- 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 November 30, 2010

[ ] 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				(IRS Employer Identification No.)
Incorporation or Organization)

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 [X] 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 27,831,240 shares of the Registrant’s Common Stock, $1.00 par value, outstanding as of January 3, 2011.

INDEX

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements

	Consolidated Balance Sheets – November 30, 2010 and May 31, 2010	3

	Consolidated Statements of Operations – three and six months ended November 30, 2010 and November 30, 2009	4

	Consolidated Statements of Cash Flows – six months ended November 30, 2010 and November 30, 2009	5

	Notes to Consolidated Financial Statements	6

	Report of Independent Registered Public Accounting Firm	25

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	36

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 5.	Other Information	38

Item 6.	Exhibits	39

SIGNATURES

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PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

CONSOLIDATED BALANCE SHEETS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


	(Unaudited) November 30,			May 31,
In thousands	2010			2010

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	139,753		$	74,946
Receivables – net		96,671			112,184
Inventories		152,681			142,419
Deferred income taxes and prepaid expenses		23,351			23,426

TOTAL CURRENT ASSETS		412,456			352,975

PROPERTY, PLANT AND EQUIPMENT
Land and land improvements		158,941			158,367
Buildings		58,817			58,351
Machinery and equipment		1,226,794			1,220,021
Construction in progress		330,574			322,039

		1,775,126			1,758,778
Less depreciation and depletion		634,404			604,269

		1,140,722			1,154,509

OTHER ASSETS
Goodwill		1,715			1,715
Real estate and investments		7,426			6,774
Deferred charges and other		23,219			15,774

		32,360			24,263

	$	1,585,538		$	1,531,747


LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	41,800		$	56,214
Accrued interest, compensation and other		63,307			51,455
Current portion of long-term debt		95			234

TOTAL CURRENT LIABILITIES		105,202			107,903

LONG-TERM DEBT		652,441			538,620

DEFERRED INCOME TAXES AND OTHER CREDITS		102,495			123,976

SHAREHOLDERS’ EQUITY
Common stock, $1 par value; authorized 100,000 shares; issued and outstanding 27,820 and 27,796 shares, respectively		27,820			27,796
Additional paid-in capital		478,172			475,584
Retained earnings		232,953			272,018
Accumulated other comprehensive loss		(13,545	)		(14,150	)

		725,400			761,248

	$	1,585,538		$	1,531,747

See notes to consolidated financial statements.

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(Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


		Three months ended November 30,							Six months ended November 30,
In thousands except per share			2010			2009				2010			2009

NET SALES	$		148,111		$	142,935		$		320,233		$	326,892

Cost of products sold			136,044			126,063				292,058			275,915

GROSS PROFIT			12,067			16,872				28,175			50,977

Selling, general and administrative			18,543			15,886				34,684			36,140
Interest			13,886			13,364				28,297			26,608
Loss on debt retirements			613			--				29,619			--
Other income			(1,929	)		(5,728	)			(6,819	)		(8,380	)

			31,113			23,522				85,781			54,368

LOSS BEFORE INCOME TAXES			(19,046	)		(6,650	)			(57,606	)		(3,391	)

Income tax benefit			(7,845	)		(2,948	)			(22,713	)		(1,404	)

NET LOSS	$		(11,201	)	$	(3,702	)	$		(34,893	)	$	(1,987	)


Net loss per share
Basic	$		(.40	)	$	(.13	)	$		(1.25	)	$	(.07	)
Diluted	$		(.40	)	$	(.13	)	$		(1.25	)	$	(.07	)


Average shares outstanding
Basic			27,807			27,736				27,797			27,728
Diluted			27,807			27,736				27,797			27,728

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

See notes to consolidated financial statements.

