~~Use~~Table ~~these links to rapidly review the document~~of ~~TABLE OF CONTENTS~~ Contents

UNITED ~~STATES~~ ~~SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549~~STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 27, 2010
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .

(Mark one)

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

For the quarterly period ended May 29, 2010

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

For the transition period from to .

Commission file number 333-111407

NATIONAL BEEF PACKING COMPANY, ~~LLC (Exact~~ ~~name of registrant as specified in its charter)~~ LLC

~~DELAWARE~~ (~~State~~Exact orname ~~other jurisdiction~~ of ~~incorporation~~registrant oras ~~organization)~~specified ~~48-1129505~~in ~~(I.R.S.~~its ~~employer identification number~~charter)

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

DELAWARE

48-1129505

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer

identification number)

~~Telephone:~~12200 ~~(800) 449-2333 (Registrant's~~North ~~telephone~~Ambassador ~~number, including area code)~~ Drive

~~Indicate by~~Kansas check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports)City, ~~and~~MO ~~(2) has been subject to such filing requirements for the past 90 days. Yes ý No o~~ 64163

(Address of principal executive offices)

Telephone: (800) 449-2333

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of "“large accelerated filer,"” ~~"large~~ “accelerated filer",” and "“small reporting company"” in Rule 12b-2 of the Exchange Act.

Large ~~accelerated~~Accelerated ~~filer~~Filer o Accelerated ~~filer~~Filer o Non-~~accelerated~~Accelerated ~~filer~~Filer ýx ~~(Do~~Small ~~not~~Reporting ~~check~~Company ~~if a smaller reporting company) Smaller reporting company~~ o

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

There is no market for the Registrant'’s equity. As of ~~April~~July 9, 2010, there were 203,990,136 Class A units and 15,~~545~~381,~~948~~317 Class B units outstanding.

Table of Contents

TABLE OF CONTENTS

PART I.		FINANCIAL INFORMATION	Page No.
		Page No.
Item 1.		Financial Statements	1
PART I.	FINANCIAL INFORMATION
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 1.	Financial Statements.	1
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	11
Item 4T.		Controls and Procedures	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	19
PART II.		OTHER INFORMATION
Item 4.	Controls and Procedures.	20
Item 1.		Legal Proceedings	22
PART II.	OTHER INFORMATION
Item 1A.		Risk Factors	22
Item 1.	Legal Proceedings.	21
Item 6.		Exhibits	22
Item 1A.	Risk Factors.	21
		Signatures	23
Item 6.	Exhibits.	21
	Signatures.	22

Unless the context indicates or otherwise requires, the terms "“National Beef,"” "“NBP,"” "“Company,"” "“we,"” "“our,"” and "“us"” refer to National Beef Packing Company, LLC and its consolidated subsidiaries. As used in this report, the term "“U.S. Premium Beef"” or "“USPB"” refers to U.S. Premium Beef, LLC, a Delaware limited liability company, formerly U.S. ~~Premium~~ Premium Beef, Ltd., a Kansas cooperative, which owns a majority interest in National Beef.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Table of Contents

NATIONAL BEEF PACKING COMPANY, ~~LLC AND~~ ~~SUBSIDIARIES Consolidated Balance Sheets (in thousands)~~ LLC

			February 27, 2010 (unaudited)		August 29, 2009
Assets
Current assets:
	Cash and cash equivalents		$	11,059	$	17,373
	Accounts receivable, less allowance for returns and doubtful accounts of $2,289 and $1,511, respectively			171,678		172,420
	Due from affiliates			3,975		4,532
	Other receivables			7,364		7,165
	Inventories			188,552		175,300
	Other current assets			18,054		16,602
		Total current assets		400,682		393,392
Property, plant and equipment, at cost				496,858		479,926
	Less accumulated depreciation			197,011		174,295
		Net property, plant and equipment		299,847		305,631
Goodwill				81,242		81,242
Other intangibles, net of accumulated amortization of $12,528 and $11,450, respectively				23,688		24,760
Other assets				5,154		4,120
		Total assets	$	810,613	$	809,145
Liabilities and Members' Capital
Current liabilities:
	Current installments of long-term debt		$	9,413	$	11,458
	Cattle purchases payable			52,068		49,806
	Accounts payable—trade			61,393		69,073
	Due to affiliates			1,048		1,042
	Accrued compensation and benefits			40,883		50,857
	Accrued insurance			16,123		16,344
	Other accrued expenses and liabilities			9,460		14,585
	Distributions payable			11,567		35,183
		Total current liabilities		201,955		248,348
	Long-term debt, excluding current installments			290,313		287,370
	Other liabilities			2,223		2,364
		Total liabilities		494,491		538,082
Capital subject to redemption				228,056		183,407
Members' capital:
	Members' capital attributable to NBP			85,381		85,290
	Accumulated other comprehensive (loss) / income attributable to NBP			17		(1	)
	Non-controlling interest in Kansas City Steak Company, LLC			2,668		2,367
		Total members' capital		88,066		87,656
Commitments and contingencies				—		—
		Total liabilities, capital subject to redemption and members' capital	$	810,613	$	809,145

AND SUBSIDIARIES

~~See~~Consolidated ~~accompanying~~Balance ~~notes to consolidated financial statements.~~ Sheets

2(in thousands)

Table of Contents

	May 29, 2010
	(unaudited)		August 29, 2009
Assets
Current assets:
Cash and cash equivalents	$	20,082	$	17,373
Accounts receivable, less allowance for returns and doubtful accounts of $3,391 and $1,511, respectively	205,784		172,420
Due from affiliates	3,837		4,532
Other receivables	7,070		7,165
Inventories	216,706		175,300
Other current assets	18,596		16,602
Total current assets	472,075		393,392

Property, plant and equipment, at cost	507,286		479,926
Less accumulated depreciation	208,685		174,295
Net property, plant and equipment	298,601		305,631
Goodwill	81,242		81,242
Other intangibles, net of accumulated amortization of $13,129 and $11,450, respectively	23,392		24,760
Other assets	4,976		4,120
Total assets	$	880,286	$	809,145
Liabilities and Members’ Capital
Current liabilities:
Current installments of long-term debt	$	6,635	$	11,458
Cattle purchases payable	63,100		49,806
Accounts payable — trade	66,671		69,073
Due to affiliates	1,101		1,042
Accrued compensation and benefits	61,751		50,857
Accrued insurance	15,162		16,344
Other accrued expenses and liabilities	11,353		14,585
Distributions payable	32,698		35,183
Total current liabilities	258,471		248,348
Long-term debt, excluding current installments	280,116		287,370
Other liabilities	2,155		2,364
Total liabilities	540,742		538,082
Capital subject to redemption	264,371		183,407
Members’ capital:
Members’ capital attributable to NBP	72,518		85,290
Accumulated other comprehensive income / (loss) attributable to NBP	6		(1		)
Non-controlling interest in Kansas City Steak Company, LLC	2,649		2,367
Total members’ capital	75,173		87,656
Commitments and contingencies	—		—
Total liabilities, capital subject to redemption and members’ capital	$	880,286	$	809,145

See ~~NATIONAL~~accompanying ~~BEEF~~notes ~~PACKING~~to ~~COMPANY, LLC AND~~consolidated ~~SUBSIDIARIES Consolidated~~financial ~~Statements of Operations (in thousands)~~ statements.

				13 weeks ended February 27, 2010 (unaudited)			13 weeks ended February 28, 2009 (unaudited)			26 weeks ended February 27, 2010 (unaudited)			26 weeks ended February 28, 2009 (unaudited)
Net sales				$	1,340,926		$	1,298,218		$	2,683,536		$	2,727,195
Costs and expenses:
	Cost of sales				1,259,860			1,236,297			2,533,171			2,640,335
	Selling, general and administrative				12,063			10,341			23,293			21,204
	Depreciation and amortization				12,376			11,264			24,284			21,230
		Total costs and expenses			1,284,299			1,257,902			2,580,748			2,682,769
			Operating income		56,627			40,316			102,788			44,426
Other income (expense):
	Interest income				6			50			34			106
	Interest expense				(3,519	)		(5,567	)		(8,051	)		(12,376	)
	Equity in loss of aLF Ventures, LLC				—			(24	)		—			(49	)
	Other, net				(3,784	)		(4,237	)		(3,776	)		(3,835	)
			Income before taxes		49,330			30,538			90,995			28,272
Income tax (benefit) expense					(48	)		192			352			561
			Net income		49,378			30,346			90,643			27,711
			Net income attributable to the non-controlling interest		(568	)		(546	)		(791	)		(717	)
			Net income attributable to NBP	$	48,810		$	29,800		$	89,852		$	26,994

~~See accompanying~~Table ~~notes~~of ~~to consolidated financial statements.~~ Contents

3NATIONAL BEEF PACKING COMPANY, LLC

~~Table~~AND ~~of Contents~~ SUBSIDIARIES

~~NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES~~ Consolidated Statements of ~~Cash Flows (in thousands)~~ Operations

						26 weeks ended February 27, 2010 (unaudited)			26 weeks ended February 28, 2009 (unaudited)
Cash flows from operating activities:
			Net income			$	90,643		$	27,711
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization				24,284			21,230
			(Gain) / loss on disposal of property, plant and equipment				(120	)		132
			Write-off of debt issuance costs				418			—
			Change in assets and liabilities:
				Accounts receivable			742			52,239
				Due from affiliates			557			4,183
				Other receivables			(199	)		(655	)
				Inventories			(13,252	)		24,950
				Other assets			(1,806	)		(15,755	)
				Cattle purchases payable			223			(561	)
				Accounts payable			(4,705	)		(11,735	)
				Due to affiliates			6			(523	)
				Accrued compensation and benefits			(9,974	)		(23,110	)
				Accrued insurance			(221	)		906
				Other accrued expenses and liabilities			(5,266	)		20,215
					Net cash provided by operating activities		81,330			99,227
Cash flows from investing activities:
	Capital expenditures, including interest capitalized						(17,986	)		(17,969	)
	Proceeds from sale of property, plant and equipment						683			894
					Net cash used in investing activities		(17,303	)		(17,075	)
Cash flows from financing activities:
	Net receipts under revolving credit lines						21,100			1,451
	Repayments of term note payable						(23,102	)		(25,713	)
	Borrowings of term note payable						75,000			—
	Purchase and cancellation of senior notes						(66,855	)		—
	Change in overdraft balances						(936	)		(17,383	)
	Repayments of other indebtedness						(5,245	)		(4,200	)
	Cash paid for financing costs						(1,103	)		—
	Member distributions						(68,728	)		(45,242	)
	Distributions paid to non-controlling interest						(490	)		(272	)
					Net cash used in financing activities		(70,359	)		(91,359	)
Effect of exchange rate changes on cash							18			(74	)
					Net decrease in cash		(6,314	)		(9,281	)
Cash and cash equivalents at beginning of period							17,373			25,466
Cash and cash equivalents at end of period						$	11,059		$	16,185
Supplemental disclosures:
	Cash paid during the period for interest					$	8,154		$	12,008
		Cash paid / (received) during the period for taxes, net of $0 and $925 refunds, respectively				$	9		$	(798	)

(in thousands)

See accompanying notes to consolidated financial statements.

	13 weeks ended			13 weeks ended			39 weeks ended			39 weeks ended
	May 29, 2010			May 30, 2009			May 29, 2010			May 30, 2009
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales	$	1,537,879		$	1,318,020		$	4,221,415		$	4,045,215
Costs and expenses:
Cost of sales	1,429,435			1,242,304			3,962,607			3,882,639
Selling, general and administrative	13,196			10,862			36,489			32,066
Depreciation and amortization	12,471			11,594			36,756			32,823
Total costs and expenses	1,455,102			1,264,760			4,035,852			3,947,528
Operating income	82,777			53,260			185,563			97,687
Other income (expense):
Interest income	4			40			39			145
Interest expense	(3,513		)	(5,816		)	(11,563		)	(18,191		)
Equity in loss of aLF Ventures, LLC	—			(8		)	—			(57		)
Other, net	217			(617		)	(3,559		)	(4,452		)
Income before taxes	79,485			46,859			170,480			75,132
Income tax expense	326			338			678			899
Net income	79,159			46,521			169,802			74,233
Net income attributable to the non-controlling interest	(58		)	(232		)	(850		)	(950		)
Net income attributable to NBP	$	79,101		$	46,289		$	168,952		$	73,283

4See accompanying notes to consolidated financial statements.

~~Table of Contents~~ 3

Table ~~NATIONAL~~of ~~BEEF PACKING COMPANY, LLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~ Contents

NATIONAL ~~(1)~~BEEF ~~Interim~~PACKING ~~Financial~~COMPANY, ~~Statements~~ LLC

AND ~~Basis of Presentation~~ SUBSIDIARIES

~~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~~Cash 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 NBP's Annual Report on Form 10-K on file with the Securities and Exchange Commission (SEC) for the fiscal year ended August 29, 2009. The results of operations for the interim periods presented are not necessarily indicative of the results for a full fiscal year. Flows

~~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 our senior unsecured obligations, ranking equal~~ (in right of payment with all of our other senior unsecured obligations. The Senior Notes were retired on January 11, 2010. 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. thousands)

(2) New Accounting Pronouncements

	39 weeks ended			39 weeks ended
	May 29, 2010			May 30, 2009
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income	$	169,802		$	74,233
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	37,528			32,823
(Gain) / loss on disposal of property, plant and equipment	(154		)	119
Write-off of debt issuance costs	418			1,317
Change in assets and liabilities:
Accounts receivable	(33,364		)	29,247
Due from affiliates	695			3,758
Other receivables	95			(2,316		)
Inventories	(41,406		)	11,702
Other assets	(3,334		)	(3,970		)
Cattle purchases payable	5,505			7,767
Accounts payable	(1,470		)	(4,569		)
Due to affiliates	59			9
Accrued compensation and benefits	10,894			(10,465		)
Accrued insurance	(1,182		)	(87		)
Other accrued expenses and liabilities	(3,441		)	8,387
Net cash provided by operating activities	140,645			147,955

Cash flows from investing activities:
Capital expenditures, including interest capitalized	(28,867		)	(35,573		)
Proceeds from sale of property, plant and equipment	974			1,240
Net cash used in investing activities	(27,893		)	(34,333		)

Cash flows from financing activities:
Net receipts under revolving credit lines	8,718			52,448
Repayments under term note payable	(23,102		)	(25,713		)
Borrowings of term note payable	75,000			—
Change in overdraft balances	6,857			(1,750		)
Purchase and cancellation of Senior Notes	(66,855		)	(45,479		)
Net repayments of other indebtedness	(5,838		)	(3,104		)
Member capital redeemed	—			(125,484		)
Member capital contribution	—			75,484
Cash paid for financing costs	(1,017		)	—
Member distributions	(103,245		)	(50,369		)
Distributions paid to non-controlling interest	(568		)	(390		)
Net cash used in financing activities	(110,050		)	(124,357		)

Effect of exchange rate changes on cash	7			(32		)
Net increase (decrease) in cash	2,709			(10,767		)
Cash and cash equivalents at beginning of period	17,373			25,466
Cash and cash equivalents at end of period	$	20,082		$	14,699

Supplemental disclosures:
Cash paid during the period for interest	$	11,285		$	15,802
Cash paid/(received) during the period for taxes, net of $0 and $925 refunds, respectively	729			(771		)

See Onaccompanying ~~June 29,~~notes 2009, the Financial Accounting Standards Board ("FASB") issued FASB Accounting Standards Codification (the "ASC") under ASC 105-10 as the source of authoritative accounting principles recognized by the FASB to beconsolidated ~~applied by nongovernmental entities. This pronouncement was effective for~~ financial ~~statements~~ issued for interim and annual periods ending after September 15, 2009 for most entities. On the effective date, all non-SEC accounting and reporting standards was superseded. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative U.S. generally accepted accounting principles ("GAAP") for SEC registrants. All other accounting literature is considered non-authoritative. The switch to ASC affects the manner in which companies refer to U.S. GAAP in financial statements ~~and note disclosures~~. The Company adopted this body of accounting for the quarterly period ended November 28, 2009, as required, and adoption did not have a material impact on our consolidated financial statements taken as a whole.

