- Quarterly Report (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 August 31, 2009

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

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


Large Accelerated Filer [X]		Accelerated Filer [ ]
Non-accelerated Filer [ ]		Smaller Reporting Company [ ]

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 27,737,228 shares of the Registrant’s Common Stock, $1.00 par value, outstanding as of September 21, 2009.

INDEX

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements

	Consolidated Balance Sheets – August 31, 2009 and May 31, 2009	3

	Consolidated Statements of Operations -- three months ended August 31, 2009 and August 31, 2008	4

	Consolidated Statements of Cash Flows -- three months ended August 31, 2009 and August 31, 2008	5

	Notes to Consolidated Financial Statements	6

	Report of Independent Registered Public Accounting Firm	23

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 6.	Exhibits	32

SIGNATURES

- 2 -

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


		(Unaudited) August 31,			May 31,
In thousands		2009			2009

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	32,183		$	19,796
Receivables – net		129,430			129,432
Inventories		156,355			155,724
Deferred income taxes and prepaid expenses		21,244			22,039

TOTAL CURRENT ASSETS		339,212			326,991

OTHER ASSETS
Goodwill		1,715			1,715
Real estate and investments		7,736			10,001
Deferred charges and other		15,852			14,486

		25,303			26,202

PROPERTY, PLANT AND EQUIPMENT
Land and land improvements		156,887			156,917
Buildings		58,234			58,442
Machinery and equipment		1,245,722			1,247,931
Construction in progress		328,508			328,256

		1,789,351			1,791,546
Less depreciation and depletion		587,052			572,195

		1,202,299			1,219,351

	$	1,566,814		$	1,572,544


LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	48,894		$	55,749
Accrued interest, compensation and other		47,808			51,856
Current portion of long-term debt		247			243

TOTAL CURRENT LIABILITIES		96,949			107,848

LONG-TERM DEBT		542,371			541,540

DEFERRED INCOME TAXES AND OTHER CREDITS		122,765			120,011

SHAREHOLDERS’ EQUITY
Common stock, $1 par value		27,737			27,718
Additional paid-in capital		471,548			469,908
Retained earnings		318,834			319,199
Accumulated other comprehensive loss		(13,390	)		(13,680	)

		804,729			803,145

	$	1,566,814		$	1,572,544

See notes to consolidated financial statements.

- 3 -

(Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


		Three months ended August 31,
In thousands except per share		2009			2008

NET SALES	$	183,957		$	256,392

Cost of products sold		149,852			223,765

GROSS PROFIT		34,105			32,627

Selling, general and administrative		20,254			17,338
Interest		13,244			7,245
Loss on debt retirements		--			907
Other income		(2,652	)		(8,241	)

		30,846			17,249

INCOME BEFORE INCOME TAXES		3,259			15,378

Income taxes		1,544			4,726

NET INCOME	$	1,715		$	10,652


Net income per share
Basic	$	.06		$	.39
Diluted	$	.06		$	.38


Average shares outstanding
Basic		27,720			27,506
Diluted		27,940			27,831


Cash dividends per share	$	.075		$	.075

See notes to consolidated financial statements.

- 4 -

(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


		Three months ended August 31,
In thousands		2009			2008

OPERATING ACTIVITIES
Net income	$	1,715		$	10,652
Adjustments to reconcile net income to cash provided by operating activities
Depreciation, depletion and amortization		16,594			16,865
Gains on asset disposals		(1,030	)		(280	)
Deferred income taxes		743			2,538
Stock-based compensation expense (credit)		2,643			(4,060	)
Excess tax benefits from stock-based compensation		(211	)		(1,212	)
Loss on debt retirements		--			907
Other – net		(221	)		(1,006	)
Changes in operating assets and liabilities
Receivables – net		(888	)		14,269
Inventories		757			(12,504	)
Prepaid expenses		1,074			1,366
Accounts payable and accrued liabilities		(6,638	)		(16,920	)

Net cash provided by operating activities		14,538			10,615

INVESTING ACTIVITIES
Capital expenditures – expansions		(4,569	)		(48,037	)
Capital expenditures – other		(804	)		(40,699	)
Cash designated for property acquisitions		--			26,958
Proceeds from asset disposals		1,068			512
Investments in life insurance contracts		5,802			1,464
Other – net		(19	)		192

Net cash provided (used) by investing activities		1,478			(59,610	)

FINANCING ACTIVITIES
Long-term borrowings		--			327,250
Debt retirements		(59	)		(197,555	)
Debt issuance costs		(2,032	)		(2,306	)
Stock option exercises		331			1,480
Excess tax benefits from stock-based compensation		211			1,212
Common dividends paid		(2,080	)		(2,065	)

Net cash provided (used) by financing activities		(3,629	)		128,016

Increase in cash and cash equivalents		12,387			79,021

Cash and cash equivalents at beginning of period		19,796			39,527

Cash and cash equivalents at end of period	$	32,183		$	118,548

See notes to consolidated financial statements.

- 5 -

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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

1. 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 three-month period ended August 31, 2009, are not necessarily indicative of the results that may be expected for the year ended May 31, 2010. 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, 2009.

Principles of Consolidation . The consolidated financial statements include the accounts of Texas Industries, Inc. and all subsidiaries. The consolidated financial statements also include the accounts of a former qualified intermediary trust, in which we were the primary beneficiary. The trust accounts were established in connection with our tax deferred like-kind-exchange property acquisition transactions under Section 1031 of the Internal Revenue Code. Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation or adjusted to reflect changes we made to prior period interim financial information related to our aggregate inventory in conjunction with our audited financial statements for the year ended May 31, 2009. See Note 1 of Notes to Consolidated Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended May 31, 2009.

Subsequent Events. We evaluated subsequent events through the time of filing this Quarterly Report on Form 10-Q on September 25, 2009. We are not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our consolidated financial statements.

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.

- 6 -

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

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

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

Goodwill resulting from the acquisition of ready-mix operations in Texas and Louisiana and identified with our consumer products operations has a carrying value of $1.7 million at both August 31, 2009 and May 31, 2009. Based on an impairment test performed as of March 31, 2009, 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 both August 31, 2009 and May 31, 2009.

Investments include life insurance contracts purchased in connection with certain of our benefit plans. The contracts, recorded at their net cash surrender value, totaled $1.7 million (net of distributions of $80.4 million plus accrued interest and fees) at August 31, 2009 and $4.0 million (net of distributions of $89.5 million plus accrued interest and fees) at May 31, 2009. We can elect to receive distributions chargeable against the cash surrender value of the policies in the form of borrowings or withdrawals or we can elect to surrender the policies and receive their net cash surrender value. Distributions and policy surrenders totaling $8.1 million and $3.5 million were received in the three-month periods ended August 31, 2009 and August 31, 2008, respectively.

Deferred Charges and Other. Deferred charges are composed primarily of debt issuance costs that totaled $10.3 million at August 31, 2009 and $9.0 million at May 31, 2009. The costs are amortized over the term of the related debt.

