Form 10-Q

10-Q 1 d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended November 30, 2007

¨	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 1-4887

TEXAS INDUSTRIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

75-0832210

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer Identification No.)


1341 West Mockingbird Lane, Suite 700W, Dallas, Texas		75247-6913
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code (972) 647-6700

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 ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x Accelerated Filer ¨ Non-Accelerated Filer ¨

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

There were 27,360,139 shares of the Registrant’s Common Stock, $1.00 par value, outstanding as of January 2, 2008.

INDEX

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets — November 30, 2007 and May 31, 2007	3

	Consolidated Statements of Operations — three months and six months ended November 30, 2007 and November 30, 2006	4

	Consolidated Statements of Cash Flows — six months ended November 30, 2007 and November 30, 2006	5

	Notes to Consolidated Financial Statements	6

	Report of Independent Registered Public Accounting Firm	22

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk — the information required by this item is included in Item 2	—

Item 4.	Controls and Procedures	28

PART II. OTHER INFORMATION

Item 4.	Submission of Matters to a Vote of Security Holders	28

Item 6.	Exhibits	29

SIGNATURES

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CONSOLIDATED BALANCE SHEETS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


In thousands	Unaudited November 30, 2007			May 31, 2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	26,216		$	15,138
Receivables – net		163,990			142,610
Inventories		112,824			121,467
Deferred income taxes and prepaid expenses		19,785			17,621

TOTAL CURRENT ASSETS		322,815			296,836
OTHER ASSETS
Goodwill		60,110			58,395
Real estate and investments		48,037			111,414
Deferred charges and intangibles		12,097			11,369

		120,244			181,178
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements		134,227			132,992
Buildings		40,868			41,485
Machinery and equipment		774,832			752,531
Construction in progress		492,518			362,646

		1,442,445			1,289,654
Less depreciation and depletion		517,557			505,432

		924,888			784,222

	$	1,367,947		$	1,262,236

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	115,408		$	109,749
Accrued interest, wages and other items		50,568			57,891
Current portion of long-term debt		217			1,340

TOTAL CURRENT LIABILITIES		166,193			168,980
LONG-TERM DEBT		334,517			274,416
DEFERRED INCOME TAXES AND OTHER CREDITS		89,014			90,358
SHAREHOLDERS’ EQUITY
Common stock, $1 par value		27,355			27,323
Additional paid-in capital		454,860			448,289
Retained earnings		300,214			257,087
Accumulated other comprehensive loss		(4,206	)		(4,217	)

		778,223			728,482

	$	1,367,947		$	1,262,236

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


	Three months ended November 30,						Six months ended November 30,
In thousands except per share	2007			2006			2007			2006
NET SALES	$	268,473		$	245,832		$	531,927		$	517,484
Cost of products sold		208,271			194,057			425,708			399,395

GROSS PROFIT		60,202			51,775			106,219			118,089

Selling, general and administrative		21,064			30,147			43,247			51,205
Interest		—			4,643			—			10,185
Other income		(3,442	)		(24,800	)		(5,695	)		(28,351	)

		17,622			9,990			37,552			33,039

INCOME BEFORE INCOME TAXES		42,580			41,785			68,667			85,050
Income taxes		13,265			13,133			21,438			26,967

NET INCOME	$	29,315		$	28,652		$	47,229		$	58,083

Net income per share
Basic	$	1.07		$	1.19		$	1.73		$	2.42
Diluted	$	1.05		$	1.09		$	1.69		$	2.21

Average shares outstanding
Basic		27,348			24,001			27,340			23,980
Diluted		27,849			27,602			27,873			27,558

Cash dividends per share	$	.075		$	.075		$	.15		$	.15

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


	Six months ended November 30,
In thousands	2007			2006
OPERATING ACTIVITIES
Net income	$	47,229		$	58,083
Adjustments to reconcile net income to cash provided by operating activities
Gain on asset disposals		(917	)		(539	)
Depreciation, depletion and amortization		27,164			22,284
Deferred income taxes		1,127			8,511
Stock-based compensation expense (credit)		(1,325	)		6,267
Excess tax benefits from stock-based compensation		(3,383	)		(1,563	)
Other – net		(945	)		(2,724	)
Changes in operating assets and liabilities
Receivables – net		(21,357	)		2,816
Inventories		8,643			1,562
Prepaid expenses		1,920			2,365
Accounts payable and accrued liabilities		2,320			13,556

Net cash provided by operating activities		60,476			110,618
INVESTING ACTIVITIES
Capital expenditures – expansions		(138,364	)		(107,855	)
Capital expenditures – other		(36,724	)		(39,601	)
Proceeds from asset disposals		2,366			775
Purchases of short-term investments		—			(8,500	)
Sales of short-term investments		—			49,000
Investments in life insurance contracts		65,529			(4,274	)
Other – net		55			(105	)

Net cash used by investing activities		(107,138	)		(110,560	)
FINANCING ACTIVITIES
Long-term borrowings		189,000			—
Debt retirements		(130,237	)		(355	)
Debt issuance costs		(1,033	)		—
Stock option exercises		730			1,843
Excess tax benefits from stock-based compensation		3,383			1,563
Common dividends paid		(4,103	)		(3,600	)

Net cash provided (used) by financing activities		57,740			(549	)

Increase (decrease) in cash and cash equivalents		11,078			(491	)
Cash and cash equivalents at beginning of period		15,138			84,139

Cash and cash equivalents at end of period	$	26,216		$	83,648

See notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Texas Industries, Inc. and subsidiaries is a leading supplier of heavy building materials in the United States through three business segments: cement, aggregates and consumer products, which produce and sell cement; stone, sand and gravel and expanded shale and clay aggregate; and ready-mix concrete and packaged concrete and related products, respectively, from facilities 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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, 2007, are not necessarily indicative of the results that may be expected for the year ended May 31, 2008. 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, 2007.

Principles of Consolidation. The consolidated financial statements include the accounts of Texas Industries, Inc. and all subsidiaries except a former subsidiary trust, in which we had a variable interest but were not the primary beneficiary. Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

Estimates. The preparation of financial statements and accompanying notes in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates.

Cash and Cash Equivalents. Investments with maturities of less than 90 days when purchased are classified as cash equivalents and consist primarily of money market funds and investment grade commercial paper issued by major corporations and financial institutions.

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.

Environmental Liabilities. We are subject to environmental laws and regulations established by federal, state and local authorities, and make provision for the estimated costs related to compliance when it is probable that a reasonably estimable liability has been incurred.

Legal Contingencies. We are a defendant in lawsuits which arose in the normal course of business, and make provision for the estimated loss from any claim or legal proceeding when it is probable that a reasonably estimable liability has been incurred.

Long-lived Assets. Management reviews long-lived assets 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.

Property, plant and equipment is recorded at cost. Provisions for depreciation are computed generally using the straight-line method. Provisions for depletion of mineral deposits are computed on the basis of the estimated quantity of recoverable raw materials. Useful lives for our primary operating facilities range from 10 to 25 years.

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Major Maintenance Activities. Maintenance and repairs are charged to expense as incurred. Effective June 1, 2007, we adopted Financial Accounting Standards Board FSP AUG AIR-1, “Accounting for Planned Major Maintenance Activities.” This FSP addresses the planned major maintenance of assets and prohibits the use of the “accrue-in-advance” method of accounting for these activities. The adoption of this FSP did not have any impact on our consolidated financial statements.

Goodwill. Management tests goodwill for impairment at least annually by reporting unit. If the carrying amount of the goodwill exceeds its fair value, an impairment loss is recognized. 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. Goodwill having a carrying value of $58.4 million at November 30, 2007 and May 31, 2007 resulted primarily from the acquisition of Riverside Cement Company and is identified with our California cement operations. Goodwill having a carrying value of $1.7 million at November 30, 2007 resulted from the acquisition of ready-mix operations in Texas and Louisiana and is identified with our consumer products operations. In each case, the fair value of the reporting unit exceeds its carrying value.

Real Estate and Investments. Surplus real estate and real estate acquired for development of high quality industrial, office or multi-use parks totaled $6.0 million at November 30, 2007 and $6.2 million at May 31, 2007.