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(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES


		Six months ended November 30,
In thousands		2010				2009

OPERATING ACTIVITIES
Net loss	$		(34,893	)	$		(1,987	)
Adjustments to reconcile net loss to cash provided by operating activities
Depreciation, depletion and amortization			31,991				32,971
Gains on asset disposals			(1,555	)			(1,433	)
Deferred income taxes (benefit)			(22,964	)			756
Stock-based compensation expense			2,288				2,143
Excess tax benefits from stock-based compensation			--				(248	)
Loss on debt retirements			29,619				--
Other – net			(2,855	)			609
Changes in operating assets and liabilities
Receivables – net			16,112				14,020
Inventories			(10,262	)			(3,843	)
Prepaid expenses			1,232				1,767
Accounts payable and accrued liabilities			1,313				(4,823	)

Net cash provided by operating activities			10,026				39,932

INVESTING ACTIVITIES
Capital expenditures – expansions			(11,198	)			(4,543	)
Capital expenditures – other			(12,201	)			(2,899	)
Proceeds from asset disposals			3,037				1,443
Investments in life insurance contracts			3,704				6,726
Other – net			(859	)			(2	)

Net cash provided (used) by investing activities			(17,517	)			725

FINANCING ACTIVITIES
Long-term borrowings			650,000				--
Debt retirements			(561,568	)			(144	)
Debt issuance costs			(12,426	)			(2,039	)
Stock option exercises			464				356
Excess tax benefits from stock-based compensation			--				248
Common dividends paid			(4,172	)			(2,080	)

Net cash provided (used) by financing activities			72,298				(3,659	)

Increase in cash and cash equivalents			64,807				36,998
Cash and cash equivalents at beginning of period			74,946				19,796

Cash and cash equivalents at end of period	$		139,753		$		56,794

See notes to consolidated financial statements.

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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 six-month period ended November 30, 2010, are not necessarily indicative of the results that may be expected for the year ended May 31, 2011. 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, 2010.

Principles of Consolidation . The consolidated financial statements include the accounts of Texas Industries, Inc. and all subsidiaries. Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

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

Fair Value of Financial Instruments. The estimated fair value of each class of financial instrument as of November 30, 2010 and May 31, 2010 approximates its carrying value except for long-term debt having fixed interest rates. The fair value of our long-term debt is estimated based on broker/dealer quoted market prices. As of November 30, 2010, the fair value of our long-term debt, including the current portion, was approximately $681.8 million compared to the carrying amount of $652.5 million. As of May 31, 2010, the fair value of our long-term debt, including the current portion, was approximately $534.8 million compared to the carrying amount of $538.9 million.

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.

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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.

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 on a facility by facility basis for impairment whenever changes in circumstances indicate that the carrying amount of the assets may not be recoverable and would record an impairment charge if necessary. Such evaluations compare the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset and are significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors.

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

Property, plant and equipment is recorded at cost. Costs incurred to construct certain long-lived assets include capitalized interest which is amortized over the estimated useful life of the related asset. Interest is capitalized during the construction period of qualified assets based on the average amount of accumulated expenditures and the weighted average interest rate applicable to borrowings outstanding during the period. If accumulated expenditures exceed applicable borrowings outstanding during the period, capitalized interest is allocated to projects under construction on a pro rata basis. Provisions for depreciation are computed generally using the straight-line method. Useful lives for our primary operating facilities range from 10 to 25 years with certain cement facility structures having useful lives of 40 years. Provisions for depletion of mineral deposits are computed on the basis of the estimated quantity of recoverable raw materials. The 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 and Goodwill Impairment . Management tests goodwill for impairment annually by reporting unit in the fourth quarter of our fiscal year using a two-step process. The first step of the impairment test identifies potential impairment by comparing the fair value of a reporting unit to its carrying value including goodwill. In applying a fair-value-based test, estimates are made of the expected future cash flows to be derived from the reporting unit. Similar to the review for impairment of other long-lived assets, the resulting fair value determination is significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors. If the carrying value of the reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment test compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying value of the reporting unit goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.

Goodwill resulting from the acquisition of ready-mix operations in Texas and Louisiana and identified with our consumer products operations has a carrying value of $1.7 million at both November 30, 2010 and May 31, 2010. Based on an impairment test performed as of March 31, 2010, the fair value of the reporting unit exceeds its carrying value, and therefore, no potential impairment was identified.

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Real Estate and Investments. Surplus real estate and real estate acquired for development of high quality industrial, office or multi-use parks totaled $5.9 million at both November 30, 2010 and May 31, 2010.

Investments include life insurance contracts purchased in connection with certain of our benefit plans. The contracts, recorded at their net cash surrender value, totaled $1.4 million (net of distributions of $87.8 million plus accrued interest and fees) at November 30, 2010 and $0.8 million (net of distributions of $82.8 million plus accrued interest and fees) at May 31, 2010. 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. Proceeds received from the policies were $7.2 million and $10.1 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively.