Other Credits. Other credits totaled $73.8 million at August 31, 2009 and $72.3 million at May 31, 2009 and are composed primarily of liabilities related to our retirement plans, deferred compensation agreements and asset retirement obligations.

- 7 -

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.

Changes in asset retirement obligations are as follows:


		Three months ended August 31,
In thousands		2009			2008

Balance at beginning of period	$	4,415		$	3,961
Accretion expense		83			82
Settlements		(5	)		--

Balance at end of period	$	4,493		$	4,043

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 $13.4 million (net of tax of $7.7 million) at August 31, 2009 and $13.7 million (net of tax of $7.9 million) at May 31, 2009.

Comprehensive income for the three-month periods ending August 31, 2009 and August 31, 2008 consisted of net income and amounts in accumulated other comprehensive loss recognized in the periods as components of net periodic postretirement benefit cost, net of tax. Comprehensive income was $2.0 million and $10.8 million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively.

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 and include these delivery fees.

Other Income. Routine sales of surplus operating assets and real estate resulted in gains of $1.0 million and $0.3 million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively. In addition, other income in the three-month period ended August 31, 2008 includes a gain of $1.7 million from the sale of emission credits associated with our California cement operations. We have entered into various oil and gas lease agreements on property we own in north Texas. The terms of the agreements include the payment of a lease bonus and royalties on any oil and gas produced. However, we cannot guaranty what the level of royalties, if any, will be. Other income in the three-month period ended August 31, 2008 includes $4.6 million representing lease bonus payments received.

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. A liability, which is included in other credits, is recorded for stock appreciation rights, deferred compensation agreements and stock awards expected to be settled in cash, based on their fair value at the end of each period until such awards are paid.

- 8 -

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.

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 stock options, restricted shares and awards.

Basic and Diluted EPS are calculated as follows:


		Three months ended August 31,
In thousands except per share		2009			2008

Basic earnings
Net income	$	1,715		$	10,652
Unvested restricted share participation		(1	)		(7	)

Basic income	$	1,714		$	10,645


Diluted earnings
Net income	$	1,715		$	10,652
Unvested restricted share participation		(1	)		(7	)

Diluted income	$	1,714		$	10,645


Shares
Weighted-average shares outstanding		27,727			27,516
Contingently issuable shares		11			9
Unvested restricted shares		(18	)		(19	)

Basic weighted-average shares		27,720			27,506

Stock option, restricted share and award dilution		220			325

Diluted weighted-average shares*		27,940			27,831


Net income per share
Basic	$	.06		$	.39
Diluted	$	06		$	.38


* Shares excluded due to antidilutive effect Stock options, restricted shares and awards		761			195

Recent Accounting Developments. In May 2009, the Financial Accounting Standards Board issued SFAS No. 165, “Subsequent Events.” SFAS No. 165 establishes authoritative accounting and disclosure guidance for recognized and non-recognized subsequent events that occur after the balance sheet date but before financial statements are issued. SFAS No. 165 also requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. SFAS No. 165 was effective for our Company beginning with our Quarterly Report on Form 10-Q for the three-month period ended August 31, 2009, and will be applied prospectively. The adoption of SFAS No. 165 had no impact on our consolidated financial statements.

- 9 -

In February 2007, the Financial Accounting Standards Board issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. We adopted SFAS No. 159 effective June 1, 2008. At this time, we have not elected to use the fair value measures permitted by this standard.

In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. This standard was effective for our Company on June 1, 2008. However, in February 2008, the FASB released FASB Staff Position No. FAS 157-2 “Effective Date of FASB Statement No. 157,” which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS No. 157 became effective for all nonfinancial assets and nonfinancial liabilities on June 1, 2009. The adoption of SFAS No. 157 for our nonfinancial assets and nonfinancial liabilities has not had a current material impact on our consolidated financial statements.

2. Working Capital

Working capital totaled $242.3 million at August 31, 2009, compared to $219.1 million at May 31, 2009. Selected components of working capital are summarized below.

Receivables consist of:


		August 31,		May 31,
In thousands		2009		2009

Trade notes and accounts receivable	$	93,306	$	92,622
Other notes receivable including accrued interest		19,515		19,197
Income tax receivable		13,579		13,579
Refund claims and other		3,030		4,034

	$	129,430	$	129,432

Trade notes and accounts receivable are presented net of allowances for doubtful receivables of $2.8 million at August 31, 2009 and $2.1 million at May 31, 2009. Provisions for bad debts charged to expense were $0.9 million and $0.3 million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively. Uncollectible accounts written off totaled $0.2 million and $0.1 million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively. Other notes receivable included in current receivables relate to routine sales of surplus operating assets and real estate.

Inventories consist of:


		August 31,		May 31,
In thousands		2009		2009

Finished products	$	11,153	$	10,873
Work in process		60,274		61,608
Raw materials		18,020		17,513

Total inventories at LIFO cost		89,447		89,994

Finished products		15,908		16,575
Raw materials		1,537		2,079
Parts and supplies		49,463		47,076

Total inventories at average cost		66,908		65,730

Total inventories	$	156,355	$	155,724

- 10 -

All inventories are stated at the lower of cost or market. Finished products, work in process and raw material inventories excluding natural aggregate inventories are valued using the last-in, first-out (“LIFO”) method. Natural aggregate finished product and raw material inventories and parts and supplies inventories are valued using the average cost method. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation. If the average cost method (which approximates current replacement cost) had been used for all of these inventories, inventory values would have been higher by $53.3 million at August 31, 2009 and $47.0 million at May 31, 2009.

Accrued interest, compensation and other consist of:


		August 31,		May 31,
In thousands		2009		2009

Interest	$	5,226	$	15,271
Compensation and employee benefits		16,752		14,316
Casualty insurance		13,779		14,332
Income taxes		1,229		613
Property taxes and other		10,822		7,324

	$	47,808	$	51,856

3. Long-Term Debt

Long-term debt consists of:


		August 31,			May 31,
In thousands		2009			2009

Senior secured revolving credit facility expiring in 2012	$	--		$	--
7.25% Senior notes due 2013
Notes issued July 6, 2005 at par value		250,000			250,000
Additional notes issued August 18, 2008, net of unamortized discount of $16.7 million at August 31, 2009 and $17.6 million at May 31, 2009 (effective interest rate 8.98%)		283,342			282,448

		533,342			532,448
Capital lease obligation		8,999			9,058
Other contract obligations		277			277

		542,618			541,783
Less current portion		(247	)		(243	)

	$	542,371		$	541,540

Senior Secured Revolving Credit Facility. On June 19, 2009, we amended and restated our credit agreement and the associated security agreement. The credit agreement continues to provide for a $200 million senior secured revolving credit facility with a $50 million sub-limit for letters of credit. The credit facility matures on August 15, 2012. Amounts drawn under the credit facility bear annual interest either at the LIBOR rate plus a margin of 3.5% to 4.0% or at a base rate plus a margin of 2.5% to 3.0%. The base rate is the higher of the federal funds rate plus 0.5%, the prime rate established by Bank of America, N.A. or the one-month LIBOR rate plus 1.0%. The interest rate margins are determined based on our leverage ratio. The commitment fee calculated on the unused portion of the credit facility ranges from 0.50% to 0.75% per year based on our leverage ratio. We may terminate the credit facility at any time.