Investments are composed primarily of life insurance contracts purchased in connection with certain of our benefit plans. The contracts, recorded at their net cash surrender value, totaled $41.9 million (net of distributions of $71.5 million plus accrued interest) at November 30, 2007 and $105.0 million (net of distributions of $1.2 million plus accrued interest) at May 31, 2007. Distributions totaling $70.3 million were received during the six-month period ended November 30, 2007.

Deferred Charges and Intangibles. Deferred charges are composed primarily of debt issuance costs that totaled $5.9 million at November 30, 2007 and $5.4 million at May 31, 2007. The costs are amortized over the term of the related debt.

Intangibles are composed of non-compete agreements and other intangibles with finite lives being amortized on a straight-line basis over periods of 2 to 15 years. Their carrying value, adjusted for write-offs, totaled $1.0 million (net of accumulated amortization of $2.9 million) at November 30, 2007 and $1.1 million (net of accumulated amortization of $2.8 million) at May 31, 2007. Amortization expense incurred was $100,000 in each of the six-month periods ended November 30, 2007 and 2006. Estimated amortization expense for each of the five succeeding years is approximately $300,000 for 2008 and 2009, $200,000 for 2010 and 2011, and none for 2012.

Other Credits. Other credits, composed primarily of liabilities related to our retirement plans, deferred compensation agreements and asset retirement obligations, totaled $60.2 million at November 30, 2007 and $62.9 million at May 31, 2007.

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 a reasonable estimate of fair value of the obligation can be made. The discounted fair value of the obligation incurred in each period is 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.

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Changes in asset retirement obligations are as follows:


	Six months ended November 30,
In thousands	2007			2006
Balance at beginning of period	$	4,987		$	4,346
Additions		259			63
Accretion expense		197			189
Settlements		(457	)		(363	)

Balance at end of period	$	4,986		$	4,235

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 $4.2 million (net of tax of $2.5 million) at November 30, 2007 and May 31, 2007.

Comprehensive income for the three-month and six-month periods ending November 30, 2007 and 2006 consisted of net income and amounts in accumulated other comprehensive loss recognized as components of net periodic postretirement benefit cost, net of tax. These recognized amounts were not significant, and therefore, comprehensive income approximated net income for the periods.

Net Sales. Sales are recognized when title has transferred and products are delivered. We include delivery fees in the amount we bill customers to the extent needed to recover our cost of freight and delivery. Net sales are presented as revenues including these delivery fees.

Other Income. Routine sales of surplus operating assets and real estate resulted in gains of $1.3 million and $2.2 million in the three-month periods ended November 30, 2007 and 2006, respectively, and $2.0 million and $2.7 million in the six-month periods ended November 30, 2007 and 2006, respectively. Interest income totaled $500,000 and $1.9 million in the three-month periods ended November 30, 2007 and 2006, respectively, and $900,000 and $4.0 million in the six-month periods ended November 30, 2007 and 2006, respectively.

Other income in the three-month and six-month periods ended November 30, 2006 includes $19.8 million representing distributions which we received pursuant to agreements that settled a 16-year dispute over the U.S. antidumping duty order on cement imports from Mexico.

Income Taxes. Accounting for income taxes uses the liability method of recognizing and classifying deferred income taxes. Texas Industries, Inc. (the parent company) joins in filing a consolidated return with its subsidiaries. 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. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense.

Stock-based Compensation. Effective June 1, 2006, we adopted SFAS No. 123R, “Share-Based Payment,” utilizing the modified prospective transition method. Under this transition method, we account for awards granted prior to adoption, but for which the vesting period is not complete, on a prospective basis with expense being recognized in our statement of operations based on the grant date fair value estimated in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation.” 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.

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Earnings Per Share (“EPS”). Basic EPS is computed by adjusting net income for the participation in earnings of unvested restricted shares outstanding, then dividing by the weighted-average number of common shares outstanding during the period including contingently issuable shares and excluding outstanding unvested restricted shares.

Contingently issuable shares relate to deferred compensation agreements in which directors elected to defer annual and meeting fees and vested shares under our former stock awards program. 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. Vested stock award shares are issued in the year in which the employee reaches age 60.

Diluted EPS adjusts net income and the outstanding shares for the dilutive effect of convertible subordinated debentures, stock options, restricted shares and awards.

Basic and Diluted EPS are calculated as follows:


	Three-months ended November 30,						Six-months ended November 30,
In thousands except per share	2007			2006			2007			2006
Basic earnings
Net income	$	29,315		$	28,652		$	47,229		$	58,083
Unvested restricted share participation		(13	)		(9	)		(23	)		(19	)

Basic income	$	29,302		$	28,643		$	47,206		$	58,064

Diluted earnings
Net income	$	29,315		$	28,652		$	47,229		$	58,083
Interest on convertible subordinated debentures – net of tax		—			1,427			—			2,854
Unvested restricted share participation		(13	)		(9	)		(23	)		(19	)

Diluted income	$	29,302		$	30,070		$	47,206		$	60,918

Shares
Weighted-average shares outstanding		27,353			24,002			27,347			23,982
Contingently issuable shares		7			6			7			6
Unvested restricted shares		(12	)		(7	)		(14	)		(8	)

Basic weighted-average shares		27,348			24,001			27,340			23,980

Convertible subordinated debentures		—			3,112			—			3,112
Stock option, restricted share and award dilution		501			489			533			466

Diluted weighted-average shares*		27,849			27,602			27,873			27,558

Net income per share
Basic	$	1.07		$	1.19		$	1.73		$	2.42
Diluted	$	1.05		$	1.09		$	1.69		$	2.21

* Shares excluded due to antidilutive effect
Stock options, restricted shares and awards		—			—			—			110

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WORKING CAPITAL

Working capital totaled $156.6 million at November 30, 2007, compared to $127.9 million at May 31, 2007.

Receivables consist of:


In thousands	November 30, 2007		May 31, 2007
Accounts receivable	$	141,895	$	121,282
Notes receivable including accrual interest		22,095		21,328

	$	163,990	$	142,610

Accounts receivable are presented net of allowances for doubtful receivables of $1.7 million at November 30, 2007 and $1.3 million at May 31, 2007. Provisions for bad debts charged to expense were $500,000 and $300,000 in the six-month periods ended November 30, 2007 and 2006, respectively. Uncollectible accounts written off totaled $100,000 in each of the six-month periods ended November 30, 2007 and 2006. Notes receivable included in current receivables relate to routine sales of surplus operating assets and real estate.

Inventories consist of:


In thousands	November 30, 2007		May 31, 2007
Finished products	$	9,408	$	12,190
Work in process		49,832		56,628
Raw materials		18,428		16,300

Total inventories at LIFO cost		77,668		85,118
Parts and supplies		35,156		36,349

Total inventories	$	112,824	$	121,467

Inventories are stated at cost (not in excess of market) with finished products, work in process and raw material inventories using the last-in, first-out (“LIFO”) method and parts and supplies inventories 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 $27.2 million at November 30, 2007 and $27.0 million at May 31, 2007.

Accrued interest, wages and other items consist of:


In thousands	November 30, 2007		May 31, 2007
Interest	$	7,152	$	7,029
Employee compensation		20,681		36,942
Income taxes		1,437		1,316
Property taxes and other		21,298		12,604

	$	50,568	$	57,891

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LONG-TERM DEBT

Long-term debt consists of:


In thousands	November 30, 2007			May 31, 2007
Senior revolving credit facility expiring in 2012	$	75,000		$	15,000
Senior notes due 2013, interest rate 7.25%		250,000			250,000
Pollution control bonds due through 2007, interest rate 6.19% (75% of prime)		—			1,135
Other		344			354

		325,344			266,489
Capital lease obligation		9,390			9,267
Less current portion		(217	)		(1,340	)

	$	334,517		$	274,416

Senior Revolving Credit Facility. On August 15, 2007, we amended and restated our June 30, 2005 credit agreement. The amended and restated credit agreement continues to provide for a $200 million senior revolving credit facility, but the credit facility is no longer secured and the principal amount may be increased by up to an additional $100 million at our option, provided that the lenders that are parties to the amended and restated credit agreement and such additional lenders as are invited by us and approved by the administrative agent provide commitments for the additional principal amount. The credit facility expires on August 15, 2012. It includes a $50 million sub-limit for letters of credit. Any outstanding letters of credit are deducted from the borrowing availability under the facility. At November 30, 2007, $75.0 million was outstanding under the facility and an additional $29.1 million of the facility was utilized to support letters of credit. Amounts drawn under the facility bear interest either at the LIBOR rate plus a margin of .75% to 2%, or at a base rate (which is the higher of the federal funds rate plus 0.5% and the prime rate) plus a margin of up to 1%. The interest rate margins are subject to adjustments based on our leverage ratio. Commitment fees are payable currently at an annual rate of .25% on the unused portion of the facility. All of our consolidated subsidiaries have guaranteed our obligations under the credit facility. We may terminate the facility at any time.

