TXI 2012.11.30 10Q

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 ý No ¨



	(Unaudited)
In thousands	November 30, 2012			May 31, 2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	71,782		$	88,027
Receivables – net	107,760			98,836
Inventories	85,530			99,441
Deferred income taxes and prepaid expenses	16,672			19,007
Discontinued Operations Held for Sale	39,360			40,344
TOTAL CURRENT ASSETS	321,104			345,655
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements	169,925			168,173
Buildings	49,608			49,567
Machinery and equipment	1,146,301			1,142,439
Construction in progress	472,185			436,552
	1,838,019			1,796,731
Less depreciation and depletion	633,973			611,406
	1,204,046			1,185,325
OTHER ASSETS
Goodwill	1,715			1,715
Real estate and investments	23,168			20,865
Deferred income taxes and other charges	23,234			23,368
	48,117			45,948
	$	1,573,267		$	1,576,928
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	64,520		$	64,825
Accrued interest, compensation and other	67,712			61,317
Current portion of long-term debt	1,432			1,214
TOTAL CURRENT LIABILITIES	133,664			127,356
LONG-TERM DEBT	657,269			656,949
OTHER CREDITS	95,995			96,352
SHAREHOLDERS’ EQUITY
Common stock, $1 par value; authorized 100,000 shares; issued and outstanding 28,056 and 27,996 shares, respectively	28,056			27,996
Additional paid-in capital	491,959			488,637
Retained earnings	190,357			204,136
Accumulated other comprehensive loss	(24,033		)	(24,498		)
	686,339			696,271
	$	1,573,267		$	1,576,928



	Three months ended November 30,						Six months ended November 30,
In thousands except per share	2012			2011			2012			2011
NET SALES	$	167,693		$	146,172		$	342,216		$	313,802
Cost of products sold	155,939			144,689			315,262			301,690
GROSS PROFIT	11,754			1,483			26,954			12,112
Selling, general and administrative	17,067			12,781			34,623			29,511
Restructuring charges	—			3,153			—			3,153
Interest	7,457			8,838			15,235			18,298
Loss on debt retirements	—			—			—			—
Other income	(1,924		)	(1,522		)	(4,525		)	(7,393		)
	22,600			23,250			45,333			43,569
LOSS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS	(10,846		)	(21,767		)	(18,379		)	(31,457		)
Income taxes (benefit)	(657		)	(1,144		)	(796		)	(1,453		)
NET LOSS FROM CONTINUING OPERATIONS	$	(10,189	)	$	(20,623	)	$	(17,583	)	$	(30,004	)
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX	(933		)	(414		)	3,805			1,547
NET LOSS	$	(11,122	)	$	(21,037	)	$	(13,778	)	$	(28,457	)
NET LOSS PER SHARE FROM CONTINUING OPERATIONS:
Basic	$	(0.36	)	$	(0.73	)	$	(0.63	)	$	(1.08	)
Diluted	$	(0.36	)	$	(0.73	)	$	(0.63	)	$	(1.08	)
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
Basic	$	(0.04	)	$	(0.02	)	$	0.14		$	0.06
Diluted	$	(0.04	)	$	(0.02	)	$	0.14		$	0.06
NET LOSS PER SHARE:
Basic	$	(0.40	)	$	(0.75	)	$	(0.49	)	$	(1.02	)
Diluted	$	(0.40	)	$	(0.75	)	$	(0.49	)	$	(1.02	)
AVERAGE SHARES OUTSTANDING
Basic	28,030			27,882			28,014			27,878
Diluted	28,030			27,882			28,014			27,878
CASH DIVIDENDS DECLARED PER SHARE	$	—		$	—		$	—		$	0.075



	Three months ended November 30,						Six months ended November 30,
In thousands	2012			2011			2012			2011
Net loss	$	(11,122	)	$	(21,037	)	$	(13,778	)	$	(28,457	)
Other comprehensive income
Net actuarial gains (losses) of defined postretirement benefit plans
Reclassification of recognized transactions, net of tax	20			363			565			725
Adjustment, net of tax	—			—			(55		)	—
Prior service cost of defined postretirement benefit plans
Reclassification of recognized transactions, net of taxes	77			(123		)	(45		)	(246		)
Total other comprehensive income	97			240			465			479
Comprehensive loss	$	(11,025	)	$	(20,797	)	$	(13,313	)	$	(27,978	)



	Six months ended November 30,
In thousands	2012			2011
OPERATING ACTIVITIES
Net loss	$	(13,778	)	$	(28,457	)
Adjustments to reconcile net loss to cash provided by operating activities
Depreciation, depletion and amortization	28,543			31,385
Gains on asset disposals	(2,879		)	(2,751		)
Deferred income tax (benefit) expense	957			(945		)
Stock-based compensation expense	5,505			(1,229		)
Other – net	(8,469		)	(5,185		)
Changes in operating assets and liabilities
Receivables – net	(8,488		)	3,696
Inventories	13,967			12,189
Prepaid expenses	1,687			2,854
Accounts payable and accrued liabilities	7,933			930
Net cash provided by operating activities	24,978			12,487
INVESTING ACTIVITIES
Capital expenditures – expansions	(36,118		)	(35,966		)
Capital expenditures – other	(10,845		)	(26,300		)
Proceeds from asset disposals	3,958			1,649
Investments in life insurance contracts	2,366			2,989
Other – net	(88		)	(128		)
Net cash used by investing activities	(40,727		)	(57,756		)
FINANCING ACTIVITIES
Debt payments	(1,585		)	(36		)
Debt issuance costs	—			(1,732		)
Stock option exercises	1,089			158
Common dividends paid	—			(2,091		)
Net cash used by financing activities	(496		)	(3,701		)
Decrease in cash and cash equivalents	(16,245		)	(48,970		)
Cash and cash equivalents at beginning of period	88,027			116,432
Cash and cash equivalents at end of period	$	71,782		$	67,462

Texas Industries, Inc. and subsidiaries is a leading supplier of heavy construction materials in the southwestern United States through our three business segments: cement, aggregates and consumer products. Our principal products are gray portland cement, produced and sold through our cement segment; stone, sand, gravel and lightweight aggregates, produced and sold through our aggregates segment; and ready-mix concrete, produced and sold through our consumer products segment. Our facilities are concentrated primarily in Texas, Louisiana and California. When used in these notes the terms “Company,” “we,” “us” or “our” mean Texas Industries, Inc. and subsidiaries unless the context indicates otherwise.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended November 30, 2012, are not necessarily indicative of the results that may be expected for the year ended May 31, 2013. For further information, refer to the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of Texas Industries, Inc. for the year ended May 31, 2012.