In December 2007, the FASB issued Business Combinations under ASC 805. 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. The Company adopted ASC 805 on August 30, 2009 and the impact will depend on future acquisitions at the time. 4

5Table of Contents

~~Table~~NATIONAL BEEF ofPACKING ~~Contents~~COMPANY, LLC AND SUBSIDIARIES

NOTES ~~NATIONAL~~TO ~~BEEF~~CONSOLIDATED ~~PACKING~~FINANCIAL ~~COMPANY, LLC~~STATEMENTS ~~AND SUBSIDIARIES~~ (UNAUDITED)

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~ (~~UNAUDITED~~1) Interim ~~(Continued)~~ Financial Statements

Basis ~~(2)~~of ~~New Accounting Pronouncements (Continued)~~ Presentation

~~Also in~~The ~~December~~accompanying ~~2007,~~unaudited Consolidated ~~the~~Financial ~~FASB~~Statements ~~issued~~have ~~Noncontrolling~~been ~~Interests~~prepared in ~~Consolidated~~accordance ~~Financial~~with ~~Statements—an~~U.S. generally ~~Amendment~~accepted ofaccounting ~~ARB~~principles (GAAP) for interim financial ~~No. 51~~information; ~~under~~therefore, ~~ASC~~they ~~810-10-65~~do ~~which~~not ~~establishes~~include ~~accounting~~all of the information and ~~reporting~~footnotes required ~~standards~~by GAAP for complete financial statements. In the ~~noncontrolling~~opinion ~~interest~~of management, ~~(minority~~all ~~interest)~~adjustments inconsidered necessary for a fair presentation have ~~subsidiary.~~been ~~ASC~~included ~~810-10-65~~using ~~requires~~management’s ~~non-controlling~~best ~~interests~~estimates ~~held~~and byjudgments ~~parties~~where appropriate. These ~~other~~estimates ~~than~~and judgments affect the ~~parent~~reported inamounts ~~subsidiaries~~of beassets ~~clearly~~and ~~identified,~~liabilities ~~labeled,~~and disclosure of contingent assets and ~~presented~~liabilities inat the date of the financial statements. The estimates and judgments will also affect the ~~consolidated~~reported ~~balance~~amounts ~~sheet~~for ~~within~~certain ~~equity,~~revenues ~~but~~and ~~separate~~expenses ~~from~~during the ~~parent's~~reporting period. Actual ~~equity~~results could differ materially from these estimates and judgments. For ~~The~~further ~~Company'~~information, refer to the audited Consolidated Financial Statements and Notes to Consolidated Financial Statements, which are included in NBP’s ~~adoption~~Annual ofReport ~~ASC~~on ~~810-~~Form 10-65K ason offile with the Securities and Exchange Commission (SEC) for the fiscal year ended August 3029, 2009. The ~~changed~~results of operations for the interim ~~presentation~~periods presented are not necessarily indicative of the ~~non-controlling~~results ~~interest.~~for a full fiscal year.

In February 2008, the FASB issued Fair Value Measurements under ASC 820-10 which deferred the effective date of fair value measurement 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. There was no impact when the Company adopted for these nonfinancial assets and nonfinancial liabilities on August(2) ~~30,~~New ~~2009. These assets and liabilities are measured at fair value on~~Accounting ~~an ongoing basis but are reported at fair value only in certain circumstances.~~ Pronouncements

On June 29, 2009, the Financial Accounting Standards Board (3“FASB”) ~~Inventories~~ issued FASB Accounting Standards Codification (the ASC) under ASC 105-10 as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities. This pronouncement was effective for financial statements issued for interim and annual periods ending after September 15, 2009 for most entities. On the effective date, all non-SEC accounting and reporting standards were superseded. Rules and interpretive releases of the SEC under the authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All other accounting literature is considered non-authoritative. The switch to ASC affects the manner in which companies refer to U.S. GAAP in financial statements and note disclosures. The Company adopted this body of accounting for the quarterly period ended November 28, 2009, as required, and adoption did not have a material impact on our consolidated financial statements taken as a whole.

In ~~Inventories~~December 2007, atthe ~~February 27~~FASB issued Business Combinations under ASC 805. This statement requires an acquirer to recognize the assets acquired, ~~2010~~the liabilities assumed, and ~~August~~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. 296, ~~2009~~Elements ~~consisted~~of Financial Statements. Any acquisition-related costs are to be expensed instead of capitalized. The Company adopted ASC 805 on August 30, 2009 and the ~~following~~impact ~~(in~~will ~~thousands):~~depend on future acquisitions at the time.

		February 27, 2010		August 29, 2009
Dressed and boxed meat products		$	121,479	$	119,274
Beef by-products			39,085		29,756
Supplies and other			27,988		26,270
	Total inventory	$	188,552	$	175,300

Also in December 2007, the FASB issued Noncontrolling Interests in Consolidated Financial Statements - an Amendment of ARB No. 51 under ASC 810-10-65, which establishes accounting and reporting standards for the noncontrolling interest (minority interest) in a subsidiary. ASC 810-10-65 requires non-controlling 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. The Company’s adoption of ASC 810-10-65 as of August 30, 2009 changed the presentation of the non-controlling interest.

~~(4) Comprehensive Income~~ 5

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

			13 weeks ended February 27, 2010			13 weeks ended February 28, 2009			26 weeks ended February 27, 2010			26 weeks ended February 28, 2009
Net income			$	49,378		$	30,346		$	90,643		$	27,711
Other comprehensive income / (loss):
	Foreign currency translation adjustments			(4	)		(8	)		18			(74	)
		Comprehensive income		49,374			30,338			90,661			27,637
Comprehensive income attributable to the non-controlling interest				(568	)		(546	)		(791	)		(717	)
Comprehensive income attributable to NBP			$	48,806		$	29,792		$	89,870		$	26,920

In February 2008, the FASB issued Fair Value Measurements under ASC 820-10, which deferred the effective date of fair value measurement 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. There was no impact when the Company adopted for these nonfinancial assets and nonfinancial liabilities on August 30, 2009. These assets and liabilities are measured at fair value on an ongoing basis but are reported at fair value only in certain circumstances.

(53) ~~Contingencies~~ Inventories

Inventories consist ~~National~~primarily ~~Beef~~of ~~Leathers~~meat products and supplies. ~~LLC~~ Product ~~(NBL),~~inventories aare ~~wholly-owned~~considered ~~subsidiary~~commodities ofand ~~NBP,~~are ~~has~~recorded ~~been~~based ~~named~~on quoted ascommodity aprices, ~~defendant~~which inapproximate ~~seventeen~~net ~~currently~~realizable ~~pending~~value. Supply ~~lawsuits~~and ~~involving~~other ~~NBL's~~inventories ~~tannery~~are valued on ~~located~~the basis of first-in, ~~St. Joseph~~first-out, ~~Missouri.~~specific ~~NBL~~or ~~purchased~~average ~~certain~~cost ~~assets~~methods. Product ofinventories ~~the~~are ~~tannery~~relieved from inventory ~~Prime~~utilizing ~~Tanning~~the first-in, ~~March~~first-out ~~2009~~method. ~~The lawsuits~~

6Inventories at May 29, 2010 and August 29, 2009 consisted of the following (in thousands):

Table of Contents

	May 29, 2010		August 29, 2009
Dressed and boxed meat products	$	141,139	$	119,274
Beef by-products	39,546		29,756
Supplies and other	36,021		26,270

Total inventory	$	216,706	$	175,300

~~NATIONAL BEEF PACKING COMPANY,~~(4) ~~LLC~~Comprehensive ~~AND SUBSIDIARIES~~ Income

Comprehensive ~~NOTES~~income, TOwhich consists ~~CONSOLIDATED~~of ~~FINANCIAL~~net ~~STATEMENTS~~income ~~(UNAUDITED)~~and foreign currency translation adjustments, was as follows for the periods indicated (~~Continued)~~in thousands):

(5) Contingencies (Continued)

	13 weeks ended			13 weeks ended			39 weeks ended			39 weeks ended
	May 29, 2010			May 30, 2009			May 29, 2010			May 30, 2009
Net income	$	79,159		$	46,521		$	169,802		$	74,233
Other comprehensive income / (loss):
Foreign currency translation Adjustments	(11		)	42			7			(32		)
Comprehensive income	79,148			46,563			169,809			74,201
Comprehensive income attributable to the non-controlling interest	(58		)	(232		)	(850		)	(950		)
Comprehensive income attributable to NBP	$	79,090		$	46,331		$	168,959		$	73,251

are pending in the Circuit Courts of Buchanan County, Clinton County, Ray County, and DeKalb County, Missouri and in the U.S. District Court for the Western District of Missouri and were filed between April(5) 22, 2009 and March 12, 2010. The lawsuits allege that Prime and NBL spread wastewater sludge containing hexavalent chromium in four counties in northwest Missouri. The lawsuits currently include fifteen actions filed by individual plaintiffs and two purported class actions. The plaintiffs are seeking an unspecified amount of damages for wrongful death, personal injury, pain and suffering, economic damages, punitive damages, diminished property values and medical monitoring. NBL is vigorously defending the cases. Contingencies

~~The~~National ~~Company~~Beef isLeathers, LLC, or NBL, a ~~party~~wholly-owned tosubsidiary of NBP LLC, is a ~~number~~named ofdefendant ~~other~~in two currently pending purported class actions involving NBL’s tannery located in St. Joseph, Missouri, which NBL purchased in March 2009. These lawsuits ~~and~~were ~~claims~~filed ~~arising~~on July 22, 2009 ~~out~~in ofthe U.S. District Court for the ~~operation~~Western District of ~~its~~Missouri. ~~business~~The lawsuits allege that NBL spread wastewater sludge containing hexavalent chromium in four counties in northwest Missouri. ~~Management~~The ~~believes~~plaintiffs ~~the~~are ~~ultimate~~seeking ~~resolution~~an unspecified amount of ~~such~~damages ~~matters~~for ~~should~~economic ~~not~~damages, ~~have~~punitive damages, diminished property values and medical monitoring. On May 11, 2010, the court issued an order ruling that NBL is not liable under a ~~material~~successor ~~adverse~~liability theory ~~effect~~for onthe conduct of the ~~Company'~~tannery’s ~~financial~~previous ~~condition~~owner and another party prior to NBL’s purchase of the tannery. As a result of this ruling, ~~results~~the plaintiffs in 15 lawsuits filed between April 22, 2009 and April 29, 2010, in the Circuit Courts of ~~operations~~Buchannan orCounty, Clinton ~~liquidity.~~County, and DeKalb County, Missouri seeking damages for economic damages, punitive damages, diminished property values and

(6~~) Fair Value Measurements~~

~~The~~Table Company determines fair value utilizing a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of ~~inputs used to measure fair value are as~~ ~~follows:~~ Contents

~~The~~medical ~~following~~monitoring ~~table~~voluntarily ~~details~~dismissed ~~the~~their ~~assets~~claims ~~and~~against ~~liabilities~~NBL ~~measured~~in ~~at fair value on a recurring basis as of February~~June ~~27,~~ 2010. NBL ~~and~~believes ~~August 29,~~it ~~2009~~has ~~and~~meritorious ~~also~~defenses ~~the level within~~to the ~~fair~~claims ~~value~~in ~~hierarchy~~the ~~used~~remaining totwo ~~measure~~lawsuits ~~each~~and ~~category~~intends ofto ~~assets~~defend ~~(in~~them ~~thousands)~~vigorously.

Description	February 27, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other current assets—derivatives	$	3,411	$	1,408	$	2,003	$	—
Other accrued expenses and liabilities—derivatives	$	861	$	861	$	—	$	—
Capital subject to redemption	$	228,056	$	—	$	228,056	$	—

The Company is 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.

7(6) Capital Subject to Redemption

~~Table~~At any time after certain dates, the earliest being July 31, 2010, the latest being July 31, 2011, certain affiliates of ~~Contents~~our Chief Executive officer, Timothy M. Klein (collectively referred to herein as the “Klein Affiliates”), and/or NBPCo Holdings have the right to request that the Company repurchase their interests, the value of which is to be determined by a specified formula or a mutually agreed appraisal process. If the Company is unable to effect the repurchase within a specified time, the requesting member(s) have the right to cause a sale process to commence.

Generally accepted accounting principles require the Company to ~~NATIONAL~~determine ~~BEEF~~the ~~PACKING~~fair ~~COMPANY~~value of the capital subject to redemption at the end of each reporting period. To the extent this value increases, the change in fair value is accreted over the redemption period. In determining the fair value of the capital subject to redemption held by NBPCo Holdings as of May ~~LLC~~29, 2010, ~~AND~~management ~~SUBSIDIARIES~~has considered previous redemption prices, valuations of peer companies and other factors. A portion of the Klein Affiliates’ capital subject to redemption as of May 29, 2010 was valued based upon the redemption that occurred on June 2, 2010, as described in Note 10 below. The remaining capital subject to redemption held by the Klein Affiliates as of May 29, 2010 was valued based upon a contractually stipulated valuation formula.

The ~~NOTES~~Company TOaccounts ~~CONSOLIDATED~~for ~~FINANCIAL~~changes ~~STATEMENTS~~in ~~(UNAUDITED)~~the ~~(Continued)~~redemption value of these interests by accreting the change in value from the date of change through the earliest redemption date of the respective interests. At May 29, 2010, the value of the capital subject to redemption was determined to be $295.4 million, which was in excess of its carrying value. Accordingly, the carrying value of the capital subject to redemption increased by approximately $31.2 million through accretion during the thirteen weeks ended May 29, 2010, resulting in the $264.4 million carrying value, as reflected in the accompanying consolidated balance sheet as of May 29, 2010.

The ~~(6)~~total ~~Fair~~value ~~Value~~of ~~Measurements~~the capital ~~(Continued)~~subject to redemption at May 29, 2010, increased by approximately $54.9 million compared to the value at August 29, 2009. Offsetting the change in the value of the capital subject to redemption is a corresponding change in members’ capital.

