See accompanying notes to financial statements.

U.S. PREMIUM BEEF, LLC

Statements of Operations

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

See accompanying notes to financial statements.

U.S. PREMIUM BEEF, LLC

Statements of Cash Flows

(thousands of dollars)

See accompanying notes to financial statements.

U.S. PREMIUM BEEF, LLC

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

(1) Interim Financial Statements

Basis of Presentation

The accompanying unaudited Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP), for interim financial information; therefore, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included using management’s best estimates and judgments where appropriate. These estimates and judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ materially from these estimates and judgments. For further information, refer to the audited Financial Statements and Notes to Financial Statements, which are included in the Company’s Annual Report on Form 10-K on file with the Securities and Exchange Commission (SEC), for the fiscal year ended December 31, 2022. The results of operations for the interim periods presented are not necessarily indicative of the results for a full fiscal year.

(2) Accounting Policies

Accounting for Investment in NBP.NBP. USPB’s 15.0729% investment in National Beef Packing Company, LLC (NBP) is accounted for using the equity method of accounting asbecause the Company has the ability to exercise significant influence over NBP but does not have financial or operational control.

Operating losses, diminished cash flows, economic and industry events, pandemics, such as coronavirus disease (COVID-19), and a variety of other factors may result in a decrease in the value of the investment in NBP, which is other than temporary. Such potential decreasesNBP. If a decrease in value ifis deemed other than temporary, will cause the Company towould record an impairment charge, which may have an impact on the trading values of USPB’s Class A and Class B units. However, NBP’s plants are allcurrently operational at the present time and its results of operations are profitable, as reflected in Note 6. As a result, we believeUSPB believes the fair value of ourits investment in NBP exceeds the carrying value.

Cash and Cash Equivalents. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of March 25,June 24, 2023, the Company’s balance sheet reflected Cashcash and cash equivalents of $95.333.5 million. The cash is invested in the CoBank, ACB (CoBank) overnight investment account. Investments are not deposits and are not insured by the Federal Deposit Insurance Corporation or the Farm Credit System Insurance Corporation.

Certificates of Deposit: Certificates of deposit held for investment with original maturities greater than three months and remaining maturities less than one year are classified as current assets. Certificates of deposit with remaining maturities greater than one year are classified as long-term assets. On March 27, 2023, USPB invested $20 million of its available cash balance in a six-month certificate of deposit at CoBank, at a 4.28% interest rate, that matures on September 25, 2023.

Accrued Expenses. The Company accrues for expenses that have been incurred but have not been invoiced. As of March 26,June 24, 2023, the Company had accrued $0.20.1 million accrued for accounting related expenses.

(3) Noncompetition Agreement

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

As of March 25,June 24, 2023 and December 31, 2022, the Company had accrued $0.3 million and $0.3 million, respectively, for the noncompetition agreement. The accrued amount is included in Other long-term liabilities on the balance sheet.

(4) Employee Compensation Plans

In September 2010, USPB’s Board of Directors approved a management phantom unit plan and subsequently awarded phantom units in fiscal years 2010 and 2013. As of March 25,June 24, 2023 and December 31, 2022, the Company had accrued $9.3 9.5million and $10.4million, respectively, for the management phantom awards. The accrued amounts are included in Accrued compensation and benefits and Other liabilities on the balance sheet. The table below summarizes the current and long-term portions of the accrued amounts (thousands of dollars):

USPB provides its employees the opportunity to earn cash incentives and bonuses. As of March 25,June 24, 2023 and December 31, 2022, the Company had accrued $0.30.6 million and $1.5 million, respectively, for the cash incentive and bonus plans. The accrued amounts are included in Accrued compensation and benefits on the balance sheet.

(5) Earnings Per Unit

Under the LLC structure, earnings of the Company are to be allocated to unitholders based on their proportionate share of underlying equity. Earnings Per Unit (EPU) has been presented in the accompanying Statements of Operations and in the table that follows.