Principles of Consolidation. The consolidated financial statements include the accounts of Texas Industries, Inc. and all subsidiaries except for a joint venture in which the Company has a 40% equity interest. The joint venture is accounted for using the equity method. Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

Fair Value of Financial Instruments. The estimated fair value of each class of financial instrument as of November 30, 2012 and May 31, 2012 approximates its carrying value except for long-term debt having fixed interest rates. The fair value of our long-term debt is estimated based on broker/dealer quoted market prices, which is level two inputs. As of November 30, 2012, the fair value of our long-term debt, including the current portion, was approximately $705.8 million compared to the carrying amount of $658.7 million. As of May 31, 2012, the fair value of our long-term debt, including the current portion, was approximately $646.8 million compared to the carrying amount of $658.2 million.

Receivables. Management evaluates the ability to collect accounts receivable based on a combination of factors. A reserve for doubtful accounts is maintained based on the length of time receivables are past due or the status of a customer’s financial condition. If we are aware of a specific customer’s inability to make required payments, specific amounts are added to the reserve.

Inventories. Inventories are stated at the lower of cost or market. We use the last-in, first out (“LIFO”) method to value finished products, work in process and raw material inventories excluding natural aggregate inventories. Natural aggregate inventories and parts and supplies inventories are valued using the average cost method. Our natural aggregate inventory excludes volumes in excess of an average twelve-month period of actual sales.

Long-lived Assets. Management reviews long-lived assets on a facility by facility basis for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be recoverable and would record an impairment charge if necessary. Such evaluations compare the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset and are significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors. Estimates of future cash flows reflect Management’s belief that it operates in a cyclical industry.

In the fourth quarter of our prior fiscal year, management evaluated the Hunter, Texas cement plant, including the capitalized construction and interest costs associated with the expansion. We expect the Texas market to recover to pre-recession levels and to complete the expansion project. Based on historical margins, we believe the undiscounted cash flows over the remaining life of the Hunter plant after completion of the expansion will significantly exceed the current investment in the plant as well as the remaining costs of the expansion and future capital expenditures necessary to achieve these cash flows.

Property, plant and equipment is recorded at cost. Costs incurred to construct certain long-lived assets include capitalized interest which is amortized over the estimated useful life of the related asset. Interest is capitalized during the construction period of qualified assets based on the average amount of accumulated expenditures and the weighted average interest rate applicable to borrowings outstanding during the period. If accumulated expenditures exceed applicable borrowings outstanding during the period, capitalized interest is allocated to projects under construction on a pro rata basis. Provisions for depreciation are computed generally using the straight-line method. Useful lives for our primary operating facilities range from 10 to 25 years with certain cement facility structures having useful lives of 40 years. Provisions for depletion of mineral deposits are computed on the basis of the estimated quantity of recoverable raw materials. The costs of removing overburden and waste materials to access mineral deposits are referred to as stripping costs. All production phase stripping costs are recognized as costs of the inventory produced during the period the stripping costs are incurred. Maintenance and repairs are charged to expense as incurred.

Goodwill and Goodwill Impairment. Management tests goodwill for impairment annually by reporting unit in the fourth quarter of our fiscal year using a two-step process. The first step of the impairment test identifies potential impairment by comparing the fair value of a reporting unit to its carrying value including goodwill. In applying a fair-value-based test, estimates are made of the expected future cash flows to be derived from the reporting unit. Similar to the review for impairment of other long-lived assets, the resulting fair value determination is significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors. If the carrying value of the reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment test compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying value of the reporting unit goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.

Goodwill resulting from the acquisition of ready-mix operations in Texas and Louisiana and identified with our consumer products operations has a carrying value of $1.7 million at both November 30, 2012 and May 31, 2012. Based on an impairment test performed as of March 31, 2012, the fair value of the reporting unit exceeds its carrying value, and therefore, no potential impairment was identified.

Income Taxes. Texas Industries, Inc. (the parent company) joins in filing a consolidated return with its subsidiaries based on federal and certain state tax filing requirements. Certain subsidiaries also file separate state income tax returns. Current and deferred tax expense is allocated among the members of the group based on a stand-alone calculation of the tax of the individual member. We recognize and classify deferred income taxes using an asset and liability method, whereby deferred tax assets and liabilities are recognized based on the tax effect of temporary differences between the financial statements and the tax basis of assets and liabilities, as measured by current enacted tax rates.

The amount of income tax we pay is subject to ongoing audits by federal and state authorities which may result in proposed assessments. Our estimate of the potential outcome for any uncertain tax issue is highly judgmental. We account for these uncertain tax issues using a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step determines if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step measures the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax audit, judicial rulings, refinement of estimates, or realization of earnings or deductions that differ from our estimates. To the extent that the

Management reviews our deferred tax position and in particular our deferred tax assets whenever circumstances indicate that the assets may not be realized in the future and would record a valuation allowance unless such deferred tax assets were deemed more likely than not to be recoverable. The ultimate realization of these deferred tax assets is dependent upon various factors including the generation of taxable income during future periods. In determining the need for a valuation allowance, we consider such factors as historical earnings, the reversal of existing temporary differences, prior taxable income (if carryback is permitted under the tax law), and prudent and feasible tax planning strategies. In the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets valuation allowance would be charged to earnings in the period in which we make such a determination. If we later determine that it is more likely than not that the net deferred tax assets would be realized, we would reverse the applicable portion of the previously provided valuation allowance as an adjustment to earnings at such time. See further discussion in note 9.

Investments include life insurance contracts purchased in connection with certain of our benefit plans. The contracts, recorded at their net cash surrender value, totaled $2.2 million (net of distributions of $99.4 million plus accrued interest and fees) at November 30, 2012 and $0.7 million (net of distributions of $94.4 million plus accrued interest and fees) at May 31, 2012. We can elect to receive distributions chargeable against the cash surrender value of the policies in the form of borrowings or withdrawals or we can elect to surrender the policies and receive their net cash surrender value.

Investment in Joint Venture. In November 2011 we entered into a joint venture agreement with a ready-mix operator based in Waco, Texas. We contributed certain of our central Texas ready-mix plants and related assets to the joint venture in return for a 40% equity interest. The joint venture operates ready-mix plants serving the central Texas market. The day to day business operations are managed by the 60% partner in the venture. We supply cement to the joint venture. The debt of the joint venture is secured by the underlying assets of the joint venture. In addition, we have guaranteed 50% and our partner has guaranteed 100% of the debt of the joint venture. Our investment totaled $13.6 million at November 30, 2012 and $12.5 million at May 31, 2012. Our equity in income of the joint venture was $1.1 million for the six-month period ended November 30, 2012.