Description	August 29, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other current assets—derivatives	$	1,442	$	1,442	$	—	$	—
Other accrued expenses and liabilities—derivatives	$	5,087	$	3,535	$	1,552	$	—
Capital subject to redemption	$	183,407	$	—	$	183,407	$	—

(7) Fair Value Measurements

The Company ~~has~~determines ~~not~~fair ~~elected~~value ~~the~~utilizing ~~option~~a tothree-level ~~report~~fair ~~any~~value ofhierarchy that prioritizes the ~~selected~~inputs ~~financial~~used ~~assets~~to ~~and~~measure ~~liabilities~~fair atvalue. The fair value. ~~Management~~hierarchy ~~has~~gives ~~used~~the ~~certain~~highest priority ~~agreed~~to ~~upon~~quoted ~~redemption~~market prices ~~in measuring~~(Level 1) and the ~~fair~~lowest ~~value~~priority ofto unobservable ~~the~~inputs ~~capital~~(Level ~~subject~~3). The three levels of inputs used to ~~redemption.~~measure fair value are as follows:

· Level ~~(7)~~1 ~~Disclosure~~— quoted ~~about~~prices ~~Derivative~~in ~~Instruments~~active ~~and~~markets ~~Hedging~~for ~~Activities~~ identical assets or liabilities accessible by the reporting entity.

· Level 2 — Asobservable ~~part~~inputs ofother ~~the~~than ~~Company's~~quoted ~~ongoing~~prices ~~operations,~~included ~~the~~in ~~Company~~Level is1, ~~exposed~~such toas ~~market~~quoted prices ~~risks~~for ~~such~~similar asassets ~~changes~~and liabilities in ~~commodity~~active markets; quoted prices. Tofor identical ~~manage~~or ~~these~~similar ~~risks,~~assets ~~the~~and ~~Company~~liabilities ~~may~~in ~~enter into~~markets ~~the~~that ~~following~~are not active; or ~~derivative~~other ~~instruments~~inputs ~~pursuant~~that toare ~~our~~observable ~~established~~or ~~policies:~~can be corroborated by observable market data.

~~While management~~· Level ~~believes~~3 ~~each~~— unobservable ofinputs ~~these instruments help mitigate various market risks, they are not designated and accounted~~ for asan ~~hedges~~asset asor ~~a result of the extensive recordkeeping~~liability. ~~requirements~~Unobservable ~~associated~~inputs ~~with~~should ~~hedge~~only ~~accounting.~~be ~~Accordingly,~~used ~~the gains and losses associated with the change in fair value of the instruments are recorded~~ to ~~net sales and cost of goods sold in~~ the ~~period~~ ofextent ~~change.~~observable ~~Certain firm commitments for live cattle purchases and all firm commitments for boxed beef sales~~ inputs are ~~treated as normal purchases and sales and~~ not ~~recorded at fair value~~available.

The Company enters into certain commodity derivatives, primarily with a diversified group of highly rated counterparties. The maximum amount of loss due to the credit risk of the counterparties, should the counterparties fail to perform according to the terms of the contracts, is deemed to be immaterial as of February 27, 2010 as all derivatives in an asset position are exchange-traded contracts. The exchange-traded contracts have been entered into under a master netting agreement. None of the derivatives entered into have credit-related contingent features. The Company has $3.2 million in cash collateral posted on its derivative liabilities. 7

8Table of Contents

~~Table~~The following table details the assets and liabilities measured at fair value on a recurring basis as of ~~Contents~~May 29, 2010 and August 29, 2009 and also the level within the fair value hierarchy used to measure each category of assets (in thousands).

NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES

Description	May 29, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Other current assets — derivatives	$	4,629	$	4,629	$	—	$	—
Other accrued expenses and liabilities — derivatives	$	3,008	$	261	$	2,747	$	—
Capital subject to redemption	$	264,371	$	—	$	61,963	$	202,408

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

Description	August 29, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Other current assets — derivatives	$	1,442	$	1,442	$	—	$	—
Other accrued expenses and liabilities — derivatives	$	5,087	$	3,535	$	1,552	$	—
Capital subject to redemption	$	183,407	$	—	$	183,407	$	—

Management ~~(7)~~has ~~Disclosure~~used ~~about~~certain agreed-upon ~~Derivative~~redemption ~~Instruments~~prices in measuring the fair value of the Klein Affiliates capital subject to redemption, which is classified as level 2 as of May 29, 2010. NBPCo Holdings shares are based upon unobservable inputs, thus classified as level 3 as of May 29, 2010. Management has used certain agreed-upon redemption prices in measuring the fair value of the capital subject to redemption as of August 29, 2009. During the 3 months ended May 29, 2010 we have transferred the calculated fair value of NBPCO’s capital subject to redemption from level 2 to level 3 based upon the change in valuation techniques due to the amount of time lapsed and ~~Hedging~~changes ~~Activities~~in ~~(Continued)~~business from the previous agreed-upon redemption price.

~~The following table presents the fair values as discussed in Note~~(8) 6Disclosure ~~and other information regarding derivative instruments not designated as hedging instruments as of~~about ~~February 27,~~Derivative ~~2010~~Instruments and ~~August 29,~~Hedging ~~2009 (in thousands of dollars):~~ Activities

		Derivative Asset			Derivative Liability
		As of February 27, 2010			As of February 27, 2010
		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts		Other current assets	$	3,411	Other accrued expenses and liabilities	$	861
	Totals		$	3,411		$	861

As part of the Company’s ongoing operations, the Company is exposed to market risks such as changes in commodity prices. To manage these risks, the Company may enter into the following derivative instruments pursuant to our established policies:

		Derivative Asset			Derivative Liability
		As of August 29, 2009
					As of August 29, 2009
		Balance Sheet Location
			Fair Value		Balance Sheet Location	Fair Value
Commodity contracts		Other current assets	$	1,442	Other accrued expenses and liabilities	$	5,087
	Totals		$	1,442		$	5,087

· Forward purchase contracts for cattle for use in our beef plants

~~The following~~· Exchange ~~table~~traded ~~presents~~futures contracts ~~the impact of derivative instruments on the Consolidated Statement of Operations~~ for ~~the thirteen and twenty-six week periods ended February 27, 2010 (in thousands of dollars):~~ cattle

			Amount of Gain or (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments		Location of Gain or (Loss) Recognized in Income on Derivatives
			13 Weeks ended February 27, 2010		26 Weeks ended February 27, 2010
Commodity contracts		Net sales	$	3,588	$	(3,169	)
Commodity contracts		Cost of sales		4,393		7,937
	Totals		$	7,981	$	4,768

· Exchange traded futures contracts for grain

While management ~~(8)~~believes ~~Capital~~each ~~Subject~~of these instruments help mitigate various market risks, they are not designated and accounted for as hedges as a result of the extensive recordkeeping requirements associated with hedge accounting. Accordingly, the gains and losses associated with the change in fair value of the instruments are recorded to ~~Redemption~~ net sales and cost of goods sold in the period of change. Certain firm commitments for live cattle purchases and all firm commitments for boxed beef sales are treated as normal purchases and sales and not recorded at fair value.

AtThe ~~any~~Company ~~time~~enters ~~after~~into certain ~~dates,~~commodity ~~the earliest being July 31~~derivatives, ~~2010,~~primarily ~~the~~with ~~latest~~a diversified ~~being~~group ~~July 31,~~of ~~2011,~~highly ~~our~~rated ~~Chief~~counterparties. The ~~Executive~~maximum ~~Officer,~~amount ~~Timothy~~of M.loss ~~Klein~~due ~~(referred~~ to ~~herein~~the ascredit ~~"Mr. Klein"),~~risk ~~and/or~~of ~~NBPCo~~the ~~Holdings~~counterparties, ~~have~~should the ~~right~~counterparties fail to ~~request~~perform ~~that~~according to the ~~Company~~terms ~~repurchase~~of ~~their~~the ~~interests~~contracts, ~~the value of which~~ is deemed to be ~~determined~~immaterial byas aof ~~mutually agreed appraisal process. If the~~May 29, ~~Company~~2010 isas ~~unable~~all toderivatives ~~effect~~in ~~the~~an ~~repurchase~~asset ~~within~~position aare ~~specified~~exchange-traded contracts. The ~~time,~~exchange-traded ~~the~~contracts have ~~requesting~~been ~~member(s)~~entered ~~have~~into ~~the~~under ~~right~~a tomaster ~~cause~~netting aagreement, ~~sale~~and ~~process~~are tonetted ~~commence.~~on the

Generally accepted accounting principles require the Company to determine the fair value of the capital subject to redemption at the end of each reporting period. To the extent that this value increases, this change in fair value is accreted over the redemption period as discussed above. Since the second quarter of fiscal year 2009, management has used certain agreed upon redemption prices that were used in the Unit Redemption Agreements in measuring the fair value of the capital subject to redemption held by NBPCo Holdings. The Unit Redemption Agreement between the Company and 8

9Table of Contents

~~Table~~consolidated balance sheets. None of ~~Contents~~the derivatives entered into have credit-related contingent features. The Company has $3.4 million in cash collateral posted on its derivative liabilities.

The following table presents the fair values as discussed in Note 6 and ~~NATIONAL~~other ~~BEEF~~information ~~PACKING~~regarding ~~COMPANY~~derivative instruments not designated as hedging instruments as of May 29, 2010 and August ~~LLC~~29, ~~AND~~2009 ~~SUBSIDIARIES~~(in thousands of dollars):

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

	Derivative Asset			Derivative Liability
	As of May 29, 2010			As of May 29, 2010
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Other current assets	$	4,629	Other accrued expenses and liabilities	$	3,008
Totals		$	4,629		$	3,008

(8) Capital Subject to Redemption (Continued)

	Derivative Asset			Derivative Liability
	As of August 29, 2009			As of August 29, 2009
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Commodity contracts	Other current assets	$	1,442	Other accrued expenses and liabilities	$	5,087
Totals		$	1,442		$	5,087

~~Timothy Klein~~The ~~and~~following ~~affiliates~~table ~~provides~~presents ~~for~~the aimpact ~~formula-based method~~ of ~~calculating~~derivative ~~their~~instruments ~~Class B~~on the ~~interests~~Consolidated ~~which~~Statement ~~was~~of ~~used~~Operations infor ~~valuing~~ the ~~interest~~thirteen ~~of Timothy Klein~~ and ~~affiliates~~thirty-nine atweek ~~February~~periods ended May 2729, 2010. (in thousands of dollars):

The Company accounts for changes in the redemption value of redeemable interests by accreting the change in value from the date of change through the earliest redemption date of the respective interests. At February 27, 2010, the value of the capital subject to redemption was determined to be $264.2 million, which was in excess of its carrying value. Accordingly, the carrying value of the capital subject to redemption increased by approximately $30.6 million through accretion during the twenty-six weeks ended February 27, 2010, resulting in the $228.1 million carrying value, as reflected in the accompanying consolidated balance sheet as of February 27, 2010.

Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
		13 Weeks ended May 29, 2010			39 Weeks ended May 29, 2010
Commodity contracts	Net sales	$	(11,866	)	$	(8,697	)
Commodity contracts	Cost of sales	8,794			857
Totals		$	(3,072	)	$	(7,840	)

The total value of the capital subject to redemption at February 27, 2010, increased by approximately $23.6 million compared to the value at August 29, 2009. Offsetting the change in the value of the capital subject to redemption is a corresponding change in members' capital. (9) Segments

The Company’s operating segments are based on segment profit and evaluated by the Chief Executive Officer, who also serves as the Chief Operating Decision Maker (9CODM). Segment profit is measured as operating income for NBP’s two reporting segments, Core Beef and Other, based on the definitions provided in ASC 280, Disclosures about Segments of an Enterprise and Related Information.

~~The~~Core ~~Company's~~Beef—the ~~operating~~majority ~~segments~~of NBP’s revenues are ~~based~~generated onfrom the ~~segment~~sale ~~profit~~of ~~and~~fresh ~~evaluated~~meat, bywhich ~~the~~include ~~Chief~~chuck ~~Executive~~cuts, ~~Officer~~rib cuts, ~~who~~loin ~~also~~cuts, ~~serves~~round cuts, asthin ~~the~~meats, ~~Chief~~ground ~~Operating~~beef, ~~Decision~~and ~~Maker (CODM)~~other products. ~~Segment~~In ~~profit is~~addition, ~~measured~~we asalso ~~operating~~sell beef ~~income~~by-products ~~for~~to ~~NBP's~~the ~~two~~variety ~~reporting segments~~meat, ~~Core~~feed ~~Beef and Other~~processing, ~~based~~fertilizer onand ~~the~~pet ~~definitions~~food industries. Aggregation ~~provided~~criteria inwere applied ~~ASC~~to ~~280,~~determine ~~Disclosures~~the ~~about~~constituents ~~Segments~~ of anthe ~~Enterprise and~~Core ~~Related~~Beef ~~Information~~segment.

Core Beef—the majority of NBP's revenues are generated from the sale of fresh meat, which include chuck cuts, rib cuts, loin cuts, round cuts, thin meats, ground beef, and other products. In addition, we also sell beef by-products including hides to the variety meat, feed processing, fertilizer and pet food industries. Aggregation criteria were applied to determine the constituents of the Core Beef segment. 9

~~Other—the Other segment of NBP consists of the operations of National Carriers, Inc., a refrigerated and~~Table ~~livestock contract carrier company, National Elite Transportation, LLC, a provider~~ of ~~transportation logistics services, and Kansas City Steak Company, LLC, a portion control steak cutting operation.~~ Contents

~~Eliminations~~Other—~~this~~the ~~line~~Other ~~item~~segment ~~includes~~of ~~eliminations~~NBP consists of ~~inter-segment~~the operations of National Carriers, Inc., a refrigerated and ~~intra-segment~~livestock ~~activity~~contract ~~resulting~~carrier company, ~~from~~National ~~the~~Elite Transportation, LLC, a provider of transportation ~~consolidation~~logistics ~~process.~~services, and Kansas City Steak Company, LLC, a portion control steak cutting operation.

10Eliminations—this line item includes eliminations of inter-segment and intra-segment activity resulting from the consolidation process.

~~Table~~The offollowing ~~Contents~~table represents segment results for the periods indicated (in thousands):

NATIONAL BEEF PACKING COMPANY, LLC AND SUBSIDIARIES

	13 weeks ended			13 weeks ended			39 weeks ended			39 weeks ended
	May 29, 2010			May 30, 2009			May 29, 2010			May 30, 2009
Net sales:
Core beef	$	1,575,926		$	1,331,722		$	4,306,246		$	4,070,295
Other	53,954			61,387			173,962			180,857
Eliminations	(92,001		)	(75,089		)	(258,793		)	(205,937		)
Total net sales	$	1,537,879		$	1,318,020		$	4,221,415		$	4,045,215

Operating income:
Core beef	$	82,252		$	51,865		$	181,911		$	92,370
Other	525			1,395			3,652			5,317
Total operating income	82,777			53,260			185,563			97,687

Interest income	4			40			39			145
Interest expense	(3,513		)	(5,816		)	(11,563		)	(18,191		)
Other (expense) / income, net	217			(625		)	(3,559		)	(4,509		)
Total income before taxes	$	79,485		$	46,859		$	170,480		$	75,132

	May 29, 2010			May 30, 2009
Assets:
Core beef	$	836,339		$	784,636
Other	44,155			42,668
Eliminations	(208		)	(516		)
Total assets	$	880,286		$	826,788

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~ (~~UNAUDITED~~10) Subsequent ~~(Continued)~~ Events

On June 2, ~~(9)~~2010, ~~Segments~~the ~~(Continued)~~Company entered into a Unit Redemption Agreement pursuant to Section 12.5 of our LLC Agreement to redeem at agreed-upon redemption prices a portion of the membership interests in the Company that are owned or controlled by our Chief Executive Officer, Timothy M. Klein. As a result, Mr. Klein’s affiliates received $8.0 million for their redeemed units, and he retained his position with the Company.