The credit facility contains covenants restricting, among other things, prepayment or redemption of our senior notes, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. We are required to comply with certain financial tests and to maintain certain financial ratios, such as leverage and interest coverage ratios. We were in compliance with all of our loan covenants as of November 30, 2007.

7.25% Senior Notes. At any time on or prior to July 15, 2009, 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 July 15, 2009, we may redeem the notes at a premium of 103.625% in 2009, 101.813% in 2010 and 100% in 2011 and thereafter. In addition, prior to July 15, 2008, we may redeem up to 35% of the aggregate principal amount of the notes at a redemption price equal to 107.25% 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 7.25% Senior Notes. The indenture governing the notes contains covenants that will limit our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem our stock, make investments, sell assets, incur liens, enter into agreements restricting our subsidiaries’ ability to pay dividends, enter into transactions with affiliates and consolidate, merge or sell all or substantially all of our assets.

Other. Maturities of long-term debt, excluding the capital lease obligation, for each of the five succeeding years are none for 2008 through 2011 and $75.0 million for 2012. The total amount of interest paid was $12.2 million and $14.0 million during the six-month periods ended November 30, 2007 and 2006, respectively. Interest capitalized was $13.3 million and $4.4 million during the six-month periods ended November, 2007 and 2006, respectively.

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COMMITMENTS

During fiscal year 2006, we commenced construction on a project to expand and modernize our Oro Grande, California cement plant. We are constructing approximately 2.3 million tons of advanced dry process annual cement production capacity, and plan to retire the 1.3 million tons of existing, but less efficient, production after the new plant is commissioned. We now expect the Oro Grande project will cost $385 to $400 million, excluding capitalized interest related to the project, of which $378.0 million has been expended as of November 30, 2007. The new plant is currently expected to begin the startup and commissioning process in early calendar year 2008.

During October 2007, we commenced construction on a project to expand our Hunter, Texas cement plant. We are expanding the Hunter plant by approximately 1.4 million tons of advanced dry process annual cement production capacity. The 900,000 tons of existing annual cement production capacity will remain in operation. We currently expect the Hunter project will cost from $325 to $350 million, excluding capitalized interest related to the project, of which $27.6 million has been expended as of November 30, 2007. We currently expect to start commissioning the new kiln system during the winter of fiscal year 2010.

SHAREHOLDERS’ EQUITY

Common stock consists of:


In thousands	November 30, 2007	May 31, 2007
Shares authorized	100,000	40,000
Shares outstanding	27,355	27,323
Shares reserved for stock options and other	3,301	3,334

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 Cumulative Preferred Stock or Series B Junior Participating Preferred Stock were outstanding as of November 30, 2007. Pursuant to a Rights Agreement, in November 2006, we distributed a dividend of one preferred share purchase right for each outstanding share of our Common Stock. Each right entitles the holder to purchase from us one one-thousandth of a share of the Series B Junior Participating Preferred Stock at a price of $300, subject to adjustment. The rights will expire on November 1, 2016 unless the date is extended or the rights are earlier redeemed or exchanged by us pursuant to the Rights Agreement.

STOCK-BASED COMPENSATION PLANS

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. During 2006, our Board of Directors approved the amendment of certain options to conform the “change of control” provisions in such options with the terms of our other agreements.

Options become exercisable in installments beginning one year after date of grant and expire ten years later. 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 periods ended November 30, 2007 and 2006.

- 12 -

A summary of option transactions for the six-month period ended November 30, 2007, follows:


	Shares Under Option		Weighted-Average Option Price
Outstanding at May 31, 2007	1,483,035		$	36.31
Exercised	(30,139	)		24.23
Canceled	(4,900	)		62.24

Outstanding at November 30, 2007	1,447,996		$	36.47

Exercisable at November 30, 2007	816,273		$	27.04

The following table summarizes information about stock options outstanding as of November 30, 2007.


	Range of Exercise Prices
	$16.04 - $27.85		$31.15 - $45.86		$51.70 - $70.18
Options outstanding
Shares outstanding		623,712		413,634		410,650
Weighted-average remaining life in years		4.53		3.69		8.61
Weighted-average exercise price	$	19.12	$	38.59	$	60.71
Options exercisable
Shares exercisable		483,363		298,310		34,600
Weighted-average remaining life in years		4.30		2.37		8.13
Weighted-average exercise price	$	19.74	$	36.00	$	51.71

Outstanding options expire on various dates to January 17, 2017. We have reserved 1,840,964 shares for future awards under the 2004 Plan as of November 30, 2007.

As of November 30, 2007, the aggregate intrinsic value (the difference in the closing market price of our common stock of $69.38 and the exercise price to be paid by the optionee) of stock options outstanding was $47.7 million. The aggregate intrinsic value of exercisable stock options at that date was $34.6 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 $300,000 and $1.9 million for the three-month periods ended November 30, 2007 and 2006, respectively, and $1.7 million and $2.8 million for the six-month periods ended November 30, 2007 and 2006, 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. At November 30, 2007, outstanding stock appreciation rights totaled 158,645 shares, deferred compensation agreements to be settled in cash totaled 98,630 shares, deferred compensation agreements to be settled in common stock totaled 5,724 shares, unvested restricted stock payments totaled 9,167 shares and stock awards totaled 6,426 shares. Other credits included $13.5 million at November 30, 2007 and $17.4 million at May 31, 2007 representing accrued stock-based compensation which is expected to be settled in cash.

Total stock-based compensation included in selling, general and administrative expense (credit) was $400,000 and $5.7 million in the three-month periods ended November 30, 2007 and 2006, respectively and $(1.3) million and $6.3 million in the six-month periods ended November 30, 2007 and 2006, respectively.

As of November 30, 2007, $9.2 million of total unrecognized compensation cost related to stock options, stock appreciation rights contracts, restricted stock payments and stock awards is expected to be recognized. We currently expect to recognize approximately $3.6 million of this stock-based compensation expense in 2008, $2.6 million in 2009, $1.8 million in 2010, $1.0 million in 2011, $100,000 in 2012 and thereafter an aggregate of $100,000.

- 13 -

RETIREMENT PLANS

Riverside Defined Benefit Plans. Approximately 600 employees and retirees of our California cement 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, 2007 and 2006, was as follows:


	Pension Benefit						Health Benefit
In thousands	2007			2006			2007			2006
Three-months ended November 30
Service cost	$	144		$	123		$	30		$	25
Interest cost		695			681			99			92
Expected return on plan assets		(881	)		(760	)		—			—
Amortization of prior service cost		—			—			(211	)		(211	)
Amortization of net actuarial loss		55			106			164			149

	$	13		$	150		$	82		$	55

Six-months ended November 30
Service cost	$	288		$	246		$	60		$	49
Interest cost		1,390			1,362			199			184
Expected return on plan assets		(1,763	)		(1,520	)		—			—
Amortization of prior service cost		—			—			(422	)		(422	)
Amortization of net actuarial loss		110			213			328			299

	$	25		$	301		$	165		$	110

Financial Security Defined Benefit Plans. We have a series of financial security plans that are non-qualified defined benefit plans providing retirement and death benefits to substantially all of our executive and key managerial employees. The plans are contributory but not funded. The amount of financial security plan benefit expense charged to costs and expenses for the three-month and six-month periods ended November 30, 2007 and 2006, was as follows:


	FSP Benefit
In thousands	2007			2006
Three-months ended November 30
Service cost	$	743		$	571
Interest cost		474			441
Recognized actuarial loss		—			—
Participant contributions		(98	)		(74	)

	$	1,119		$	938

Six-months ended November 30
Service cost	$	1,486		$	1,143
Interest cost		948			881
Recognized actuarial loss		—			254
Participant contributions		(197	)		(161	)

	$	2,237		$	2,117

- 14 -

INCOME TAXES

Federal income taxes for the interim periods ended November 30, 2007 and 2006 have been included in the accompanying financial statements on the basis of an estimated annual rate. The primary reason that the tax rate differs from the 35% statutory corporate rate is due to percentage depletion that is tax deductible, state income taxes and deductions for income from qualified domestic production activities. Our estimated effective tax rate for 2007 is 31.2% compared to 31.7% for 2006. We made income tax payments of $21.3 million and $17.0 million and received income tax refunds of $600,000 and $300,000 during the six-month periods ended November 30, 2007 and 2006, respectively.