Asset Retirement Obligations. We record a liability for legal obligations associated with the retirement of our long-lived assets in the period in which it is incurred if an estimate of fair value of the obligation can be made. The discounted fair value of the obligations incurred in each period are added to the carrying amount of the associated assets and depreciated over the lives of the assets. The liability is accreted at the end of each period through a charge to operating expense. A gain or loss on settlement is recognized if the obligation is settled for other than the carrying amount of the liability.

We incur legal obligations for asset retirement as part of our normal operations related to land reclamation, plant removal and Resource Conservation and Recovery Act closures. Determining the amount of an asset retirement liability requires estimating the future cost of contracting with third parties to perform the obligation. The estimate is significantly impacted by, among other considerations, management’s assumptions regarding the scope of the work required, labor costs, inflation rates, market-risk premiums and closure dates.

Accumulated Other Comprehensive Loss. Amounts recognized in accumulated other comprehensive loss represent adjustments related to a defined benefit retirement plan and a postretirement health benefit plan covering approximately 600 employees and retirees of our California cement subsidiary. The amounts totaled $24.0 million (net of tax of $5.7 million) at November 30, 2012 and $24.5 million (net of tax of $6.0 million) at May 31, 2012.

Other Income. Routine sales of surplus operating assets and real estate resulted in gains of $0.4 million and $0.4 million in the three-month periods ended November 30, 2012 and November 30, 2011 and $2.9 million and $0.7 million in the six-month periods ended November 30, 2012 and November 30, 2011, respectively. In addition, we sold emissions credits associated with our Crestmore cement plant in Riverside, California resulting in a gain of $2.5 million in the six-month period ended November 30, 2011.

In July 2011 we entered into an asset exchange transaction with CEMEX USA in which we acquired three ready-mix concrete plants and a sand and gravel plant that serve the Austin, Texas metropolitan market. In exchange, we transferred to CEMEX USA seven ready-mix concrete plants in the Houston, Texas market, and we designated four non-operating ready-mix plant sites in the Houston area as surplus real estate. The exchange resulted in the acquisition of ready-mix and aggregate property, plant and equipment of $6.1 million and the recognition of a gain of $2.1 million in the six-month period ended November 30, 2011. The gain from the transaction and the operating results of the acquired ready-mix operations are reported in our consumer products segment, and the operating results of the acquired sand and gravel operations are reported in our aggregates segment.

Stock-based Compensation. We have provided stock-based compensation to employees and non-employee directors in the form of non-qualified and incentive stock options, restricted stock, stock appreciation rights, deferred compensation agreements and stock awards. We use the Black-Scholes option-pricing model to determine the fair value of stock options granted as of the date of grant. Options with graded vesting are valued as single awards and the related compensation cost is recognized using a straight-line attribution method over the shorter of the vesting period or required service period adjusted for estimated forfeitures. We use the average stock price on the date of grant to determine the fair value of restricted stock awards paid. A liability, which is included in other credits, is recorded for stock appreciation rights, deferred compensation agreements and stock awards expected to be settled in cash, based on their fair value at the end of each period until such awards are paid. See further discussion in note 7.

Basic weighted-average number of common shares outstanding during the period includes contingently issuable shares and excludes outstanding unvested restricted shares. Contingently issuable shares outstanding at November 30, 2012 relate to deferred compensation agreements in which directors elected to defer their fees. The deferred compensation is denominated in shares of our common stock and issued in accordance with the terms of the agreement subsequent to retirement or separation from us. The shares are considered contingently issuable because the director has an unconditional right to the shares to be issued.



	Three months ended November 30,						Six months ended November 30,
In thousands except per share	2012			2011			2012			2011
Earnings
Net loss from continuing operations	$	(10,189	)	$	(20,623	)	$	(17,583	)	$	(30,004	)
Net income (loss) from discontinued operations	$	(933	)	$	(414	)	$	3,805		$	1,547
Unvested restricted share participation	6			9			11			14
Loss allocated to common shareholders	$	(11,116	)	$	(21,028	)	$	(13,767	)	$	(28,443	)
Shares
Weighted-average shares outstanding	28,043			27,892			28,028			27,890
Contingently issuable shares	3			2			3			2
Unvested restricted shares	(16		)	(12		)	(17		)	(14		)
Basic weighted-average shares	28,030			27,882			28,014			27,878
Stock option, restricted share and award dilution	—			—			—			—
Diluted weighted-average shares (1)	28,030			27,882			28,014			27,878
Net loss from continuing operations
Basic	$	(0.36	)	$	(0.73	)	$	(0.63	)	$	(1.08	)
Diluted	$	(0.36	)	$	(0.73	)	$	(0.63	)	$	(1.08	)
Net income (loss) from discontinued operations
Basic	(0.04		)	(0.02		)	0.14			0.06
Diluted	(0.04		)	(0.02		)	0.14			0.06
Net loss per share
Basic	(0.40		)	(0.75		)	(0.49		)	(1.02		)
Diluted	(0.40		)	(0.75		)	(0.49		)	(1.02		)
(1) Shares excluded due to antidilutive effect of stock options, restricted shares and awards	826			1,514			978			1,359

Recently Issued Accounting Guidance. In June 2011, the Financial Accounting Standards Board issued new accounting guidance that requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This new guidance eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity. In December 2011, the Financial Accounting Standards Board issued an amendment to an existing accounting standard which defers the requirement to present reclassification adjustments for each component of other comprehensive income on the face of the income statement. The new guidance is effective for us on June 1, 2012 and has not had a material impact on our consolidated financial statements.

On December 4, 2012, our subsidiaries entered into agreements to exchange their expanded shale and clay lightweight aggregates manufacturing business for the ready-mix concrete business of subsidiaries of Trinity Industries, Inc. in east Texas and southwest Arkansas. Pursuant to the agreements, we will transfer our expanded shale and clay manufacturing facilities in Streetman, Texas; Boulder, Colorado and Frazier Park, California; and our DiamondPro® product line in exchange for 42 ready-mix concrete plants stretching from Texarkana to Beaumont in east Texas and in southwestern Arkansas, as well as two aggregate distribution facilities in Beaumont and Port Arthur, Texas, and related assets. We anticipate recognizing a gain on the transaction, the amount of which will be determined after the transaction closes and valuations of the assets are obtained. Closing is subject to negotiations of ancillary agreements, satisfactory completion of due diligence, receipt of required consents, approvals and permit amendments and other customary conditions.

Trade notes and accounts receivable are presented net of allowances for doubtful receivables of $2.8 million at November 30, 2012 and $2.5 million at May 31, 2012. Provisions for bad debts charged to expense were $0.4 million and $0.2 million in the six-month periods ended November 30, 2012 and November 30, 2011, respectively. Uncollectible accounts written off totaled less than $0.2 million and $0.2 million in the six-month periods ended November 30, 2012 and November 30, 2011, respectively.