In addition, the Company’s Credit Facility was amended and restated on June 4, 2010. The amendment and restatement ~~following~~increased ~~table~~the ~~represents~~available ~~segment~~borrowings ~~results~~under ~~for~~our term loan to $375.0 million, increased the ~~periods~~revolving ~~indicated~~line ~~(in~~of credit ~~thousands):~~to $250.0 million, reduced the applicable margin of the term loan and revolving line of credit, extended the maturity date of the term loan to June 2015 and revised the payment schedule of the term loan, among other things. The related bank financing charges of approximately $4.1 million will be amortized over the life of the loan.

			13 weeks ended February 27, 2010			13 weeks ended February 28, 2009			26 weeks ended February 27, 2010			26 weeks ended February 28, 2009
Net sales:
	Core beef		$	1,367,189		$	1,300,714		$	2,730,320		$	2,738,573
	Other			65,088			61,715			120,008			119,469
	Eliminations			(91,351	)		(64,211	)		(166,792	)		(130,847	)
		Total net sales	$	1,340,926		$	1,298,218		$	2,683,536		$	2,727,195
Operating income:
	Core beef		$	54,931		$	38,095		$	99,659		$	40,505
	Other			1,696			2,221			3,129			3,921
		Total operating income		56,627			40,316			102,788			44,426
Interest income				6			50			34			106
Interest expense				(3,519	)		(5,567	)		(8,051	)		(12,376	)
Other expense, net				(3,784	)		(4,261	)		(3,776	)		(3,884	)
		Total income before taxes	$	49,330		$	30,538		$	90,995		$	28,272

			February 27, 2010			February 28, 2009
Assets:
	Core beef		$	769,251		$	757,124
	Other			43,534			41,078
	Eliminations			(2,172	)		(830	)
		Total assets	$	810,613		$	797,372

Table of Contents

11Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The ~~Table~~following ofdiscussion ~~Contents~~should be read in conjunction with our Consolidated Financial Statements and related notes and other financial information appearing elsewhere in this report.

Disclosure ~~Item 2. Management's~~Regarding ~~Discussion~~Forward-Looking ~~and Analysis of Financial Condition and Results of Operations.~~ Statements

~~The~~This ~~following~~report ~~discussion~~contains ~~should~~“forward-looking bestatements,” ~~read~~which inare ~~conjunction~~subject ~~with~~to a number of risks and uncertainties, many of which are beyond our ~~consolidated~~control. Forward-looking ~~financial~~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 ~~related~~in ~~notes~~our principal markets; the availability and ~~other~~prices of live cattle, ~~financial~~natural ~~information~~resources ~~appearing~~and ~~elsewhere~~commodities; food safety; livestock disease, including the identification of cattle with Bovine Spongiform Encephalopathy (BSE); competitive practices and consolidation in ~~this~~the ~~report.~~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 ~~Disclosure~~this ~~Regarding~~report ~~Forward~~will in fact transpire. Readers are cautioned not to place undue reliance on these forward-~~Looking~~looking ~~Statements~~ 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. of our Annual Report for the year ended August 29, 2009 on Form 10-K filed with the Securities and Exchange Commission for other important factors that could cause actual results to differ materially from those in any such forward-looking statements, and which should be read in conjunction with this report.

~~This report contains "forward-looking statements," which are subject to a number of risks and uncertainties, many of which are beyond~~Industry 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. Outlook

InYear-to-year ~~light~~increases ofin ~~these~~placement ~~risks~~of ~~and~~cattle ~~uncertainties,~~on ~~there~~feed ~~can~~during ~~be no assurance that~~ the ~~results~~spring ~~and~~quarter ~~events contemplated by the forward-looking information contained in this report~~ will ~~in fact~~provide ~~transpire.~~adequate ~~Readers~~fed ~~are~~cattle ~~cautioned~~supplies ~~not~~going tointo ~~place~~the ~~undue~~fall ~~reliance on these forward-looking statements~~quarter. However, industry Weherd doliquidation ~~not~~persists ~~undertake~~and ~~any~~from ~~obligation~~a tomacro ~~update~~perspective orkeeps ~~revise any forward-looking statements. All subsequent~~longer ~~written~~term orcattle ~~oral~~supplies ~~forward-looking statements attributable to us or persons acting on our behalf are expressly qualified~~ in ~~their~~a ~~entirety~~downward ~~by these factors~~trend. The ~~See~~lack ~~also~~of ~~Part II.~~expansion ~~Item 1A, Risk Factors, included~~ in pork ~~this~~output ~~report,~~ and ~~Part I,~~very ~~Item 1A,~~modest ~~Risk~~growth ~~Factors~~ in ~~our~~poultry ~~Annual~~will ~~Report~~keep onper ~~Form 10-K~~capita ~~for the year~~protein ~~ended~~supplies ~~August 29,~~in ~~2009~~check onand ~~Form 10-K~~provide ~~filed~~underlying ~~with~~support ~~the~~to ~~Securities~~cattle and ~~Exchange~~beef prices. General ~~Commission~~economic ~~for~~conditions ~~other~~remain ~~important~~tenuous ~~factors~~and ~~that~~will ~~could~~continue ~~cause~~to dominate ~~actual~~market ~~results~~potential toover ~~differ~~the ~~materially~~coming ~~from those~~months. Global intrade ~~any~~prospects remain ~~such~~positive ~~forward-looking~~on ~~statements,~~similar ~~and~~global ~~which~~supply ~~should~~issues beas ~~read~~well inas ~~conjunction~~the ~~with~~potential ~~this~~for stronger ~~report.~~economic performance.

Recent ~~Industry Outlook~~ Developments

~~Beef~~On June 22, ~~prices have responded positively since the beginning of~~ 2010 ~~due to weather related carcass weight declines~~, ~~fewer~~the ~~cattle~~Grain ~~on feed,~~Inspection ~~improved~~and ~~beef~~Packers ~~exports~~ and ~~smaller~~Stockyards Administration ~~beef~~published ~~imports. The smaller than expected domestic beef supply has also found modest support from~~ a ~~economy~~proposed ~~working~~rule adding ~~its~~new ~~way~~regulations ~~slowly~~under ~~out~~the Packers ofand ~~recession~~Stockyards Act. If ~~Meanwhile~~adopted, ~~competing meat supplies do not appear burdensome which should keep~~ the ~~overall~~new ~~protein~~regulations ~~supply~~could inhave ~~check~~a ~~and~~significant ~~continue~~impact ~~to support stronger year~~ on ~~year~~marketing ~~cattle~~ and procurement ~~beef~~practices ~~prices.~~in Wethe ~~believe~~beef ~~that~~processing ~~global~~industry ~~beef~~ and ~~beef~~could ~~by-product~~affect ~~demand~~how ~~will~~we procure ~~continue~~cattle tofor ~~improve~~our onvalue-added ~~gradual~~programs ~~economic gains~~ and ~~smaller~~how ~~global~~we ~~protein~~process and bymarket value-~~product~~added ~~production~~beef products. ~~For~~We ~~the~~cannot ~~remainder~~presently ofassess ~~2010~~the ~~and~~full ~~beyond,~~economic weimpact ~~expect~~of ~~that~~ the ~~cattle~~proposed ~~industry~~rule on ~~will continue to struggle with~~ the ~~long~~beef ~~term~~processing ~~implications~~industry ofor aon ~~herd~~our ~~reduction~~operations.

Beef Export ~~Recent Developments~~ Markets

OnExport markets ~~November 3,~~for ~~2009,~~U.S. ~~the~~beef ~~United~~products ~~Food~~remain ~~and~~constrained ~~Commercial~~since ~~Workers Union (~~the ~~"UFCWU")~~discovery ~~filed~~of a ~~petition~~case of ~~with~~BSE in the ~~Regional~~State ~~Office~~ of ~~the~~ ~~National~~Washington ~~Labor~~in ~~Relations~~December 2003, ~~Board~~as ~~(the~~well ~~"NLRB")~~as inother isolated ~~Kansas~~cases. In ~~City~~July 2006, ~~Missouri~~Japan agreed ~~seeking~~ to ~~represent~~reopen ~~approximately~~its ~~2,200~~market ~~employees~~to ~~who~~U.S. ~~work~~beef atfrom ~~our~~cattle ~~Dodge~~aged ~~City,~~20 ~~Kansas~~months ~~facility~~and younger. South OnKorea ~~January 8,~~announced ~~2010, the~~a ~~UFCWU~~provisional ~~withdrew~~opening of its ~~petition~~border ~~for~~to ~~an election~~U.S. beef from animals 30 months and younger in September 2006,

~~Beef Export Markets~~ 11

~~Export~~Table ~~markets for U.S. beef products remain constrained since the discovery~~ of ~~a single 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. In April 2008, our Brawley facility was suspended from shipping beef to Japan following the discovery of a short loin Contents

12however, its border was subsequently closed in October 2007. South Korea reopened its border and started inspecting U.S. beef near the end of June 2008. These constraints and uncertainties have had a negative impact on beef export demand.

~~Table~~We cannot presently assess the full economic impact of ~~Contents~~the consequences of BSE on the U.S. beef packing industry or on our operations. Existing or new import restrictions or additional regulatory restrictions or disruptions in domestic and foreign consumer demand for beef could have a material adverse affect on our revenues and net income.

~~which included~~Results ~~a portion~~ of a spinal column, a specified risk material, prohibited by Japan. Our Brawley facility was subsequently cleared to resume shipments to Japan on September 19, 2008. South Korea announced a provisional opening of its border to U.S. beef from animals 30 months and younger in September 2006 but subsequently closed its border again in October 2007. South Korea reopened its border and started inspecting U.S. beef near the end of June 2008. Our Dodge City facility was removed for two days from the eligible supplier list to Mexico beginning on December 23, 2008 for an alleged issue that arose in September of 2008 on a basis which we believe to be untrue and unfounded. These constraints and uncertainties have historically had a negative impact on beef margins during the periods in which they occurred. Operations

~~We cannot~~Thirteen ~~presently~~weeks ~~assess~~ended ~~the full economic impact of the consequences of BSE on the U.S. beef packing industry or on our operations. Existing or new import restrictions or additional~~May 29, ~~regulatory~~2010 ~~restrictions~~compared orto ~~disruptions~~thirteen inweeks ~~domestic~~ended ~~and~~May 30, ~~foreign consumer demand for beef could have a material adverse effect on the Company's revenues and net income.~~ 2009

General. Net income for the thirteen weeks ended May 29, 2010 was approximately $79.2 million compared to approximately $46.5 million ~~Results~~for the thirteen weeks ended May 30, 2009, an increase of ~~Operations~~ approximately $32.7 million. Sales were higher in the thirteen weeks ended May 29, 2010 compared to the thirteen weeks ended May 30, 2009 due in part to an approximate 3.1% increase in the average volume of cattle processed per week and increase in the average sales prices per head of approximately 14.8% during this reporting period.

Total ~~Thirteen~~costs and expenses of approximately $1,455.1 million for the thirteen weeks ended ~~February~~May 2729, 2010 were 94.6% as a percent of sales compared to approximately $1,264.8 million for the thirteen weeks ended ~~February~~May 2830, 2009 , or 96.0% as a percent of sales. An increase in the volume of cattle processed and cost of live cattle, and a decrease in total costs as a percentage of sales resulted in increased operating income of approximately $29.5 million for the thirteen week period of fiscal 2010 as compared to the thirteen week period of fiscal 2009.

~~General~~Net Sales. Net ~~income~~sales were approximately $1,537.9 million for the thirteen weeks ended ~~February~~May 2729, 2010 ~~was approximately $49.4 million~~ compared to ~~a net income of~~ approximately $301,318.3 0 million for the thirteen weeks ended ~~February~~May 2830, 2009, an ~~improvement~~increase of approximately $19219.~~1 million.~~9 ~~Total costs and expenses of approximately $1,284.3~~ million, ~~and~~or ~~$1,257~~16.97%. ~~million~~ The ~~for~~increase ~~the~~in ~~thirteen~~net ~~weeks~~sales ~~ended~~resulted ~~February 27,~~from ~~2010~~an ~~and~~approximate ~~February 28, 2009, respectively, were 95~~3.81% asincrease ~~a percent of sales for~~ in the ~~thirteen weeks~~average ~~ended~~volume ~~February 27,~~of ~~2010~~cattle ~~compared~~processed toper 96week.9% Also ~~for~~contributing to the ~~thirteen~~increase ~~weeks~~in ~~ended~~sales was ~~February 28,~~an ~~2009.~~increase ~~Continued~~in ~~stable~~average ~~demand~~sales ~~for~~prices ~~beef~~per ~~products~~head ~~and~~of ~~relative~~about ~~stability~~14.8% ~~in cattle prices~~ during the thirteen ~~second~~week ~~quarter~~period ofended ~~fiscal~~May 29, 2010 as compared to the ~~same~~similar thirteen week period of fiscal 2009 ~~allowed the sales prices to cover the cost of the cattle we processed~~. .

~~Net~~Cost of Sales. ~~Net~~ Cost of sales ~~were~~was approximately $1,~~340~~429.9 4 million for the thirteen weeks ended ~~February~~ May 2729, 2010 compared to ~~approximately~~ approximately $1,~~298~~242.2 3 million for the thirteen weeks ended ~~February~~May 2830, 2009, an increase of approximately $42187.7 1 million, or 315.31%. The increase ~~in net sales~~ resulted primarily from aan approximate 3.1% increase in the number of cattle processed, asand ~~well~~an asincrease ain live 1cattle prices of approximately 14.92%. Partially ~~increase~~offsetting these increases was a decrease in the ~~sales~~average cattle ~~prices~~weights ~~per~~of ~~head~~approximately in1.2% during the thirteen ~~weeks~~week ~~ended~~period ~~February 27,~~of fiscal 2010 as compared to the ~~same~~thirteen week period inof ~~the~~fiscal ~~prior year~~2009.

