amount outstanding under the term loan is payable in semi-annual installments on the last business day of each June and December commencing June 30, 2011 in equal installments of approximately $3.5 million, with any and all remaining principal outstanding being due and payable on the maturity date in May 2016. Prepayment is allowed at any time.

NBP’s amended and restated credit facility contains covenants that limit NBP’s ability to incur additional indebtedness, sell or dispose of assets, pay certain dividends and prepay or amend certain indebtedness, among other matters. NBP’s amended and restated credit facility also contains a provision for a conversion to more favorable interest rates and more restrictive financial covenants on the earlier of (a) August 25, 2007 or (b) NBP’s election (Conversion Date). Currently, the interest rate for the term loan is (a) the Base Rate (as defined in the credit agreement) plus 75 basis points or (b) the LIBOR Rate (as defined in the credit agreement) plus 275 basis points, or a combination of these rates at NBP’s election. As of May 26, 2007, the interest rate for the term loan was equal to 8.125%. Currently, the interest rate for the revolving loan is (a) the Base Rate plus 50 basis points or (b) the LIBOR Rate plus 250 basis points, or a combination of these rates at NBP’s election. As of May 26, 2007, the interest rate for the revolving loan was equal to 8.013%. After the Conversion Date, the interest rate for the term loan and revolving loan will be determined by reference to a matrix of rates keyed to NBP’s funded debt to EBITDA (as defined in the credit agreement) ratio.

NBP’s amended and restated credit facility imposes certain financial covenants. Until the Conversion Date, NBP is required to (i) have as of the end of each fiscal quarter a minimum four-quarter rolling EBITDA of $60.0 million and (ii) maintain at all times a minimum Borrowing Base Availability of at least $25.0 million. After the Conversion Date, NBP is required to maintain at all times a specified maximum funded debt to EBITDA ratio, a maximum senior secured funded debt to EBITDA ratio, a minimum four-quarter rolling EBITDA and a minimum four-quarter rolling debt service coverage ratio. In addition, NBP’s annual net capital expenditures are limited to $50 million in each fiscal year.

NBP’s amended and restated credit facility contains customary affirmative covenants, including furnishing financial statements, maintenance of insurance, conduct of business, maintenance of properties, and compliance with laws. The facility also contains customary negative covenants, including covenants restricting NBP’s ability to pay certain distributions, incur additional indebtedness, merge with another entity, sell or dispose assets, and make investments or acquire assets, among other restrictions.

The Company believes that available borrowings under NBP’s fifth amended and restated credit facility and cash provided by operating activities will be sufficient to support its working capital, capital expenditures and debt service requirements for the foreseeable future. NBP’s ability to generate sufficient cash, however, is subject to certain general economic, financial, industry, legislative, regulatory and other factors beyond their control. For a review of the Company’s obligations that affect liquidity, please see the “Cash Payment Obligations” table in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended August 26, 2006.

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

Commodities. NBP uses various raw materials, many of which are commodities. Raw materials are generally available from several different sources, and NBP presently believes that it can obtain them as needed. Commodities are subject to price fluctuations that may create price risk. When appropriate, NBP may hedge commodities in order to mitigate this price risk. While this may tend to limit NBP’s ability to participate in gains from commodity price fluctuations, it also tends to reduce the risk of loss from changes in commodity prices. NBP reflects commodity contract gains and losses as adjustments to the basis of underlying commodities purchased; gains or losses are recognized in the statement of operations as a component of costs of goods sold.

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

NBP sells commodity beef products in its business. Commodity beef products are subject to price fluctuations that may create price risk. When appropriate, NBP enters into forward sales contracts at prices determined prior to shipment. NBP may hedge the commodity price risk associated with these activities in order to mitigate this price risk. While this may tend to limit NBP’s ability to participate in gains from commodity price fluctuations, it also tends to reduce the risk of loss from changes in commodity beef prices. NBP reflects commodity contract gains and losses as adjustments to the basis of underlying commodities sold; gains or losses are recognized in the statement of operations as a component of net sales.