All inventories are stated at the lower of cost or market. Finished products, work in process and raw material inventories, excluding natural aggregate inventories, are valued using the last-in, first-out (“LIFO”) method. Natural aggregate finished products and raw material inventories and parts and supplies inventories are valued using the average cost method. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation. If the average cost method (which approximates current replacement cost) had been used for all of these inventories, inventory values would have been higher by $36.8 million at November 30, 2012 and $37.5 million at May 31, 2012.



	November 30,		May 31,
In thousands	2012		2012
Senior secured revolving credit facility expiring in 2016	$	—	$	—
9.25% Senior notes due 2020 issued August 10, 2010 at par value	650,000		650,000
Other	6,359		5,778
	656,359		655,778
Capital lease obligations	2,097		2,136
Other contract obligations	245		249
	658,701		658,163
Less current portion	1,432		1,214
	$	657,269	$	656,949

Senior Secured Revolving Credit Facility. On August 25, 2011, we amended and restated our credit agreement and the associated security agreement. The credit agreement continues to provide for a $200 million senior secured revolving credit facility with a $50 million sub-limit for letters of credit and a $15 million sub-limit for swing line loans. The credit facility matures on August 25, 2016. Amounts drawn under the credit facility bear annual interest either at the LIBOR rate plus a margin of 2.00% to 2.75% or at a base rate plus a margin of 1.0% to 1.75%. The base rate is the higher of the federal funds rate plus 0.5%, the prime rate established by Bank of America, N.A. or the one-month LIBOR rate plus 1.0%. The interest rate

The amount that can be borrowed under the credit facility is limited to an amount called the borrowing base. The borrowing base may be less than the $200 million stated principal amount of the credit facility. The borrowing base is calculated based on the value of our accounts receivable, inventory and mobile equipment in which the lenders have a security interest. In addition, by mortgaging tracts of its real property to the lenders, the Company may increase the borrowing base by an amount beginning at $20 million and declining to $10.7 million at the maturity of the credit facility.

The borrowing base under the agreement was $147.8 million as of November 30, 2012. We are not required to maintain any financial ratios or covenants unless an event of default occurs or the unused portion of the borrowing base is less than $25 million, in which case we must maintain a fixed charge coverage ratio of at least 1.0 to 1.0. At November 30, 2012, our fixed charge coverage ratio was .01 to 1.0. Given this ratio, we may use only $122.8 million of the borrowing base as of such date. No borrowings were outstanding at November 30, 2012; however, $31.1 million of the borrowing base was used to support letters of credit. As a result, the maximum amount we could borrow as of November 30, 2012 was $91.6 million.

All of our consolidated subsidiaries have guaranteed our obligations under the credit facility. The credit facility is secured by first priority security interests in all or most of our existing and future consolidated accounts, inventory, equipment, intellectual property and other personal property, and in all of our equity interests in present and future domestic subsidiaries and 66% of the equity interest in any future foreign subsidiaries, if any.

The credit agreement contains a number of covenants restricting, among other things, prepayment or redemption of our senior notes, distributions and dividends on and repurchases of our capital stock, acquisitions and investments, indebtedness, liens and affiliate transactions. We are permitted to pay cash dividends on our common stock as long as the credit facility is not in default, the fixed charge coverage ratio is greater than 1.0 to 1.0 and borrowing availability under the borrowing base is more than $40 million. When our fixed charge coverage ratio is less than 1.0 to 1.0, we are permitted to pay cash dividends on our common stock not to exceed $2.5 million in any single instance (which shall not occur more than four times in any calendar year) or $10 million in the aggregate during any calendar year as long as the credit facility is not in default and borrowing availability is more than the greater of $60 million or 30% of the aggregate commitments of all lenders. For this purpose, borrowing availability is equal to the borrowing base less the amount of outstanding borrowings less the amount used to support letters of credit. We were in compliance with all of our loan covenants as of November 30, 2012.

9.25% Senior Notes. On August 10, 2010, we sold $650 million aggregate principal amount of our 9.25% senior notes due 2020 at an offering price of 100%. The notes were issued under an indenture dated as of August 10, 2010. The net proceeds were used to purchase or redeem all of our outstanding 7.25% senior notes due 2013, with additional proceeds available for general corporate purposes.

At November 30, 2012, we had $650 million aggregate principal amount of 9.25% senior notes outstanding. Under the indenture, at any time on or prior to August 15, 2015, we may redeem the notes at a redemption price equal to the sum of the principal amount thereof, plus accrued interest and a make-whole premium. On and after August 15, 2015, we may redeem all or a part of the notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest if redeemed during the twelve-month period beginning on August 15 of the years indicated below:

In addition, prior to August 15, 2013, we may redeem up to 35% of the aggregate principal amount of the notes at a redemption price equal to 109.250% of the principal amount thereof, plus accrued interest with the net cash proceeds from certain equity offerings. If we experience a change of control, we may be required to offer to purchase the notes at a purchase price equal to 101% of the principal amount, plus accrued interest.

All of our consolidated subsidiaries have unconditionally guaranteed the 9.25% senior notes. The indenture governing the notes contains affirmative and negative covenants that, among other things, limit our and our subsidiaries’ ability to pay dividends on or redeem or repurchase stock, make certain investments, incur additional debt or sell preferred stock, create liens, restrict dividend payments or other payments from subsidiaries to the Company, engage in consolidations and mergers or

Other. Principal payments due on long-term debt, excluding capital lease and other contract obligations, during each of the five years subsequent to November 30, 2012 are $1.4 million, $1.5 million, $1.6 million, $1.6 million and $0.7 million. The total amount of interest incurred was $17.8 million and $17.1 million in the three-month periods ended November 30, 2012 and November 30, 2011, respectively, of which $9.9 million and $8.3 million was capitalized. The total amount of interest incurred was $34.5 million and $34.4 million in the six-month periods ended November 30, 2012 and November 30, 2011, respectively, of which $19.2 million and $16.1 million was capitalized. The total amount of interest paid in cash was $35.5 million and $35.4 million in the six-month periods ended November 30, 2012 and November 30, 2011, respectively.

During October 2007, we commenced construction on a project to expand our Hunter, Texas cement plant. In May 2009 we temporarily halted construction on the project because we believed that economic and market conditions made it unlikely that cement demand levels in Texas at that time would permit the new kiln to operate profitably if the project was completed as originally scheduled. We resumed construction in October 2010 and began commissioning in November 2012 and should be complete in the spring of 2013. The total capital cost of the project is expected to be between $370 million and $375 million, excluding capitalized interest. As of November 30, 2012, we have incurred $367.9 million, excluding capitalized interest of $87.9 million related to the project, of which $362.1 million has been paid.