The amount that can be borrowed under the credit facility is limited to an amount based on the value of our consolidated accounts receivable, inventory and mobile equipment. This amount, called the borrowing base, may be less than the $200 million stated principal amount of the credit facility. Our current borrowing base under our amended agreement is $166.5 million. No borrowings were outstanding at August 31, 2009; however, $28.4 million of the borrowing base was utilized to support letters of credit.

- 11 -

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

The credit agreement contains a number of covenants restricting, among other things, prepayment or redemption of our senior notes, distributions and dividends on and repurchases of our capital stock, acquisitions and investments, indebtedness, liens and affiliate transactions. We are not required to maintain any financial ratios or covenants unless an event of default occurs or borrowing availability under the borrowing base is less than $40 million, in which case we must comply with a fixed charge coverage ratio. We are permitted to pay cash dividends on our common stock as long as the credit facility is not in default, the fixed charge coverage ratio is greater than 1.1 to 1.0 and borrowing availability under the borrowing base is more than $50 million. We were in compliance with all of these loan covenants as of August 31, 2009.

7.25% Senior Notes. On August 18, 2008, we sold $300 million aggregate principal amount of additional 7.25% senior notes at an offering price of 93.25%. The additional notes were issued under our existing indenture dated July 6, 2005. The net proceeds were used to repay our $150 million senior term loan and borrowings outstanding under our senior secured revolving credit facility in the amount of $29.5 million, with additional proceeds available for general corporate purposes. We recognized a loss on debt retirement of $0.9 million representing a write-off of debt issuance costs associated with the mandatory prepayment of the term loan.

At August 31, 2009, we had $550 million aggregate principal amount of 7.25% senior notes outstanding. Under the indenture, we may redeem the notes at a premium of 103.625% in 2009, 101.813% in 2010 and 100% in 2011 and thereafter. 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. Required principal payments on long-term debt, excluding the capital lease obligation, for each of the five years succeeding August 31, 2009 are none for 2010 through 2012 and $550.0 million for 2013 and none for 2014. The total amount of interest paid was $23.5 million and $13.7 million during the three-month periods ended August 31, 2009 and August 31, 2008, respectively. The total amount of interest incurred was $13.2 million and $9.0 million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively, of which $1.8 million was capitalized in the three-month period ended August 31, 2008.

4. Commitments

During October 2007, we commenced construction on a project to expand our Hunter, Texas cement plant. In light of current economic and market conditions, we have delayed completion of the project. We believe it is likely that current cement demand levels in Texas will not permit the new kiln to operate profitably if the project is completed as originally scheduled. We expect cement demand to rebound in the future and we will resume construction when future economic and market conditions indicate it is appropriate. The pause in construction began in May 2009. As of August 31, 2009, we have incurred approximately $294.5 million, excluding capitalized interest of approximately $16.3 million related to the project, of which $288.6 million has been expended. The project is 85-90% complete. Until we determine the date that we will resume construction, we cannot accurately estimate the cost of completing the project.

- 12 -

5. Shareholders’ Equity

Common stock consists of:


	August 31,	May 31,
In thousands	2009	2009

Shares authorized	100,000	100,000
Shares outstanding	27,737	27,718
Shares reserved for stock options and other	2,831	2,850

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 August 31, 2009. 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.

6. 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.

Options become exercisable in installments beginning one year after the date of grant and expire ten years after the date of grant. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. Options with graded vesting are valued as single awards and the compensation cost recognized using a straight-line attribution method over the shorter of the vesting period or required service period adjusted for estimated forfeitures. No options were granted during the three-month period ended August 31, 2009. The weighted-average grant date fair value of options granted during the three-month period ended August 31, 2008 was $23.95 based on weighted average assumptions for expected volatility of .360, expected lives of 10 years, risk-free interest rates of 4.00% and expected dividend yields of .62%.

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

A summary of option transactions for the three-month period ended August 31, 2009, follows:


	Shares Under Option			Weighted-Average Option Price

Outstanding at May 31, 2009	1,594,757		$	38.03
Exercised	(18,275	)		18.13
Canceled	(13,816	)		37.86

Outstanding at August 31, 2009	1,562,666		$	38.26

Exercisable at August 31, 2009	778,521		$	35.83

- 13 -

The following table summarizes information about stock options outstanding as of August 31, 2009.


	Range of Exercise Prices
	$16.04 - $27.39	$31.15 - $48.60	$50.63 - $70.18

Options outstanding
Shares outstanding	727,028	246,338	589,300
Weighted-average remaining life in years	6.33	3.90	7.05
Weighted-average exercise price	$21.92	$41.02	$57.28
Options exercisable
Shares exercisable	346,828	203,953	227,740
Weighted-average remaining life in years	3.09	3.54	6.75
Weighted-average exercise price	$18.97	$40.11	$57.68

Outstanding options expire on various dates to January 14, 2019. As of August 31, 2009, we have reserved 1,255,775 shares for future awards under the 2004 Plan.

As of August 31, 2009, the aggregate intrinsic value (the difference in the closing market price of our common stock of $39.76 and the exercise price to be paid by the optionee) of stock options outstanding was $13.6 million. The aggregate intrinsic value of exercisable stock options at that date was $7.9 million. The total intrinsic value for options exercised (the difference in the market price of our common stock on the exercise date and the price paid by the optionee to exercise the option) was $0.5 million and $0.8 million for the three-month periods ended August 31, 2009 and August 31, 2008, 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 August 31, 2009, outstanding stock appreciation rights totaled 155,979 shares, deferred compensation agreements to be settled in cash totaled 100,126 shares, deferred compensation agreements to be settled in common stock totaled 9,343 shares, unvested restricted stock payments totaled 18,000 shares and stock awards totaled 3,499 shares. Other credits included $7.5 million at August 31, 2009 and $6.0 million at May 31, 2009 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 $2.6 million and $(4.1) million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively. The impact of changes in our company’s stock price on stock-based awards accounted for as liabilities increased stock-based compensation $1.6 million in the three-month period ended August 31, 2009 and reduced stock-based compensation $5.1 million in the three-month period ended August 31, 2008. The total tax expense (benefit) recognized in our statements of operations for stock-based compensation was $(0.8) million and $1.7 million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively. The total tax benefit realized for stock-based compensation was $0.2 million and $1.2 million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively.

