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PART I. FINANCIAL INFORMATION


U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except unit data)

			May 31,		August 25,
Assets			2008		2007
			(unaudited)
Current assets:
	Cash and cash equivalents		$	61,438	$	62,869
	Accounts receivable, less allowance for returns and doubtful accounts
		of $3,343 and $4,642, respectively	199,240		189,728
	Due from affiliates		4,741		4,609
	Other receivables		6,141		8,389
	Inventories		198,055		177,244
	Other current assets		19,607		14,144
		Total current assets	489,222		456,983
Property, plant, and equipment, at cost			412,120		372,404
	Less accumulated depreciation		(125,201)		(99,575)
		Net property, plant, and equipment	286,919		272,829
Goodwill			80,042		80,042
Other intangible assets, net of accumulated amortization
	of $8,823 and $7,214, respectively		27,228		28,659
Other assets			10,222		10,104
		Total assets	$	893,633	$	848,617

Liabilities and Capital Shares and Equities
Current liabilities:
	Current installments of long-term debt		$	4,583	$	4,421
	Cattle purchases payable		86,407		62,995
	Accounts payable - trade		63,221		60,257
	Due to affiliates		215		977
	Accrued compensation and benefits		28,923		18,785
	Accrued insurance		12,854		14,550
	Other accrued expenses and liabilities		16,723		11,757
	Distributions payable		14,440		2,708
		Total current liabilities	227,366		176,450
Long-term liabilities:
	Long-term debt, excluding current installments		412,380		438,544
	Other liabilities		2,365		2,559
		Total long-term liabilities	414,745		441,103
		Total liabilities	642,111		617,553
Minority interest in National Beef Packing Company, LLC and Kansas City Steak Company, LLC			134,703		77,890
Capital shares and equities:
	Members' capital, 735,385 Class A units and 735,385 Class B units
		authorized, issued and outstanding	66,140		102,472
	Patronage notices		50,642		50,642
	Accumulated other comprehensive income		37		60
		Total capital shares and equities	116,819		153,174
Commitments and contingencies			-		-
		Total liabilities and capital shares and equities	$	893,633	$	848,617

See accompanying notes to consolidated financial statements.


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


				14 weeks ended		13 weeks ended		40 weeks ended		39 weeks ended
				May 31, 2008		May 26, 2007		May 31, 2008		May 26, 2007
				(unaudited)		(unaudited)		(unaudited)		(unaudited)

Net sales				$	1,529,624	$	1,479,676	$	4,233,676	$	4,066,020

Costs and expenses:
	Cost of sales			1,428,059		1,436,361		4,109,947		3,993,987
	Selling, general, and administrative expenses			13,844		12,491		38,713		33,726
	Depreciation and amortization			9,819		8,249		27,403		24,066
		Total costs and expenses		1,451,722		1,457,101		4,176,063		4,051,779

			Operating income	77,902		22,575		57,613		14,241

Other income (expense):
	Interest income			217		475		1,159		1,569
	Interest expense			(8,737)		(10,632)		(27,147)		(29,788)
	Minority owners' interest in net (income) loss of
		National Beef Packing Company, LLC		(33,265)		(5,827)		(17,002)		6,497
	Minority owners' interest in net (income) loss of
		Kansas City Steak Company, LLC		(162)		90		(608)		(262)
	Equity in loss of aLF Ventures, LLC			(26)		(23)		(76)		(77)
	Other, net			4,331		935		6,138		1,606
			Income (loss) before taxes	40,260		7,593		20,077		(6,214)

Income tax expense				(978)		(558)		(2,057)		(1,443)
			Net income (loss)	$	39,282	$	7,035	$	18,020	$	(7,657)


Net income (loss) per linked unit:
	Basic			$	53.42	$	9.57	$	24.50	$	(10.41)
	Diluted			$	52.64	$	9.42	$	24.15	$	(10.41)

Outstanding weighted-average Class A and Class B units:
	Basic			735,385		735,425		735,385		735,478
	Diluted			746,218		746,946		746,161		735,478

See accompanying notes to consolidated financial statements.