Effective June 1, 2007, we adopted Financial Accounting Standards Board Interpretation 48, “Accounting for Uncertainty in Income Taxes.” This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes” and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We have no significant reserves for uncertain tax positions and no adjustments to such reserves were required upon adoption of this interpretation. Interest and penalties resulting from audits by tax authorities have been immaterial and are included in income tax expense in the consolidated statements of operations.

In addition to our federal income tax return, we file income tax returns in various state jurisdictions. We are no longer subject to federal or state income tax examinations by tax authorities for years prior to 2004. Our federal income tax returns for 2004 through 2006 are currently under examination. We do not anticipate that any adjustments would have a material effect on our financial position.

LEGAL PROCEEDINGS AND CONTINGENT LIABILITIES

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. Based on our experience and the information currently available to us, we believe that such claims will not have a material impact on our financial condition or results of operations. Despite our compliance and experience, 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.

We are defendants in lawsuits which arose in the normal course of business. In management’s judgment the ultimate liability, if any, from such legal proceedings will not have a material effect on our consolidated financial position or results of operations.

BUSINESS SEGMENTS

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, as well as expanded shale and clay aggregates. Through the consumer products segment we produce and sell ready-mix concrete as our principal product, as well as packaged concrete and related products. We account for intersegment sales at market prices. Segment operating profit consists of net sales less operating costs and expenses, including certain operating overhead and other income items not allocated to a specific segment. Corporate includes those administrative, financial, legal, environmental, human resources 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.

- 15 -

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	2007			2006			2007			2006
Net sales
Cement
Sales to external customers	$	107,998		$	102,231		$	216,796		$	218,507
Intersegment sales		21,236			20,539			41,935			41,953
Aggregates
Sales to external customers		63,355			57,401			124,536			124,315
Intersegment sales		12,603			8,478			23,285			17,459
Consumer products
Sales to external customers		97,120			86,200			190,595			174,662
Intersegment sales		911			1,029			1,962			2,112
Eliminations		(34,750	)		(30,046	)		(67,182	)		(61,524	)

Total net sales	$	268,473		$	245,832		$	531,927		$	517,484

Segment operating profit
Cement	$	33,950		$	50,346		$	51,168		$	90,480
Aggregates		11,085			6,832			22,745			19,414
Consumer products		4,607			2,623			8,684			6,264
Unallocated overhead and other income - net		(1,746	)		(2,877	)		(3,480	)		(4,788	)

Total segment operating profit		47,896			56,924			79,117			111,370
Corporate
Selling, general and administrative expense		(7,379	)		(14,522	)		(13,188	)		(22,269	)
Interest		—			(4,643	)		—			(10,185	)
Other income		2,063			4,026			2,738			6,134

Income before income taxes	$	42,580		$	41,785		$	68,667		$	85,050

Depreciation, depletion and amortization
Cement	$	6,009		$	5,671		$	11,906		$	11,386
Aggregates		5,410			3,725			10,548			7,525
Consumer products		2,231			1,600			4,286			3,142
Corporate		196			116			424			231

Total depreciation, depletion and amortization	$	13,846		$	11,112		$	27,164		$	22,284

Capital expenditures
Cement	$	56,025		$	66,034		$	148,072		$	116,389
Aggregates		10,939			14,833			18,488			24,088
Consumer products		4,222			1,554			7,795			5,745
Corporate		310			917			733			1,234

Total capital expenditures	$	71,496		$	83,338		$	175,088		$	147,456

Net sales by product
Cement	$	101,350		$	96,988		$	204,073		$	206,732
Stone, sand and gravel		33,439			30,611			65,094			65,757
Ready-mix concrete		84,112			73,010			164,037			145,355
Other products		27,867			26,277			56,524			58,359
Delivery fees		21,705			18,946			42,199			41,281

Total net sales	$	268,473		$	245,832		$	531,927		$	517,484

- 16 -

All sales were made in the United States during the periods presented with no single customer representing more than 10 percent of sales.

Cement segment operating profit for the three-month and six-month periods ended November 30, 2006 includes $19.8 million representing distributions which we received pursuant to agreements that settled a 16-year dispute over the U.S. antidumping duty order on cement imports from Mexico.

Cement capital expenditures include $117.2 million and $106.2 million in the six-month periods ended November 30, 2007 and 2006, respectively, incurred in connection with the expansion and modernization of our Oro Grande, California cement plant. In addition, cement capital expenditures include $21.2 million and $1.7 million in the six-month periods ended November 30, 2007 and 2006, respectively, incurred in connection with the expansion of our Hunter, Texas cement plant. Other capital expenditures incurred represent normal replacement and technological upgrades of existing equipment and acquisitions to sustain existing operations in each segment.

The following is a summary of assets used in each of our business segments.


In thousands	November 30, 2007		May 31, 2007
Identifiable assets
Cement	$	904,819	$	775,229
Aggregates		220,273		209,614
Consumer products		118,506		102,916
Corporate		124,349		174,477

Total assets	$	1,367,947	$	1,262,236

All of our identifiable assets are located in the United States.

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

On July 6, 2005, Texas Industries, Inc. (the parent company) issued $250 million principal amount of its 7.25% Senior Notes. 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, all guarantor subsidiaries and all non-guarantor subsidiaries. The information has been presented as if the parent company accounted for its ownership of the guarantor and non-guarantor subsidiaries using the equity method of accounting.

- 17 -


In thousands	Texas Industries, Inc.		Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Eliminating Entries			Consolidated
Condensed consolidating balance sheet at November 30, 2007
Cash and cash equivalents	$	22,675	$	3,541	$	—	$	—		$	26,216
Receivables – net		—		163,990		—		—			163,990
Intercompany receivables		146,630		18,762		—		(165,392	)		—
Inventories		—		112,824		—		—			112,824
Deferred income taxes and prepaid expenses		6,938		12,847		—		—			19,785

Total current assets		176,243		311,964		—		(165,392	)		322,815
Goodwill		—		60,110		—		—			60,110
Real estate and investments		41,915		6,122		—		—			48,037
Deferred charges and intangibles		7,113		4,984		—		—			12,097
Investment in subsidiaries		872,258		—		—		(872,258	)		—
Long-term intercompany receivables		50,000		—		—		(50,000	)		—
Property, plant and equipment – net		—		924,888		—		—			924,888

Total assets	$	1,147,529	$	1,308,068	$	—	$	(1,087,650	)	$	1,367,947

Accounts payable	$	34	$	115,374	$	—	$	—		$	115,408
Intercompany payables		18,762		146,630		—		(165,392	)		—
Accrued interest, wages and other items		11,174		39,394		—		—			50,568
Current portion of long-term debt		—		217		—		—			217

Total current liabilities		29,970		301,615		—		(165,392	)		166,193
Long-term debt		325,344		9,173		—		—			334,517
Long-term intercompany payables		—		50,000		—		(50,000	)		—
Deferred income taxes and other credits		13,992		75,022		—		—			89,014
Shareholders’ equity		778,223		872,258		—		(872,258	)		778,223

Total liabilities and shareholders’ equity	$	1,147,529	$	1,308,068	$	—	$	(1,087,650	)	$	1,367,947


Condensed consolidating balance sheet at May 31, 2007
Cash and cash equivalents	$	6,095	$	9,043	$	—	$	—		$	15,138
Receivables – net		—		142,610		—		—			142,610
Intercompany receivables		50,296		18,761		—		(69,057	)		—
Inventories		—		121,467		—		—			121,467
Deferred income taxes and prepaid expenses		3,277		14,344		—		—			17,621

Total current assets		59,668		306,225		—		(69,057	)		296,836
Goodwill		—		58,395		—		—			58,395
Real estate and investments		104,980		6,434		—		—			111,414
Deferred charges and intangibles		7,180		4,189		—		—			11,369
Investment in subsidiaries		816,831		—		—		(816,831	)		—
Long-term intercompany receivables		50,000		—		—		(50,000	)		—
Property, plant and equipment – net		—		784,222		—		—			784,222

