It took trust, focus, commitment and bold leadership from everyone

Charting the Course

By Steven D. Hunt

From day one, U.S. Premium Beef has been true to its mission: “To increase the quality of beef and long-term profitability of cattle producers by creating a fully integrated, producer-owned beef processing system that is a global supplier of high quality value-added beef products responsive to consumer desires.”

The success of USPB is rooted in that statement and an unwavering belief that consumers want better beef with more product choices and will signal what they want with their pocket books. And, that beef producers, given the tools, the incentive and information, will respond. You did when we started U.S. Premium Beef and you continue to do so today.

As I transition to a different role with USPB, I’ve had the opportunity to reflect on our formation in 1996 through the culmination of my term as CEO during the last week of January. In order to carry out our mission we needed real drivers such as quality grade, yield grade and carcass weight to start the process of measuring success and paying producers for delivering product that consumers told us they wanted to buy.

Those drivers are still on our grids, but in addition we’ve added and adjusted incentives as consumer demand dictated. Product lines such as Naturewell® Natural Beef, NatureSource® Natural Beef, Black Canyon® Angus Beef, Vintage Natural Beef®, Certified Angus Beef®, age and source verified beef, sent a message to producers that their urban friends wanted more variety and “no surprises” products for their money.

The success of USPB is much like the analogy spelled out in Jim Collin’s best-selling book, “Good to Great”, where he likens the transformation of good companies to great companies to a flywheel. He imagines many people surrounding a very large steel flywheel and with all their energy and teamwork they slowly begin rotating it until it finally completes one revolution. After countless days, weeks and years of work they reach the breakthrough point where momentum of this mass hurtles the flywheel faster with the same energy. With each turn, it builds upon all the work done earlier.

Jim Collins concludes that in companies that successfully transform from good to great, no matter how dramatic the end result, it doesn’t happen in one fell swoop. It happens with a quiet, consistent and deliberate process of doing what it takes to achieve the mission, one day at a time. That’s precisely the philosophy we had in the beginning and still have today at U.S. Premium Beef. Stay focused. Keep chopping wood. Get a

...continued on page 4

See You in Kansas City

Fiscal year 2012 was a record setting year for U.S. Premium Beef producers who marketed their cattle through our company.

Our producers received a record average grid premium of $62.89 per head on the cattle they marketed on our grids in 2012. In total, our company paid more than $51.0 million in grid premiums to producers who delivered cattle to our Kansas and California plants which was $19.0 million more than the record set in 2011. And, we surpassed a milestone of marketing more than 10 million head through USPB since beginning operations in 1997.

Regarding financial results, our fiscal year ended December 29 and final results are not yet available. However, reduced cattle supplies combined with higher cattle prices contributed to 2012 being a more challenging year for U.S. beef processors than previous years.

USPB unitholders also realized solid prices paid for both Class A and Class B units last year. Class A units sold for as much as $150 per unit while Class B units recorded a high price of $200 per unit. The combined value of those Class A and Class B units was $350.00.

One of USPB’s services to our unitholders is to facilitate the leasing of their delivery rights to other producers in years where unitholders cannot meet their delivery obligations. This service again worked well for both parties in 2012. Delivery right lease rates were $7 per delivery right for the entire year. In total, our cattle deliverers continued to use a high percentage of delivery rights available during 2012.

Plus, our company was also able to attract more high quality cattle that were delivered against leased rights. Producers who delivered cattle to our Kansas plants by leasing delivery rights through the USPB facilitated program in 2012 received average grid premiums of $64.94 per head which was above the company’s average for all USPB cattle.

I encourage you to attend our annual meeting on March 26 to learn more about our 2012 financial results and our plans going forward. I’m confident you will go home with a better understanding of the benefits of being an owner of USPB. See you in Kansas City.

Schedule

Monday, March 25*

6:30 p.m. 

Reception

Meet Board of Director Candidates

Tuesday, March 26*

7 a.m.  

Registration

8:15 a.m. 

Morning Session

National Beef: Marketing Beef Products in Today’s Environment
National Beef staff

USPB Cattle Performance

Brian Bertelsen, Vice President of Field Operations

11:15 a.m.  

Lunch—National Beef Presentation

12:45 p.m.

USPB Business Meeting

*All meetings are at the Kansas City Airport Hilton.

Driving Directions to Kansas City Airport Hilton

Take Exit #12 (112th Street) off of I-29 just south of the Kansas City International Airport. The Kansas City Airport Hilton is located on the southeast corner of the intersection of I-29 and 112th Street in Kansas City.

Charting the Course...    

continued from page 1

little better every day in some facet of what we, our producers and National Beef employees do and the rewards will come to every participant.

This past year has been an exciting one for USPB highlighted by a new partnership and record-breaking cattle and grid performance. Through all the challenges and opportunities we have faced in the last 16 years, we have done what we set out to do. While my role is changing, my commitment to USPB’s success remains as strong as ever. We have a tremendous staff led by Stan Linville, who will challenge each of us to put our shoulders against the flywheel and continue the consistent and deliberate process of achieving our mission, one day at a time. It has been an honor and privilege to serve as your CEO and I look forward to continuing my involvement in a new capacity.

I hope to see you at our annual meeting in Kansas City on March 26. We and our management team at National Beef and a representative from Leucadia will discuss cattle and financial performance as well as our partnership with Leucadia.®

QSS Spring Bull Sale Dates

The following USPB Qualified Seedstock Suppliers (QSS) will conduct sales during February through April. See USPB’s web page for links that detail sale times and locations.®

Cow Camp, Inc.  

February 22

Thorstenson Gelbvieh & Angus

March 2

Lyons Ranch 

March 4

CB Farms  

March 6

Spring Valley Ranch 

March 6

Briarwood Farms   

March 9

Bar Arrow Cattle Co.    

March 12

Marshall & Fenner   

March 15

Molitor Angus Ranch    

 March 16

Oleen Brothers   

March 25

Rishel Angus   

March 25

Larson Angus Ranch  

March 27

Pelton Simmental/Red Angus    

March 27

Gardiner Angus Ranch   

April 6