Basic EPU excludes dilution and is computed by first allocating a portion of USPB’s net income or net loss to Class A units and allocating the remainder is allocated to Class B units. For the twelve-week periodquarterly and year-to-date periods ended March 25,June 24, 2023 and thirteen-week period ended March 26,June 25, 2022, respectively, 10% of USPB’s net income was allocated to the Class A’sA units and 90% to the Class B’s.B units. The net income allocated to the Class A units and Class B units were then divided by the weighted-average number of Class A units and Class B units outstanding for the period to determine the basic EPU for each respective class of unit.unit class.

Diluted EPU reflects the potential dilution that could occur if any securities or contracts to the extent that any outstanding dilutiveissue Class A units or Class B units were exercised. There are no potentially dilutive Class Asuch securities or Class B unitsrights outstanding.

(6) Investment in National Beef Packing Company, LLC

USPB’s 15.0729% investment in NBP is accounted for using the equity method of accounting asbecause the Company has the ability to exercise significant influence over NBP, but does not have financial or operational control. The table below summarizes the changes to USPB’s investment in NBP for the twelve-week periodquarterly and year-to-date periods ended March 25,June 24, 2023 and thirteen-week period ended March 26,June 25, 2022 (unaudited) (thousands of dollars):

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

Below is a summary of the results of operations for NBP for the twelvequarterly and thirteen-weekyear-to-date periods ended March 25,June 24, 2023 and March 26,June 25, 2022 (thousands of dollars):

As of March 25,June 24, 2023, USPB’s balance sheet reflected a $1.12.4 million payable to National Beefreceivable from affiliates, of which $1.9 million receivable from NBP for Connecticut, and New Jersey and Iowa income taxes. The balance relates to amounts due from USPB members.

(7) Income Taxes

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

Although income taxes are assessed to the individual members, USPB nonetheless is required to withhold state income taxes from the cash distributions it makes to it members. As of March 25,June 24, 2023 and December 31, 2022, Other accrued expenses and liabilities on the Company’s balance sheet reflected state taxes payable of $0.80.1 million and $0.9 million, respectively.

(8) Long-term Debt and Loan Agreements

On July 13, 2020, USPB and CoBank entered into a Credit Agreement, an Amended and Restated Revolving Term Promissory Note (“Promissory Note”), and an Affirmation of Pledge Agreement.

The Credit Agreement and Promissory Note provide for a $1.0 million Revolving Term Commitment.revolving term commitment. That commitment carries a term of five years, maturing on June 30, 2025. All of the $1.0 million revolving credit commitment was available as of March 25,June 24, 2023. The Promissory Note defines Interest as equal to the One-Month LIBOR Index Rate or if LIBOR quotes are no longer available, CoBank will replace the LIBOR Index Rate with a replacement benchmark rate. The Affirmation of Pledge Agreement provides CoBank with a first-priority security interest in USPB’s Membership Interests in, and Distributions from, NBP.

(9) Members’ Capital

The following table represents a reconciliation of Members’ Capital for the twelvethirteen and thirteentwenty-five week periods ended March 25,June 24, 2023 and March 26,thirteen and twenty-six week periods June 25, 2022 (unaudited) (thousands of dollars).

(10) Legal Proceedings

USPB is not currently involved in any litigation. However, because its ownership interest in NBP is USPB’s largest asset and because of the cattle procurement and distribution relationship between USPB and NBP, litigation involving NBP may impact USPB.