There are authorized 100,000 shares of Cumulative Preferred Stock, no par value, of which 20,000 shares are designated $5 Cumulative Preferred Stock (Voting), redeemable at $105 per share and entitled to $100 per share upon dissolution. An additional 40,000 shares are designated Series B Junior Participating Preferred Stock. The Series B Preferred Stock is not redeemable and ranks, with respect to the payment of dividends and the distribution of assets, junior to (i) all other series of the Preferred Stock unless the terms of any other series shall provide otherwise and (ii) the $5 Cumulative Preferred Stock. No shares of $5 Cumulative Preferred Stock or Series B Junior Participating Preferred Stock were outstanding as of November 30, 2012.

The Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan (the “2004 Plan”) provides that, in addition to other types of awards, non-qualified and incentive stock options to purchase Common Stock may be granted to employees and non-employee directors at market prices at date of grant. In addition, non-qualified and incentive stock options remain outstanding under our 1993 Stock Option Plan.

Options become exercisable in installments beginning one year after the date of grant and expire 10 years after the date of grant. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. Options with graded vesting are valued as single awards and the compensation cost recognized using a straight-line attribution method over the shorter of the vesting period or required service period adjusted for estimated forfeitures. No options were granted during the six-month period ended November 30, 2012. The following table sets forth the information about the weighted-average grant date fair value of options granted during the six-month period ended November 30, 2011 and the weighted-average assumptions used for such grants.

Expected volatility is based on an analysis of historical volatility of our common stock. Expected option term is the period of time that options granted are expected to be outstanding and is derived by analyzing the historical option exercise experience of our optionees. Risk-free interest rate is determined using the implied yield currently available for zero coupon U.S. treasury issues with a remaining term equal to the expected term of the option. Expected dividend yield is based on the approved annual dividend rate in effect and the market price of our common stock at the time of grant.



	Range of Exercise Prices
	$16.04 - $29.38		$33.57 - $48.60		$50.63 - $70.18
Options outstanding
Shares outstanding	768,531		781,717		514,100
Weighted-average remaining life in years	6.34		6.15		3.61
Weighted-average exercise price	$	25.54	$	39.71	$	57.40
Options exercisable
Shares exercisable	286,828		345,280		480,890
Weighted-average remaining life in years	3.17		4.63		3.56
Weighted-average exercise price	$	21.10	$	41.15	$	57.87

As of November 30, 2012, the aggregate intrinsic value (the difference in the closing market price of our common stock of $46.42 and the exercise price to be paid by the optionee) of stock options outstanding was $21.3 million. The aggregate intrinsic value of exercisable stock options at that date was $8.9 million. The total intrinsic value for options exercised (the difference in the market price of our common stock on the exercise date and the price paid by the optionee to exercise the option) was $0.3 million and less than $0.1 million for the three-month periods ended November 30, 2012 and November 30, 2011, respectively and $1.0 million and $0.1 million for the six-month periods ended November 30, 2012 and November 30, 2011, respectively.

We have provided additional stock-based compensation to employees and directors under stock appreciation rights contracts, deferred compensation agreements, restricted stock payments and a former stock awards program which was settled during fiscal year 2012. At November 30, 2012, outstanding stock appreciation rights totaled 133,315 shares, deferred compensation agreements to be settled in cash totaled 101,790 shares, deferred compensation agreements to be settled in common stock totaled 2,995 shares and unvested restricted stock payments totaled 14,331 shares. Other credits include $7.3

Total stock-based compensation included in selling, general and administrative expense (credit) was $2.7 million and $(1.3) million in the three-month periods ended November 30, 2012 and November 30, 2011, respectively and $5.5 million and $(1.2) million in the six-month periods ended November 30, 2012 and November30, 2011, respectively. The impact of changes in our company's stock price on stock-based awards accounted for as liabilities increased stock-based compensation $1.6 million in the the three-month period ended November 30, 2012 and reduced stock-based compensation $2.7 million in the three-month period ended November 30, 2011. The impact of changes in our company’s stock price on stock-based awards accounted for as liabilities increased stock-based compensation $3.2 million in the six-month period ended November 30, 2012 and reduced stock-based compensation $3.8 million in the six-month period ended November 30, 2011.

Total tax expense or benefit recognized in our statements of operations for stock-based compensation was an expense of less than $0.1 million in the three-month periods ended November 30, 2012 and November 30, 2011 and an expense less than $0.1 million in the six-month periods ended November 30, 2012 and November 30, 2011. No cash tax benefit was realized for stock-based compensation in the six-month periods ended November 30, 2012 and November 30, 2011.

Effective January 4, 2013 the stock appreciation rights agreement was extended and modified to require settlement in shares instead of cash. Also effective December 28, 2012, the deferred compensation agreements totaling 101,790 shares were settled with shares. The Company is in the process of obtaining the valuations required for amended terms of these agreements, but does not expect the modifications to result in a significant gain or loss in the third quarter. These changes will reduce the Company's exposure to future volatility caused by the previous awards being accounted for as liabilities and reflecting changes in the Company's stock price.

Riverside Defined Benefit Plans. Approximately 600 employees and retirees of our subsidiary, Riverside Cement Company, are covered by a defined benefit pension plan and a postretirement health benefit plan. Unrecognized prior service costs and actuarial gains or losses for these plans are recognized in a systematic manner over the remaining service periods of active employees expected to receive benefits under these plans. The amount of the defined benefit pension plan and postretirement health benefit plan expense charged to costs and expenses for the three-month and six-month periods ended November 30, 2012 and November 30, 2011, was as follows:



	Three months ended November 30,						Six months ended November 30,
In thousands	2012			2011			2012			2011
Defined benefit pension plan
Service cost	$	61		$	134		$	216		$	268
Interest cost	635			760			1,343			1,520
Expected return on plan assets	(770		)	(777		)	(1,518		)	(1,554		)
Amortization of net actuarial loss	217			430			948			861
	$	143		$	547		$	989		$	1,095
Postretirement health benefit plan
Service cost	$	27		$	25		$	54		$	50
Interest cost	88			104			176			208
Amortization of prior service cost	(194		)	(194		)	(388		)	(388		)
Amortization of net actuarial loss	129			141			258			282
	$	50		$	76		$	100		$	152

effective December 31, 2012, all future benefit accruals under the Pension Plan will automatically cease for all participants, and the accrued benefits under the Pension Plan will be determined and frozen as of that date. Accordingly, as a result of these amendments, accrued pension liability was reduced by $2.2 million with an offsetting reduction in the funded status of pension liability included in accumulated other comprehensive loss.