U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
					40 weeks ended		39 weeks ended
					May 31, 2008		May 26, 2007
					(unaudited)		(unaudited)
Cash flows from operating activities:
	Net income (loss)				$	18,020	$	(7,657)
	Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
		Depreciation and amortization			27,403		24,066
		Gain on disposal of property, plant, and equipment			(1)		(137)
		Gain on disposal of investment			(1,342)		-
		Minority interest			17,419		(6,373)
		Changes in assets and liabilities:
			Accounts receivable		(9,512)		(17,999)
			Due from affiliates		(132)		(523)
			Other receivables		2,248		(2,901)
			Inventories		(20,811)		(30,698)
			Other assets		(5,759)		10,688
			Cattle purchases payable		9,216		1,853
			Accounts payable		9,250		(1,620)
			Due to affiliates		(762)		(480)
			Accrued compensation and benefits		10,138		(12,220)
			Accrued insurance		(1,696)		(4,907)
			Other accrued expenses and liabilities		5,238		2,335
				Net cash provided by (used in) operating activities	58,917		(46,573)
Cash flows from investing activities:
	Capital expenditures, including interest capitalized				(40,058)		(31,003)
	Acquisition of business, final purchase price adjustment				-		1,248
	Proceeds from sale of property, plant, and equipment				175		381
	Proceeds from redemption of investment				1,342		-
				Net cash used in investing activities	(38,541)		(29,374)
Cash flows from financing activities:
	Net (payments) receipts under revolving credit lines				(22,368)		42,854
	Borrowings of term note payable				-		40,000
	Payments of notes payable and fees				(772)		(8,157)
	Repayments of other indebtedness / capital leases				(2,862)		(1,963)
	Change in overdraft balances				7,910		12,881
	Distributions to minority interest owners in National Beef Packing Company, LLC				(3,692)		(5,862)
	Member distributions				-		(1,755)
				Net cash (used in) provided by financing activities	(21,784)		77,998
Effect of exchange rate changes on cash					(23)		9
				Net (decrease) increase in cash	(1,431)		2,060
Cash and cash equivalents at beginning of the period					62,869		58,434
Cash and cash equivalents at end of the period					$	61,438	$	60,494
Supplemental cash disclosures:
	Cash paid during the period for interest				$	23,561	$	25,419
	Cash paid during the period for taxes, net of refunds				$	1,082	$	756


See accompanying notes to consolidated financial statements.

U.S. PREMIUM BEEF, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) Interim Financial Statements

Basis of Presentation

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 25, 2007. 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.

The Company’s fiscal year ends on the last Saturday in August. For financial reporting purposes, fiscal year 2008 will consist of 53 weeks, whereas fiscal year 2007 consisted of 52 weeks. The additional week is included in the third quarter of fiscal year 2008. As a result, the quarterly and nine-month periods ended May 31, 2008 consisted of fourteen and forty weeks, respectively, as compared to the quarterly and nine-month periods ended May 26, 2007, which consisted of thirteen weeks and thirty-nine weeks, respectively.

(2) New Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standard No. 157, Fair Value Measurements (SFAS 157). 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 will apply to fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. In February 2008, however, the FASB issued FASB Staff Position 157-2 (FSP 157-2) which defers the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). FSP 157-2 will apply to fiscal years beginning after November 15, 2008, 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, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). 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.

In December 2007, the FASB issued Statement of Financial Accounting Standard No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (SFAS 160). SFAS 160 establishes accounting and reporting standards for the noncontrolling interest (minority interest) in a subsidiary. SFAS 160 requires noncontrolling interests held by parties other than the parent in subsidiaries be clearly identified, labeled, and presented in the consolidated balance sheet within equity, but separate from the parent's equity. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of SFAS 160 on its Consolidated Financial Statements.

In December 2007, the FASB issued Statement of Financial Accounting Standard No. 141R, Business Combinations (SFAS 141R). This statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date to be measured at their fair value as of that date. An acquirer is required to recognize assets or liabilities arising from all other contingencies (contractual contingencies) as of the acquisition date, measured at their acquisition-date fair values, only if it is more likely than not that they meet the definition of an asset or a liability in FASB Concepts Statement No. 6, Elements of Financial Statements. Any acquisition-related costs are to be expensed instead of capitalized. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The impact to the Company from the adoption of SFAS 141R in fiscal year 2010 will depend on acquisitions at the time.

In March 2008, the FASB issued Statement of Financial Accounting Standard No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 establishes enhanced disclosure requirements about: 1) how and why an entity uses derivative instruments; 2) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and 3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently assessing the impact SFAS 161 will have on its Consolidated Financial Statements.

(3) Inventories

Inventories at May 31, 2008 and August 25, 2007 consisted of the following (in thousands):


		May 31, 2008		August 25, 2007

Dressed and boxed meat products		$	153,611	$	144,766
Beef by-products		27,911		19,540
Supplies		16,533		12,938
	Total inventories	$	198,055	$	177,244

(4) Comprehensive Income (Loss)

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


		14 weeks ended May 31, 2008		13 weeks ended May 26, 2007		40 weeks ended May 31, 2008		39 weeks ended May 26, 2007
Net income (loss)		$	39,282	$	7,035	$	18,020	$	(7,657)
Other comprehensive (loss) income:
Foreign currency translation adjustments		(26)		2		(23)		9
	Comprehensive income (loss)	$	39,256	$	7,037	$	17,997	$	(7,648)

(5) Minority Interest

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 31, 2008, the minority interest in National Beef was revalued by an independent appraisal process, and the value was determined to be $194.8 million, which was in excess of its carrying value. Accordingly, the carrying value of the minority interest in National Beef increased by approximately $29.1 million through accretion during the fourteen weeks ended May 31, 2008, resulting in a carrying value of $133.3 million, which is included in the accompanying Consolidated Balance Sheet as of May 31, 2008.