As of August 31, 2009, $8.5 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 in the years succeeding August 31, 2009 approximately $3.4 million of this stock-based compensation expense in 2010, $2.4 million in 2011, $1.6 million in 2012, $0.8 million in 2013 and $0.3 million in 2014.

- 14 -

7. 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 periods ended August 31, 2009 and August 31, 2008, was as follows:


		Pension Benefit						Health Benefit
In thousands		2009			2008			2009			2008

Service cost	$	114		$	179		$	27		$	22
Interest cost		791			791			116			109
Expected return on plan assets		(585	)		(812	)		--			--
Amortization of prior service cost		--			--			(194	)		(196	)
Amortization of net actuarial loss		500			175			151			168

	$	820		$	333		$	100		$	103

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 periods ended August 31, 2009 and August 31, 2008, was as follows:


		FSP Benefit
In thousands		2009			2008

Service cost	$	469		$	399
Interest cost		561			545
Participant contributions		(95	)		(88	)

	$	935		$	856

8. Income Taxes

Income taxes for the interim periods ended August 31, 2009 and August 31, 2008 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% federal 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 fiscal year 2010 is 47.4% compared to 30.7% for fiscal year 2009. We made income tax payments of less than $0.1 million and $1.9 million during the three-month periods ended August 31, 2009 and August 31, 2008, respectively, and received income tax refunds of $0.1 million and $0.2 million during the three-month periods ended August 31, 2009 and August 31, 2008, respectively.

In addition to our federal income tax return, we file income tax returns in various state jurisdictions. We are no longer subject to income tax examinations by federal tax authorities for years prior to 2007 and state tax authorities for years prior to 2006.

- 15 -

9. 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. It is possible that we could be held liable for future charges which might be material but are not currently known or estimable. In addition, changes in federal or state laws, regulations or requirements or discovery of currently unknown conditions could require additional expenditures by us.

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


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

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

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

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

- 16 -

Since August 2008, 20 additional lawsuits have been filed in the same court against us or one or more of our subsidiaries containing allegations of personal injury and wrongful death by approximately 2,500 individual plaintiffs who were allegedly exposed to chrome 6 and other toxic or harmful substances in the air, water and soil caused by emissions from the Crestmore plant. The plaintiffs allege causes of action that vary somewhat from suit to suit, but typically include, among other things, negligence, intentional and negligent infliction of emotional distress, trespass, public and private nuisance, strict liability, willful misconduct, fraudulent concealment, wrongful death and loss of consortium. The plaintiffs generally request, among other things, general and punitive damages, medical expenses, loss of earnings, property damages and medical monitoring costs. Some of the suits include additional defendants, such as predecessor owners of Riverside and the owner of another cement plant located approximately four miles from the Crestmore plant.

Since January 2009, five lawsuits have been filed against us or one or more of our subsidiaries in the same court involving similar allegations, causes of action and requests for relief, but with respect to our Oro Grande, California cement plant instead of the Crestmore plant. The suits involve approximately 270 individual plaintiffs. Prior to the filing of the lawsuits, the air quality management district in whose jurisdiction the plant lies conducted air sampling from locations around the plant. None of the samples contained chrome 6 levels above 1.0 ng/m³.

We will vigorously defend all of these suits but we cannot predict what liability, if any, could arise from them. We also cannot predict whether any other suits may be filed against us alleging damages due to injuries to persons or property caused by claimed exposure to chrome 6.

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

10. 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 lightweight aggregates. Through the consumer products segment we produce and sell ready-mix concrete as our principal product, as well as packaged concrete mix, mortar, sand and related products. We account for intersegment sales at market prices. Segment operating profit consists of net sales less operating costs and expenses. Corporate includes those administrative, financial, legal, human resources, environmental and real estate activities which are not allocated to operations and are excluded from segment operating profit. Identifiable assets by segment are those assets that are used in each segment’s operation. Corporate assets consist primarily of cash and cash equivalents, real estate and other financial assets not identified with a business segment. We currently do not report unallocated overhead and other income – net as a separate part of total segment operating profit. Engineering and other income items previously reported in unallocated overhead and other income – net are reported in our cement segment. Environmental and other remaining overhead items previously reported in unallocated overhead and other income – net are reported in corporate. Prior period information has been reclassified to conform to the current period presentation.

- 17 -

The following is a summary of operating results and certain other financial data for our business segments.


		Three months ended August 31,
In thousands		2009			2008

Net sales
Cement
Sales to external customers	$	72,037		$	101,857
Intersegment sales		13,159			19,506
Aggregates
Sales to external customers		43,240			60,299
Intersegment sales		6,861			11,498
Consumer products
Sales to external customers		68,680			94,236
Intersegment sales		858			988
Eliminations		(20,878	)		(31,992	)

Total net sales	$	183,957		$	256,392


Segment operating profit (loss)
Cement	$	12,406		$	16,665
Aggregates		8,639			8,925
Consumer products		4,751			(450	)

Total segment operating profit		25,796			25,140

Corporate		(9,293	)		(1,610	)
Interest		(13,244	)		(7,245	)
Loss on debt retirements		--			(907	)

Income before income taxes	$	3,259		$	15,378


Depreciation, depletion and amortization
Cement	$	9,341		$	9,333
Aggregates		5,067			5,421
Consumer products		1,896			1,873
Corporate		290			238

Total depreciation, depletion and amortization	$	16,594		$	16,865


Capital expenditures
Cement	$	4,718		$	54,352
Aggregates		480			32,517
Consumer products		151			1,588
Corporate		24			279

Total capital expenditures	$	5,373		$	88,736


Net sales by product
Cement	$	65,331		$	91,897
Stone, sand and gravel		21,649			30,328
Ready-mix concrete		54,019			78,843
Other products		27,369			30,192
Delivery fees		15,589			25,132

Total net sales	$	183,957		$	256,392

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

- 18 -

Other income in the three-month period ended August 31, 2008 includes $4.6 million in lease bonus payments received upon the execution of oil and gas lease agreements on property we own in north Texas, including $2.8 million associated with our cement operations, $0.2 million associated with our ready-mix concrete operations and $1.6 million associated with our corporate real estate activities. Other income for the three-month period ended August 31, 2008 also includes a gain of $1.7 million from the sale of emission credits associated with our California cement operations.

Cement capital expenditures, including capitalized interest, incurred in connection with the expansion of our Hunter, Texas cement plant was $4.6 million and $46.7 million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively. In addition, cement capital expenditures, including capitalized interest, incurred in connection with the expansion and modernization of our Oro Grande, California cement plant were $1.3 million in the three-month period ended August 31, 2008. Aggregate capital expenditures include $25.6 million in the three-month period ended August 31, 2008 incurred to acquire aggregate operations in central Texas through a deferred like-kind-exchange transaction. 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.