~~Cost~~Selling, ofGeneral ~~Sales~~and Administrative Expenses. ~~Cost~~ Selling, general ofand ~~sales~~administrative ~~was~~expenses were approximately $~~1,259~~13.9 2 million for the thirteen weeks ended ~~February~~ May 2729, 2010 compared to approximately $~~1,236~~10.~~3 million~~9 million for the thirteen weeks ended ~~February~~May 2830, 2009, an increase of approximately $232.6 3 million, or 121.91%. The increase ~~was primarily a result of a 3.1%~~reflects an increase in ~~the~~bad ~~number~~debt expense of ~~live~~approximately ~~cattle~~$1.4 ~~processed~~million, asadvertising ~~well~~and promotion asexpense aof approximately $0.4% million, and an increase in ~~average~~salaries ~~cattle~~of approximately ~~prices~~$0.3 million.

~~Selling,~~Depreciation ~~General~~ and ~~Administrative Expenses~~Amortization Expense. ~~Selling,~~ Depreciation ~~general~~ and ~~administrative~~ amortization expenses were approximately $12.1 5 million for the thirteen weeks ended ~~February~~May 2729, 2010 compared to approximately $1011.3 6 million for the thirteen weeks ended ~~February~~May 2830, 2009, an increase of approximately $10.8 9 million, or 177.58%. ~~The~~ Depreciation ~~increase reflects an increase in advertising and promotion~~ expense ofincreased ~~approximately~~due ~~$0.5 million,~~to anassets being ~~increase~~placed ininto ~~salaries of approximately $0.3 million~~service, anprimarily ~~increase~~at inour ~~consulting expenses~~three ofbeef ~~approximately~~plants ~~$0.3 million~~ and antwo ~~increase~~case ready inplants, ~~travel~~during ~~and~~fiscal ~~related~~year ~~expenses of approximately $0~~2010.~~3 million.~~

~~Depreciation and Amortization Expense. Depreciation and amortization expenses were approximately $~~12.4 million for the thirteen weeks ended February 27, 2010 compared to approximately $11.3 million for the thirteen weeks ended February 28, 2009, an increase of approximately $1.1 million, or 9.7%. Depreciation expense increased due to assets being placed into service, primarily at our three beef plants and two case ready plants, during fiscal year 2010.

13Table of Contents

~~Table~~Operating Income. Operating income was approximately $82.8 million for the thirteen weeks ended May 29, 2010 compared to approximately $53.3 million for the thirteen weeks ended May 30, 2009, an increase of ~~Contents~~approximately $29.5 million. The increase in operating income for the thirteen week period ending May 29, 2010, resulted primarily from a decrease in the percentage of costs as a percentage of sales of approximately 1.4%, driven by improved demand characteristics for beef products, as compared to the thirteen week period ended May 30, 2009.

~~Operating~~Interest ~~Income/Loss~~Expense. ~~Operating~~ Interest ~~income~~expense was approximately $563.6 5 million for the thirteen weeks ended ~~February~~May 2729, 2010 compared to an ~~operating income of~~ approximately $405.3 8 million for the thirteen weeks ended ~~February~~May 2830, 2009, ana decrease ~~improvement~~ of approximately $162.3 million., or 39.7%. The ~~increased~~decrease ~~operating~~in ~~income~~interest expense during the ~~resulted~~thirteen ~~from~~weeks anended ~~increase~~May 29, in2010 ~~sales~~as ~~price~~compared ~~per~~to ~~head~~the ~~for~~thirteen ~~beef~~week ~~products~~period ended May 30, 2009 was due primarily to the purchase and ~~relatively~~cancellation ~~steady~~of the ~~cattle~~remaining ~~prices~~$66.9 million of our Senior Notes during the 2nd quarter of fiscal 2010 resulting in a decrease of approximately $3.0 million in interest expense compared to the thirteen week period ended May 30, 2009.

~~Interest~~Other, ~~Expense~~net. ~~Interest~~ Other, ~~expense~~net non-operating income was approximately $30.~~5 million~~2 ~~for the thirteen weeks ended February 27, 2010 compared to $5.6~~ million for the thirteen weeks ended ~~February~~May 2829, ~~2009, a decrease of $2.1 million or 37.5%. The decrease in interest expense during the thirteen weeks ended~~ ~~February 27,~~ 2010 as compared to ~~the~~other, ~~same~~net ~~period~~non-operating ~~last~~expense ~~year was due primarily to a reduction in average daily borrowings~~ of approximately 22$0.7%6 ~~as well as the purchase and cancellation of our~~million ~~Senior~~for ~~Notes of approximately $27.1 million during~~ the ~~second quarter of fiscal 2010 which contributed to a decrease of approximately 165 basis points in our average borrowing rate during the~~ thirteen weeks ended ~~February~~May 2730, ~~2010~~2009, asan ~~compared~~increase ~~to the same period~~ of ~~last year~~approximately $0.8 million.

~~Other, net. Other, net non~~Thirty-~~operating~~nine ~~expense was approximately $3.8 million for the thirteen~~ weeks ended ~~February~~May 2729, ~~2010~~ 2010 compared to ~~other, net non~~thirty-~~operating~~nine ~~expense of approximately $4.2 million for the thirteen~~ weeks ended ~~February~~May 2830, 2009, a decrease of approximately $0.4 million. During the thirteen weeks ended February 27, 2010, we expensed costs we incurred in connection with the attempted IPO by National Beef, Inc. in December 2009 of $2.2 million as well as expensing the remaining senior notes issuance fees of $0.2 million compared to the write-off of approximately $3.6 million of legal fees related to the termination of the Membership Interest Purchase Agreement (MIPA) and the approximate $0.7 million write-off of obsolete parts at our case ready facilities during the same period of the prior year.

~~Income Tax Expense/Benefit~~General. ~~Income~~ Net ~~tax~~income ~~benefit was $0.1 million~~ for the ~~thirteen~~thirty-nine weeks ended ~~February~~ May 2729, 2010 was approximately $169.8 million compared to net income of approximately $074.2 million ~~expense~~ for the ~~same~~thirty-nine ~~period~~weeks ofended ~~fiscal~~May 30, ~~year~~ 2009, aan ~~decrease~~increase of approximately $095.3 6 million,. Sales ~~or 50~~were 4.04%. Ahigher ~~decrease~~ in ~~income~~the ~~taxes~~thirty-nine ~~for~~week period ended May 29, 2010 compared to the thirty-nine week period ~~was~~ended May 30, 2009 primarily ~~related~~due toin ~~our~~part ~~subsidiary,~~to an ~~National~~approximate ~~Carriers~~1.1% ~~Income~~increase ~~tax~~in ~~expense~~the isnumber ~~recorded~~of oncattle ~~income~~processed, ~~from~~and ~~National~~a ~~Carriers,~~4.6% increase ~~which~~in isthe ~~organized~~average assales aprice Cper ~~Corporation~~head.

Total ~~Twenty~~costs and expenses of approximately $4,035.9 million for the thirty-~~six~~nine weeks ended ~~February~~May 2729, 2010 were 95.6% as a percent of sales compared to ~~twenty~~approximately $3,947.5 million for the thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009 , or 97.6% as a percent of sales. An increase in the volume of cattle processed and cost of live cattle and a decrease in total costs as a percentage of sales resulted in increased operating income of approximately $87.8 million for the thirty nine weeks ended May 29, 2010 compared to the same thirty nine week period of fiscal 2009.

~~General~~Net Sales. Net ~~income~~sales were approximately $4,221.4 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2729, 2010 ~~was approximately $90.6 million~~ compared to ~~a net income of~~ approximately $274,045.7 2 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009, an ~~improvement~~ increase of approximately $62176.9 2 million., or 4.4%. Net sales ~~were~~increased ~~lower~~primarily indue ~~the twenty-six~~to ~~weeks~~an ~~ended~~approximate ~~February 27,~~1.1% ~~2010~~increase ~~compared~~in tothe number ~~those~~ of ~~the~~cattle ~~prior~~processed, ~~period~~and ~~primarily~~a ~~due~~4.6% toincrease anin the average ~~decrease in~~ sales ~~prices~~price per head, ~~of approximately 0.4%. The number of cattle processed~~ during the ~~current twenty~~thirty-~~six~~nine ~~week~~weeks ~~period~~ended ~~was~~May 29, ~~0.1%~~2010 ~~more~~as ~~than~~compared to the thirty-nine ~~same~~weeks ~~period~~ended ofMay 30, ~~last year~~2009.

~~Total costs~~Cost ~~and~~of ~~expenses~~Sales. Cost of ~~approximately~~sales ~~$2,580.8 million~~was ~~and~~approximately $23,~~682~~962.8 6 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2729, 2010 ~~and~~compared ~~February 28,~~to ~~2009,~~approximately ~~respectively~~$3, ~~were 96~~882.2%6 asmillion ~~a percent of sales~~ for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009, ~~compared~~an toincrease ~~98.4%~~of ~~for~~approximately ~~the~~$80.0 ~~twenty-six weeks ended February 28~~million, ~~2009~~or 2.1%. The Aincrease ~~relatively~~in ~~stable~~cost ~~demand~~of sales for ~~beef~~the thirty-nine ~~products~~weeks ~~and~~ended ~~lower~~May 29, ~~cattle~~2010 ~~prices~~resulted ~~allowed~~primarily ~~for~~from ~~increased~~an ~~sales~~approximate 1.1% ~~prices~~increase toin ~~cover~~ the ~~cost~~number of ~~the live~~ cattle ~~that~~processed, weand ~~processed~~an ~~during~~increase ~~the~~of ~~twenty-six~~approximately ~~week~~0.9% ~~period~~in oflive ~~fiscal~~cattle ~~2010~~prices as compared to the ~~same~~thirty-nine week period of fiscal 2009.

~~Net~~Selling, ~~Sales~~General and Administrative Expenses. ~~Net~~ Selling, ~~sales~~general and administrative expenses were approximately $~~2,683~~36.6 5 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~ May 2729, 2010 compared to approximately $~~2,727~~32.2 1 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009, an aincrease ~~decrease~~ of approximately $434.6 4 million, or 113.67%. The ~~slight~~increase ~~decrease~~for inthis ~~net~~period ~~sales resulted~~is primarily ~~from~~due to an ~~average~~increase ~~decrease~~ in ~~sales~~bad ~~prices~~debt ~~per~~expense ~~head~~ of 0approximately $1.4%6 ~~in the twenty-six weeks ended February 27~~million, ~~2010~~increase asin marketing ~~compared~~of toapproximately ~~the~~$1.1 ~~same~~million, ~~period~~increase in ~~the~~travel ~~prior~~for ~~year while~~ the ~~volume~~period of approximately ~~cattle~~$0.9 ~~processed~~million, and increased byconsulting ~~approximately~~expenses of approximately $0.~~1%.~~8 million.

1413

Table of Contents

~~Cost~~Depreciation ofand ~~Sales~~Amortization Expense. ~~Cost~~ Depreciation ofand ~~sales~~amortization expenses ~~was~~were approximately $~~2,533~~36.2 8 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~ May 2729, 2010 compared to approximately $~~2,640~~32.3 8 million for the ~~twenty~~thirty-~~six~~ nine weeks ended ~~February~~May 2830, 2009, aan ~~decrease~~increase of approximately $~~107~~4.1 0 million, or 412.12%. Depreciation ~~The~~expense ~~decrease~~increased ~~was~~due ~~primarily~~to ~~a result of decreased live cattle prices that were approximately 5.4% lower~~assets ~~than~~being ~~the~~placed ~~twenty-six~~into ~~week~~service, ~~period~~primarily ofat ~~last~~our ~~year.~~three ~~Partially~~beef ~~offsetting~~plants ~~this~~and ~~decrease~~two ~~was a slight increase in cattle processed of approximately 0.1% for the current twenty-six week~~case ~~period~~ready ~~ended February 27~~plants, ~~2010~~during ~~as compared to the same period of~~ fiscal ~~2009.~~year 2010.

~~Selling,~~Operating ~~General and Administrative Expenses~~Income. ~~Selling,~~ Operating ~~general~~income ~~and~~was ~~administrative expenses were~~ approximately $23185.3 6 million for the ~~twenty~~ thirty-~~six~~nine weeks ended ~~February~~May 2729, 2010 compared to approximately $2197.2 7 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009, an increase of approximately $287.~~1 million, or~~ 9~~.9%.~~ million. The increase ~~for~~in ~~this~~operating ~~period~~income isfor ~~primarily~~the ~~due~~thirty-nine toweek anperiod ~~approximate~~ended ~~$0.7~~May ~~million increase in advertising and marketing expenses~~29, ~~an increase in legal~~ ~~expense~~2010, ofresulted ~~approximately~~primarily ~~$0.5 million,~~from ana ~~increase~~decrease in ~~consulting~~the ~~expense~~percentage of ~~approximately~~costs ~~$0.4 million~~as ~~and~~a anpercentage of ~~increase~~sales ~~in salary expenses~~ of approximately $02.~~4 million~~0%, ~~during the current period~~ as compared to the ~~same~~thirty-nine week period ended ofMay 30, ~~last year~~2009.

~~Depreciation~~Interest ~~and Amortization~~ Expense. ~~Depreciation~~ Interest ~~and~~expense ~~amortization~~was ~~expenses were~~ approximately $2411.3 6 million for the ~~twenty~~thirty-~~six~~ nine weeks ended ~~February~~May 2729, 2010 compared to approximately $2118.2 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009, a andecrease ~~increase~~ of approximately $36.1 6 million, or 1436.63%. The ~~Depreciation~~decrease in interest expense ~~increased~~during ~~due~~the thirty-nine weeks ended May 30, 2009 as compared to ~~assets~~the ~~being~~thirty-nine ~~placed~~week period ~~into~~ended ~~service~~May 30, ~~primarily~~2009 atwas ~~our~~due ~~three~~primarily ~~beef~~to ~~plants~~the purchase and cancellation ~~two~~of ~~case~~the ~~ready~~remaining ~~plants,~~$66.9 million of our Senior Notes during ~~fiscal~~the ~~year~~2nd quarter of fiscal 2010 resulting in a decrease of approximately $7.6 million in interest expense compared to the thirty-nine week period ended May 30, 2009.

~~Operating~~Other, ~~Income~~net. ~~Operating~~ Other, ~~income~~net ~~was~~non-operating expense was approximately $~~102~~3.8 6 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2729, 2010 compared to other, net non-operating ~~income~~expense of approximately $~~44.~~4 .5 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009, ana ~~improvement~~decrease of approximately $580.4 9 million. The improved operating income resulted from a relatively stable demand for beef products and lower cattle prices which increased the margin of the live cattle we processed in the current twenty-six week period as compared to the same period of last year.

~~Interest~~Income Tax Expense. ~~Interest~~ Income tax expense was approximately $80.1 7 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2729, 2010 compared to approximately $120.4 9 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009, a decrease of approximately $40.3 2 million, or 3422.72%. This ~~The~~ decrease in ~~interest~~income ~~expense~~taxes ~~during the~~for ~~twenty-six weeks ended February 27, 2010 as compared to~~ the ~~same~~ period of ~~last~~approximately ~~year~~$0.2 million was ~~due~~related ~~primarily~~ to aour ~~reduction~~subsidiary, inNational Carriers. Income ~~average~~tax ~~daily~~expense ~~borrowings~~is ~~of approximately 23.5%. In~~recorded ~~addition,~~on weincome ~~purchased~~from ~~and~~National ~~cancelled~~Carriers, ~~the~~which ~~remaining~~is ~~$66.9 million~~organized ofas ~~our~~a ~~Senior~~C ~~Notes during the twenty-six weeks ended February 27, 2010~~Corporation.