The redemption value of the minority interest in NBP at May 31, 2008, increased by approximately $122.7 million compared to the value at August 25, 2007 primarily as a result of the Membership Interest Purchase Agreement (the Agreement) that was entered into on February 29, 2008 with JBS S.A. (JBS). Under the Agreement, JBS will acquire all of the outstanding membership interests in NBP for an aggregate value of $560.0 million. Generally accepted accounting principles require that the fair value of the Company’s minority interests in NBP that are redeemable be determined at the end of each reporting period. This change in fair value is accreted over the redemption period as discussed above. The value arrived at through the independent appraisal process considers certain estimates of management regarding future performance as well as an estimated probability of the Agreement reaching a successful conclusion. Offsetting the change in the redemption value of the minority interest is a corresponding change in members’ capital.

(6) Income Taxes

On August 26, 2007, the Company adopted FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes. FIN 48 provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classifications, interest and penalties, accounting in interim periods, disclosures and transition. As a result of the adoption, tax reserves in the amount of approximately $0.5 million were reversed during the first quarter of fiscal year 2008.

Prior to the adoption of FIN 48, the Company did not recognize accrued interest or penalties on uncertain tax positions. Should the Company be required to accrue interest and penalties in the future, it will likely record the interest accrual to interest expense and record the penalties accrual to selling, general and administrative expense. As of August 26, 2007, the Company did not have any amounts recorded for accrued interest and penalties on uncertain tax positions.

The Company’s subsidiary, National Carriers, Inc. (NCI), has concluded an examination of its U.S. federal income taxes for fiscal year 2005. Based on federal income tax statute of limitations, NCI remains subject to examination of its income taxes for fiscal years 2006 and 2007. USPB does not currently have any ongoing income tax examinations with the Internal Revenue Service or other tax authorities.

(7) Legal Proceedings

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. After a trial, at which the Company prevailed, a judgment against the other defendants was reversed by the United States Court of Appeals for the Eighth Circuit and the District Court has entered judgment for the defendants. The only remaining issue in the case is the amount of court costs to be assessed against the plaintiffs.

The Company’s wholly owned subsidiary, NCI, has various independent contractor drivers who are involved in accidents from time to time. 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.

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.

During the fourteen week period ending May 31, 2008, NBP received approximately $3.4 million in income for a settlement of a lawsuit related to corrugated packaging materials. The settlement is included in Other, net on the Consolidated Statements of Operations.

(8) Earnings Per Unit

Basic earnings per unit (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 loss per linked unit calculation in the following table excludes the effect of the 20,000 unit purchase rights noted above for thirty-nine week period ending May 26, 2007, 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)	14 weeks ended May 31, 2008		13 weeks ended May 26, 2007		40 weeks ended May 31, 2008		39 weeks ended May 26, 2007
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Basic income (loss) per unit
Income (loss) available to unitholders (numerator)	$	39,282	$	7,035	$	18,020	$	(7,657)

Weighted average outstanding units (denominator)	735,385		735,425		735,385		735,478

Per unit amount	$	53.42	$	9.57	$	24.50	$	(10.41)

Diluted income (loss) per unit
Income (loss) available to unitholders (numerator)	$	39,282	$	7,035	$	18,020	$	(7,657)

Weighted average outstanding units	735,385		735,425		735,385		735,478
Effect of dilutive securities - unit options	10,833		11,521		10,776		-
Units (demoninator)	746,218		746,946		746,161		735,478

Per unit amount	$	52.64	$	9.42	$	24.15	$	(10.41)

(9) Subsequent Event

On June 27, 2008, NBP amended its existing amended and restated credit agreement with a consortium of banks. The credit agreement was amended by increasing the amount of permitted net capital expenditures (as defined in the credit agreement) for fiscal year 2008 from $50.0 million to $60.0 million.

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

The following discussion should be read in conjunction with our Consolidated 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 the satisfaction of all conditions to close the transaction with JBS S.A. (JBS) described below under Recent Developments, 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, 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. See also the Risk Factors in Item 1A. Business of the Company’s Annual Report for the year ended August 25, 2007 on Form 10-K and the Risk Factors section of the Proxy Statement, which were filed with the Securities and Exchange Commission on November 14, 2007 and March 4, 2008, respectively, 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.

Industry Outlook

Continued rising input costs at the cow-calf sector have resulted in further industry contraction. Liquidation of the beef cow herd in the United States (U.S.) remained active during the first six months of calendar year 2008 and will result in a smaller U.S. beef herd going forward. The new placement of cattle into feed lots has slowed as producers look to minimize feed costs given the sharp increase in grain prices. With seasonal grass availability, steers and heifers will likely remain on pasture longer into the summer quarter, which could result in larger placements of heavier cattle in the late summer and early fall. Currently, deferred live cattle futures are pricing record high live cattle and beef prices now and into the foreseeable future. It remains unknown whether the beef industry will be able to pass these record high live cattle and beef prices through to the consumer given the current weak status of the U.S. economy and consumers’ available disposable income.

Beef Export Markets

Export markets for U.S. beef products remain significantly constrained since the discovery of a case of BSE in the State of Washington in December 2003, as well as other isolated cases. In July 2006, Japan agreed to reopen its market to U.S. beef from cattle aged 20 months and younger. NBP’s Brawley facility was suspended from shipping beef to Japan in April 2008 following the discovery of a short loin, which included a portion of a spinal column, a specified risk material, prohibited by Japan. We have supplied information, per their request, to the United States Department of Agriculture related to this shipment and we believe that the suspension will be lifted by the end of August, 2008, although there can be no assurance that the ban will be lifted by then. South Korea announced a provisional opening of its border to U.S. beef from animals 30 months and younger in September 2006; however, its border was subsequently closed on October 5, 2007. South Korea re-opened its border and started inspecting U.S. beef on June 27, 2008. These constraints and uncertainties have had a negative impact on beef margins.