		August 31,		May 31,
In thousands		2009		2009

Identifiable assets
Cement	$	1,139,682	$	1,149,320
Aggregates		231,429		236,727
Consumer products		94,018		95,310
Corporate		101,685		91,187

Total assets	$	1,566,814	$	1,572,544

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

11. Condensed Consolidating Financial Information

On July 6, 2005 and August 18, 2008, Texas Industries, Inc. (the parent company) issued $250 million and $300 million aggregate principal amounts of its 7.25% Senior Notes, respectively. All existing consolidated subsidiaries of the parent company are 100% owned and provide a joint and several, full and unconditional guarantee of the securities. There are no significant restrictions on the parent company’s ability to obtain funds from any of the guarantor subsidiaries in the form of a dividend or loan. Additionally, there are no significant restrictions on a guarantor subsidiary’s ability to obtain funds from the parent company or its direct or indirect subsidiaries.

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

- 19 -


In thousands		Texas Industries, Inc.			Guarantor Subsidiaries		Eliminating Entries			Consolidated

Condensed consolidating balance sheet at August 31, 2009

Cash and cash equivalents	$	31,118		$	1,065	$	--		$	32,183
Receivables - net		13,579			115,851		--			129,430
Intercompany receivables		304,049			18,753		(322,802	)		--
Inventories		--			156,355		--			156,355
Deferred income taxes and prepaid expenses		302			20,942		--			21,244

Total current assets		349,048			312,966		(322,802	)		339,212
Goodwill		--			1,715		--			1,715
Real estate and investments		1,699			6,037		--			7,736
Deferred charges and other		10,322			5,530		--			15,852
Investment in subsidiaries		952,446			--		(952,446	)		--
Long-term intercompany receivables		50,000			--		(50,000	)		--
Property, plant and equipment – net		--			1,202,299		--			1,202,299

Total assets	$	1,363,515		$	1,528,547	$	(1,325,248	)	$	1,566,814


Accounts payable	$	98		$	48,796	$	--		$	48,894
Intercompany payables		18,753			304,049		(322,802	)		--
Accrued interest, compensation and other		9,695			38,113		--			47,808
Current portion of long-term debt		--			247		--			247

Total current liabilities		28,546			391,205		(322,802	)		96,949
Long-term debt		533,619			8,752		--			542,371
Long-term intercompany payables		--			50,000		(50,000	)		--
Deferred income taxes and other credits		(3,379	)		126,144		--			122,765
Shareholders’ equity		804,729			952,446		(952,446	)		804,729

Total liabilities and shareholders’ equity	$	1,363,515		$	1,528,547	$	(1,325,248	)	$	1,566,814


Condensed consolidating balance sheet at May 31, 2009

Cash and cash equivalents	$	17,226		$	2,570	$	--		$	19,796
Receivables - net		14,707			114,725		--			129,432
Intercompany receivables		333,886			18,759		(352,645	)		--
Inventories		--			155,724		--			155,724
Deferred income taxes and prepaid expenses		426			21,613		--			22,039

Total current assets		366,245			313,391		(352,645	)		326,991
Goodwill		--			1,715		--			1,715
Real estate and investments		3,965			6,036		--			10,001
Deferred charges and other		8,997			5,489		--			14,486
Investment in subsidiaries		940,982			--		(940,982	)		--
Long-term intercompany receivables		50,000			--		(50,000	)		--
Property, plant and equipment - net		--			1,219,351		--			1,219,351

Total assets	$	1,370,189		$	1,545,982	$	(1,343,627	)	$	1,572,544


Accounts payable	$	74		$	55,675	$	--		$	55,749
Intercompany payables		18,759			333,886		(352,645	)		--
Accrued interest, compensation and other		19,773			32,083		--			51,856
Current portion of long-term debt		--			243		--			243

Total current liabilities		38,606			421,887		(352,645	)		107,848
Long-term debt		532,725			8,815		--			541,540
Long-term intercompany payables		--			50,000		(50,000	)		--
Deferred income taxes and other credits		(4,287	)		124,298		--			120,011
Shareholders’ equity		803,145			940,982		(940,982	)		803,145

Total liabilities and shareholders’ equity	$	1,370,189		$	1,545,982	$	(1,343,627	)	$	1,572,544

- 20 -


In thousands		Texas Industries, Inc.			Guarantor Subsidiaries			Eliminating Entries			Consolidated

Condensed consolidating statement of operations for the three months ended August 31, 2009

Net sales	$	--		$	183,957		$	--		$	183,957
Cost of products sold		--			149,852			--			149,852

Gross profit		--			34,105			--			34,105

Selling, general and administrative		2,838			17,416			--			20,254
Interest		13,071			1,055			(882	)		13,244
Loss on debt retirements		--			--			--			--
Other income		(12	)		(2,640	)		--			(2,652	)
Intercompany other income		(882	)		--			882			--

		15,015			15,831			--			30,846

Income before the following items		(15,015	)		18,274			--			3,259
Income taxes		(5,556	)		7,100			--			1,544

		(9,459	)		11,174			--			1,715
Equity in earnings of subsidiaries		11,174			--			(11,174	)		--

Net income	$	1,715		$	11,174		$	(11,174	)	$	1,715


Condensed consolidating statement of operations for the three months ended August 31, 2008

Net sales	$	--		$	256,392		$	--		$	256,392
Cost of products sold		--			223,765			--			223,765

Gross profit		--			32,627			--			32,627

Selling, general and administrative		(1,530	)		18,868			--			17,338
Interest		8,845			--			(1,600	)		7,245
Loss on debt retirements		907			--			--			907
Other income		(132	)		(8,109	)		--			(8,241	)
Intercompany other income		(882	)		(718	)		1,600			--

		7,208			10,041			--			17,249

Income before the following items		(7,208	)		22,586			--			15,378
Income taxes		(2,651	)		7,377			--			4,726

		(4,557	)		15,209			--			10,652
Equity in earnings of subsidiaries		15,209			--			(15,209	)		--

Net income	$	10,652		$	15,209		$	(15,209	)	$	10,652

- 21 -


In thousands		Texas Industries, Inc.			Guarantor Subsidiaries			Eliminating Entries		Consolidated

Condensed consolidating statement of cash flows for the three months ended August 31, 2009

Net cash provided by operating activities	$	11,660		$	2,878		$	--	$		14,538

Investing activities
Capital expenditures - expansions		--			(4,569	)		--			(4,569	)
Capital expenditures - other		--			(804	)		--			(804	)
Cash designated for property acquisitions		--			--			--			--
Proceeds from asset disposals		--			1,068			--			1,068
Investments in life insurance contracts		5,802			--			--			5,802
Other - net		--			(19	)		--			(19	)

Net cash provided (used) by investing activities		5,802			(4,324	)		--			1,478

Financing activities
Long-term borrowings		--			--			--			--
Debt retirements		--			(59	)		--			(59	)
Debt issuance costs		(2,032	)		--			--			(2,032	)
Stock option exercises		331			--			--			331
Excess tax benefits from stock-based compensation		211			--			--			211
Common dividends paid		(2,080	)		--			--			(2,080	)