~~Income~~Segment Tax Expense. Income tax expense was $0.4 million for the twenty-six weeks ended February 27, 2010 compared to $0.6 million for the same period of fiscal year 2009, a decrease of $0.2 million, or 33.3%. A decrease in income taxes for the period was primarily related to our subsidiary, National Carriers. Income tax expense is recorded on income from National Carriers, which is organized as a C Corporation. Results

The Company’s operating segments are based on segment profit and evaluated by the Chief Executive Officer, who also serves as the Chief Operating Decision Maker (CODM). Segment ~~Results~~ profit is measured as operating income for NBP’s two reporting segments, Core Beef and Other, based on the definitions provided in ASC 280, Disclosures about Segments of an Enterprise and Related Information.

~~The~~Core ~~Company's~~Beef—the ~~operating~~majority ~~segments~~of ~~are~~NBP’s ~~based~~revenues onare ~~segment~~generated ~~profit~~from the ~~and~~sale ~~evaluated~~of byfresh ~~the~~meat, ~~Chief~~which ~~Executive~~include ~~Officer~~chuck cuts, ~~who~~rib ~~also~~cuts, ~~serves~~loin ascuts, ~~the~~round ~~Chief~~cuts, ~~Operating~~thin ~~Decision~~meats, ~~Maker~~ground ~~(CODM).~~beef, ~~Segment~~and ~~profit~~other isproducts. ~~measured~~In asaddition, ~~operating~~we ~~income~~also ~~for~~sell beef ~~NBP's~~by-products ~~two~~to ~~reporting~~the ~~segments~~variety meat, ~~Core~~feed ~~Beef and Other~~processing, ~~based~~fertilizer onand ~~the~~pet ~~definitions~~food industries. Aggregation ~~provided~~criteria inwere applied ~~ASC~~to ~~280, Disclosures~~determine ~~about~~the ~~Segments~~constituents of ~~an Enterprise~~the ~~and~~Core ~~Related~~Beef ~~Information~~segment.

~~Core Beef~~Other—the ~~majority~~Other segment of NBP's ~~revenues~~consists ~~are~~of ~~generated from~~ the ~~sale~~ operations of ~~fresh~~National ~~meat~~Carriers, Inc., ~~which~~a ~~include~~refrigerated ~~chuck~~and ~~cuts,~~livestock ~~rib~~contract carrier ~~cuts~~company, ~~loin~~National ~~cuts,~~Elite ~~round cuts~~Transportation, ~~thin meats~~LLC, ~~ground~~a ~~beef,~~provider ~~and~~of ~~other~~transportation logistics ~~products. In addition~~services, weand ~~also~~Kansas ~~sell~~City ~~beef~~Steak ~~by-products~~Company, ~~including hides to the variety meat~~LLC, ~~feed~~a ~~processing,~~portion ~~fertilizer~~control steak cutting operation.

15Eliminations—this line item includes eliminations of inter-segment and intra-segment activity resulting from the consolidation process.

~~Table of Contents~~14

~~and pet~~Table ~~food industries. Aggregation criteria were applied to determine the constituents~~ of ~~the Core Beef segment.~~ Contents

~~Other—the~~The ~~Other~~following table represents segment ofresults ~~NBP~~for ~~consists of~~ the ~~operations~~periods ofindicated ~~National~~(in Carriers, Inc., a refrigerated and livestock contract carrier company, National Elite Transportation, LLC, a provider of transportation logistics services, and Kansas City Steak Company, LLC, a portion control steak cutting operation. thousands):

Eliminations—this line item includes eliminations of inter-segment and intra-segment activity resulting from the consolidation process.

	13 weeks ended			13 weeks ended			39 weeks ended			39 weeks ended
	May 29, 2010			May 30, 2009			May 29, 2010			May 30, 2009
Net sales:
Core beef	$	1,575,926		$	1,331,722		$	4,306,246		$	4,070,295
Other	53,954			61,387			173,962			180,857
Eliminations	(92,001		)	(75,089		)	(258,793		)	(205,937		)
Total net sales	$	1,537,879		$	1,318,020		$	4,221,415		$	4,045,215

Operating income:
Core beef	$	82,252		$	51,865		$	181,911		$	92,370
Other	525			1,395			3,652			5,317
Total operating income	82,777			53,260			185,563			97,687

Interest income	4			40			39			145
Interest expense	(3,513		)	(5,816		)	(11,563		)	(18,191		)
Other (expense) / income, net	217			(625		)	(3,559		)	(4,509		)
Total income before taxes	$	79,485		$	46,859		$	170,480		$	75,132

	May 29, 2010			May 30, 2009
Assets:
Core beef	$	836,339		$	784,636
Other	44,155			42,668
Eliminations	(208		)	(516		)
Total assets	$	880,286		$	826,788

~~The following~~Thirteen ~~table~~weeks ~~represents~~ended ~~segment~~May 29, 2010 ~~results~~compared ~~for~~to ~~the~~thirteen ~~periods~~weeks ~~indicated~~ended ~~(in~~May 30, ~~thousands):~~ 2009

			13 weeks ended February 27, 2010			13 weeks ended February 28, 2009			26 weeks ended February 27, 2010			26 weeks ended February 28, 2009
Net sales:
	Core beef		$	1,367,189		$	1,300,714		$	2,730,320		$	2,738,573
	Other			65,088			61,715			120,008			119,469
	Eliminations			(91,351	)		(64,211	)		(166,792	)		(130,847	)
		Total net sales	$	1,340,926		$	1,298,218		$	2,683,536		$	2,727,195
Operating income:
	Core beef		$	54,931		$	38,095		$	99,659		$	40,505
	Other			1,696			2,221			3,129			3,921
		Total operating income		56,627			40,316			102,788			44,426
Interest income				6			50			34			106
Interest expense				(3,519	)		(5,567	)		(8,051	)		(12,376	)
Other expense, net				(3,784	)		(4,261	)		(3,776	)		(3,884	)
		Total income before taxes	$	49,330		$	30,538		$	90,995		$	28,272

Core Beef

			February 27, 2010			February 28, 2009
Assets:
	Core beef		$	769,251		$	757,124
	Other			43,534			41,078
	Eliminations			(2,172	)		(830	)
		Total assets	$	810,613		$	797,372

Net Sales. Net sales for Core Beef were approximately $1,575.9 million for the thirteen weeks ended May 29, 2010 compared to approximately $1,331.7 million for the thirteen weeks ended May 30, 2009, an increase of approximately $244.2 million, or 18.3%. The increase in net sales resulted from an approximate 3.1% increase in the average volume of cattle processed per week, and an increase in average sales per head of approximately 14.8% during the current thirteen week period of fiscal 2010 as compared to the thirteen week period of fiscal 2009.

Operating ~~Thirteen~~Income. Operating income for Core Beef was approximately $82.3 million for the thirteen weeks ended ~~February~~May 2729, 2010 compared to approximately $51.9 million for the thirteen weeks ended ~~February~~May 2830, 2009, an increase of approximately $30.4 million. The increase in operating income resulted primarily from improved demand characteristics for beef products during the thirteen week period ended May 29, 2010, as compared to the thirteen week period ended May 30, 2009 .

~~Core Beef~~ Other

Net Sales. Net sales for ~~Core~~Other ~~Beef~~ were approximately $~~1,367~~54.2 0 million for the thirteen weeks ended ~~February~~May 2729, 2010 compared to approximately $~~1,300~~61.7 4 million for the thirteen weeks ended ~~February~~May 2830, 2009, ana decrease ~~increase~~ of approximately $667.5 4 million, or 512.1%. The ~~increase~~decrease inwas ~~net~~attributable ~~sales~~to ~~resulted~~lower ~~primarily~~sales ~~from~~volume awithin ~~3.1%~~both ~~increase in~~ the ~~number~~transportation ofoperations ~~cattle processed~~ as well as ~~an average increase in sales prices per head of 1.9% for~~ the ~~current~~portion ~~thirteen week period as compared to the same period of last year~~control business.

Operating Income. The operating income for Core Beef was approximately $54.9 million for the thirteen weeks ended February 27, 2010 compared to an operating income of approximately $38.1 million for the thirteen weeks ended February 28, 2009, an improvement of approximately 15

16Table of Contents

~~Table~~Operating Income. Operating income for Other was approximately $0.5 million for the thirteen weeks ended May 29, 2010 compared to operating income of ~~Contents~~approximately $1.4 million for the thirteen weeks ended May 30, 2009, a decrease of approximately $0.9 million. The decrease was due primarily to a reduction of net sales within our transportation operations and portion controlled business, along with an increase in depreciation expense within our portion controlled business.

~~$16.8 million. The~~Thirty-nine ~~increased~~weeks ~~operating~~ended ~~income~~May 29, 2010 ~~resulted~~compared ~~from~~to anthirty-nine ~~increase~~weeks inended ~~sales~~May 30, ~~price per head for beef products and relatively steady cattle prices.~~ 2009

Core ~~Other~~ Beef

Net Sales. Net sales for ~~Other~~Core Beef were approximately $654,306.1 2 million for the ~~thirteen~~thirty-nine weeks ended ~~February~~ May 2729, 2010 compared to approximately $614,070.7 3 million for the ~~thirteen~~thirty-nine weeks ended ~~February~~May 2830, 2009, an increase of approximately $3235.4 9 million, or 5.58%. Net ~~The~~sales ~~increase~~increased ~~was~~ primarily due to ~~increased sales~~an ~~volume~~approximate in1.1% ~~our~~decrease ~~portion~~in ~~control~~the ~~beef~~average ~~facility~~volume ~~which~~of ~~was~~cattle ~~somewhat~~processed ~~offset~~per byweek, along awith ~~reduction~~an increase in the average sales inper ~~our~~head ~~transportation~~of ~~operations~~approximately 4.6%, during the ~~thirteen~~first ~~week~~thirty-nine ~~period~~weeks of fiscal 2010 as compared to the ~~same~~first ~~period~~thirty-nine weeks of ~~last~~fiscal ~~year~~2009.

Operating Income. Operating income for ~~Other~~Core ~~was~~Beef was approximately $1181.7 9 million for the ~~thirteen~~ thirty-nine weeks ended ~~February~~May 2729, 2010 compared to approximately $292.2 4 million for the ~~thirteen~~thirty-nine weeks ended ~~February~~May 2830, 2009, aan ~~decrease~~increase of approximately $089.5 million,. The orimprovement ~~22.7%.~~in ~~The~~operating ~~decrease~~income ~~was~~during the ~~due~~thirty-nine ~~primarily~~week toperiod aended ~~reduction~~May 29, ~~of operating~~2010 ~~income~~resulted ofprimarily ~~our~~from ~~transportation~~an increase ~~operations~~in ~~during~~sales ~~the~~price ~~thirteen~~per ~~week~~head ~~period~~of beef products of ~~fiscal~~approximately ~~2010~~4.6%, aswith ~~compared~~a relatively tomoderate ~~the~~increase ~~same~~in ~~period~~live cattle costs of ~~last~~approximately ~~year~~0. 9%.

~~Twenty-six weeks ended February 27, 2010 compared to twenty-six weeks ended February 28, 2009~~ Other

Net ~~Core~~Sales. Net ~~Beef~~ sales for Other were approximately $174.0 million for the thirty-nine weeks ended May 29, 2010 compared to approximately $180.9 million for the thirty-nine weeks ended May 30, 2009, a decrease of approximately $6.9 million, or 3.8%. The slight decrease was primarily due to decreased fuel surcharge revenues at our transportation company, offset by a slight increase in sales at our portion control beef facility during the thirty-nine week period ended May 29, 2010 as compared to the thirty-nine week period ended May 30, 2009.

~~Net~~Operating ~~Sales~~Income. ~~Net~~ Operating ~~sales~~income for ~~Core~~Other ~~Beef~~was ~~were~~ approximately $~~2,730.~~3 .7 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2729, 2010 compared to approximately $~~2,738~~5.6 3 million for the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009, a decrease of approximately $81.2 6 million,. The ordecrease ~~0.3%.~~was ~~The~~due ~~slight~~primarily ~~decrease~~to ~~in net~~our ~~sales~~transportation ~~resulted~~operations ~~primarily~~lower sales ~~from~~and anhigher ~~average~~depreciation ~~decrease~~expense inand ~~sales~~our ~~prices~~portion ~~per~~control ~~head~~beef offacilities higher ~~0.4%~~depreciation ~~for~~expense during the ~~twenty-six~~period ~~weeks~~resulting ~~ended~~in ~~February 27,~~a ~~2010~~reduction asin operating ~~compared~~income tofor the ~~same~~current ~~period~~thirty-nine ofweek ~~last~~period ~~year~~ended May 29, ~~partially~~2010 ~~offset~~as bycompared ato ~~0.1%~~the ~~increase~~thirty-nine inweek ~~the~~period ~~number~~ended ofMay 30, ~~cattle slaughtered~~2009.

~~Operating~~Liquidity Income. Operating income for Core Beef was approximately $99.7 million for the twenty-six weeks ended February 27, 2010 compared to operating income of approximately $40.5 million for the twenty-six weeks ended February 28, 2009, an improvement of approximately $59.2 million. The improved operating income resulted from an increase in sales price per head for beef products and ~~relatively~~Capital ~~steady cattle prices~~ Resources

As ~~Other~~ of May 29, 2010, we had net working capital of approximately $213.6 million, which included $32.7 million in distributions payable and cash and cash equivalents of $20.1 million. As of August 29, 2009, we had net working capital of approximately $145.0 million, which included $35.2 million in distributions payable and cash and cash equivalents of $17.4 million. Our primary sources of liquidity are cash flows from operations and available borrowings under our amended and restated credit facility (Credit Facility).

~~Net~~As ~~Sales. Net~~of ~~sales~~May 29, ~~for~~2010, ~~Other~~we had ~~were approximately~~ $~~120~~286.0 8 million ~~for~~of ~~the twenty~~long-~~six~~term ~~weeks ended February 27~~debt, ~~2010~~of ~~compared to~~which ~~approximately~~ $~~119~~6.5 6 million ~~for~~was ~~the~~classified ~~twenty-six~~as ~~weeks~~a current ~~ended~~liability. As ~~February~~of May 2829, ~~2009~~ 2010, anour ~~increase~~Credit Facility consisted of ~~approximately~~a $0228.5 8 million, orterm ~~0.4%.~~loan, ~~The~~all ~~slight~~of ~~increase in net sales~~which was ~~primarily~~outstanding, ~~due~~and toa ~~increased~~$225.0 ~~sales~~million ~~volume~~revolving inline ~~our~~of ~~portion~~credit ~~control~~loan, ~~facility~~which ~~offset~~had outstanding byborrowings ~~lower~~of ~~sales~~$37.9 inmillion, ~~our~~outstanding ~~transportation~~letters ~~operations during the twenty-six week period~~ of ~~fiscal~~credit ~~2010 as compared to the same period~~ of ~~last year~~$26.0 million and available

Operating Income. Operating income for Other was approximately $3.1 million for the twenty-six weeks ended February 27, 2010 compared to approximately $3.9 million for the twenty-six weeks ended February 28, 2009, a decrease of approximately $0.8 million. The decrease was due primarily to a reduction of operating income of our transportation operations due to decreased total sales which was partially offset by improved operating income of our portion control beef facility during the current twenty-six week period of fiscal 2010 as compared to the same period of last year. 16

17Table of Contents

borrowings of $161.2 ~~Table~~million, based on the most restrictive financial covenant calculations. Cash flows from operations and borrowings under our Credit Facility have funded our working capital requirements, acquisitions, capital expenditures and other general corporate purposes. We were in compliance with all of ~~Contents~~our financial covenants under our Credit Facility as of May 29, 2010.