We cannot presently assess the full economic impact of the consequences of BSE on the U.S. beef packing industry or on its 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 our revenues and net income.

Recent Developments

Collective Bargaining Agreement: The collective bargaining agreement with the United Food and Commercial Workers International Union and the Teamsters International Union for the Brawley, California facility that expired on May 31, 2008 was mutually extended by all parties while negotiations continue. On June 27, 2008, a tentative agreement in principal was reached, subject to the preparation of an agreement in writing and ratification by the members at a date to be determined in July 2008.

Production Cutbacks: On May 28, 2008, NBP announced production cutbacks from six to five production days a week at its beef processing facilities in Liberal and Dodge City, Kansas and in Brawley, California. Production cuts began that week and have reduced slaughter by approximately 15,000 head per week. Management’s decision to regulate production hours is driven by market conditions.

Membership Interest Purchase Agreement with JBS: On February 29, 2008, JBS, NBP, USPB and the other holders of membership interests in NBP, including NBPCO Holdings, LLC and parties controlled by three executive officers, John R. Miller, Timothy M. Klein and Scott H. Smith, entered into a Membership Interest Purchase Agreement (the Agreement). Under the Agreement, JBS will acquire all of the outstanding membership interests in NBP (including the membership interests issuable pursuant to deferred equity incentive compensation agreements with NBP’s Chief Executive Officer and Chief Operating Officer) for a combination of approximately $465.0 million cash and $95.0 million in common stock of JBS (the Purchase Price).

Pursuant to the Agreement, at closing USPB and certain other members of NBP will receive their proportionate share of the Purchase Price with 80.0% to be paid in cash and 20.0% to be paid in shares of common stock of JBS (the JBS Stock), which will be freely transferable on the Novo Mercado segment of the BOVESPA stock exchange in Brazil. The number of shares of JBS Stock will be determined based on the volume weighted average of the closing per share price of the JBS Stock on the BOVESPA stock exchange during the 20 trading days prior to closing, subject to certain adjustments. Certain of NBP’s members have elected to receive or, under certain circumstances, have the right to receive their portion of the Purchase Price entirely in cash. If JBS is unable to deliver JBS Stock on an unencumbered and freely transferable basis at closing, the sellers entitled to receive the JBS Stock may still demand to close, but be paid their proportionate s hare of the Purchase Price entirely in cash.

Consummation of the Agreement is subject to customary conditions, including approval of the Agreement by the members of USPB and the shareholders of JBS and the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and possible approvals by certain foreign jurisdictions. On March 14, 2008, at a Special Meeting of Members, USPB’s members approved the Agreement and the transactions contemplated under the Agreement. The shareholders of JBS approved the Agreement on April 11, 2008.

The Agreement contains certain termination rights and provides that under certain circumstances, JBS or NBP may be required to pay NBP or JBS, respectively, a termination fee of $25 million plus certain costs. The parties have agreed on the payment of certain fees and expenses, including those related to antitrust filings and compliance.

Results of Operations

Fourteen weeks ended May 31, 2008 compared to thirteen weeks ended May 26, 2007

General. Net income for the fourteen weeks ended May 31, 2008 was $39.3 million compared to a net income of $7.0 million for the thirteen weeks ended May 26, 2007, an increase of $32.3 million. Net sales were higher in the fourteen weeks ended May 31, 2008 compared to those of the prior period primarily due to the extra week in the current reporting period as compared to last year. While the average volume of cattle processed per week fell by approximately 7.0%, average sales prices per head increased approximately 3.4% during this reporting period. Improved demand of beef products during this quarter allowed the increase in sales prices to cover the continued high cost of live cattle that we processed as compared to the same quarter of last year.

Total costs and expenses of approximately $1,451.7 million for the fourteen weeks ended May 31, 2008 were 94.9% as a percent of sales compared to approximately $1,457.1 million for the thirteen weeks ended May 26, 2007, or 98.5% as a percent of sales. Lower live cattle prices by approximately 5.8% put less strain on gross margin resulting in increased operating income of approximately $55.3 million for this fourteen week period of fiscal year 2008 as compared to the thirteen week period of fiscal year 2007.

Net Sales. Net sales were approximately $1,529.6 million for the fourteen weeks ended May 31, 2008 compared to approximately $1,479.7 million for the thirteen weeks ended May 26, 2007, an increase of approximately $49.9 million, or 3.4%. The increase in net sales resulted primarily from an extra week of sales activity as compared to the same period of last year. Also contributing to the increase in sales was an increase in average sales prices per head of about 3.4% during the current fourteen week period of fiscal year 2008 as compared to the thirteen week period of fiscal year 2007 while the average volume of cattle process per week fell by approximately 7.0%.