Net cash provided (used) by financing activities		(3,570	)		(59	)		--			(3,629	)

Increase in cash and cash equivalents		13,892			(1,505	)		--			12,387

Cash and cash equivalents at beginning of period		17,226			2,570			--			19,796

Cash and cash equivalents at end of period	$	31,118		$	1,065		$	--	$		32,183


Condensed consolidating statement of cash flows for the three months ended August 31, 2008

Net cash provided by operating activities	$	(46,782	)	$	57,397		$	--		$	10,615

Investing activities
Capital expenditures - expansions		--			(48,037	)		--			(48,037	)
Capital expenditures - other		--			(40,699	)		--			(40,699	)
Cash designated for property acquisitions		--			26,958			--			26,958
Proceeds from asset disposals		--			512			--			512
Investments in life insurance contracts		1,464			--			--			1,464
Other - net		--			192			--			192

Net cash provided (used) by investing activities		1,464			(61,074	)		--			(59,610	)

Financing activities
Long-term borrowings		327,250			--			--			327,250
Debt retirements		(197,500	)		(55	)		--			(197,555	)
Debt issuance costs		(2,306	)		--			--			(2,306	)
Stock option exercises		1,480			--			--			1,480
Excess tax benefits from stock-based compensation		1,212			--			--			1,212
Common dividends paid		(2,065	)		--			--			(2,065	)

Net cash provided (used) by financing activities		128,071			(55	)		--			128,016

Increase in cash and cash equivalents		82,753			(3,732	)		--			79,021

Cash and cash equivalents at beginning of period		34,675			4,852			--			39,527

Cash and cash equivalents at end of period	$	117,428		$	1,120		$	--	$		118,548

- 22 -

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 August 31, 2009, and the related consolidated statements of operations and cash flows for the three-month periods ended August 31, 2009 and 2008. 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, 2009, 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 15, 2009, 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, 2009, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Fort Worth, Texas

September 25, 2009

- 23 -

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

When used in this report the terms “Company,” “we,” “us,” or “our” mean Texas Industries, Inc. and subsidiaries unless the context indicates otherwise.

RESULTS OF OPERATIONS

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

Management uses segment operating profit as its principal measure to assess performance and to allocate resources. Business segment operating profit consists of net sales less operating costs and expenses that are directly attributable to the segment. Corporate includes non-operating income and expenses related to administrative, financial, legal, human resources environmental and real estate activities. Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation or adjusted to reflect changes we made to prior period interim financial information related to our aggregate inventory in conjunction with our audited financial statements for the year ended May 31, 2009. See Note 1 of Notes to Consolidated Financial Statements in Item 8 of our Annual Report on Form 10-K for the year ended May 31, 2009.

The following is a summary of operating results for our business segments and certain other operating information related to our principal products.

Cement Operations


		Three months ended August 31,
In thousands except per unit		2009			2008

Operating Results
Total cement sales	$	78,460		$	111,404
Total other sales and delivery fees		6,736			9,959

Total segment sales		85,196			121,363
Cost of products sold		69,859			104,557

Gross profit		15,337			16,806
Selling, general and administrative		(4,674	)		(5,405	)
Other income		1,743			5,264

Operating Profit	$	12,406		$	16,665


Cement
Shipments (tons)		915			1,218
Prices ($/ton)	$	85.70		$	91.43
Cost of sales ($/ton)	$	68.70		$	79.26

Cement operating profit for the three-month period ended August 31, 2009 was $12.4 million, a decrease of $4.3 million from the prior year period.

- 24 -

Total segment sales for the three-month period ended August 31, 2009 were $85.2 million compared to $121.4 million for the prior year period. Cement sales decreased $32.9 million as construction activity declined in both our Texas and California market areas. Our Texas market area accounted for approximately 71% of cement sales in the current period compared to 69% of cement sales in the prior year period. Shipments in both our market areas decreased 25% from the prior year period. Average cement prices declined 3% in our Texas market area and 13% in our California market area.

Cost of products sold for the three-month period ended August 31, 2009 decreased $34.7 million from the prior year period primarily due to lower shipments. Cement unit costs decreased 13% from the prior year period on lower variable costs, including labor, energy, supplies and maintenance costs. In addition, scheduled shutdowns for maintenance at our California and central Texas cement plants increased unit costs in the prior year period.

Selling, general and administrative expense for the three-month period ended August 31, 2009 decreased $0.7 million from the prior year period. Lower overall selling and administrative expenses, including wages and benefits, marketing, travel and outside service expenses as a result of our focus on cost reduction initiatives were offset in part by $0.6 million higher provisions for bad debts and $0.5 million higher defined benefit plan expense.

Other income for the three-month period ended August 31, 2009 decreased $3.5 million from the prior year period. Other income in the prior period included a lease bonus payment of $2.8 million received upon the execution of an oil and gas lease on property we own in north Texas and a gain of $1.7 million from the sale of emission credits associated with our California cement operations.

Aggregate Operations


		Three months ended August 31,
In thousands except per unit		2009			2008

Operating Results
Total stone, sand and gravel sales	$	27,794		$	40,679
Total other sales and delivery fees		22,307			31,118

Total segment sales		50,101			71,797
Cost of products sold		39,155			59,456

Gross profit		10,946			12,341
Selling, general and administrative		(2,705	)		(3,823	)
Other income		398			407

Operating Profit	$	8,639		$	8,925


Stone, sand and gravel
Shipments (tons)		3,423			5,201
Prices ($/ton)	$	8.12		$	7.82
Cost of sales ($/ton)	$	6.28		$	6.28

Aggregate operating profit for the three-month period ended August 31, 2009 was 8.6 million, a decrease of $0.3 million from the prior year period. Improvements in average prices for our stone, sand and gravel were offset by lower shipments.

Total segment sales for the three-month period ended August 31, 2009 decreased $21.7 million from the prior year period. Stone, sand and gravel sales decreased $12.9 million on 4% higher average prices and 34% lower shipments.

Cost of products sold for the three-month period ended August 31, 2009 decreased $20.3 million from the prior year period primarily due to lower shipments. Overall stone, sand and gravel unit costs were comparable to the prior year period.

Selling, general and administrative expense for the three-month period ended August 31, 2009 decreased $1.1 million from the prior year period primarily due to lower overall selling and administrative expenses, including wages and benefits, marketing, travel and outside service expenses as a result of our focus on cost reduction initiatives.

Other income for the three-month period ended August 31, 2009 was comparable to the prior year period.