Total assets	$	1,038,659	$	1,159,465	$	—	$	(935,888	)	$	1,262,236

Accounts payable	$	77	$	109,672	$	—	$	—		$	109,749
Intercompany payables		18,761		50,296		—		(69,057	)		—
Accrued interest, wages and other items		10,457		47,434		—		—			57,891
Current portion of long-term debt		1,135		205		—		—			1,340

Total current liabilities		30,430		207,607		—		(69,057	)		168,980
Long-term debt		265,354		9,062		—		—			274,416
Long-term intercompany payables		—		50,000		—		(50,000	)		—
Deferred income taxes and other credits		14,393		75,965		—		—			90,358
Shareholders’ equity		728,482		816,831		—		(816,831	)		728,482

Total liabilities and shareholders’ equity	$	1,038,659	$	1,159,465	$	—	$	(935,888	)	$	1,262,236

- 18 -


In thousands	Texas Industries, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminating Entries			Consolidated
Condensed consolidating statement of operations for the three months ended November 30, 2007
Net sales	$	—		$	268,473		$	—	$	—		$	268,473
Cost of products sold		—			208,271			—		—			208,271

Gross profit		—			60,202			—		—			60,202
Selling, general and administrative		1,707			19,357			—		—			21,064
Interest		6,975			—			—		(6,975	)		—
Other income		(140	)		(3,302	)		—		—			(3,442	)
Intercompany other income		(873	)		(6,102	)		—		6,975			—

		7,669			9,953			—		—			17,622

Income before the following items		(7,669	)		50,249			—		—			42,580
Income taxes		(2,778	)		16,043			—		—			13,265

		(4,891	)		34,206			—		—			29,315
Equity in earnings of subsidiaries		34,206			—			—		(34,206	)		—

Net income	$	29,315		$	34,206		$	—	$	(34,206	)	$	29,315


Condensed consolidating statement of operations for the three months ended November 30, 2006
Net sales	$	—		$	245,832		$	—	$	—		$	245,832
Cost of products sold		—			194,057			—		—			194,057

Gross profit		—			51,775			—		—			51,775
Selling, general and administrative		4,040			26,107			—		—			30,147
Interest		5,502			14			—		(873	)		4,643
Other income		(1,492	)		(23,308	)		—		—			(24,800	)
Intercompany other income		(873	)		—			—		873			—

		7,177			2,813			—		—			9,990

Income before the following items		(7,177	)		48,962			—		—			41,785
Income taxes		(2,681	)		15,814			—		—			13,133

		(4,496	)		33,148			—		—			28,652
Equity in earnings of subsidiaries		33,148			—			—		(33,148	)		—

Net income	$	28,652		$	33,148		$	—	$	(33,148	)	$	28,652

- 19 -


In thousands	Texas Industries, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminating Entries			Consolidated
Condensed consolidating statement of operations for the six months ended November 30, 2007
Net sales	$	—		$	531,927		$	—	$	—		$	531,927
Cost of products sold		—			425,708			—		—			425,708

Gross profit		—			106,219			—		—			106,219
Selling, general and administrative		1,961			41,286			—		—			43,247
Interest		12,841			—			—		(12,841	)		—
Other income		(166	)		(5,529	)		—		—			(5,695	)
Intercompany other income		(1,755	)		(11,086	)		—		12,841			—

		12,881			24,671			—		—			37,552

Income before the following items		(12,881	)		81,548			—		—			68,667
Income taxes		(4,694	)		26,132			—		—			21,438

		(8,187	)		55,416			—		—			47,229
Equity in earnings of subsidiaries		55,416			—			—		(55,416	)		—

Net income	$	47,229		$	55,416		$	—	$	(55,416	)	$	47,229


Condensed consolidating statement of operations for the six months ended November 30, 2006
Net sales	$	—		$	517,484		$	—	$	—		$	517,484
Cost of products sold		—			399,395			—		—			399,395

Gross profit		—			118,089			—		—			118,089
Selling, general and administrative		5,542			45,663			—		—			51,205
Interest		11,914			26			—		(1,755	)		10,185
Other income		(3,168	)		(25,183	)		—		—			(28,351	)
Intercompany other income		(1,755	)		—			—		1,755			—

		12,533			20,506			—		—			33,039

Income before the following items		(12,533	)		97,583			—		—			85,050
Income taxes		(4,696	)		31,663			—		—			26,967

		(7,837	)		65,920			—		—			58,083
Equity in earnings of subsidiaries		65,920			—			—		(65,920	)		—

Net income	$	58,083		$	65,920		$	—	$	(65,920	)	$	58,083

- 20 -


In thousands	Texas Industries, Inc.			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Eliminating Entries		Consolidated
Condensed consolidating statement of cash flows for the six months ended November 30, 2007
Net cash provided by operating activities	$	(106,779	)	$	167,255		$	—	$	—	$	60,476
Investing activities
Capital expenditures – expansions		—			(138,364	)		—		—		(138,364	)
Capital expenditures – other		—			(36,724	)		—		—		(36,724	)
Proceeds from asset disposals		—			2,366			—		—		2,366
Purchases of short-term investments		—			—			—		—		—
Sales of short-term investments		—			—			—		—		—
Investments in life insurance contracts		65,529			—			—		—		65,529
Other – net		—			55			—		—		55

Net cash used by investing activities		65,529			(172,667	)		—		—		(107,138	)
Financing activities
Long-term borrowings		189,000			—			—		—		189,000
Debt retirements		(130,147	)		(90	)		—		—		(130,237	)
Debt issuance costs		(1,033	)		—			—		—		(1,033	)
Stock option exercises		730			—			—		—		730
Excess tax benefits from stock-based compensation		3,383			—			—		—		3,383
Common dividends paid		(4,103	)		—			—		—		(4,103	)

Net cash provided (used) by financing activities		57,830			(90	)		—		—		57,740

Increase (decrease) in cash and cash equivalents		16,580			(5,502	)		—		—		11,078
Cash and cash equivalents at beginning of period		6,095			9,043			—		—		15,138

Cash and cash equivalents at end of period	$	22,675		$	3,541		$	—	$	—	$	26,216


Condensed consolidating statement of cash flows for the six months ended November 30, 2006
Net cash provided by operating activities	$	(34,041	)	$	144,659		$	—	$	—	$	110,618
Investing activities
Capital expenditures – expansions		—			(107,855	)		—		—		(107,855	)
Capital expenditures – other		—			(39,601	)		—		—		(39,601	)
Proceeds from asset disposals		—			775			—		—		775
Purchases of short-term investments		(8,500	)		—			—		—		(8,500	)
Sales of short-term investments		49,000			—			—		—		49,000
Investments in life insurance contracts		(4,274	)		—			—		—		(4,274	)
Other – net		—			(105	)		—		—		(105	)

Net cash used by investing activities		36,226			(146,786	)		—		—		(110,560	)
Financing activities
Long-term borrowings		—			—			—		—		—
Debt retirements		(355	)		—			—		—		(355	)
Debt issuance costs		—			—			—		—		—
Stock option exercises		1,843			—			—		—		1,843
Excess tax benefits from stock-based compensation		1,563			—			—		—		1,563
Common dividends paid		(3,600	)		—			—		—		(3,600	)

Net cash provided (used) by financing activities		(549	)		—			—		—		(549	)

Increase (decrease) in cash and cash equivalents		1,636			(2,127	)		—		—		(491	)
Cash and cash equivalents at beginning of period		78,569			5,570			—		—		84,139

Cash and cash equivalents at end of period	$	80,205		$	3,443		$	—	$	—	$	83,648

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EXHIBIT A

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Texas Industries, Inc.

We have reviewed the accompanying consolidated balance sheet of Texas Industries, Inc. and subsidiaries (the Company) as of November 30, 2007, and the related consolidated statements of operations for the three and six-month periods ended November 30, 2007 and 2006 and cash flows for the six-month periods ended November 30, 2007 and 2006. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the consolidated interim financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Texas Industries, Inc. and subsidiaries as of May 31, 2007, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended [not presented herein], and in our report dated July 10, 2007, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of May 31, 2007, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Dallas, Texas

January 4, 2008

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

We are a leading supplier of heavy building construction materials in the United States through three business segments: cement, aggregates and consumer products. Our principal products are gray portland cement, produced and sold through our cement segment; stone, sand and gravel, produced and sold through our aggregates segment; and ready-mix concrete, produced and sold through our consumer products segment. Other products include expanded shale and clay aggregates, produced and sold through our aggregates segment, and packaged concrete and related products produced and sold through our consumer products segment. Our facilities are concentrated primarily in Texas, Louisiana and California.