Cost of Sales. Cost of sales was approximately $1,428.1 million for the fourteen weeks ended May 31, 2008 compared to approximately $1,436.4 million for the thirteen weeks ended May 26, 2007, a decrease of approximately $8.3 million, or 0.6%. The decrease resulted primarily from an approximate 5.8% decrease in live cattle prices. Although cattle prices declined in comparison of the current quarter to the same quarter of last year, cattle prices remain historically high due to tight supplies of market-ready cattle. Also contributing to this decrease was an approximate 7.0% decrease in the number of live cattle purchased on a per week basis due to the current reporting period reflecting an additional week compared to the same period of last year. Partially offsetting these decreases was an increase in the average cattle weights by approximately 2.1% during this fourteen week period of fiscal year 2008 as compared to the thirteen week period of fiscal year 2007.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were approximately $13.8 million for the fourteen weeks ended May 31, 2008 compared to approximately $12.5 million for the thirteen weeks ended May 26, 2007, an increase of approximately $1.3 million, or 10.4%. While comparing the current quarter of fiscal year 2008 to the comparable quarter of fiscal year 2007, payroll, bonus and related expenses increased by approximately $1.3 million, marketing expense increased by approximately $0.5 million, and legal expenses increased by approximately $0.1 million, while repairs and maintenance decreased by an approximate $0.2 million. The increase in selling, general, and administrative expenses primarily reflects an extra week of expense in the current reporting period as compared to the same period of last year.

Depreciation and Amortization Expense. Depreciation and amortization expenses were approximately $9.8 million for the fourteen weeks ended May 31, 2008 compared to approximately $8.2 million for the thirteen weeks ended May 26, 2007, an increase of approximately $1.6 million, or 19.5%. Depreciation expense increased due to assets being placed into service, primarily at the Dodge City and Liberal beef plants, during fiscal year 2007 and to assets being placed into service at our Case Ready plants during the current quarter. In addition, the current reporting period reflects an extra week of expense as compared to the same period of last year.

Operating Income. Operating income was approximately $77.9 million for the fourteen weeks ended May 31, 2008 compared to approximately $22.6 million for the thirteen weeks ended May 26, 2007, an increase of approximately $55.3 million. The improved operating income resulted primarily from lower live cattle prices during the fourteen week period ended May 31, 2008, as compared to the thirteen week period ended May 26, 2007, and increased average selling prices of beef products. In addition, the current reporting period reflects an extra week of operating income as compared to the same period of last year.

Interest Expense. Interest expense was approximately $8.7 million for the fourteen weeks ended May 31, 2008 compared to approximately $10.6 million for the thirteen weeks ended May 26, 2007, a decrease of approximately $1.9 million, or 17.9%. The decrease in interest expense was due primarily to lower interest rates on our variable rate debt, a decrease of approximately 345 basis points. In addition, our weighted average of variable rate debt decreased approximately $17.6 million at May 31, 2008 as compared to May 26, 2007. Partially offsetting these decreases was an extra week of interest expense in the current reporting period as compared to the same period of last year.

Minority Owners’ Interest in Net Income of National Beef Packing Company, LLC. Minority owners interest in the net income of NBP was $33.3 million for the fourteen weeks ended May 31, 2008 compared to $5.8 million for the thirteen weeks ended May 26, 2007, an increase of $27.5 million. The increase in minority owners’ interest in the net income of NBP was due to increased net income at NBP.

Other, net. Other, net non-operating income was approximately $4.3 million for the fourteen weeks ended May 31, 2008 compared to approximately $0.9 million for the thirteen weeks ended May 26, 2007, an increase of approximately $3.4 million. The increase in other, net non-operating income was primarily related to an approximate $3.4 million in income for a settlement of a lawsuit related to corrugated packaging materials.

Income Tax Expense. Income tax expense was approximately $1.0 million for the fourteen weeks ended May 31, 2008 compared to income tax expense of approximately $0.6 million for the thirteen weeks ended May 26, 2007, an increase in expense of approximately $0.4 million. Beginning in calendar year 2008, some states in which we conduct business, modified their business taxes, using net income, or a modification of net income, as the basis. The modification of these state taxes necessitated the inclusion of approximately $0.3 million of these business taxes in income tax expense during the current reporting period as compared to the same period of last year. The remaining increase in income taxes for the period of approximately $0.2 million is related to our subsidiary, National Carriers, Inc. (NCI). Income tax expense is recorded on income from NCI, which is organized as a C Corporation.

Forty weeks ended May 31, 2008 compared to thirty-nine weeks ended May 26, 2007

General. Net income for the forty weeks ended May 31, 2008 was approximately $18.0 million compared to a net loss of approximately $7.7 million for the thirty-nine weeks ended May 27, 2006, an increase of approximately $25.7 million. Sales were higher in the forty week period ended May 31, 2008 compared to the thirty-nine week period ended May 26, 2007 primarily due to increased average sales prices per head of approximately 4.1%. Also contributing to this increase in sales was an extra week during the current reporting period as compared to the same period of last year. Partially offsetting these increases in sales was a slight decline in the number of cattle processed, about 0.8%, during the forty weeks of fiscal year 2008 as compared to the thirty-nine weeks of fiscal year 2007. An overall improved demand for beef products drove an increase in our operating income for this reporting period.