NBP is a defendant in (i) five putative class action lawsuits in the United States District Court, Minnesota District, alleging that it violated the Sherman Antitrust Act, the Packers and Stockyards Act, the Commodity Exchange Act, and various state laws and (ii) putative class action lawsuits in the Supreme Court of British Columbia and the Superior Court of Quebec, Montreal District, alleging that it violated the Canadian Competition Act and various provincial laws (the “Beef Class Actions”). The Beef Class Actions are entitled In re Cattle Antitrust Litigation, which was filed originally on April 23, 2019; Peterson et al. v. JBS USA Food Company Holdings, et al., which was filed originally on April 26, 2019; In re DPP Beef Litigation, which was filed originally on April 26, 2019; Erbert & Gerbert’s, Inc. v. JBS USA Food Company Holdings, et al., which was filed originally on June 18, 2020; Specht v. Tyson Foods, Inc., et al., which was filed originally on October 31, 2022; Giang Bui v. Cargill, Incorporated, et al. which was filed originally on February 18, 2022; and Sylvie De Bellefeuille v. Cargill, Inc. et al., which was filed originally on March 24, 2022. Since the original filings, certain putative class members of the Peterson case have opted out of the matter and are proceeding with nineteen individual direct actions making similar claims (the “Opt-Out Cases”), and others may do so in the future. The Opt-Out Cases are entitled Winn-Dixie Stores, Inc. and Bi-Lo Holding, LLC v. Cargill, Inc., et al., which was filed on August 2, 2021 in the United States District Court, Minnesota; Cheney Brothers, Inc. v. Cargill, Inc., et al., which was filed on January 31, 2022 in the United States District Court, Southern District of Florida; Subway v. Cargill, Inc. et al., which was filed on February 22, 2022 in the United States District Court, Connecticut; Amory Investments LLC v. Cargill, Inc. et al., which was filed originally on March 8, 2022 in the United States District Court, Northern District of New York; Associated Grocers, Inc., et al. v. Cargill, Inc., et al., which was filed originally on May 12, 2022 in the United States District Court, Northern District of Illinois; Giant Eagle, Inc. v. Cargill, Inc., et al., which was filed originally on June 8, 2022 in the United States District Court, Northern District of Illinois; Sysco Corporation v. Cargill, Inc., et al., which was filed originally on June 24, 2022 in the United States District Court, Southern District of Texas; John Soules Foods, Inc. v. Cargill, Inc., et al., which was filed originally on August 5, 2022 in the United States District Court, Eastern District of Texas; Associated Grocers of the South et al. v. Cargill, Inc., et al., which was filed originally on September 15, 2022 in the United States District Court, District of Montana; The Kroger Co. et al. v. Cargill, Inc., et al., which was filed originally on September 15, 2022 in the United States District Court, District of Montana; Kraft Heinz Food Company v. Cargill Inc., et al., which was filed originally on September 30, 2022 in the United States District Court, Eastern District of New York; Aramark Food and Support Services Group., Inc. v. Cargill Inc., et al., which was filed originally on September 30, 2022 in the United States District Court, Eastern District of New York; ARCOP, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; CKE Restaurant Holdings, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; Sonic Industries Services Inc. v. Cargill, Inc. et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; Restaurant Services, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; Whatabrands LLC et al. vs. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; and Sherwood Food Distributors, L.L.C. et al. vs. Cargill, Inc. et al., which was filed originally on March 7, 2023 in the United States District Court, Eastern District of New York. On October 4, 2022, the United States Beef Class Actions and Opt-Out Cases were consolidated for pretrial proceedings in the United States District Court, Minnesota District under the style In re: Cattle and Beef Antitrust Litigation. The plaintiffs in these cases seek treble damages and other relief under various laws including the Sherman Antitrust Act, the Canadian Competition Act, the Packers & Stockyards Act, and/or the Commodities Exchange Act and various state and provincial laws and attorneys’ fees. NBP believes it has meritorious defenses to the claims in these cases and intends to defend them vigorously. There can be no assurances, however, as to the outcome of these matters or the impact on NBP’s consolidated financial position, results of operations and cash flows.

In addition to the above antitrust litigation, NBP is subject to an investigation by the United States Department of Justice (“DOJ”) and approximately 30 state attorneys general regarding fed cattle and beef packing markets. NBP is cooperating with these investigations and is working with the DOJ and the relevant states to provide information requested in connection with the investigations. NBP believes it has meritorious defenses to any potential claims that might arise out of these government investigations, although there can be no assurance as to the outcome of these investigations or the impact on NBP’s consolidated financial position, results of operations and cash flows.