In addition to outstanding borrowings under our Credit Facility, we had outstanding borrowings under ~~Liquidity~~industrial revenue bonds of $12.2 million and ~~Capital~~capital ~~Resources~~ leases and other obligations of $7.9 million as of May 29, 2010.

As ofnoted ~~February 27,~~within ~~2010,~~Footnote ~~we had net working capital of approximately $198.7 million~~10, ~~which included $11.6 million~~ inwe ~~distributions~~have ~~payable~~amended and ~~cash~~restated ~~and~~the ~~cash~~terms ~~equivalents~~ of ~~$11.1 million.~~our AsCredit ofFacility ~~August 29,~~as ~~2009, we had net working capital~~ of ~~approximately $145.0~~June ~~million~~4, ~~which included~~ ~~$35~~2010.~~2 million~~ See inthe ~~distributions~~“Amended ~~payable~~ and ~~cash~~Restated Senior ~~and~~Credit ~~cash~~Facility” ~~equivalents~~section ofbelow ~~$17.4 million.~~for ~~Our~~additional ~~primary~~details ~~sources~~related ofto ~~liquidity are cash flows from operations and available borrowings under our~~the ~~amended~~amendment and ~~restated credit facility (Credit Facility)~~restatement.

~~As of~~We ~~February 27,~~believe ~~2010,~~that weavailable borrowings ~~had~~under ~~$299.7 million~~our ofCredit ~~long-term~~Facility ~~debt,~~and ofcash ~~which~~provided ~~$9.4 million~~by ~~was~~operating ~~classified~~activities will asbe asufficient ~~current~~to ~~liability.~~support Asour ofworking ~~February 27~~capital, ~~2010,~~ ~~our~~capital ~~Credit~~expenditures ~~Facility~~and debt ~~consisted~~service ofrequirements afor ~~$228.8 million~~the ~~term~~foreseeable ~~loan,~~future. Our ~~all~~ability ofto ~~which~~generate ~~was~~sufficient ~~outstanding~~cash, however, ~~and~~is asubject ~~$225.0 million~~to ~~revolving~~certain ~~line~~general ofeconomic, ~~credit~~financial, ~~loan~~industry, legislative, ~~which~~regulatory ~~had~~and ~~outstanding~~other ~~borrowings~~factors ~~of $50.3 million,~~beyond ~~outstanding~~our ~~letters~~control. For ofa ~~credit~~review of ~~$25.2 million~~our ~~and~~obligations ~~available~~that ~~borrowings of $137.9 million~~affect liquidity, ~~based~~please onsee the ~~most~~“Cash ~~restrictive~~Payment ~~financial~~Obligations” ~~covenant~~table ~~calculations.~~in ~~Cash~~“Item ~~flows~~7. ~~from~~Management’s ~~operations~~Discussion and ~~borrowings~~Analysis ~~under~~of ~~our~~Financial ~~Credit~~Condition ~~Facility have funded our working capital requirements, acquisitions, capital expenditures~~ and ~~other~~Results ~~general corporate purposes. We were in compliance~~of ~~with~~Operations” ~~all~~ of our ~~financial~~Annual ~~covenants~~Report ~~under~~on ~~our~~Form 10-K ~~Credit~~for ~~Facility~~the asyear ofended ~~February~~August 2729, ~~2010~~ 2009.

~~In addition~~Operating to outstanding borrowings under our Credit Facility, we had outstanding borrowings under industrial revenue bonds of $12.2 million and capital leases and other obligations of $8.4 million as of February 27, 2010. During the quarter ended February 27, 2010, we redeemed the entire outstanding borrowings under our Senior Notes in the amount of $27.1 million. Activities

~~We believe~~Net ~~that~~cash ~~available~~provided ~~borrowings~~by operating ~~under~~activities ~~our~~in ~~Credit~~the ~~Facility~~thirty-nine ~~and~~weeks ~~cash~~ended ~~provided~~May 29, by2010 ~~operating~~was $140.6 ~~activities~~million ~~will~~compared ~~be sufficient~~ to ~~support~~net ~~our~~cash ~~working~~provided ~~capital,~~by ~~capital~~operating ~~expenditures~~activities ~~and~~of ~~debt~~$148.0 ~~service~~million ~~requirements~~in ~~for~~ the ~~foreseeable~~thirty-nine ~~future.~~weeks ~~Our~~ended ~~ability~~May 30, to2009. The ~~generate~~$7.4 ~~sufficient~~million ~~cash,~~change ~~however,~~was isprimarily ~~subject~~due to net ~~certain~~income ~~general~~of ~~economic,~~approximately ~~financial,~~$169.8 ~~industry,~~million ~~legislative,~~during ~~regulatory~~the ~~and~~thirty-nine ~~other~~week period ~~factors~~ended ~~beyond~~May 29, ~~our~~2010 ~~control.~~as ~~For~~compared ato ~~review~~the ofnet ~~our~~income ~~obligations~~of ~~that~~$74.2 ~~affect~~million ~~liquidity,~~during the ~~please~~thirty-nine ~~see~~week ~~the~~period ~~"Cash~~ended ~~Payment~~May 30, ~~Obligations"~~2009. The ~~table~~increase in ~~"Item 7.~~net ~~Management's~~income ~~Discussion~~is ~~and~~offset ~~Analysis~~by ~~of Financial~~a ~~Condition~~decrease ~~and~~in ~~Results~~cash ofprovided ~~Operations"~~by ofaccounts ~~our~~receivable ~~Annual~~and ~~Report~~inventory onof ~~Form 10-K~~approximately of ~~for~~$62.6 ~~the~~and ~~year~~$53.1 ~~ended~~million ~~August 29, 2009~~respectively.

Investing ~~Operating~~ Activities

Net cash ~~provided~~used byin ~~operating~~ investing activities was $27.9 million in the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2729, 2010 ~~was approximately~~ ~~$81.3 million~~ compared to ~~net cash provided by operating activities of approximately~~ $9934.2 3 million in the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009. The ~~$17.9 million~~ ~~change~~decrease ~~was~~in ~~primarily due to net~~ cash ~~being~~ used inwas primarily ~~inventory,~~attributable ~~less~~to ~~cash~~a ~~being~~decrease ~~used~~ in ~~accounts~~expenditures ~~receivable~~for property, ~~offset~~plant byand equipment ~~$62.9 million~~related ~~provided~~to byimproving ~~additional~~operating ~~net~~efficiencies, ~~income~~primarily ~~for~~at ~~the~~our ~~twenty-six~~Liberal, ~~week~~Dodge ~~period~~City ofand ~~fiscal~~Case ~~2010~~Ready ~~compared~~facilities, toin the ~~same~~current ~~period of the prior~~ year.

Financing ~~Investing~~ Activities

Net cash used in ~~investing~~ financing activities was approximately $17110.3 1 million in the ~~twenty~~thirty-~~six~~nine weeks ended ~~February~~ May 2729, 2010 compared to ~~approximately~~net cash used in financing activities of $17124.1 4 million in the ~~twenty~~ thirty-~~six~~nine weeks ended ~~February~~May 2830, 2009. The decrease in cash used in financing activities was primarily attributed to an approximate $125.5 million redemption of member capital in the prior period, and an additional $75.0 million borrowings on the term loan during the current period. These decreases are offset by an approximate $52.9 million increase in member distributions paid in the current year, the purchase and cancellation of approximately $66.9 million aggregate principal amount of our Senior Notes compared to only $45.5 million in the same period of the prior year, $43.7 million reduction in net receipts under the revolving loan, and an approximate $75.5 million member capital contribution during the prior reporting period.

Amended ~~Financing~~and ~~Activities~~ Restated Senior Credit Facility

~~Net cash used in financing activities was approximately $70.4 million in the twenty-six weeks ended~~Effective ~~February 27,~~as ~~2010 compared to net cash used in financing activities~~ of ~~approximately $91.4~~June ~~million~~4, ~~in the twenty-six weeks ended February 28~~2010, ~~2009.~~our ~~The~~Credit ~~change~~Facility was ~~primarily~~ ~~attributed~~amended ~~to the $66.9 million purchase~~ and ~~cancellation~~restated ~~of our senior notes and an approximate $23.5~~to: (1) ~~million~~ increase inthe ~~member~~borrowings ~~distributions,~~under ~~partially~~the Credit ~~offset~~Facility by ~~$75.0 million~~ inproviding ~~borrowings~~for ~~under~~a ~~our~~ term ~~note~~loan ~~payable,~~facility ~~an increase~~ of ~~approximately~~up to $~~19.6~~ 375 million ~~in net revolving credit borrowings,~~ and a

1817

Table of Contents

revolving line of credit of up to $~~16.4~~ 250 million; (2) reduce the applicable margin on ~~change~~the inrates of interest of the ~~impact~~term loan and revolving line of ~~overdraft~~credit; ~~balances~~(3) revise the ~~during~~payment schedule of the ~~current~~term ~~twenty-six~~loan; ~~week~~(4) extend ~~period~~the asmaturity ~~compared~~date of the Credit Facility to June 4, 2015; and (5) remove the ~~same~~limitations ~~period~~on capital expenditures; (6) add new financial covenants regarding adjusted net worth and a fixed charge coverage ratio; and (7) add two wholly owned subsidiaries, National Beef California, LLP and National Carriers, Inc., as loan parties and guarantors. The related financing charges, of ~~last~~approximately ~~year~~$4.1 million, will be amortized over the life of the loan.

The borrowings ~~Amended~~under the Credit Facility bear interest at LIBOR or the Base Rate, plus the applicable margin. The applicable margin for the revolving line of credit and ~~Restated~~the ~~Senior~~term ~~Credit~~loan ~~Facility~~ will be based on funded debt to EBITDA ratio with grids based on different ratios.

~~Effective~~The ~~April 13,~~borrowings ~~2009,~~under ~~our~~the ~~Credit~~revolving ~~Facility~~loan ~~was~~are ~~amended~~available tofor ~~permit the redemption of~~ our ~~membership interests in the amount of~~working ~~$125.5 million~~capital requirements, ~~including~~capital ~~the~~expenditures ~~authorization~~ and ~~issuance~~other ofgeneral ~~Class A1 Units to help fund the redemption~~corporate purposes. The ~~In addition, the terms of our~~ Credit Facility ~~were~~is ~~amended to: (1) increase the~~secured ~~borrowings under our Credit Facility~~ by upa tofirst ~~$100.0 million;~~priority ~~(2) increase~~lien ~~the~~on ~~applicable~~substantially ~~margin~~all onof the ~~rates~~assets of ~~interest of~~ the ~~term~~Company ~~loan~~ and its ~~revolving~~subsidiaries. The ~~line~~principal ~~of credit; (3) revise~~amount ~~the~~outstanding ~~payment~~under ~~schedule of~~ the term loan; ~~(4) shorten~~is ~~the~~due ~~maturity~~and ~~date~~payable ofin ~~the~~equal ~~term~~quarterly installments, ~~loan;~~beginning ~~(5)~~in October ~~remove~~2010, ~~the~~based ~~restrictions~~ on ~~purchasing~~a ~~our~~10-year ~~Senior Notes and require the repurchase or redemption~~level ofamortization ~~$100 million~~ of ~~our Senior Notes; (6) increase~~ the remaining amount of ~~capital~~the ~~expenditures~~term weloan. All ~~can~~outstanding ~~make~~loan inamounts ~~any~~are ~~fiscal~~due ~~year~~and payable ~~from $50~~June ~~million to $60 million~~4, or2015. Prepayment ~~$65 million~~of ~~if we expend less than $55 million in~~ the ~~immediately~~loans ~~preceding~~is ~~fiscal~~allowed ~~year;~~at ~~and~~any ~~(7) add a financial covenant requiring us to maintain a Funded Debt to EBITDA ratio~~time.

The ~~borrowings~~ ~~under the~~ Credit Facility ~~bear~~contains customary ~~interest~~affirmative atcovenants ~~LIBOR~~relating orto ~~the~~NBP ~~Base~~LLC ~~Rate~~and its subsidiaries, including, ~~plus~~without limitation, conduct of business, the ~~applicable~~maintenance ~~margin.~~of insurance, ~~The~~compliance ~~applicable~~with ~~margin~~laws, ~~for~~maintenance ~~the~~of ~~revolving~~properties, ~~line~~keeping of ~~credit~~books and records, and the ~~term~~furnishing ~~loan will~~of befinancial ~~based~~statements. The onfacility ~~borrowing~~also ~~base~~contains ~~availability~~customary ~~with~~negative covenants ~~grids~~relating ~~greater~~to ~~than~~NBP ~~$150.0 million,~~LLC ~~$50.0~~and toits ~~$150.0 million~~subsidiaries, ~~and~~including, ~~less~~without limitation, ~~than~~restrictions ~~$50.0~~on the following: ~~million.~~ cash Asdistributions ofto ~~February 27~~its members, ~~2010~~mergers, ~~the~~sale of assets, investments ~~interest~~and ~~rates~~acquisitions, ~~for~~encumbrances, ~~the~~indebtedness, ~~revolving~~affiliate ~~loan~~transactions, and ~~the~~ERISA matters. The ~~term~~ability ~~loan~~of ~~were~~NBP ~~approximately~~LLC ~~4.45%~~ and ~~3.48%~~its subsidiaries to engage in other business, ~~respectively.~~incur debt or grant liens is also restricted.