Financial Security Defined Benefit Plans. Substantially all of our executive and certain managerial employees are covered by a series of financial security plans that are non-qualified defined benefit plans. The financial security plans require deferral of a portion of a participant’s salary and provide retirement, death and disability benefits to participants. The financial security plans are unfunded and benefits are paid as they become due. Actuarial gains or losses are recognized when incurred. The amount of financial security plan benefit expense charged to costs and expenses for the three-month and six-month periods ended November 30, 2012 and November 30, 2011, was as follows:

Income taxes for the interim periods ended November 30, 2012 and November 30, 2011 have been included in the accompanying financial statements on the basis of an estimated annual rate. The tax rate differs from the 35% federal statutory corporate rate primarily due to percentage depletion that is tax deductible, state income taxes and valuation allowances against deferred tax assets. The estimated annualized rate for continuing operations is 4.3% for fiscal year 2013 compared to 4.6% for fiscal year 2012. We made no income tax payments in the six-month periods ended November 30, 2012 and November 30, 2011. We received income tax refunds of less than $0.1 million in the six-month period ended November 30, 2011.

Net deferred tax assets totaled $12.5 million at November 30, 2012 and $13.7 million at May 31, 2012, of which $10.0 million at November 30, 2012 and $10.7 million at May 31, 2012 were classified as current. Management reviews our deferred tax position and in particular our deferred tax assets whenever circumstances indicate that the assets may not be realized in the future and records a valuation allowance unless such deferred tax assets are deemed more likely than not to be recoverable. The ultimate realization of these deferred tax assets depends upon various factors including the generation of taxable income during future periods. The Company’s deferred tax assets exceeded deferred tax liabilities as of November 30, 2012 and May 31, 2012 primarily as a result of recent losses. Management has concluded that the sources of taxable income we are permitted to consider do not assure the realization of the entire amount of our net deferred tax assets. Accordingly, a valuation allowance is required due to the uncertainty of realizing the deferred tax assets. We recorded a valuation allowance of $5.2 million in fiscal year 2012 through a charge to other comprehensive loss given the increase in actuarial losses in our retirement plans in 2012. We will continue to record additional valuation allowance against additions to our net deferred tax assets for fiscal year 2013 until Management believes it is more likely than not the deferred tax assets will be realized.

The amount of income tax we pay is subject to ongoing audits by federal and state authorities which may result in proposed assessments. We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax audit, judicial rulings, refinement of estimates, or realization of earnings or deductions that differ from our estimates. To the extent that the final outcome of a matter differs from the amount recorded, such difference generally will impact our provision for income taxes in the period that includes its final resolution. We have no significant reserves for uncertain tax positions including related interest and penalties.

In addition to our federal income tax return, we file income tax returns in various state jurisdictions. We are no longer subject to income tax examinations by federal tax authorities for years prior to 2007 and state tax authorities for years prior to 2007. Our federal income tax returns for 2007 through 2010 are currently under examination. We do not anticipate that any adjustments that may result from this examination would have a material effect on our financial position or results of operations.

We are subject to federal, state and local environmental laws, regulations and permits concerning, among other matters, air emissions and wastewater discharge. We intend to comply with these laws, regulations and permits. However, from time to time we receive claims from federal and state environmental regulatory agencies and entities asserting that we are or may be in violation of certain of these laws, regulations and permits, or from private parties alleging that our operations have injured them or their property. It is possible that we could be held liable for future charges which might be material but are not currently known or estimable. In addition, changes in federal or state laws, regulations or requirements or discovery of currently unknown conditions could require additional expenditures by us.

In March 2008, the South Coast Air Quality Management District, or SCAQMD, informed one of our subsidiaries, Riverside Cement Company (Riverside), that it believed that operations at the Crestmore cement plant in Riverside, California caused the level of hexavalent chromium, or chrome 6, in the air in the vicinity of the plant to be elevated above ambient air levels. Chrome 6 has been identified by the State of California as a carcinogen. Riverside immediately began taking steps, in addition to its normal dust control procedures, to reduce dust from plant operations and eliminate the use of open clinker stockpiles. In February 2008, the SCAQMD placed an air monitoring station at the downwind property line closest to the open clinker stockpiles. In the SCAQMD’s first public report of the results of its monitoring, over the period of February 12 to April 9, 2008, the average level of chrome 6 was 2.43 nanograms per cubic meter, or ng/m³. Since that time, the average level has decreased. The average levels of chrome 6 reported by the SCAQMD at all of the air monitoring stations in areas around the plant, including the station at the property line, are below 1.0 ng/m³ over the entire period of time it has operated the stations. The SCAQMD compared the level of exposure at the air monitor on our property line with the following employee exposure standards established by regulatory agencies:

In public meetings conducted by the SCAQMD, it stated that the risk of long term exposure immediately adjacent to the plant is similar to living close to a busy freeway or rail yard, and it estimated an increased risk of 250 to 500 cancers per one million people, assuming continuous exposure for 70 years. Riverside has not determined how this particular risk number was calculated by SCAQMD. However, the Riverside Press Enterprise reported in a May 30, 2008 story that “John Morgan, a public health and epidemiology professor at Loma Linda University, said he looked at cancer cases reported from 1996 to 2005 in the census [tract] nearest the [plant] and found no excess cases. That includes lung cancer, which is associated with exposure to hexavalent chromium.”

In late April 2008, a lawsuit was filed in Riverside County Superior Court of the State of California styled Virginia Shellman, et al. v. Riverside Cement Holdings Company, et al . The lawsuit against three of our subsidiaries purports to be a class action complaint for medical monitoring for a putative class defined as individuals who were allegedly exposed to chrome 6 emissions from our Crestmore cement plant. The complaint alleges an increased risk of future illness due to the exposure to chrome 6 and other toxic chemicals. The suit requests, among other things, establishment and funding of a medical testing and monitoring program for the class until their exposure to chrome 6 is no longer a threat to their health, as well as punitive and exemplary damages.

Since the Shellman lawsuit was filed, five additional putative class action lawsuits have been filed in the same court. The putative class in each of these cases is the same as or a subset of the putative class in the Shellman case, and the allegations and requests for relief are similar to those in the Shellman case. As a consequence, the court has stayed four of these lawsuits until the Shellman lawsuit is finally determined.

Since August 2008, additional lawsuits have been filed in the same court against Texas Industries, Inc. or one or more of our subsidiaries containing allegations of personal injury and wrongful death by approximately 3,000 individual plaintiffs who were allegedly exposed to chrome 6 and other toxic or harmful substances in the air, water and soil caused by emissions from the Crestmore plant. The court has dismissed Texas Industries, Inc. from the suits, and our subsidiaries operating in Texas have been dismissed by agreement with the plaintiffs. Most of our subsidiaries operating in California remain as defendants. The court has dismissed from these suits plaintiffs that failed to provide required information, leaving approximately 2,000 plaintiffs.