RESULTS OF OPERATIONS

The following table highlights certain operating information relating to our products.


In thousands except per unit	Three-months ended November 30,						Six-months ended November 30,
In thousands except per unit	2007			2006			2007			2006
Sales
Cement	$	122,586		$	117,528		$	246,009		$	248,685
Stone, sand and gravel		43,324			38,066			83,128			80,789
Ready-mix concrete		84,233			73,142			164,223			145,584
Other products		31,375			28,196			63,550			62,669
Interplant		(34,750	)		(30,046	)		(67,182	)		(61,524	)
Delivery fees		21,705			18,946			42,199			41,281

Net Sales	$	268,473		$	245,832		$	531,927		$	517,484

Shipments
Cement (tons)		1,319			1,239			2,609			2,627
Stone, sand and gravel (tons)		5,863			5,573			11,414			12,034
Ready-mix concrete (cubic yards)		1,050			979			2,048			1,959
Prices
Cement ($/ton)	$	92.88		$	94.85		$	94.27		$	94.66
Stone, sand and gravel ($/ton)		7.39			6.83			7.28			6.71
Ready-mix concrete ($/cubic yard)		80.19			74.76			80.18			74.33
Cost of sales
Cement ($/ton)	$	64.41		$	67.29		$	71.80		$	65.01
Stone, sand and gravel ($/ton)		5.32			5.54			5.19			5.23
Ready-mix concrete ($/cubic yard)		75.18			70.04			74.55			70.08

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Gross Profit

Gross profit for the three-month period ended November 30, 2007 was $60.2 million, an increase of $8.4 million from the prior year period. Prices for our stone, sand and gravel and ready-mix concrete products and shipments for all of our major products improved. These improvements, together with the absence of the major scheduled maintenance that occurred at our North Texas cement plant in the prior year period, offset production inefficiencies at our old Oro Grande, California cement plant.

Gross profit for the six-month period ended November 30, 2007 was $106.2 million, a decrease of $11.9 million from the prior year period. The decrease was primarily the result of the production inefficiencies at our old Oro Grande, California cement plant combined with higher coal and maintenance costs in our cement operations.

Sales. Net sales for the three-month period ended November 30, 2007 were $268.5 million, an increase of $22.6 million from the prior year period. Total cement sales increased $5.1 million on 2% lower average prices and 6% higher shipments. Total stone, sand and gravel sales increased $5.3 million on 8% higher average prices and 5% higher shipments. Total ready-mix concrete sales increased $11.1 million on 7% higher average prices and 7% higher volume.

Net sales for the six-month period ended November 30, 2007 were $531.9 million, an increase of $14.4 million from the prior year period. Total cement sales decreased $2.7 million on comparable average prices and shipments. Total stone, sand and gravel sales increased $2.3 million on 8% higher average prices and 5% lower shipments. Total ready-mix concrete sales increased $18.6 million on 8% higher average prices and 5% higher volumes.

Favorable weather conditions in our Texas market area during the current three-month period increased shipments of all of our major products. The decline in average prices for cement during the current three-month period compared to the prior year period is due to a shift in the mix of cement products and markets.

Cost of Products Sold. Cost of products sold for the three-month period ended November 30, 2007 was $208.3 million, an increase of $14.2 million from the prior year period. The increase was primarily the result of increased shipments. Cement unit costs decreased 4%. Stone, sand and gravel unit costs decreased 4%. Ready-mix concrete unit costs increased 7%.

Cost of products sold for the six-month period ended November 30, 2007 was $425.7 million, an increase of $26.3 million from the prior year period. Cement unit costs increased 10%. Stone, sand and gravel unit costs decreased 1%. Ready-mix concrete unit costs increased 6%.

Cement unit costs increased in the current six-month period primarily as a result of the production inefficiencies at our old Oro Grande, California cement plant and higher coal and maintenance costs. Stone, sand and gravel overall unit costs decreased in the current periods primarily as a result of higher shipments helped by favorable weather conditions in north Texas during the last three months. Ready-mix concrete unit costs increased primarily as a result of higher distribution and cement and aggregate raw material and freight costs.

Selling, General and Administrative

Selling, general and administrative expense for the three-month period ended November 30, 2007 was $21.1 million, a decrease of $9.1 million from the prior year period. Operating selling, general and administrative expense for the three-month period ended November 30, 2007 was $13.7 million, a decrease of $2.0 million from the prior year period. The decrease was primarily the result of lower incentive compensation expense. Corporate selling, general and administrative expense for the three-month period ended November 30, 2007 was $7.4 million, a decrease of $7.1 million from the prior year period. The decrease was primarily the result of $5.4 million lower stock-based compensation expense and $1.9 million lower incentive compensation expense.

Selling, general and administrative expense for the six-month period ended November 30, 2007 was $43.2 million, a decrease of $8.0 million from the prior year period. Operating selling, general and administrative expense for the six-month period ended November 30, 2007 was $30.0 million, an increase of $1.1 million from the prior period. The increase was primarily the result of higher general expenses. Corporate selling, general and administrative expense for the six-month period ended November 30, 2007 was $13.2 million, a decrease of $9.1 million from the prior period. The decrease was primarily the result of $7.9 million lower stock-based compensation expense and $1.8 million lower incentive compensation expense.

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Other Income

Other income for the three-month period ended November 30, 2007 was $3.4 million, a decrease of $21.4 million from the prior year period. Other income for the six-month period ended November 30, 2007 was $5.7 million, a decrease of $22.7 million from the prior year period. Other income in the prior year periods included operating other income of $19.8 million representing distributions which we received pursuant to agreements that settled a 16-year dispute over the U.S. antidumping duty order on cement imports from Mexico. Excluding these distributions, other income for the three-month and six-month periods ended November 30, 2007, decreased from the prior year periods by $1.6 million and $2.9 million, respectively. The decreases were primarily due to lower corporate interest and real estate income.

Interest Expense

Interest incurred for the three-month and six-month periods ended November 30, 2007 was $7.2 million and $13.3 million, respectively, all of which was capitalized in conjunction with our Oro Grande, California and Hunter, Texas cement plant expansion projects. Interest incurred for the three-month and six-month periods ended November 30, 2006 was $7.3 million and $14.6 million, respectively, of which $2.6 million and $4.4 million, respectively, was capitalized.

Income Taxes

LIQUIDITY AND CAPITAL RESOURCES

In addition to cash and cash equivalents of $26.2 million at November 30, 2007, our sources of liquidity include cash from operations, borrowings available under our $200 million senior revolving credit facility and distributions available from our investments in life insurance contracts.

Senior Revolving Credit Facility. On August 15, 2007, we amended and restated our June 30, 2005 credit agreement. The amended and restated credit agreement continues to provide for a $200 million senior revolving credit facility, but the credit facility is no longer secured and the principal amount may be increased by up to an additional $100 million at our option, provided that the lenders that are parties to the amended and restated credit agreement and such additional lenders as are invited by us and approved by the administrative agent provide commitments for the additional principal amount. The credit facility expires on August 15, 2012. It includes a $50 million sub-limit for letters of credit. Any outstanding letters of credit are deducted from the borrowing availability under the facility. At November 30, 2007, $75.0 million was outstanding under the facility and an additional $29.1 million of the facility was utilized to support letters of credit. Amounts drawn under the facility bear interest either at the LIBOR rate plus a margin of .75% to 2%, or at a base rate (which is the higher of the federal funds rate plus 0.5% and the prime rate) plus a margin of up to 1%. The interest rate margins are subject to adjustments based on our leverage ratio. All of our consolidated subsidiaries have guaranteed our obligations under the credit facility.

The credit facility contains covenants restricting, among other things, prepayment or redemption of our 7.25% senior notes, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. We are required to comply with certain financial tests and to maintain certain financial ratios, such as leverage and interest coverage ratios. We are in compliance with all of our loan covenants.