Deferred Charges and Other. Deferred charges are composed primarily of debt issuance costs that totaled $14.5 million at November 30, 2010 and $8.8 million at May 31, 2010. The costs are amortized over the term of the related debt.

Other Credits. Other credits totaled $83.7 million at November 30, 2010 and $83.9 million at May 31, 2010 and are composed primarily of liabilities related to our retirement plans, deferred compensation agreements and asset retirement obligations.

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:


		Six months ended November 30,
In thousands		2010				2009

Balance at beginning of period	$		4,474		$		4,415
Additions			9				--
Accretion expense			107				161
Settlements			(169	)			(189	)

Balance at end of period	$		4,421		$		4,387

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 $13.5 million (net of tax of $7.9 million) at November 30, 2010 and $14.2 million (net of tax of $8.2 million) at May 31, 2010.

Comprehensive loss for the three-month and six-month periods ending November 30, 2010 and November 30, 2009 consisted of net loss and amounts in accumulated other comprehensive loss recognized in the periods as components of net periodic postretirement benefit cost, net of tax. Comprehensive loss was $10.9 million and $3.4 million in the three-month periods ended November 30, 2010 and November 30, 2009, respectively. Comprehensive loss was $34.3 million and $1.4 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively.

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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 $0.4 million in the three-month period ended November 30, 2009 and gains of $1.6 million and $1.4 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively. In addition, we have sold emissions credits associated with our Crestmore cement plant in Riverside, California resulting in gains of $3.4 million in the three-month period ended November 30, 2009 and gains of $1.7 million and $3.4 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively.

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. Lease bonus payments and royalties on oil and gas produced resulted in income of $1.3 million and $0.3 million in the three-month periods ended November 30, 2010 and November 30, 2009, respectively, and income of $2.1 million and $0.6 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively. We cannot predict what the level of future royalties, if any, will be.

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

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

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

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Basic and Diluted EPS are calculated as follows:


	Three months ended November 30,						Six months ended November 30,
In thousands except per share	2010			2009			2010			2009

Basic earnings
Net loss	$	(11,201	)	$	(3,702	)	$	(34,893	)	$	(1,987	)
Unvested restricted share participation		4			2			16			1

Basic loss	$	(11,197	)	$	(3,700	)	$	(34,877	)	$	(1,986	)


Diluted earnings
Net loss	$	(11,201	)	$	(3,702	)	$	(34,893	)	$	(1,987	)
Unvested restricted share participation		4			2			16			1

Diluted loss	$	(11,197	)	$	(3,700	)	$	(34,877	)	$	(1,986	)


Shares
Weighted-average shares outstanding		27,815			27,740			27,807			27,734
Contingently issuable shares		2			8			2			9
Unvested restricted shares		(10	)		(12	)		(12	)		(15	)

Basic weighted-average shares		27,807			27,736			27,797			27,728
Stock option, restricted share and award dilution		--			--			--			--

Diluted weighted-average shares*		27,807			27,736			27,797			27,728


Net loss per share
Basic	$	(.40	)	$	(.13	)	$	(1.25	)	$	(.07	)
Diluted	$	(.40	)	$	(.13	)	$	(1.25	)	$	(.07	)

* Shares excluded due to antidilutive effect Stock options, restricted shares and awards		1,246			978			1,230			979

Recently Issued Accounting Guidance. There is no recently issued accounting guidance that we expect will materially impact our financial statements during the current fiscal year.

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2. Working Capital

Working capital totaled $307.3 million at November 30, 2010 compared to $245.1 million at May 31, 2010. Selected components of working capital are summarized below.

Receivables consist of:


		November 30,			May 31,
In thousands		2010			2010

Trade notes and accounts receivable	$		82,852	$		95,120
Income tax receivable			13,253			13,253
Other			566			3,811

	$		96,671	$		112,184

Trade notes and accounts receivable are presented net of allowances for doubtful receivables of $3.3 million at November 30, 2010 and $3.5 million at May 31, 2010. Provisions for bad debts charged to expense were $1.4 million and $1.0 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively. Uncollectible accounts written off totaled $1.6 million and $0.2 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively.