NBP and one of its subsidiaries are defendants in a putative class action lawsuit entitled Brown, et al. v. JBS USA Food Company et al. and filed in the United States District Court, Colorado District on November 16, 2022, alleging that (i) the defendants directly and through a wage survey and benchmarking service exchanged information regarding labor rates in an effort to depress and fix the rates of wages in violation of federal antitrust laws and (ii) one of NBP’s subsidiaries entered into an employee non-poach agreement with a competitor in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief. NBP believes it has meritorious defenses to the claims in this case and intends to defend the case vigorously. There can be no assurances, however, as to the outcome of this case or the impact on the NBP’s consolidated financial position, results of operations and cash flows.

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

USPB is not able to assess what impact, if any, the actions described above will have on NBP or USPB.

(11) Subsequent Events

On March 27,July 6, 2023, USPB invested $20 millionand CoBank amended the Promissory Note to provide for an interest rate equal to the Daily Simple SOFR Margin (as defined in the amendment) plus the higher of its available cash balance0.00% and Daily Simply SOFR (as defined in a six month certificate of deposit at CoBank that matures on September 25, 2023.the agreement).

On April 3, 2023 and April 17, 2023, USPB made distributions totaling $23.8 million to its members. On April 4,June 30, 2023, NBP made a $4.3$20.8 million distribution to USPB.

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

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

The following discussion should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this report.

Disclosure Regarding Forward-Looking Statements

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

In light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking information contained in this report will in fact transpire. Readers are cautioned not to place undue reliance on these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Please review Part II. Item 1A. Risk Factors, included in this report, for other important factors that could cause actual results to differ materially from those in any such forward-looking statements.

Overview

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

USPB and NBP are parties to a First Amended and Restated Cattle Purchase and Sale Agreement June 10, 2019. Under this agreement, NBP must purchase through us from our owners and associates, and we must sell and deliver from our owners and associates to NBP, a base amount of head of cattle per year with prices based on those published by the U.S. Department of Agriculture, subject to adjustments for cattle performance. NBP obtained approximately 26% and 25% of its cattle requirements under this agreement during the twenty-five and twenty-six week periods ended June 24, 2023 and June 25, 2022, respectively.

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

Investment in National Beef Packing Company, LLC

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

NBP has two beef slaughter and processing facilities located in southwest Kansas and a third located in central Iowa. In addition, NBP operates a leather tannery, three case-ready manufacturing facilities, a fresh and frozen hamburger manufacturing facility and a transportation and logistics company that provides refrigerated and livestock transportation across the U.S.

NBP’s profitability typically fluctuates seasonally as well as cyclically, based on the availability of fed cattle and the demand for beef and beef by-products. Its profitability is dependent, in large part, on the spread between its cost for livefed cattle, the primary raw material for its business, and the value received from selling boxed beef and other products coupled with its overall volume. NBP operates in a large and fast-movingdynamic commodity market and does not have much influence over the price it pays for cattle or the selling price it receives for the products it produces.

RevenuesNBP’s revenues in the twelve-week period ended March 25, 2023, decreased approximately 14.6% in comparison to the thirteen-week period ended March 26,June 24, 2023 decreased approximately 0.4% compared to the same period in 2022. Cost of Sales increased by approximately 9.1% for the thirteen-week period ended June 24, 2023, compared to the same period in 2022, primarily due to lower production volume as a result of one less week in the quarter, lower average selling prices for many boxed beef and beef by-products and lower carcass weights. Cost of Sales decreased by approximately 3.2% for the twelve-week period ended March 25, 2023, as compared to the thirteen-week period ended March 26, 2022, primarily due to lower production volume and associated costs due to one less week in the period, offset, in part, by significantly higher per head costs for fed cattle.cattle prices. Lower per unit beef processing margins along with lowera decrease in volume led to a decrease in overall profitability in the 2023 period, as compared to the 2022 period.