Total costs and expenses of approximately $4,176.1 million for the forty weeks ended May 31, 2008 were 98.6% as a percent of sales compared to approximately $4,051.8 million for the thirty-nine weeks ended May 26, 2007, or 99.7% as a percent of sales. Continued high cattle prices, about 1.0% higher in the current reporting period as compared to last year, and increased depreciation and amortization expense contributed to the increase in total costs and expenses for this forty week period of fiscal year 2008 as compared to the thirty-nine week period of fiscal year 2007 as well as increased depreciation and amortization expense.

Net Sales. Net sales were approximately $4,233.7 million for the forty weeks ended May 31, 2008 compared to approximately $4,066.0 million for the thirty-nine weeks ended May 26, 2007, an increase of approximately $167.7 million, or 4.1%. The moderate increase in net sales resulted primarily from an average increase in beef sales prices per head of 4.1% in the forty week period ended May 31, 2008 as compared to the thirty-nine week period in the prior year while the volume of cattle processed per week decreased by approximately 3.3%. In addition, the current reporting period reflects an extra week of sales activity as compared to the same period of last year. Partially offsetting these increases in net sales was an approximate 0.8% decrease in the volume of cattle processed during the current forty-week period of fiscal year 2008 as compared to the thirty-nine week period of fiscal year 2007.

Cost of Sales. Cost of sales was approximately $4,109.9 million for the forty weeks ended May 31, 2008 compared to approximately $3,994.0 million for the thirty-nine weeks ended May 26, 2007, an increase of approximately $115.9 million, or 2.9%. The increase was primarily a result of an extra week of costs in the current reporting period as compared to the same period of last year. Also contributing to the increase in cost of sales was increased live cattle prices that were approximately 1.0% higher due to the continued tight supply of market-ready cattle and to the cattle being heavier, at average weights 1.1% more, during the forty week period of fiscal year 2008 than the thirty-nine week period of last year. Partially offsetting these increases was a decrease in the volume of cattle processed by approximately 0.8% during the forty week period of fiscal year 2008 as compared to the thirty-nine week period of fiscal year 2007

Selling, General, and Administrative Expenses. Selling, general and administrative expenses were approximately $38.7 million for the forty weeks ended May 31, 2008 compared to approximately $33.7 million for the thirty-nine weeks ended May 26, 2007, an increase of approximately $5.0 million, or 14.8%. The increase for this period is primarily due to an increase in payroll, option, bonus and benefit expenses of approximately $2.7 million and an increase in marketing expense of approximately $0.8 million. The current reporting period reflects an extra week of expense as compared to the same period of last year, which contributed to the increases in the payroll and benefit and marketing expenses discussed above as well as the selling, general, and administrative expenses in general.

Depreciation and Amortization Expense. Depreciation and amortization expenses were approximately $27.4 million for the forty weeks ended May 31, 2008 compared to approximately $24.1 million for the thirty-nine weeks ended May 26, 2007, an increase of approximately $3.3 million, or 13.7%. Depreciation expense increased due to assets being placed into service, primarily at the Dodge City and Brawley beef plants, during the fiscal year 2007 and to assets being placed into service at the Case Ready plants during the third quarter of fiscal year 2008. In addition, the current reporting period reflects an extra week of expense as compared to the same period of last year.

Operating Income. Operating income was approximately $57.6 million for the forty weeks ended May 31, 2008 compared to approximately $14.2 million for the thirty-nine weeks ended May 26, 2007, an increase of approximately $43.4 million. The improvement in operating income during the forty week period ended May 31, 2008 resulted primarily from increased demand and selling prices of beef products as compared to the thirty-nine week period ended May 26, 2007.

Interest Expense. Interest expense was approximately $27.1 million for the forty weeks ended May 31, 2008 compared to approximately $29.8 million for the thirty-nine weeks ended May 26, 2007, a decrease of approximately $2.7 million, or 9.1%. The decrease in interest expense during the forty week period of fiscal year 2008 as compared to the thirty-nine week period of fiscal year 2007 was due primarily to lower interest rates on our variable rate debt, a decrease of approximately 213 basis points. Offsetting this decrease in interest rates was an increase in the weighted average of variable rate debt of approximately $16.0 million at May 31, 2008 as compared to May 26, 2007. Also contributing to the offset, was an extra week of interest expense in the current reporting period as compared to the same period of last year.

Minority Owners’ Interest in Net Income (Loss) of National Beef Packing Company, LLC. Minority owners interest in the net income of NBP was $17.0 million for the forty weeks ended May 31, 2008 compared to the minority owners interest in the net loss of NBP of $6.5 million for the thirty-nine weeks ended May 26, 2007, an increase of $23.5 million. The change in minority owners’ interest in the net income (loss) of NBP was due to increased net income at NBP.

Other, net. Other, net non-operating income was approximately $6.1 million for the forty weeks ended May 31, 2008 compared to other, net non-operating income of approximately $1.6 million for the thirty-nine weeks ended May 26, 2007, an increase of approximately $4.5 million. The forty weeks ended May 31, 2008 included approximately $3.4 million in income for a settlement of a lawsuit related to corrugated packaging materials and about $1.3 million in income related to proceeds received in redemption of an investment interest in which our basis had previously been written down to zero.