- 25 -

Consumer Products Operations


		Three months ended August 31,
In thousands except per unit		2009			2008

Operating Results
Total ready-mix concrete sales	$	54,053		$	78,894
Total other sales and delivery fees		15,485			16,330

Total segment sales		69,538			95,224
Cost of products sold		61,716			91,744

Gross profit		7,822			3,480
Selling, general and administrative		(3,204	)		(4,315	)
Other income		133			385

Operating Profit (Loss)	$	4,751		$	(450	)


Ready-mix concrete
Shipments (cubic yards)		612			947
Prices ($/cubic yard)	$	88.46		$	83.30
Cost of sales ($/cubic yard)	$	79.91		$	81.15

Consumer products operating profit for the three-month period ended August 31, 2009 was $4.8 million, an increase of $5.2 million from the prior year period. Improvements in ready-mix concrete average prices and lower raw material costs were offset in part by lower shipments.

Total segment sales for the three-month period ended August 31, 2009 were $69.5 million compared to $95.2 million for the prior year period. Ready-mix concrete sales for the three-month period ended August 31, 2009 decreased $24.8 million on 6% higher average prices and 35% lower shipments.

Cost of products sold for the three-month period ended August 31, 2009 decreased $30.0 million from the prior year period. Overall ready-mix concrete unit costs decreased 2% from the prior year period primarily due to lower raw material costs. Our raw material unit costs including the cost of transportation decreased approximately 8% from the prior year period.

Other income for the three-month period ended August 31, 2009 decreased $0.3 million from the prior year period. Other income in the prior year period included lease bonus payments of $0.2 million received upon the execution of oil and gas lease agreements on property we own in north Texas.

Corporate


		Three months ended August 31,
In thousands		2009			2008

Other income	$	378		$	2,185
Selling, general and administrative		(9,671	)		(3,795	)

	$	(9,293	)	$	(1,610	)

Other income for the three-month period ended August 31, 2009 decreased $1.8 million from the prior year period. Other income in the prior year period includes a lease bonus payment of $1.6 million received upon the execution of an oil and gas lease agreement on property we own in north Texas that is not associated with any business segment.

- 26 -

Selling, general and administrative expense for the three-month period ended August 31, 2009 increased $5.9 million from the prior year period. The increase was primarily the result of $6.6 million higher stock-based compensation offset in part by $0.4 million lower wages and benefits and $0.3 million lower insurance expense. Our stock-based compensation includes awards expected to be settled in cash, the expense for which is based on their fair value at the end of each period until the awards are paid. The impact of changes in our stock price on their fair value increased stock-based compensation $1.6 million in the three-month period ended August 31, 2009 and reduced stock-based compensation $5.1 million in the three-month period ended August 31, 2008.

Interest

Interest expense incurred for the three-month period ended August 31, 2009 was $13.2 million, all of which was expensed. Interest expense incurred for the three-month period ended August 31, 2008 was $9.0 million, of which $1.8 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $7.2 million was expensed.

Interest expense incurred for the three-month period ended August 31, 2009 increased $4.2 million from the prior year period primarily as a result of higher average outstanding debt due to the sale of $300 million aggregate principal amount of additional 7.25% senior notes on August 18, 2008. We have delayed completion of the Hunter, Texas cement plant expansion and do not expect to capitalize any interest in connection with the project during the remainder of fiscal year 2010.

Loss on Debt Retirements

On August 18, 2008, we sold $300 million aggregate principal amount of additional 7.25% senior notes due in 2013 at an offering price of $93.25. The net proceeds were used to repay our $150 million senior term loan and borrowings outstanding under our senior revolving credit facility in the amount of $29.5 million. We recognized a loss on debt retirement of $0.9 million representing a write-off of debt issuance costs associated with the mandatory prepayment of the term loan.

Income Taxes

LIQUIDITY AND CAPITAL RESOURCES

In addition to cash and cash equivalents of $32.2 million at August 31, 2009, our sources of liquidity include cash from operations and borrowings available under our senior secured revolving credit facility.

- 27 -

As of August 31, 2009, there have been no material changes to our material contractual obligations described in our Annual Report on Form 10-K for the year ended May 31, 2009.

We expect cash and cash equivalents, cash from operations and available borrowings under our senior secured revolving credit facility to be sufficient to provide funds for capital expenditure commitments currently estimated at $20 million to $30 million for fiscal year 2010 (assuming we do not resume construction on the Hunter plant expansion during fiscal year 2010), scheduled debt payments, working capital needs and other general corporate purposes for at least the next year.

Cash Flows

Net cash provided by operating activities for the three-month periods ended August 31, 2009 and August 31, 2008 was $14.5 million and $10.6 million, respectively. The increase was primarily the result of changes in working capital items which offset lower income from operations excluding stock-based compensation expense.

Net cash provided by investing activities for the three-month period ended August 31, 2009 was $1.5 million. Net cash used by investing activities for the three-month period ended August 31, 2008 was $59.6 million.

Capital expenditures, including capitalized interest, incurred in connection with the expansion of our Hunter, Texas cement plant were $4.6 million and $46.7 million for the three-month periods ended August 31, 2009 and August 31, 2008, respectively. Capital expenditures, including capitalized interest, incurred in connection with the expansion and modernization of our Oro Grande, California cement plant were $1.3 million for the three-month period ended August 31, 2008. Capital expenditures for normal replacement and technological upgrades of existing equipment and acquisitions to sustain our existing operations were $0.8 million and $40.7 million for the three-month periods ended August 31, 2009 and August 31, 2008, respectively. Capital expenditures in the prior year period include $25.6 million incurred to acquire aggregate operations in central Texas through a deferred like-kind-exchange transaction. Completion of the transaction reduced the cash designated for property acquisitions held by a qualified intermediary trust by $27.0 million.

We elected to receive distributions and policy surrenders from life insurance contracts purchased in connection with certain of our benefit plans totaling $8.1 million and $3.5 million in the three-month periods ended August 31, 2009 and August 31, 2008, respectively.

Net cash used by financing activities for the three-month period ended August 31, 2009 was $3.6 million. Net cash provided by financing activities for the three-month period ended August 31, 2008 was $128.0 million.

We sold $300 million aggregate principal amount of additional 7.25% senior notes due in 2013 at an offering price of 93.25% in the three-month period ended August 31, 2008. The net proceeds were used to repay our $150 million senior term loan and borrowings outstanding under our senior revolving credit facility in the amount of $29.5 million.

- 28 -

OTHER ITEMS

Environmental Matters

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. See Note 9 of Notes to Consolidated Financial Statements presented in Part I, Item 1 of this report for a description of certain claims. 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.

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, 2009.

Recent Accounting Developments

In May 2009, the Financial Accounting Standards Board issued SFAS No. 165, “Subsequent Events.” SFAS No. 165 establishes authoritative accounting and disclosure guidance for recognized and non-recognized subsequent events that occur after the balance sheet date but before financial statements are issued. SFAS No. 165 also requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. SFAS No. 165 was effective for our Company beginning with our Quarterly Report on Form 10-Q for the three-month period ended August 31, 2009, and will be applied prospectively. The adoption of SFAS No. 165 had no impact on our consolidated financial statements.