OnNBP’s revenues in the twenty-five-week period ended June 10, 2019, USPB24, 2023 decreased approximately 7.6% compared to the twenty-six-week period ending June 25,2022. Cost of Sales increased by approximately 2.9% for the twenty-five-week period ended June 24, 2023, compared to the twenty-six week period ending June 25, 2021, primarily due to higher fed cattle prices offset, in part, by lower volume and NBP entered intoone less week in the First Amended and Restated Cattle Purchase and Sale Agreement (A&R Agreement)period. Lower per unit beef processing margins, along with USPB. The terms and conditions ofa decrease in volume, led to a decrease in overall profitability in the A&R Agreement are substantially2023 period, compared to the same as those of the Cattle Purchase and Sale Agreement dated December 30, 2011. Per the terms and conditions of the A&R Agreement, NBP is required to purchase through USPB from its owners and associates, and USPB is required to sell and deliver from its owners and associates to NBP, a base amount of 735,385 (subject to adjustment) head of cattle per year with prices based on those published by the U.S. Department of Agriculture, subject to adjustments for cattle performance.  NBP obtained approximately 27% and 25% of its cattle requirements under this agreement during the twelve and thirteen week periods ended March 25, 2023 and March 26, 2022 respectively.period.

USPB Results of Operations

Twelve-weeksThirteen-weeks ended March 25,June 24, 2023 compared to thirteen-weeks ended March 26,June 25, 2022

Net Sales. There were no Net Sales in the twelve-weekthirteen-week period ended March 25,June 24, 2023 and thirteen weekthirteen-week period ended March 26,June 25, 2022.

Cost of Sales. There were no Cost of Sales in the twelve-weekthirteen-week period ended March 25,June 24, 2023 and thirteen week periodweek-period ended March 26,June 25, 2022.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were approximately $1.2 million for the twelve-weeks ended March 25, 2023 compared to approximately $1.7$1.1 million for the thirteen-weeks ended March 26,June 24, 2023 compared to approximately $1.9 million for the thirteen-weeks ended June 25, 2022, a decrease of approximately $0.5$0.8 million. The decrease was primarily the result of lower phantom plan expenses. 

Operating Loss. Operating loss was approximately $1.1--- million for the thirteen-weeks ended June 24, 2023 compared to approximately $1.9 million for the thirteen-weeks ended June 25, 2022.

Equity in Net Income of National Beef Packing Company, LLC. Equity in NBP net income was $14.7 million for the thirteen-weeks ended June 24, 2023 compared to $52.8 million for the thirteen-weeks ended June 25, 2022. The decrease is primarily due to lower per unit beef processing margins along with a decrease in volume, as compared to the 2022 period. 

Interest Income. Interest income was $0.7 million for the thirteen-weeks ended June 24, 2023 compared to approximately $0.0 million for the thirteen-weeks ended June 25, 2022. The increase in fiscal year 2023 was due to higher interest rates.

Other, net. Other income was $0.2 million for the thirteen-week period ended June 24, 2023 compared to other loss of $0.2 million for the thirteen-week period ended June 25, 2022. The change was the result of higher delivery right lease income and lower state and local taxes in the 2023 period. 

Net income. Net income was $14.6 million and $50.7 million for the thirteen-week period ended June 24, 2023 and thirteen-week period ended June 25, 2022, respectively. The decrease was primarily for the same reasons that caused the decrease in net income of NBP.

Twenty-five weeks ended June 24, 2023 compared to twenty-six weeks ended June 25, 2022

Net Sales. There were no Net Sales in the twenty-five and twenty-six weeks periods ended June 24, 2023 and June 25, 2022, respectively.