Inventories consist of:


		November 30,			May 31,
In thousands		2010			2010

Finished products		$	10,043	$		9,632
Work in process			56,871			50,798
Raw materials			14,581			13,985

Total inventories at LIFO cost			81,495			74,415

Finished products			21,392			19,955
Raw materials			530			891
Parts and supplies			49,264			47,158

Total inventories at average cost			71,186			68,004

Total inventories	$		152,681	$		142,419

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 $42.5 million at November 30, 2010 and $43.1 million at May 31, 2010.

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Accrued interest, compensation and other consist of:


		November 30,			May 31,
In thousands		2010			2010

Interest	$		18,658	$		15,176
Compensation and employee benefits			14,691			13,574
Casualty insurance claims			13,089			12,595
Income taxes			2,941			2,526
Property taxes and other			13,928			7,584

	$		63,307	$		51,455

3. Long-Term Debt

Long-term debt consists of:


		November 30,				May 31,
In thousands		2010				2010

Senior secured revolving credit facility expiring in 2012	$		--		$		--
9.25% Senior notes due 2020 issued August 10, 2010 at par value			650,000				--
7.25% Senior notes due 2013
Notes issued July 6, 2005 at par value			--				250,000
Additional notes issued August 18, 2008, net of unamortized discount of $13.9 million at May 31, 2010 (effective interest rate 8.98%)			--				286,143

			650,000				536,143
Capital lease obligations			2,268				2,443
Other contract obligations			268				268

			652,536				538,854
Less current portion			(95	)			(234	)

	$		652,441		$		538,620

Senior Secured Revolving Credit Facility . The credit agreement provides for a $200 million senior secured revolving credit facility with a $50 million sub-limit for letters of credit and a $15 million sub-limit for swing line loans. The credit facility matures on August 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 rate for one-month LIBOR loans 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. The borrowing base under the agreement was $152.7 million as of November 30, 2010. We are not required to maintain any financial ratios or covenants unless an event of default occurs or the unused portion of the borrowing base is less than $40 million, in which case we must maintain a fixed charge coverage ratio of at least 1.1 to 1.0. At November 30, 2010, our fixed charge coverage ratio was .15 to 1.0. Given this ratio, we may use only $112.7 million of the borrowing base as of such date. No borrowings were outstanding at November 30, 2010; however, $31.7 million of the borrowing base was used to support letters of credit. As a result, the maximum amount we could borrow as of November 30, 2010 was $81.0 million.

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

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The credit agreement contains a number of covenants restricting, among other things, prepayment or redemption of our senior notes, distributions and dividends on and repurchases of our capital stock, acquisitions and investments, indebtedness, liens and affiliate transactions. We are permitted to pay cash dividends on our common stock as long as the credit facility is not in default, the fixed charge coverage ratio is greater than 1.1 to 1.0 and borrowing availability under the borrowing base is more than $50 million. When our fixed charge coverage ratio is less than 1.1 to 1.0, we are permitted to pay cash dividends on our common stock not to exceed $2.5 million in any single instance (which shall not occur more than four times in any calendar year) or $10 million in the aggregate during any calendar year as long as the credit facility is not in default and borrowing availability is more than the greater of $60 million or 30% of the aggregate commitments of all lenders. For this purpose, borrowing availability is equal to the borrowing base less the amount of outstanding borrowings less the amount used to support letters of credit. We were in compliance with all of our loan covenants as of November 30, 2010.

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

At November 30, 2010, we had $650 million aggregate principal amount of 9.25% senior notes outstanding. Under the indenture, at any time on or prior to August 15, 2015, we may redeem the notes at a redemption price equal to the sum of the principal amount thereof, plus accrued interest and a make-whole premium. On and after August 15, 2015, we may redeem all or a part of the notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest if redeemed during the twelve-month period beginning on August 15 of the years indicated below:


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

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

All of our consolidated subsidiaries have unconditionally guaranteed the 9.25% senior notes. The indenture governing the notes contains affirmative and negative covenants that, among other things, limit our and our subsidiaries’ ability to pay dividends on or redeem or repurchase stock, make certain investments, incur additional debt or sell preferred stock, create liens, restrict dividend payments or other payments from subsidiaries to the Company, engage in consolidations and mergers or sell or transfer assets, engage in sale and leaseback transactions, engage in transactions with affiliates, and sell stock in our subsidiaries. We are not required to maintain any affirmative financial ratios or covenants. We were in compliance with all of our covenants as of November 30, 2010.