Investments in Life Insurance Contracts. We have purchased life insurance contracts in connection with certain of our benefit plans from which we can elect to receive distributions. During the six-month period ended November 30, 2007 we received distributions totaling $70.3 million. At November 30, 2007, these contracts had a net cash surrender value of $41.9 million, of which approximately $30 million is available for distribution.

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Capital Expenditure Commitments. During fiscal year 2006, we commenced construction on a project to expand and modernize our Oro Grande, California cement plant. We are constructing approximately 2.3 million tons of advanced dry process annual cement production capacity, and plan to retire the 1.3 million tons of existing, but less efficient, production after the new plant is commissioned. We now expect the Oro Grande project will cost from $385 to $400 million, excluding capitalized interest related to the project, of which $378.0 million has been expended as of November 30, 2007. The new plant is currently expected to begin the startup and commissioning process in early calendar year 2008.

We expect cash and cash equivalents, cash from operations, available borrowings under our senior revolving credit facility and available distributions from our investments in life insurance contracts to be sufficient to provide funds for capital expenditure commitments currently estimated at $80 to $100 million for fiscal year 2008 (excluding the expansions of our Oro Grande, California and Hunter, Texas cement plants), scheduled debt payments, working capital needs and other general corporate purposes for at least the next year. We are currently reviewing alternatives for funding capital expenditures for the expansion of our Hunter, Texas cement plant.

Cash Flows

Net cash provided by operating activities for the six-month period ended November 30, 2007 was $60.5 million compared to $110.6 million for the prior year period. The decrease resulted primarily from lower net income and changes in working capital items.

Net cash used by investing activities for the six-month period ended November 30, 2007 was $107.1 million compared to $110.6 million for the prior year period. Capital expenditures incurred in connection with the expansion and modernization of our Oro Grande, California cement plant were $117.2 million, up $11.0 million from the prior year period. Capital expenditures incurred in connection with the expansion of our Hunter, Texas cement plant were $21.2 million, up $19.5 million from the prior year period. Capital expenditures for normal replacement and technological upgrades of existing equipment and acquisitions to sustain our existing operations were $36.7 million, down $2.9 million from the prior year period. During the six-month period ended November 30, 2007 we received distributions from our investments in life insurance contracts totaling $70.3 million. In the prior year period, we decreased our investment in auction rate securities $40.5 million.

Net cash provided by financing activities for the six-month period ended November 30, 2007 was $57.7 million compared to $500,000 used in the prior year period. The increase resulted primarily from borrowings under our senior revolving credit facility.

OTHER ITEMS

Environmental Matters

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Market Risk

Historically, we have not entered into derivatives or other financial instruments for trading or speculative purposes. Because of the short duration of our investments, changes in market interest rates would not have a significant impact on their fair value. The fair value of fixed rate debt will vary as interest rates change.

Our operations require large amounts of energy and are dependent upon energy sources, including electricity and fossil fuels. Prices for energy are subject to market forces largely beyond our control. We have generally not entered into any long-term contracts to satisfy our fuel and electricity needs, with the exception of coal which we purchase from specific mines pursuant to long-term contracts. However, we continually monitor these markets and we may decide in the future to enter into long-term contracts. If we are unable to meet our requirements for fuel and electricity, we may experience interruptions in our production. Price increases or disruption of the uninterrupted supply of these products could adversely affect our results of operations.

Critical Accounting Policies

The preparation of financial statements and accompanying notes in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Changes in the facts and circumstances could have a significant impact on the resulting financial statements. The critical accounting policies that affect the more complex judgments and estimates are described in our Annual Report on Form 10-K for the year ended May 31, 2007.

New Accounting Standards.

Accounting for Uncertainty in Income Taxes. Effective June 1, 2007, we adopted Financial Accounting Standards Board Interpretation 48, “Accounting for Uncertainty in Income Taxes.” This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes” and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We have no significant reserves for uncertain tax positions and no adjustments to such reserves were required upon adoption of this interpretation. Interest and penalties resulting from audits by tax authorities have been immaterial and are included in income tax expense in the consolidated statements of operations.

Major Maintenance Activities. Effective June 1, 2007, we adopted Financial Accounting Standards Board FSP AUG AIR-1, “Accounting for Planned Major Maintenance Activities.” This FSP addresses the planned major maintenance of assets and prohibits the use of the “accrue-in-advance” method of accounting for these activities. The adoption of this FSP did not have any impact on our consolidated financial statements.

Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995

Certain statements contained in this quarterly report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the impact of competitive pressures and changing economic and financial conditions on our business, the level of construction activity in our markets, abnormal periods of inclement weather, unexpected periods of equipment downtime, changes in the cost of raw materials, fuel and energy, the impact of environmental laws and other regulations, and the risks and uncertainties described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year-ended May 31, 2007.

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Item 4.

Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods. As of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer evaluated, with the participation of our management, the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on the evaluation, which disclosed no significant deficiencies or material weaknesses, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective. There were no significant changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 4.

Submission of Matters to a Vote of Security Holders

The following provides information concerning matters submitted to a vote at the Annual Meeting of Shareholders on October 16, 2007.

Proposal No. 1. Shareholders elected each of the following persons as a director of the Company for a term of office expiring at the Annual Meeting of Shareholders in 2010.


Name	Affirmative Votes	Negative Votes	Abstained or Non-voted
Mel G. Brekhus	18,126,473	5,715,411	3,506,852
Robert D. Rogers	17,912,015	5,929,869	3,506,852
Ronald G. Steinhart	23,617,701	224,183	3,506,852

Terms of office expire for the continuing directors Robert Alpert, Sam Coats and Thomas R. Ransdell in 2008 and for the continuing directors Gordon E. Forward, Keith W. Hughes and Henry H. Mauz, Jr. in 2009.

Proposal No. 2. Shareholders approved the Amendment of Certificate of Incorporation to increase our authorized common stock with 17,674,578 affirmative votes, 6,130,854 negative votes and 3,543,304 votes abstained or non-voted.

Proposal No. 3. Shareholders approved the selection of Ernst & Young LLP as independent auditors of the Company to audit its consolidated financial statements for fiscal year 2008 with 23,745,318 affirmative votes, 108,736 negative votes and 3,494,682 votes abstained or non-voted.

Proposal No. 4. Shareholders did not approve the shareholder proposal regarding the preparation of a sustainability report with 5,571,629 affirmative votes and 11,996,164 negative votes and 9,780,943 votes abstained or non-voted.

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Item 6.

Exhibits

The following exhibits are included herein:


3.1		Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K dated August 28, 1996, File No. 001-04887)

3.2		By-laws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K dated April 13, 2005, File No. 001-04887)

3.3		Amended and Restated Certificate of Designations of Series B Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on November 1, 2006)

4.1		Form of Rights Agreement dated as of November 1, 2006, between Texas Industries, Inc. and Mellon Investor Services, LLC (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on October 20, 2006, File No. 001-04887)

4.2		Form of the Company’s 7¹/4% Senior Note due 2013 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

4.3		Form of the Company’s Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

4.4		Registration Rights Agreement, dated July 6, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

4.5		Indenture, dated July 6, 2005, among the Company, the Guarantors and Wells Fargo, National Association, as Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

10.1		Purchase Agreement, dated June 29, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

10.2		First Amended and Restated Credit Agreement, dated August 15, 2007, among the Company, Bank of America, N.A., as Administrative Agent and lender, L/C Issuer and Swing Line Lender, UBS Securities LLC, as Syndication Agent, and certain lenders (incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed on August 17, 2007, File No. 001-04887)

10.3		Separation and Distribution Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated

		June 29, 2005, File No. 001-04887)

10.4		Amendment No. 1 to Separation and Distribution Agreement dated as of July 27, 2005 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated July 27, 2005, File No. 001-04887)

10.5		Tax Sharing and Indemnification Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

10.6		Security Agreement, dated as of July 6, 2005, among the Company, the Guarantors and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.5 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

10.7		Employment Agreement of Mel G. Brekhus (incorporated by reference to Exhibit 10.1 to Current Report on

		Form 8-K filed on January 22, 2007)

10.8		Texas Industries, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 as filed May 19, 1994, File No. 033-53715)

- 29 -


10.9		Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan, as amended (incorporated by reference to Exhibit 10.9 to Quarterly Report on Form 10-Q filed on January 5, 2007)

10.10		Form of Stock Option Agreement under Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan (incorporated by reference to Exhibit 10.10 to Annual Report on Form 10-K filed on July 25, 2006)