Income Tax Expense. Income tax expense was approximately $2.1 million for the forty weeks ended May 31, 2008 compared to approximately $1.4 million for the thirty-nine weeks ended May 26, 2007, an increase of approximately $0.7 million, or 50.0%. Beginning in calendar year 2008, some states in which we conduct business, modified their business taxes, using net income, or a modification of net income, as the basis. The modification of these state taxes necessitated the inclusion of approximately $0.4 million of these business taxes in income tax expense during the current reporting period as compared to the same period of last year. The remaining increase in income taxes for the period of approximately $1.0 million is related to our subsidiary, National Carriers, Inc. (NCI). Income tax expense is recorded on income from NCI, which is organized as a C Corporation.

Liquidity and Capital Resources

As of May 31, 2008, we had net working capital of $261.8 million, which included $14.4 million in distributions payable, and cash and cash equivalents of $61.4 million. As of August 25, 2007, we had net working capital of $280.5 million, which included $2.7 million in distributions payable, and cash and cash equivalents of $62.9 million. NBP’s primary sources of liquidity are cash flow from operations and available borrowings under its amended and restated credit facility.

As of May 31, 2008, we had $417.0 million of long-term debt, of which $4.6 million was classified as a current liability. As of May 31, 2008, NBP’s amended and restated credit facility consisted of a $202.6 million term loan, all of which was outstanding, and a $200.0 million revolving line of credit loan, which had outstanding borrowings of $16.0 million, outstanding letters of credit of $54.7 million and available borrowings of $129.3 million, based on the most restrictive financial covenant calculations. Cash flows from operations and borrowings under the amended and restated credit facility have funded 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 31, 2008.

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 $3.2 million was outstanding, and capital leases and other obligations of $14.3 million as of May 31, 2008.

NBP believes that available borrowings under its 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 its control. For a review of the 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 25, 2007.

Operating Activities

Net cash provided by operating activities in the forty weeks ended May 31, 2008 was $58.9 million compared to net cash used in operating activities of $46.6 million in the thirty-nine weeks ended May 26, 200 7. The improvement was primarily due to net cash being provided primarily in operating activities through accounts receivable, inventory, accounts payable, cattle purchases payable, and accrued compensation and benefits during the forty week period of the current year while net cash was used primarily in operating activities through accounts receivable, accounts payable, accrued compensation and benefits, accrued insurance, and other accrued expenses and liabilities during the thirty-nine week period of last year.

Investing Activities

Net cash used in investing activities was $38.5 million in the forty weeks ended May 31, 2008 compared to $29.4 million in the thirty-nine weeks ended May 26, 2007. 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 Case Ready facilities, in the current year.

Financing Activities

Net cash used in financing activities was $21.8 million in the forty weeks ended May 31, 2008 compared to net cash provided by financing activities of $78.0 million in the thirty-nine weeks ended May 26, 2007. The change was primarily attributed to a $65.3 million difference in net revolving credit borrowings, the borrowing of $40.0 million on our term note in the 2007 period that did not recur in the 2008 period and a $5.0 million change in the impact of overdraft balances. These changes were partially offset by $7.4 million in repayments on our term note, made in the 2007 period that did not recur in the 2008 period, and a $3.9 million decrease in distributions paid during the forty week period ended May 31, 2008 as compared to the thirty-nine week period ended May 26, 2007.

Amended and Restated Senior Credit Facility

Effective July 25, 2007, NBP amended and restated its existing senior credit facility with a consortium of banks. The facility now consists of a $202.6 million term loan that matures in May 2016 and a $200.0 million revolving line of credit loan that matures in July 2012 that is subject to certain borrowing base limitations.

Borrowings under the facility bear interest at LIBOR or the Base Rate, plus the applicable margin. The applicable margin for the revolving line of credit will be based on borrowing base availability with grids greater than $150.0 million, $50.0 to $150.0 million and less than $50.0 million. As of May 31, 2008, the interest rate for the revolving loan was approximately 4.6%. The applicable margin for the NBP’s term loan was also revised to a grid basis with different margins for Funded Debt to EBITDA Ratios greater than 3.50 to 1.00 and less than 3.50 to 1.00. As of May 31, 2008, the interest rate for the term loan was approximately 5.1%.

The revolving line of credit and the term loan have no financial covenants unless the borrowing base availability is less than $50.0 million for five consecutive business days or less than $35.0 million on any single business day during any fiscal quarter. If the borrowing base availability falls below these amounts, a fixed charge ratio of 1:15 to 1:00 must be maintained at the end of each subsequent fiscal quarter until the borrowing base availability has been greater than or equal to $50.0 million for 90 consecutive days. NBP was not subject to the fixed charge ratio test at May 31, 2008. The advance rates under the borrowing base are 90% on eligible accounts and 70% on eligible inventory.

The borrowings under the revolving loan are available for NBP’s working capital requirements, capital expenditures and other general corporate purposes. The 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 due and payable in equal installments of approximately $3.5 million on the last business day of each June and December commencing on June 30, 2011. All outstanding amounts of the term loan are due and payable on May 30, 2016. Prepayment is allowed at any time.