- 29 -

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 cyclical and seasonal nature of our business, the level of construction activity in our markets, abnormal periods of inclement weather, unexpected periods of equipment downtime, unexpected operational difficulties, changes in the cost of raw materials, fuel and energy, changes in the cost or availability of transportation, changes in interest rates, the timing and amount of federal, state and local funding for infrastructure, delays in announced capacity expansions, ongoing volatility and uncertainty in the capital or credit markets, the impact of environmental laws, regulations and claims and changes in governmental and public policy, and the risks and uncertainties described in our reports on Forms 10-K, 10-Q and 8-K. Forward-looking statements speak only as of the date hereof, and we assume no obligation to publicly update such statements.

- 30 -

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of August 31, 2009, there were no material changes to the information about market risk contained in our Annual Report on Form 10-K for the year ended May 31, 2009.

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, Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of August 31, 2009.

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 1. Legal Proceedings

The information required by this item is included in Note 9 of Notes to Consolidated Financial Statements presented in Part I, Item 1 of this report and incorporated herein by reference.

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

Shares of our common stock, $1 par value, are traded on the New York Stock Exchange (ticker symbol TXI). The restriction on the payment of dividends is included in Note 3 of Notes to Consolidated Financial Statements presented in Part I, Item 1 of this report and incorporated herein by reference.

- 31 -

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)

3.2

By-laws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K dated April 13, 2005)

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)

4.2

Form of the Company’s 7 ¹ / 4 % Senior Note due 2013 (CUSIP 882491 AK9) (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005)

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)

4.4

Form of the Company’s 7 ¹ / 4 % Senior Note due 2013 (CUSIP 882491 AM5) and Notation of Guarantee (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed August 19, 2008)

4.5

Form of the Company’s 7 ¹ / 4 % Senior Note due 2013 (CUSIP U88244 AC9) and Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K filed August 19, 2008)

4.6

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)

4.7

Registration Rights Agreement, dated August 18, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K filed August 19, 2008)

4.8

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)

4.9

First Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K filed August 19, 2008)

4.10

Second Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.5 to Current Report on Form 8-K filed August 19, 2008)

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)

10.2

Purchase Agreement, dated August 7, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed August 13, 2008)

10.3

Second Amended and Restated Credit Agreement, dated June 19, 2009, among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and the lenders that are parties thereto (incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed on June 25, 2009)

10.4

First Amendment to Second Amended and Restated Credit Agreement, dated June 19, 2009, among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the lenders that are parties thereto (incorporated by reference to Exhibit 10.2 to Report on Form 8-K filed on June 25, 2009)

10.5

Amended and Restated Security Agreement, dated June 19, 2009, among the Company, the Guarantors and Bank of America, N. A., as Administrative Agent (incorporated by reference to Exhibit 10.3 to Report on Form 8-K filed on June 25, 2009)

- 32 -

10.6

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)

10.7

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)

10.8

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)

10.9

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)

10.10

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)

10.11

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)

10.12

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)

10.13

Form of Non-Employee Directors Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 16, 2009)

10.14

TXI Annual Incentive Plans-Fiscal Year 2010 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 17, 2009)

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

TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2011 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 11, 2008)

10.17

TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2012 (incorporated by reference to Exhibit 10.17 to Annual Report on Form 10-K filed on July 17, 2009)

10.18

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

10.19

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)

10.20

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)

10.21

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)

10.22

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)

10.23

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)

10.24

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)

- 33 -

10.25

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)

10.26

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)

10.27

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)

10.28

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)

10.29

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)

10.30

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)

10.31

Amendment No. 1 to Employment Agreement of Mel G. Brekhus dated March 26, 2009 (incorporated by reference to Exhibit 10.33 in Quarterly Report on Form 10-Q filed on March 27, 2009)

10.32

Contract Amendment No. 1, executed August 17, 2009, between TXI Operations, LP and Amec-Zachry Contractors (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed August 21, 2009)

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.

- 34 -

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.

September 25, 2009				/s/ Kenneth R. Allen
				Kenneth R. Allen
				Vice President – Finance, Chief Financial Officer and Treasurer
				(Principal Financial Officer)

September 25, 2009				/s/ T. Lesley Vines
				T. Lesley Vines
				Vice President – Corporate Controller and Assistant Treasurer
				(Principal Accounting Officer)

- 35 -

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)

3.2		By-laws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K dated April 13, 2005)

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)

4.2		Form of the Company’s 7 ¹ / 4 % Senior Note due 2013 (CUSIP 882491 AK9) (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005)

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)

4.4		Form of the Company’s 7 ¹ / 4 % Senior Note due 2013 (CUSIP 882491 AM5) and Notation of Guarantee (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed August 19, 2008)

4.5		Form of the Company’s 7 ¹ / 4 % Senior Note due 2013 (CUSIP U88244 AC9) and Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K filed August 19, 2008)

4.6		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)

4.7		Registration Rights Agreement, dated August 18, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K filed August 19, 2008)

4.8		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)

4.9		First Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K filed August 19, 2008)

4.10		Second Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.5 to Current Report on Form 8-K filed August 19, 2008)

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)

10.2		Purchase Agreement, dated August 7, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed August 13, 2008)

10.3		Second Amended and Restated Credit Agreement, dated June 19, 2009, among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and the lenders that are parties thereto (incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed on June 25, 2009)

10.4		First Amendment to Second Amended and Restated Credit Agreement, dated June 19, 2009, among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the lenders that are parties thereto (incorporated by reference to Exhibit 10.2 to Report on Form 8-K filed on June 25, 2009)

10.5		Amended and Restated Security Agreement, dated June 19, 2009, among the Company, the Guarantors and Bank of America, N. A., as Administrative Agent (incorporated by reference to Exhibit 10.3 to Report on Form 8-K filed on June 25, 2009)

- 36 -

Index to Exhibits-(Continued)


Exhibit Number

10.6		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)

10.7		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)

10.8		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)

10.9		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)

10.10		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)

10.11		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)

10.12		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)

10.13		Form of Non-Employee Directors Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 16, 2009)

10.14		TXI Annual Incentive Plans-Fiscal Year 2010 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 17, 2009)

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		TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2011 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 11, 2008)

10.17		TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2012 (incorporated by reference to Exhibit 10.17 to Annual Report on Form 10-K filed on July 17, 2009)

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

10.19		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)

10.20		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)

10.21		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)

10.22		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)

- 37 -

Index to Exhibits-(Continued)


Exhibit Number

10.23		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)

10.24		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)

10.25		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)

10.26		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)

10.27		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)

10.28		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)

10.29		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)

10.30		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)

10.31		Amendment No. 1 to Employment Agreement of Mel G. Brekhus dated March 26, 2009 (incorporated by reference to Exhibit 10.33 in Quarterly Report on Form 10-Q filed on March 27, 2009)

10.32		Contract Amendment No. 1, executed August 17, 2009, between TXI Operations, LP and Amec-Zachry Contractors (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed August 21, 2009)

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