10.11		Form of Non-Employee Directors Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated April 19, 2006)

10.12		TXI Annual Incentive Plans-Fiscal Year 2008 (incorporated by reference to Exhibit 10.12 to Annual Report on Form 10-K filed on July 13, 2007)

10.13		TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2009 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 25, 2006)

10.14		TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2008, as amended (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on July 25, 2006)

10.15		TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2010 (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on July 13, 2007)

10.16		Master Performance-Based Incentive Plan (incorporated by reference to Appendix A to definitive proxy statement filed on August 25, 2006)

10.17		Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on August 12, 2005, File No. 001-04887)

10.18		Form of SAR Agreement for Non-Employee Directors under Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.16 to Annual Report on Form 10-K filed on August 12, 2005, File No. 001-04887)

10.19		Form of Amendment No. 1 to SAR Agreement for Non-Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K dated April 19, 2006)

10.20		SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan between Texas Industries, Inc. and Mel G. Brekhus, dated June 1, 2004 (incorporated by reference to Exhibit 10.22 to Annual Report on Form 10-K filed on July 25, 2006)

10.21		Amendment No. 1 to SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan, by and between Texas Industries, Inc. and Mel G. Brekhus dated April 24, 2006 (incorporated by reference to Exhibit 10.23 to Annual Report on Form 10-K filed on July 25, 2006)

10.22		Contract, dated September 27, 2005, between Riverside Cement Company and Oro Grande Contractors (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated September 27, 2005, noting that portions of the exhibit were omitted pursuant to a request for confidential treatment)

10.23		Deferred Compensation Plan for Directors of Texas Industries, Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 18, 2006)

10.24		Form of 2005 Executive Financial Security Plan (Annuity Formula) (incorporated by reference to Exhibit 10.25 to Quarterly Report on Form 10-Q filed on January 5, 2007)

10.25		Form of 2005 Executive Financial Security Plan (Lump Sum Formula) (incorporated by reference to Exhibit 10.26 to Quarterly Report on Form 10-Q filed on January 5, 2007)

10.26		Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated April 19, 2006)

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10.27		Amendment No. 2 to SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan, between Texas Industries, Inc. and Mel G. Brekhus dated July 11, 2007 (incorporated by reference to Exhibit 10.27 to Annual Report on Form 10-K filed on July 13, 2007)

10.28		Contract, signed September 21, 2007, between TXI Operations, LP and Amec-Zachry Contractors (incorporated by reference to Exhibit 10.28 to Quarterly Report on Form 10-Q filed on September 27, 2007, noting that portions of the exhibit have been omitted pursuant to a request for confidential treatment)

12.1		Computation of Ratios of Earnings to Fixed Charges

15.1		Letter re: Unaudited Interim Financial Information

31.1		Certification of Chief Executive Officer

31.2		Certification of Chief Financial Officer

32.1		Section 1350 Certification of Chief Executive Officer

32.2		Section 1350 Certification of Chief Financial Officer

The remaining exhibits have been omitted because they are not applicable or the information required therein is included elsewhere in the financial statements or notes thereto.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


				TEXAS INDUSTRIES, INC.

January 4, 2008				/s/ Richard M. Fowler
				Richard M. Fowler
				Executive Vice President - Finance and Chief Financial Officer
				(Principal Financial Officer)

January 4, 2008				/s/ James R. McCraw
				James R. McCraw
				Vice President – Accounting and Risk Management
				(Principal Accounting Officer)

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INDEX TO EXHIBITS


Exhibit Number

3.1		Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K dated August 28, 1996, File No. 001-04887)

3.2		By-laws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K dated April 13, 2005, File No. 001-04887)

3.3		Amended and Restated Certificate of Designations of Series B Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on November 1, 2006)

4.1		Form of Rights Agreement dated as of November 1, 2006, between Texas Industries, Inc. and Mellon Investor Services, LLC (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on October 20, 2006, File No. 001-04887)

4.2		Form of the Company’s 7¹/4% Senior Note due 2013 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

4.3		Form of the Company’s Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

4.4		Registration Rights Agreement, dated July 6, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

4.5		Indenture, dated July 6, 2005, among the Company, the Guarantors and Wells Fargo, National Association, as Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

10.1		Purchase Agreement, dated June 29, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

10.2		First Amended and Restated Credit Agreement, dated August 15, 2007, among the Company, Bank of America, N.A., as Administrative Agent and lender, L/C Issuer and Swing Line Lender, UBS Securities LLC, as Syndication Agent, and certain lenders (incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed on August 17, 2007, File No. 001-04887)

10.3		Separation and Distribution Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated

		June 29, 2005, File No. 001-04887)

10.4		Amendment No. 1 to Separation and Distribution Agreement dated as of July 27, 2005 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated July 27, 2005, File No. 001-04887)

10.5		Tax Sharing and Indemnification Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

10.6		Security Agreement, dated as of July 6, 2005, among the Company, the Guarantors and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.5 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

10.7		Employment Agreement of Mel G. Brekhus (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 22, 2007)

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Index to Exhibits-(Continued)


Exhibit Number

10.8		Texas Industries, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 as filed May 19, 1994, File No. 033-53715)

10.9		Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan, as amended (incorporated by reference to Exhibit 10.9 to Quarterly Report on Form 10-Q filed on January 5, 2007)

10.10		Form of Stock Option Agreement under Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan (incorporated by reference to Exhibit 10.10 to Annual Report on Form 10-K filed on July 25, 2006)

10.11		Form of Non-Employee Directors Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated April 19, 2006)

10.12		TXI Annual Incentive Plans-Fiscal Year 2008 (incorporated by reference to Exhibit 10.12 to Annual Report on Form 10-K filed on July 13, 2007)

10.13		TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2009 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 25, 2006)

10.14		TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2008, as amended (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on July 25, 2006)

10.15		TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2010 (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on July 13, 2007)

10.16		Master Performance-Based Incentive Plan (incorporated by reference to Appendix A to definitive proxy statement filed on August 25, 2006)

10.17		Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on August 12, 2005, File No. 001-04887)

10.18		Form of SAR Agreement for Non-Employee Directors under Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.16 to Annual Report on Form 10-K filed on August 12, 2005, File No. 001-04887)

10.19		Form of Amendment No. 1 to SAR Agreement for Non-Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K dated April 19, 2006)

10.20		SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan between Texas Industries, Inc. and Mel G. Brekhus, dated June 1, 2004 (incorporated by reference to Exhibit 10.22 to Annual Report on Form 10-K filed on July 25, 2006)

10.21		Amendment No. 1 to SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan, by and between Texas Industries, Inc. and Mel G. Brekhus dated April 24, 2006 (incorporated by reference to Exhibit 10.23 to Annual Report on Form 10-K filed on July 25, 2006)

10.22		Contract, dated September 27, 2005, between Riverside Cement Company and Oro Grande Contractors (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated September 27, 2005, noting that portions of the exhibit were omitted pursuant to a request for confidential treatment)

10.23		Deferred Compensation Plan for Directors of Texas Industries, Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 18, 2006)

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Index to Exhibits-(Continued)


Exhibit Number

10.24		Form of 2005 Executive Financial Security Plan (Annuity Formula) (incorporated by reference to Exhibit 10.25 to Quarterly Report on Form 10-Q filed on January 5, 2007)

10.25		Form of 2005 Executive Financial Security Plan (Lump Sum Formula) (incorporated by reference to Exhibit 10.26 to Quarterly Report on Form 10-Q filed on January 5, 2007)

10.26		Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated April 19, 2006)

10.27		Amendment No. 2 to SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan, between Texas Industries, Inc. and Mel G. Brekhus dated July 11, 2007 (incorporated by reference to Exhibit 10.27 to Annual Report on Form 10-K filed on July 13, 2007)

10.28		Contract, signed September 21, 2007, between TXI Operations, LP and Amec-Zachry Contractors (incorporated by reference to Exhibit 10.28 to Quarterly Report on Form 10-Q filed on September 27, 2007, noting that portions of the exhibit have been omitted pursuant to a request for confidential treatment)

12.1		Computation of Ratios of Earnings to Fixed Charges

15.1		Letter re: Unaudited Interim Financial Information

31.1		Certification of Chief Executive Officer

31.2		Certification of Chief Financial Officer

32.1		Section 1350 Certification of Chief Executive Officer

32.2		Section 1350 Certification of Chief Financial Officer

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