Cost of Sales. There were no Cost of Sales in the twenty-five and twenty-six weeks periods ended June 24, 2023 and June 25, 2022, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were approximately $2.3 million for the twenty-five weeks ended June 24, 2023 compared to approximately $3.6 million for the twenty-six weeks ended June 25, 2022, a decrease of approximately $1.3 million. The decrease was primarily the result of lower phantom plan expenses.

Operating Loss. Operating loss was approximately $1.3$2.3 million for the twelve-weekstwenty-five weeks ended March 25,June 24, 2023 compared to approximately $1.7$3.6 million for the thirteen-weekstwenty-six weeks ended March 26,June 25, 2022.

Equity in Net Income of National Beef Packing Company, LLC. Equity in NBP net income was $7.6$22.3 million for the twelve-weekstwenty-five weeks ended March 25,June 24, 2023 compared to $62.6$115.4 million for the thirteen-weekstwenty-six weeks ended March 26,June 25, 2022. The decrease in fiscal year 2023 is primarily due to lower grossper unit beef processing margins at NBP. USPB carries its 15.0729% investmentalong with a decrease in NBP undervolume, as compared to the equity method of accounting.2022 period.

Interest IncomeIncome.. Interest income was $0.9$1.6 million for the twelve-weekstwenty-five weeks ended March 25,June 24, 2023 compared to approximately $0.0 million for the thirteen-weekstwenty-six weeks ended March 26,June 25, 2022. The increase in fiscal year 2023 is primarily due to higher interest rates.

Other, net. Other income was $0.1$0.3 million compared to $0.0 million for the twelve-weektwenty-five and twenty-six weeks periods ended June 24, 2023 and June 25, 2022, respectively. The change from the prior period ended March 25, 2023 comparedwas due to otherhigher delivery right lease income of $0.1and lower state and local taxes.

Net income. Net income was $22.0 million and $111.8 million for the thirteen-week periodtwenty-five and twenty-six weeks periods ended March 26,June 24, 2023 and June 25, 2022, respectively. The income in both periodsdecrease was primarily delivery right lease income.for the same reasons that caused the decrease in net income of NBP.

Net income. Net income was $7.4 million and $61.0 million for the twelve-week period ended March 25, 2023 and thirteen-week period ended March 26, 2022, respectively.

Liquidity and Capital Resources

As of March 25,June 24, 2023, we had net working capital (the excess of current assets over current liabilities) of approximately $93.7$55.2 million, which included cash and cash equivalents of $95.3$33.5 million. As of December 31, 2022, we had net working capital of approximately $93.8 million, which included cash and cash equivalents of $97.7 million. Our primary sources of liquidity for the first quartertwo quarters of fiscal yearyears 2023 and fiscal year 2022 were cash and available borrowings under the Master Loan Agreement with CoBank.

As of March 25,June 24, 2023, USPB had no long-term debt outstanding. We had a $1.0 million revolving term credit commitment with CoBank, all of which was available. USPB was in compliance with the financial covenant under its Master Loan Agreement as of March 25,June 24, 2023.

We believe our cash will be sufficient to support our cash needs for the foreseeable future. For a review of our obligations that affect liquidity, please see the “Cash Payment Obligations” table in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for fiscal year 2022.

Operating Activities

Net cash used inprovided by operating activities in the twelvetwenty-five weeks ended March 25,June 24, 2023 was approximately $2.5$4.5 million compared to net cash provided by operating activities of approximately $50.5$131.4 million in the thirteentwenty-six weeks ended March 26,June 25, 2022. The $53.1$126.9 million change was primarily due to a $52.8$125.2 million decrease in distributions received from NBP.

Investing Activities

Net cash from investing activities was approximately $20.0 million in the twenty-five weeks ended June 24, 2023 compared to $0.0 in the twenty-six weeks ended June 25, 2022. The change was due to an investment in a certificate of deposit in the twenty-five weeks of 2023.