Industries, Inc. and our subsidiaries operating in Texas have been similarly dismissed from these suits. The court has dismissed from these suits plaintiffs that failed to provide required information, leaving approximately 250 plaintiffs. Prior to the filing of the lawsuits, the air quality management district in whose jurisdiction the plant lies conducted air sampling from locations around the plant. None of the samples contained chrome 6 levels above 1.0 ng/m³.

The plaintiffs allege causes of action that are similar from suit to suit. Following dismissal of certain causes of action by the court and amendments by the plaintiffs, the remaining causes of action typically include, among other things, negligence, intentional and negligent infliction of emotional distress, trespass, public and private nuisance, strict liability, willful misconduct, fraudulent concealment, unfair business practices, wrongful death and loss of consortium. The plaintiffs generally request, among other things, general and punitive damages, medical expenses, loss of earnings, property damages and medical monitoring costs. At the date of this report, none of the plaintiffs in these cases has alleged in their pleadings any specific amount or range of damages. Some of the suits include additional defendants, such as the owner of another cement plant located approximately four miles from the Crestmore plant or former owners of the Crestmore and Oro Grande plants. We will vigorously defend all of these suits but we cannot predict what liability, if any, could arise from them. We also cannot predict whether any other suits may be filed against us alleging damages due to injuries to persons or property caused by claimed exposure to chrome 6.

We have three business segments: cement, aggregates and consumer products. Our business segments are managed separately along product lines. Through the cement segment we produce and sell gray portland cement as our principal product, as well as specialty cements. Through the aggregates segment we produce and sell stone, sand and gravel as our principal products. Previously, the aggregates segment included our expanded shale and clay lightweight aggregates which has been classified as discontinued operations in the current period and all prior periods. Therefore, amounts for these operations are not included in the information presented below. Through the consumer products segment we produce and sell ready-mix concrete as our principal product. We account for intersegment sales at market prices. Segment operating profit consists of net sales less operating costs and expenses. Corporate includes those administrative, financial, legal, human resources, environmental and real estate activities which are not allocated to operations and are excluded from segment operating profit. Identifiable assets by segment are those assets that are used in each segment’s operation. Corporate assets consist primarily of cash and cash equivalents, real estate and other financial assets not identified with a business segment. The following is a summary of operating results and certain other financial data for our business segments.



	Three months ended November 30,						Six months ended November 30,
In thousands	2012			2011			2012			2011
Net sales
Cement
Sales to external customers	$	80,991		$	65,639		$	168,118		$	137,697
Intersegment sales	10,452			11,595			20,530			25,174
Aggregates
Sales to external customers	33,899			23,114			69,299			48,505
Intersegment sales	6,313			5,736			11,894			10,661
Consumer products
Sales to external customers	52,803			57,419			104,799			127,600
Intersegment sales	62			702			111			1,545
Eliminations	(16,827		)	(18,033		)	(32,535		)	(37,380		)
Total net sales	$	167,693		$	146,172		$	342,216		$	313,802
Segment operating profit (loss)
Cement	$	6,057		$	(5,355	)	$	14,479		$	1,162
Aggregates	3,520			1,991			7,518			3,783
Consumer products	(2,607		)	(3,606		)	(4,515		)	(5,946		)
Total segment operating profit	6,970			$	(6,970	)	17,482			(1,001		)
Corporate	(10,359		)	(5,959		)	(20,626		)	(12,158		)
Interest	(7,457		)	(8,838		)	(15,235		)	(18,298		)
Loss before income taxes	$	(10,846	)	$	(21,767	)	$	(18,379	)	$	(31,457	)
Depreciation, depletion and amortization
Cement	$	8,429		$	8,897		$	16,893		$	17,824
Aggregates	3,347			3,494			6,674			7,290
Consumer products	1,981			2,326			3,847			4,890
Corporate	229			314			446			608
Total depreciation, depletion and amortization	$	13,986		$	15,031		$	27,860		$	30,612
Capital expenditures
Cement	$	11,052		$	14,193		$	40,785		$	39,889
Aggregates	2,278			1,061			2,601			19,364
Consumer products	351			611			2,246			2,042
Corporate	645			637			1,019			793
Total capital expenditures	$	14,326		$	16,502		$	46,651		$	62,088
Net sales by product
Cement	$	72,169		$	57,400		$	149,404		$	119,799
Stone, sand and gravel	21,428			15,257			43,997			32,532
Ready-mix concrete	52,712			44,578			104,582			100,801
Other products	2,648			13,692			5,515			28,699
Delivery fees	18,736			15,245			38,718			31,971
Total net sales	$	167,693		$	146,172		$	342,216		$	313,802

Operating profit includes $2.0 million in restructuring charges in the three-month and six-month periods ended November 30, 2011, including $1.1 million associated with our cement operations, $0.4 million associated with our aggregate operations, $0.5 million associated with our ready-mix concrete operations. An additional $1.2 million in restructuring charges in the periods is associated with our corporate activities.

Capital expenditures incurred in connection with the expansion of our Hunter, Texas cement plant were $36.1 million and $36.0 million in the six-month periods ended November 30, 2012 and November 30, 2011, respectively, of which $18.4 million and $15.5 million was capitalized interest paid in the six-month periods ended November 30, 2012 and November 30, 2011, respectively. Capital expenditures for normal replacement and upgrades of existing equipment and acquisitions to sustain existing operations were $10.8 million and $26.3 million in the six-month periods ended November 30, 2012 and November 30, 2011, respectively, of which $18.0 million was incurred to acquire aggregate reserves in the six-month period ended November 30, 2011.

On August 10, 2010, Texas Industries, Inc. (the parent company) issued $650 million aggregate principal amount of its 9.25% senior notes due 2020. All existing consolidated subsidiaries of the parent company are 100% owned and provide a joint and several, full and unconditional guarantee of the securities. There are no significant restrictions on the parent company’s ability to obtain funds from any of the guarantor subsidiaries in the form of a dividend or loan. Additionally, there are no significant restrictions on a guarantor subsidiary’s ability to obtain funds from the parent company or its direct or indirect subsidiaries.

The following condensed consolidating balance sheets, statements of operations and statements of cash flows are provided for the parent company and guarantor subsidiaries. The information has been presented as if the parent company accounted for its ownership of the guarantor subsidiaries using the equity method of accounting. Prior period information has been reclassified to conform to the current period presentation.