Refinancing . On July 27, 2010, we commenced a cash tender offer for all of the outstanding $550 million aggregate principal amount of our 7.25% senior notes due 2013 and a solicitation of consents to amend the indenture governing the 7.25% notes. Pursuant to the tender offer and consent solicitation, we purchased $536.6 million aggregate principal amount of the 7.25% notes, and paid an aggregate of $547.7 million in purchase price and consent fees. On September 9, 2010, we redeemed the remaining $13.4 million aggregate principal amount of the 7.25% notes at a price of 101.813% of the principal amount thereof, plus accrued and unpaid interest on the 7.25% notes to the redemption date. As of November 30, 2010, we recognized a loss on debt retirement of $29.6 million representing $11.4 million in consent fees, redemption price premium and transaction costs and a write-off of $18.2 million of unamortized debt discount and original issuance costs associated with the 7.25% notes.

Other. There are no required principal payments on long-term debt, excluding the capital lease obligations, during the five years succeeding November 30, 2010. The total amount of interest paid was $28.6 million and $25.5 million during the six-month periods ended November 30, 2010 and November 30, 2009, respectively. The total amount of interest incurred was $17.3 million and $13.4 million in the three-month periods ended November 30, 2010 and November 30, 2009, respectively, of which $3.4 million was capitalized in the three-month period ended November 30, 2010. The total amount of interest incurred was $31.7 million and $26.6 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively, of which $3.4 million was capitalized in the six-month period ended November 30, 2010.

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4. Commitments

During October 2007, we commenced construction on a project to expand our Hunter, Texas cement plant. In May 2009 we temporarily halted construction on the project because we believed that economic and market conditions made it unlikely that current cement demand levels in Texas would permit the new kiln to operate profitably if the project was completed as originally scheduled. We resumed construction in October 2010. The expected capital cost of completion is between $70 million and $80 million, excluding capitalized interest, and commissioning is expected to begin within 24 months of the restart of construction. As of November 30, 2010, we have incurred approximately $297.8 million, excluding capitalized interest of approximately $19.7 million related to the project, of which $297.2 million has been paid.

5. Shareholders’ Equity

There are authorized 100,000 shares of Cumulative Preferred Stock, no par value, of which 20,000 shares are designated $5 Cumulative Preferred Stock (Voting), redeemable at $105 per share and entitled to $100 per share upon dissolution. An additional 40,000 shares are designated Series B Junior Participating Preferred Stock. The Series B Preferred Stock is not redeemable and ranks, with respect to the payment of dividends and the distribution of assets, junior to (i) all other series of the Preferred Stock unless the terms of any other series shall provide otherwise and (ii) the $5 Cumulative Preferred Stock. No shares of $5 Cumulative Preferred Stock or Series B Junior Participating Preferred Stock were outstanding as of November 30, 2010. 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. The Rights Agreement, as amended, expired on December 31, 2010.

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. The weighted-average grant date fair value of options granted during the six-month period ended November 30, 2010 was $17.61 based on weighted average assumptions for expected volatility of .420, expected lives of 10 years, risk-free interest rates of 3.33% and expected dividend yields of .86%. No options were granted during the six-month period ended November 30, 2009.

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 six-month period ended November 30, 2010, follows:


	Shares Under Option			Weighted-Average Option Price

Outstanding at May 31, 2010		1,764,516		$	38.54
Granted		13,000			34.68
Exercised		(25,509	)		19.88
Canceled		(10,228	)		42.42

Outstanding at November 30, 2010		1,741,779		$	38.77

Exercisable at November 30, 2010		875,829		$	39.60

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The following table summarizes information about stock options outstanding as of November 30, 2010.


	Range of Exercise Prices
	$16.04 - $27.39		$34.00 - $48.60		$50.63 - $70.18

Options outstanding
Shares outstanding		661,632		500,197		579,950
Weighted-average remaining life in years		5.15		7.28		5.72
Weighted-average exercise price		$22.20		$39.18		$57.31
Options exercisable
Shares exercisable		363,712		169,497		342,620
Weighted-average remaining life in years		2.93		3.99		5.53
Weighted-average exercise price		$20.22		$44.94		$57.53

Outstanding options expire on various dates to October 25, 2020. As of November 30, 2010, we have reserved 937,401 shares for future awards under the 2004 Plan.