Financing Activities

Net cash from financing activities was approximately $0.0$48.8 million in the twelvetwenty-five weeks ended March 25,June 24, 2023 compared to net cash used of approximately $119.7$185.7 million in the thirteentwenty-six weeks ended March 26,June 25, 2022. The change was due to a higherlower level of member distributions made in the thirteentwenty-five weeks of 2022.2023.

Master Loan Agreement

On July 13, 2020, USPB, and CoBank, entered into a Credit Agreement, Amended and Restated Revolving Term Promissory Note (“Promissory Note”), and an Affirmation of Pledge Agreement.

The Credit Agreement and Promissory Note provide for a $1.0 million Revolving Term Commitment. The commitment carries a term of five years, maturing on June 30, 2025. All of the $1.0 million revolving credit commitment was available as of March 25,June 24, 2023. TheOn July 6, 2023, USPB and CoBank amended the Promissory Note defines Interest asto provide tor an interest rate equal to the One-Month LIBOR Index Rate or if LIBOR quotes are no longer available, CoBank will replaceDaily Simple SOFR Margin (as defined in the LIBOR Index Rate with a replacement benchmark rate. Theamendment) plus the higher of 0.00% and Daily Simply SOFR (as defined in the agreement).The Affirmation of Pledge Agreement provides CoBank with a first-priority security interest in USPB’s Membership Interests in, and Distributions from, NBP.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The principal market risks affecting USPB’s business are exposure to interest rate risk, to the extent the Company has debt outstanding. As of March 25,June 24, 2023, the Company did not have any outstanding debt.

Item 4. Controls and Procedures.

We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the Financial Statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. We evaluatedEach quarter, we evaluate 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 Financial Officer. Based upon that evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in alerting them, in a timely manner, to material information required to be included in our periodic Securities and Exchange Commission filings. There have been no changes in our internal controls over financial reporting during the twelvetwenty-five weeks ended March 25,June 24, 2023 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.

USPB is not currently involved in any litigation. However, because its ownership interest in NBP is USPB’s largest asset and because of the cattle procurement and distribution relationship between USPB and NBP, litigation involving NBP may impact USPB.