In thousands	Texas Industries, Inc.		Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Condensed consolidating balance sheet at November 30, 2012
Cash and cash equivalents	$	68,356	$	3,426	$	—		$	71,782
Receivables – net	—		107,760		—			107,760
Inventories	—		85,530		—			85,530
Deferred income taxes and prepaid expenses	115		16,825		(268		)	16,672
Discontinued Operations Held for Sale	—		39,360		—			39,360
Total current assets	68,471		252,901		(268		)	321,104
Property, plant and equipment – net	—		1,204,046		—			1,204,046
Goodwill	—		1,715		—			1,715
Real estate and investments	2,242		20,926		—			23,168
Deferred income taxes and other charges	122,901		8,666		(108,333		)	23,234
Investment in subsidiaries	1,011,244		—		(1,011,244		)	—
Long-term intercompany receivables	230,814		18,740		(249,554		)	—
Total assets	$	1,435,672	$	1,506,994	$	(1,369,399	)	$	1,573,267
Accounts payable	$	34	$	64,486	$	—		$	64,520
Accrued interest, compensation and other	26,213		41,767		(268		)	67,712
Current portion of long-term debt	—		1,432		—			1,432
Total current liabilities	26,247		107,685		(268		)	133,664
Long-term debt	650,245		7,024		—			657,269
Long-term intercompany payables	18,740		230,814		(249,554		)	—
Deferred income taxes	—		108,333		(108,333		)	—
Other credits	54,101		41,894		—			95,995
Shareholders’ equity	686,339		1,011,244		(1,011,244		)	686,339
Total liabilities and shareholders’ equity	$	1,435,672	$	1,506,994	$	(1,369,399	)	$	1,573,267



In thousands	Texas Industries, Inc.		Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
Condensed consolidating balance sheet at May 31, 2012
Cash and cash equivalents	$	84,713	$	3,314	$	—		$	88,027
Receivables – net	—		98,836		—			98,836
Inventories	—		99,441		—			99,441
Deferred income taxes and prepaid expenses	99		18,908		—			19,007
Discontinued Operations Held for Sale	—		40,344		—			40,344
Total current assets	84,812		260,843		—			345,655
Property, plant and equipment – net	—		1,185,325		—			1,185,325
Goodwill	—		1,715		—			1,715
Real estate and investments	664		20,201		—			20,865
Deferred income taxes and other charges	123,734		7,356		(107,722		)	23,368
Investment in subsidiaries	987,519		—		(987,519		)	—
Long-term intercompany receivables	246,298		18,747		(265,045		)	—
Total assets	$	1,443,027	$	1,494,187	$	(1,360,286	)	$	1,576,928
Accounts payable	$	108	$	64,717	$	—		$	64,825
Accrued interest, compensation and other	25,829		35,488		—			61,317
Current portion of long-term debt	4		1,210		—			1,214
Total current liabilities	25,941		101,415		—			127,356
Long-term debt	650,245		6,704		—			656,949
Long-term intercompany payables	18,747		246,298		(265,045		)	—
Deferred income taxes	—		107,722		(107,722		)	—
Other credits	51,823		44,529		—			96,352
Shareholders’ equity	696,271		987,519		(987,519		)	696,271
Total liabilities and shareholders’ equity	$	1,443,027	$	1,494,187	$	(1,360,286	)	$	1,576,928



In thousands	Texas Industries, Inc.			Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Condensed consolidating statement of comprehensive income for the three months ended November 30, 2012
Net sales	$	—		$	167,693		$	—		$	167,693
Cost of products sold	—			155,939			—			155,939
	—			11,754			—			11,754
Selling, general and administrative	2,330			14,737			—			17,067
Interest	17,248			—			(9,791		)	7,457
Other income	(26		)	(1,898		)	—			(1,924		)
Intercompany other income	(874		)	(8,917		)	9,791			—
	18,678			3,922			—			22,600
Income (loss) from continuing operations before the following items	(18,678		)	7,832			—			(10,846		)
Income taxes (benefit)	(143		)	(514		)	—			(657		)
	(18,535		)	8,346			—			(10,189		)
Equity in earnings of subsidiaries	7,413			—			(7,413		)	—
Net income (loss)	$	(11,122	)	$	8,346		$	(7,413	)	$	(10,189	)
Net income (loss) from discontinued operations, net of tax	$	—		$	(933	)	$	—		$	(933	)
Net income (loss)	$	(11,122	)	$	7,413		$	(7,413	)	$	(11,122	)
Comprehensive loss	$	(11,025	)	$	7,509		$	(7,509	)	$	(11,025	)



In thousands	Texas Industries, Inc.			Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
Condensed consolidating statement of comprehensive income for the three months ended November 30, 2011
Net sales	$	—		$	146,172		$	—		$	146,172
Cost of products sold	—			144,689			—			144,689
	—			1,483			—			1,483
Selling, general and administrative	228			12,553			—			12,781
Restructuring charges	—			3,153			—			3,153
Interest	17,008			—			(8,170		)	8,838
Other income	(14		)	(1,508		)	—			(1,522		)
Intercompany other income	(873		)	(7,297		)	8,170			—
	16,349			6,901			—			23,250
Income (loss) from continuing operations before the following items	(16,349		)	(5,418		)	—			(21,767		)
Income taxes (benefit)	(1,404		)	260			—			(1,144		)
	(14,945		)	(5,678		)	—			(20,623		)
Equity in earnings of subsidiaries	(5,158		)	—			5,158			—
Net income (loss)	$	(20,103	)	$	(5,678	)	$	5,158		$	(20,623	)
Net income (loss) from discontinued operations, net of tax	$



Delaware		75-0832210
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)



1341 West Mockingbird Lane, Suite 700W, Dallas, Texas		75247-6913
(Address of principal executive offices)		(Zip Code)



Large Accelerated Filer	ý	Accelerated Filer	¨
Non-accelerated Filer	o	Smaller Reporting Company	¨



		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Loss	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
	Report of Independent Registered Public Accounting Firm	28
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	41
Item 6.	Exhibits	41
SIGNATURES		43



	Six months ended November 30,
In thousands	2012		2011
Balance at beginning of period	$3,879		$4,455
Additions	305		287
Accretion expense	86		89
Settlements	(1,617	)	(713	)
Balance at end of period	$2,653		$4,118



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



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



Year	Percentage
2015	104.625	%
2016	103.083	%
2017	101.542	%
2018 and thereafter	100.000	%



	Six months ended November 30,
		2011
Weighted average grant date fair value		$	19.72
Weighted average assumptions used:
Expected volatility		.411
Expected option term in years		10
Risk-free interest rate		2.97		%
Expected dividend yield		.56		%



	Shares Under Option		Weighted-Average Option Price
Outstanding at May 31, 2012	2,145,570		$	38.54
Exercised	(55,332	)	24.42
Canceled	(25,820	)	45.10
Outstanding at November 30, 2012	2,064,418		$	38.83
Exercisable at November 30, 2012	1,099,138		$	43.33



Occupational Safety and Health Administration	5,000 ng/m³
National Institute for Occupational Safety and Health	1,000 ng/m³
California Environmental Protection Agency	200 ng/m³



FORM 10-Q