~~Our funded~~The ~~debt~~Credit toFacility ~~EBITDA~~contains ~~ratio~~customary isevents ~~not~~of default, including without limitation, failure to bemake ~~more~~payment ~~than~~when ~~3.75~~due, tomaterially ~~1.00~~incorrect representations atand ~~the~~warranties, ~~end~~breach of ~~each~~covenants, ~~fiscal~~events ~~quarter.~~of Ifbankruptcy, default ~~the~~of ~~borrowing~~other ~~base~~indebtedness ~~availability~~that iswould ~~less~~permit ~~than~~acceleration ~~$50.0 million~~of ~~for five~~such ~~consecutive~~indebtedness, ~~business~~the ~~days~~occurrence orof ~~less~~one ~~than~~or ~~$35.0 million~~more onunstayed ~~any~~or ~~single~~undischarged ~~business~~judgments in ~~day~~excess ~~during~~of ~~any~~$3.0 ~~fiscal quarter~~million, achanges ~~fixed~~in ~~charge~~custody ~~ratio~~or control of ~~1:15~~the ~~to 1:00~~Company’s ~~must~~property, bechanges ~~maintained~~in atcontrol of the ~~end~~Company, ofor ~~each~~failure ~~subsequent~~of ~~fiscal~~any ~~quarter~~of ~~until~~ the ~~borrowing~~loan documents ~~base~~to ~~availability~~remain ~~has~~in ~~been~~full ~~greater~~force, ~~than~~and orthe ~~equal~~Company’s failure to ~~$50.0 million~~properly ~~for~~fund its 90employee ~~consecutive~~benefit ~~days~~plans. The ~~As of~~Credit ~~February 27,~~Facility ~~2010,~~also weincludes ~~had~~customary ~~met~~provisions ~~this~~protecting ~~borrowing~~the ~~base~~lenders ~~availability~~against increased ~~requirement~~cost ~~under~~or ~~our~~loss ~~Credit~~of ~~Facility.~~yield ~~The~~resulting ~~advance~~from ~~rates~~changes ~~under~~in ~~the~~tax, ~~borrowing~~reserve, ~~base~~capital adequacy ~~are 90% on eligible accounts~~ and ~~70%~~other onrequirements ~~eligible inventory.~~of law.

The borrowings under the revolving loan are available for our working capital requirements, capital expenditures and other general corporate purposes. The Credit Facility is secured by a first priority lien on substantially all of the Company's assets. The principal amount outstanding under the term loan is due and payable in equal installments of approximately $2.5 million on the last business day of each June and December commencing December 2009 through December 2010 after which payments increase to approximately $4.8 million. All outstanding amounts of the term loan are due and payable on July 25, 2012. Prepayment is allowed at any time. 18

~~The Credit~~Table ~~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. Contents

~~The Credit~~Item 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~~Quantitative ~~in custody or control of the Company's property, changes in control of the Company, the failure of any of the loan documents to remain in full force,~~ and ~~the~~Qualitative ~~Company's failure~~Disclosures toAbout ~~properly~~Market ~~fund its employee benefit plans~~Risk. ~~The facility also includes customary provisions protecting~~

19The principal market risks affecting our business are exposure to changes in prices for commodities, such as livestock and boxed beef, and interest rate risk.

~~Table~~Commodities. We use various raw materials, many of ~~Contents~~which are commodities. Raw materials are generally available from several different sources, and we presently believe that we can obtain them as needed. Commodities are subject to price fluctuations that may create price risk. From time to time, we may hedge commodities in order to mitigate this price risk. While this may tend to limit our ability to participate in gains from commodity price fluctuations, it also tends to reduce the risk of loss from changes in commodity prices. To the extent the contracts are not designated as normal purchases, we reflect 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.

~~the~~We ~~lenders~~purchase ~~against~~cattle ~~increased~~for ~~cost~~use orin ~~loss~~our processing businesses. From time to time, we enter into forward purchase contracts at prices determined prior to the delivery of ~~yield~~the ~~resulting~~cattle. ~~from~~The ~~changes~~commodity inprice ~~tax,~~risk ~~reserve~~associated with these activities can be hedged by selling (or buying) the underlying commodity, ~~capital~~or ~~adequacy~~by using ~~and~~an ~~other~~appropriate ~~requirements~~commodity derivative instrument. The particular hedging instrument we use depends on a number of ~~law~~factors, including availability of appropriate derivative instruments.

We sell commodity beef products in our business. Commodity beef products are ~~Item 3~~subject to price fluctuations that may create price risk. ~~Quantitative~~ From time to time, we enter into forward sales contracts at prices determined prior to shipment. We may hedge the commodity price risk associated with these activities in order to mitigate this price risk. While this may tend to limit our ability to participate in gains from commodity price fluctuations, it also tends to reduce the risk of loss from changes in commodity beef prices. To the extent the contracts are not designated as normal sales, we reflect commodity contract gains and ~~Qualitative~~losses ~~Disclosures~~as ~~About~~adjustments ~~Market~~to ~~Risk~~the basis of underlying commodities sold; gains or losses are recognized in the statement of operations as a component of net sales.

~~The~~From time ~~principal~~to ~~market~~time, ~~risks~~we ~~affecting~~purchase cattle futures and options contracts. Our primary use of these contracts is to partially determine our ~~business~~future input costs when we have committed forward sales purchase orders from customers at a specified fixed price. The longest duration futures contract owned is thirteen months. In accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities, as amended, we account 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 ~~exposure~~as “normal purchases and sales” and not marked to ~~changes~~market. ASC topic 815 imposes extensive recordkeeping requirements in ~~prices~~order to treat a derivative instrument as a hedge for accounting ~~commodities,~~purposes. ~~such~~Derivatives qualify for treatment as ~~livestock~~hedges when there is a high correlation between the change in fair value of the instrument and ~~boxed~~the related ~~beef~~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 ~~and~~earnings ~~interest~~until ~~rate~~the ~~risk~~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.

~~Commodities. We~~While management ~~use~~believes ~~various~~each ~~raw materials, many~~ of ~~which~~these ~~are~~instruments ~~commodities.~~help ~~Raw~~mitigate ~~materials~~various ~~are~~market ~~generally~~risks, ~~available~~they ~~from~~are ~~several~~not ~~different~~designated ~~sources,~~ and we ~~presently~~accounted ~~believe~~for ~~that~~as wehedges ~~can obtain them~~ as ~~needed.~~a ~~Commodities~~result ~~are~~of ~~subject~~the extensive torecordkeeping ~~price~~requirements ~~fluctuations~~of ~~that~~this ~~may create price risk~~statement. ~~When appropriate~~Accordingly, wethe ~~may hedge commodities in order to mitigate this~~gains ~~price~~and ~~risk.~~losses ~~While~~associated ~~this~~with ~~may~~the ~~tend~~change ~~to limit our ability to participate~~ in ~~gains~~fair ~~from~~value ~~commodity~~of ~~price~~the ~~fluctuations,~~instrument itand ~~also tends to reduce~~ the offsetting ~~risk~~gains ofand ~~loss~~losses ~~from~~associated with changes in ~~commodity~~the ~~prices.~~market Tovalue ~~the extent~~of ~~the~~certain ~~contracts~~of ~~are~~the ~~not~~firm ~~designated~~purchase ascommitments ~~normal~~related ~~purchases, we reflect commodity contract gains and losses as adjustments~~ to the ~~basis~~futures ofcontracts ~~underlying commodities purchased; gains or losses~~ are ~~recognized in~~ ~~the~~recorded ~~statement~~to ofincome ~~operations~~and asexpense ain ~~component~~the ofperiod ~~costs~~ of ~~goods sold~~change.

We ~~purchase~~use ~~cattle~~a ~~for~~sensitivity ~~use~~analysis into ~~our~~evaluate ~~processing~~the ~~businesses.~~effect ~~From~~that ~~time~~changes toin ~~time,~~the wemarket value ~~enter~~of ~~into~~commodities ~~forward~~will ~~purchase~~have ~~contracts~~on atthese ~~prices~~commodity ~~determined~~derivative ~~prior~~instruments. We tofeel ~~the~~that ~~delivery~~sensitivity ofanalysis more appropriately reflects the ~~cattle.~~potential ~~The commodity~~market ~~price~~value ~~risk~~exposure associated with ~~these~~the use ~~activities~~of ~~can~~derivative beinstruments. As ~~hedged~~of byMay 29, 2010, ~~selling~~the ~~(or~~potential ~~buying)~~change in the ~~underlying~~fair value of applicable commodity prices, assuming ora byhypothetical ~~using~~10% andecrease ~~appropriate~~in the underlying commodity ~~derivative~~price ~~instrument~~in each year, was $1.7 ~~The~~million. As ~~particular~~of ~~hedging~~August 30, ~~instrument~~2009, wethe ~~use~~potential ~~depends~~change onin afair ~~number~~value of ~~factors~~applicable commodity prices, assuming ~~including~~a ~~availability~~hypothetical of10% ~~appropriate~~decrease ~~derivative~~in ~~instruments~~the underlying commodity price, was $16.4 million. This change was

We sell commodity beef products in our business. Commodity beef products are subject to price fluctuations that may create price risk. From time to time, we enter into forward sales contracts at prices determined prior to shipment. We may hedge the commodity price risk associated with these activities in order to mitigate this price risk. While this may tend to limit our ability to participate in gains from commodity price fluctuations, it also tends to reduce the risk of loss from changes in commodity beef prices. To the extent the contracts are not designated as normal sales, we reflect 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. 19

~~From time~~Table ~~to time, we purchase cattle futures and options contracts. Our primary use~~ of these contracts is to partially fix our future input costs when we have committed forward sales purchase orders from customers at a specified fixed price. The longest duration futures contract owned is thirteen months. In accordance with ASC Topic 815, Accounting for Derivative Instruments and Hedging Activities, as amended, we account 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. ASC Topic 815 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. Contents

~~While management~~primarily ~~believes~~due ~~each~~to ~~of these instruments help mitigate various market risks, they are not designated and accounted for as hedges as a result of~~ the ~~extensive recordkeeping~~cattle ~~requirements~~futures ofcontracts ~~this~~that ~~statement.~~we ~~Accordingly,~~entered ~~the~~into ~~gains~~during ~~and losses associated with~~ the ~~change~~first inquarter ~~fair value~~ of ~~the~~fiscal ~~instrument~~2009 to ~~and~~offset the ~~offsetting~~risk ~~gains and losses associated with changes in the market value~~ of ~~certain~~fixed-price ofsales commitments.

20Foreign 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 and South Korea, product sales are predominately made in United States dollars, and therefore, currency risks are limited.

~~Table~~Interest Rates. As a result of ~~Contents~~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.

~~the~~We ~~firm~~have ~~purchase~~long-term ~~commitments~~debt ~~related~~with tovariable interest rates. Short-term debt is primarily comprised of the ~~futures~~current ~~contracts~~portion ~~are~~of ~~recorded~~long-term todebt ~~income~~maturing ~~and~~twelve months from the balance sheet date. Our variable interest expense is sensitive to changes in the ~~period~~general level of ~~change~~interest rates. As of May 29, 2010, the weighted average interest rate on our $278.9 million of variable rate debt was approximately 5.2%.

We ~~use~~had atotal ~~sensitivity~~interest ~~analysis~~expense ~~to evaluate the effect that changes in the market value~~ of ~~commodities~~approximately ~~will have on these commodity derivative instruments~~$11.6 Wemillion ~~feel~~during the ~~sensitivity~~ ~~analysis~~thirty-nine ~~appropriately~~week ~~reflects~~period ~~the~~ending ~~potential market value exposure associated with the use of derivative instruments. As of February~~May 2729, 2010,. The ~~the~~estimated ~~potential~~increase ~~change~~ in ~~the~~interest ~~fair value of~~expense ~~applicable~~from ~~commodity prices, assuming~~ a hypothetical ~~10%~~200 ~~decrease~~basis inpoint ~~the~~increase ~~underlying commodity price~~ in ~~each~~applicable ~~year,~~variable ~~was $7.3 million. As of August 29, 2009, the potential change in fair~~interest ~~value~~rates ofwould ~~applicable~~have ~~commodity~~been ~~prices,~~approximately ~~assuming a hypothetical 10% decrease in the underlying commodity price, was~~ $~~16.~~4 ~~million~~.0 ~~This~~million ~~change~~in ~~was primarily due to~~ the ~~cattle~~thirty-nine ~~futures~~week ~~contracts~~period ~~that~~ending weMay 29, ~~entered into during the first quarter of fiscal 2009 to offset the risk of fixed-price sales commitments~~2010.

~~Foreign~~Item ~~Operations~~4. ~~Transactions~~ ~~denominated~~Controls ~~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~~ and ~~South Korea, product sales are predominately made in United States dollars, and therefore, currency risks are limited~~Procedures.

~~Interest~~We maintain ~~Rates~~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. As aWe ~~result~~evaluated the effectiveness of the design and operation of our ~~normal~~disclosure ~~borrowing~~controls and ~~leasing~~procedures ~~activities~~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 ~~operating~~Chief Executive ~~results~~Officer and Chief Financial Officer. Based upon that evaluation, as ~~are~~of ~~exposed~~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 ~~fluctuations~~material information required to be included in ~~interest~~our ~~rates~~periodic Securities and Exchange Commission filings. There have been no changes in our internal controls over financial reporting during the thirteen weeks ended May 29, 2010 that have ~~which~~materially weaffected, ~~manage~~or ~~primarily~~are ~~through~~reasonably likely to materially affect, our internal ~~regular~~control ~~financing~~over ~~activities~~financial reporting. The Wedesign ~~generally~~of ~~maintain~~any ~~limited~~system ~~investments~~of controls and procedures is based in ~~cash~~part upon ~~and~~certain ~~cash~~assumptions ~~equivalents.~~about the likelihood of future events.

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 February 27, 2010, the weighted average interest rate on our $291.3 million of variable rate debt was approximately 3.5%. 20

~~We had~~Table ~~total interest expense~~ of ~~approximately $8.1 million during the twenty-six week period ending February 27, 2010. The estimated increase in interest~~ ~~expense from a hypothetical 200 basis point increase in applicable variable interest rates would have been approximately $2.5 million in the twenty-six week period ending February 27, 2010.~~ Contents

~~Item~~PART 4TII. ~~Controls~~ ~~and~~OTHER ~~Procedures~~ INFORMATION

WeItem 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 disposition1. WeLegal 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 Financial OfficerProceedings. 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 thirteen weeks ended February 27, 2010 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.

21For information regarding legal proceedings, see Note 5, “Contingencies” to our Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

~~Table~~Item of1A. ~~Contents~~Risk Factors.

The risk factors set forth in Item 1A of our Annual Report on Form 10-K for ~~PART~~the ~~II.~~year ~~OTHER~~ended ~~INFORMATION~~ August 29, 2009 have not materially changed.

Item 1 6. ~~Legal~~ ~~Proceedings~~Exhibits.

~~For information regarding legal proceedings, see Note 5, "Contingencies" to our Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.~~ (A) Exhibits

Item 1A. Risk Factors.

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

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

~~The risk factors set forth in our Annual Report on Form 10-K for the year ended August 29, 2009 have not materially changed.~~ 21

Table ~~Item 6. Exhibits.~~ of Contents

		31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		31.2		Certification of the Chief Financial 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 Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

22Pursuant 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.

~~Table~~National ofBeef ~~Contents~~Packing Company, LLC By: /s/ Timothy M. Klein Timothy M. Klein Chief Executive Officer and Manager (Principal Executive Officer) By: /s/ Jay D. Nielsen Jay D. Nielsen Chief Financial Officer (Principal Financial and Accounting Officer)

Date: July 9, ~~SIGNATURES~~ 2010

~~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.~~ 22

NATIONAL BEEF PACKING COMPANY, LLC By: /s/ TIMOTHY M. KLEIN Timothy M. Klein Chief Executive Officer and Manager (Principal Executive Officer) By: /s/ JAY D. NIELSEN Jay D. Nielsen Chief Financial Officer (Principal Financial and Accounting Officer)

Date: April 9, 2010

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