The amended and restated credit facility contains customary affirmative covenants, including, without limitation, conduct of business, the maintenance of insurance, compliance with laws, maintenance of properties, keeping of books and records, and the furnishing of financial statements. The facility also contains customary negative covenants, including without limitation, restrictions on the following: distributions, mergers, sale of assets, investments and acquisitions, encumbrances, indebtedness, affiliate transactions, and ERISA matters.

The amended and restated credit facility contains customary events of default, including without limitation, failure to make payment when due, materially incorrect representations and warranties, breach of covenants, events of bankruptcy, default of other indebtedness that would permit acceleration of such indebtedness, the occurrence of one or more unstayed or undischarged judgments in excess of $3.0 million, changes in custody or control of NBP’s property, changes in control of NBP, the failure of any of the loan documents to remain in full force, and NBP’s failure to properly fund its employee benefit plans. The facility also includes customary provisions protecting the lenders against increased cost or loss of yield resulting from changes in tax, reserve, capital adequacy and other requirements of law.

On June 27, 2008, NBP amended its amended and restated credit facility by increasing the amount of permitted net capital expenditures (as defined in the credit agreement) for fiscal year 2008 from $50.0 million to $60.0 million.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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 that statement. Accordingly, the gains and losses associated with the change in fair value of all futures contracts and the gains and losses associated with changes in the market value of certain of the firm commitments not designated as normal purchases are recorded to income and expense in the period of change.

We use 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 31, 2008, the potential change in fair value of applicable commodity prices, assuming a hypothetical 10% decrease in the underlying commodity price, was $13.6 million. As of August 25, 2007, the potential change in fair value of applicable commodity prices, assuming a hypothetical 10% decrease in the underlying commodity price, was $5.2 million.

Foreign Operations. Transactions denominated in a currency other than an entity’s functional currency may expose that entity to currency risk. Although we operate 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 our 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 31, 2008, the weighted average interest rate on our $242.5 million of variable rate debt was approximately 4.1%.

We had total interest expense of approximately $27.1 million during the forty week period ending May 31, 2008. The estimated increase in interest expense from a hypothetical 200 basis point increase in applicable variable interest rates would have been approximately $4.0 million in the forty week period ending May 31, 2008.

Item 4T. Controls and Procedures.

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 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

For information regarding legal proceedings, see Note 7. Legal Proceedings to our Consolidated Financial Statements included in Part I- Item 1 of this Form 10-Q.

Item 1A. Risk Factors.

Other than the satisfaction of closing conditions to complete the Agreement, the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended August 25, 2007 have not materially changed. Please refer to the Company’s report on Form 10-K for the fiscal year ended August 25, 2007 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. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

USPB may purchase a portion of its outstanding Class A and Class B units from time to time in accordance with the limits imposed under the CoBank Credit Agreement.

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

Item 6. Exhibits.

(A)	Exhibits

		2.1	Membership Interest Purchase Agreement dated February 29, 2008 between JBS S.A.; National Beef Packing Company, LLC; U.S. Premium Beef, LLC; French Basin Land and Cattle Co., LLC; TKK Investments, LLC; S‑B Enterprises V, LLC; TMKCo, LLC; John R. Miller; Timothy M. Klein; and NBPCO Holdings, LLC (incorporated by reference to Exhibit 20.1 to Form 8-K (File No. 333-115164) filed with the Commission on March 4, 2008).

		2.2	First Amendment of Membership Interest Purchase Agreement dated as of March 24, 2008, among JBS, S.A.; National Beef Packing Company, LLC; U.S. Premium Beef, LLC; French Basin Land and Cattle Co., LLC; TKK Investments, LLC; S-B Enterprises V, LLC; TMKCO, LLC; John R. Miller; Timothy M. Klein and NBPCO Holdings, LLC (incorporated by reference to Exhibit 2.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 23, 2008, filed with the SEC on April 4, 2008).


			2.3	Second Amendment of Membership Interest Purchase Agreement dated as of April 3, 2008, among JBS, S.A.; National Beef Packing Company, LLC; U.S. Premium Beef, LLC; French Basin Land and Cattle Co., LLC; TKK Investments, LLC; S-B Enterprises V, LLC; TMKCO, LLC; John R. Miller; Timothy M. Klein and NBPCO Holdings, LLC (incorporated by reference to Exhibit 2.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 23, 2008, filed with the SEC on April 4, 2008).

			10.1	First Amendment to Sixth Amended and Restated Credit Agreement dated as of June 27, 2008 by and among the Company and certain agents, lenders and issuers (incorporated by reference to Exhibit 10.1 to Form 8-K (File No. 333-111407) filed by National Beef Packing Company, LLC with the SEC on June 30, 2008).

			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.

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/ 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)

Date: July 11, 2008

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.	15

Item 4T.	Controls and Procedures.	17


PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings.	18

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.	Submission of Matters to a Vote of Security Holders.	18

Item 5.	Other Information.	18

Item 6.	Exhibits.	18

	Signatures.	20