NBP is a defendant in (i) five putative class action lawsuits in the United States District Court, Minnesota District, alleging that it violated the Sherman Antitrust Act, the Packers and Stockyards Act, the Commodity Exchange Act, and various state laws and (ii) putative class action lawsuits in the Supreme Court of British Columbia and the Superior Court of Quebec, Montreal District, alleging that it violated the Canadian Competition Act and various provincial laws (the “Beef Class Actions”). The Beef Class Actions are entitled In re Cattle Antitrust Litigation, which was filed originally on April 23, 2019; Peterson et al. v. JBS USA Food Company Holdings, et al., which was filed originally on April 26, 2019; In re DPP Beef Litigation, which was filed originally on April 26, 2019; Erbert & Gerbert’s, Inc. v. JBS USA Food Company Holdings, et al., which was filed originally on June 18, 2020; Specht v. Tyson Foods, Inc., et al., which was filed originally on October 31, 2022; Giang Bui v. Cargill, Incorporated, et al. which was filed originally on February 18, 2022; and Sylvie De Bellefeuille v. Cargill, Inc. et al., which was filed originally on March 24, 2022. Since the original filings, certain putative class members of the Peterson case have opted out of the matter and are proceeding with nineteen individual direct actions making similar claims (the “Opt-Out Cases”), and others may do so in the future. The Opt-Out Cases are entitled Winn-Dixie Stores, Inc. and Bi-Lo Holding, LLC v. Cargill, Inc., et al., which was filed on August 2, 2021 in the United States District Court, Minnesota; Cheney Brothers, Inc. v. Cargill, Inc., et al., which was filed on January 31, 2022 in the United States District Court, Southern District of Florida; Subway v. Cargill, Inc. et al., which was filed on February 22, 2022 in the United States District Court, Connecticut; Amory Investments LLC v. Cargill, Inc. et al., which was filed originally on March 8, 2022 in the United States District Court, Northern District of New York; Associated Grocers, Inc., et al. v. Cargill, Inc., et al., which was filed originally on May 12, 2022 in the United States District Court, Northern District of Illinois; Giant Eagle, Inc. v. Cargill, Inc., et al., which was filed originally on June 8, 2022 in the United States District Court, Northern District of Illinois; Sysco Corporation v. Cargill, Inc., et al., which was filed originally on June 24, 2022 in the United States District Court, Southern District of Texas; John Soules Foods, Inc. v. Cargill, Inc., et al., which was filed originally on August 5, 2022 in the United States District Court, Eastern District of Texas; Associated Grocers of the South et al. v. Cargill, Inc., et al., which was filed originally on September 15, 2022 in the United States District Court, District of Montana; The Kroger Co. et al. v. Cargill, Inc., et al., which was filed originally on September 15, 2022 in the United States District Court, District of Montana; Kraft Heinz Food Company v. Cargill Inc., et al., which was filed originally on September 30, 2022 in the United States District Court, Eastern District of New York; Aramark Food and Support Services Group., Inc. v. Cargill Inc., et al., which was filed originally on September 30, 2022 in the United States District Court, Eastern District of New York; ARCOP, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; CKE Restaurant Holdings, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; Sonic Industries Services Inc. v. Cargill, Inc. et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; Restaurant Services, Inc. v. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; Whatabrands LLC et al. vs. Cargill, Inc., et al., which was filed originally on December 19, 2022 in the United States District Court, Southern District of Florida; and Sherwood Food Distributors, L.L.C. et al. vs. Cargill, Inc. et al., which was filed originally on March 7, 2023 in the United States District Court, Eastern District of New York. On October 4, 2022, the United States Beef Class Actions and Opt-Out Cases were consolidated for pretrial proceedings in the United States District Court, Minnesota District under the style In re: Cattle and Beef Antitrust Litigation. The plaintiffs in these cases seek treble damages and other relief under various laws including the Sherman Antitrust Act, the Canadian Competition Act, the Packers & Stockyards Act, and/or the Commodities Exchange Act and various state and provincial laws and attorneys’ fees. NBP believes it has meritorious defenses to the claims in these cases and intends to defend them vigorously. There can be no assurances, however, as to the outcome of these matters or the impact on NBP’s consolidated financial position, results of operations and cash flows.

In addition to the above antitrust litigation, NBP is subject to an investigation by the United States Department of Justice (“DOJ”) and approximately 30 state attorneys general regarding fed cattle and beef packing markets. NBP is cooperating with these investigations and is working with the DOJ and the relevant states to provide information requested in connection with the investigations. NBP believes it has meritorious defenses to any potential claims that might arise out of these government investigations, although there can be no assurance as to the outcome of these investigations or the impact on NBP’s consolidated financial position, results of operations and cash flows.

NBP and one of its subsidiaries are defendants in a putative class action lawsuit entitled Brown, et al. v. JBS USA Food Company et al. and filed in the United States District Court, Colorado District on November 16, 2022, alleging that (i) the defendants directly and through a wage survey and benchmarking service exchanged information regarding labor rates in an effort to depress and fix the rates of wages in violation of federal antitrust laws and (ii) one of NBP’s subsidiaries entered into an employee non-poach agreement with a competitor in violation of federal antitrust laws. The plaintiffs seek, among other things, treble monetary damages, punitive damages, restitution, and pre- and post-judgment interest, as well as declaratory and injunctive relief. NBP believes it has meritorious defenses to the claims in this case and intends to defend the case vigorously. There can be no assurances, however, as to the outcome of this case or the impact on the NBP’s consolidated financial position, results of operations and cash flows.

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

USPB is not able to assess what impact, if any, the actions described above will have on NBP or USPB.

Item 1A. Risk Factors.

The risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 have not materially changed. Please refer to the Company’s report on Form 10-K for the fiscal year ended December 31, 2022 to consider those risk factors.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

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

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.

Date: May 4,August 3, 2023