NBP may use futures contracts in order to reduce exposure associated with entering into firm commitments to purchase live cattle at prices determined prior to delivery of the cattle as well as firm commitments to sell certain beef products at sales prices determined prior to shipment. In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended, NBP accounts for futures contracts and their related firm purchase commitments at fair value. Certain firm commitments for live cattle purchases and all firm commitments for boxed beef sales are treated as “normal purchases and sales” and not marked to market. SFAS No. 133 imposes extensive recordkeeping requirements in order to treat a derivative instrument as a hedge for accounting purposes. Derivatives qualify for treatment as hedges when there is a high correlation between the change in fair value of the instrument and the related change in fair value of the underlying commitment. For derivatives that qualify as effective hedges, the change in fair value has no net effect on earnings until the hedged transaction affects earnings. For derivatives that are not designated as hedging instruments, or for the ineffective portion of a hedging instrument, the change in fair value does affect current period net earnings.

While management believes each of these instruments help mitigate various market risks, they are not designated and accounted for as hedges under SFAS No. 133 as a result of the extensive recordkeeping requirements of this statement. Accordingly, the gains and losses associated with the change in fair value of the instrument and the offsetting gains and losses associated with changes in the market value of certain of the firm commitments related to the futures contracts are recorded to income and expense in the period of change.

NBP uses a sensitivity analysis to evaluate the effect that changes in the market value of commodities will have on these commodity derivative instruments. As of May 26, 2007, the potential change in fair value of applicable commodity prices, assuming a hypothetical 10% decrease in the underlying commodity price, was $0.5 million. As of August 26, 2006, the potential change in fair value of applicable commodity prices, assuming a hypothetical 10% decrease in the underlying commodity price, was $1.4 million.

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

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

We have long-term debt with variable interest rates. Short-term debt is primarily comprised of the current portion of long-term debt maturing twelve months from the balance sheet date. Our variable interest expense is sensitive to changes in the general level of interest rates. As of May 26, 2007, the weighted average interest rate on our $289.4 million of variable rate debt was approximately 7.9%.

We had total interest expense of approximately $29.8 million during the thirty-nine week period ending May 26, 2007. The estimated increase in interest expense from a hypothetical 200 basis point increase in applicable variable interest rates would have been approximately $3.7 million in the thirty-nine week period ending May 26, 2007.

We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the Consolidated Financial Statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. We evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e) under supervision and with the participation of management, including our Chief Executive Officer and Chief Reporting and Compliance 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 Reporting and Compliance Officer concluded that our disclosure controls and procedures were effective in alerting them, in a timely manner, to material information required to be included in our periodic Securities and Exchange Commission filings. There have been no changes in our internal controls over financial reporting during the thirteen weeks ended May 26, 2007 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.

For information regarding legal proceedings, see Note 6. Contingencies to our Consolidated Financial Statements included in Part I- Item 1 of this Form 10-Q.

The risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended August 26, 2006 have not materially changed. Please refer to the Company’s report on Form 10-K for the fiscal year ended August 26, 2006 to consider those risk factors.

NBP may purchase a portion of its outstanding Senior Notes from time to time in accordance with the limits imposed under the amended and restated senior credit facility.

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.

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

		For the quarterly period ended May 26, 2007

		or

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

		For the transition period from to .

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

	TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION	Page No.

Item 1.	Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	9

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	14

Item 4.	Controls and Procedures.	15


PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings.	16

Item 1A.	Risk Factors.	16

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	16

Item 3.	Defaults Upon Senior Securities.	16

Item 4.	Submission of Matters to a Vote of Security Holders.	16

Item 5.	Other Information.	16

Item 6.	Exhibits.	16

	Signatures.	17

		May 26, 2007		August 26, 2006
Dressed and boxed beef		$	137,857	$	117,712
Beef by-products			24,696		15,180
Supplies			13,154		12,117
	Total inventories	$	175,707	$	145,009

(A)	Exhibits

	31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	Certification of the Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

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

U.S. Premium Beef, LLC


By:		/s/ Steven D. Hunt
		Steven D. Hunt Chief Executive Officer (Principal Executive Officer)

By		/s/ Scott J. Miller
		Scott J. Miller Chief Reporting and Compliance Officer (Principal Financial and Accounting Officer)