As of November 30, 2010, the aggregate intrinsic value (the difference in the closing market price of our common stock of $37.68 and the exercise price to be paid by the optionee) of stock options outstanding was $10.8 million. The aggregate intrinsic value of exercisable stock options at that date was $6.4 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 $0.2 million and less than $0.1 million for the three-month periods ended November 30, 2010 and November 30, 2009, respectively, and $0.3 million and $0.5 million for the six-month periods ended November 30, 2010 and November 30, 2009, respectively.

We have provided additional stock-based compensation to employees and directors under stock appreciation rights contracts, deferred compensation agreements, restricted stock payments and a former stock awards program. At November 30, 2010, outstanding stock appreciation rights totaled 133,315 shares, deferred compensation agreements to be settled in cash totaled 101,210 shares, deferred compensation agreements to be settled in common stock totaled 1,802 shares, unvested restricted stock payments totaled 7,167 shares and stock awards totaled 2,323 shares. Other credits include $6.1 million at November 30, 2010 and $6.0 million at May 31, 2010 representing accrued stock-based compensation which is accounted for as liabilities and expected to be settled in cash. Common stock totaling 2.7 million shares at both November 30, 2010 and May 31, 2010 have been reserved for the settlement of stock-based compensation.

Total stock-based compensation included in selling, general and administrative expense (credit) was $2.5 million and $(0.5) million in the three-month periods ended November 30, 2010 and November 30, 2009, respectively, and $2.3 million and $2.1 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively. The impact of changes in our company’s stock price on stock-based awards accounted for as liabilities increased stock-based compensation $1.5 million in the three-month period ended November 30, 2010 and reduced stock-based compensation $1.5 million in the three-month period ended November 30, 2009. The impact of changes in our company’s stock price on stock-based awards accounted for as liabilities increased stock-based compensation $0.1 million in each of the six-month periods ended November 30, 2010 and November 30, 2009.

Total tax expense (benefit) recognized in our statements of operations for stock-based compensation was $(0.7) million and $0.4 million in the three-month periods ended November 30, 2010 and November 30, 2009, respectively, and $(0.4) million in each of the six-month periods ended November 30, 2010 and November 30, 2009, respectively. No tax benefit was realized for stock-based compensation in the three-month and six-month periods ended November 30, 2010. Total tax benefit realized for stock-based compensation was $0.2 million in the three-month and six-month periods ended November 30, 2009.

As of November 30, 2010, $8.5 million of total unrecognized compensation cost related to stock options, restricted stock payments and stock awards is expected to be recognized. We currently expect to recognize in the years succeeding November 30, 2010 approximately $3.3 million of this stock-based compensation expense in 2011, $2.4 million in 2012, $1.7 million in 2013, $1.0 million in 2014 and $0.1 million in 2015.

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7. Retirement Plans

Riverside Defined Benefit Plans. Approximately 600 employees and retirees of our subsidiary, Riverside Cement Company, are covered by a defined benefit pension plan and a postretirement health benefit plan. Unrecognized prior service costs and actuarial gains or losses for these plans are recognized in a systematic manner over the remaining service periods of active employees expected to receive benefits under these plans. The amount of the defined benefit pension plan and postretirement health benefit plan expense charged to costs and expenses for the three-month and six-month periods ended November 30, 2010 and November 30, 2009, was as follows:


		Pension Benefit								Health Benefit
In thousands		2010				2009				2010				2009

Three months ended November 30
Service cost	$		126		$		115		$		29		$		26
Interest cost			737				792				106				117
Expected return on plan assets			(685	)			(586	)			--				--
Amortization of prior service cost			--				--				(193	)			(193	)
Amortization of net actuarial loss			517				500				153				151

	$		695		$		821		$		95		$		101


Six months ended November 30
Service cost	$		251		$		229		$		57		$		53
Interest cost			1,475				1,583				212				233
Expected return on plan assets			(1,370	)			(1,171	)			--				--
Amortization of prior service cost			--				--				(387	)			(387	)
Amortization of net actuarial loss			1,034				1,000				307				302

	$		1,390		$		1,641		$		189		$		201

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. Actuarial gains or losses are recognized when incurred. The amount of financial security plan benefit expense charged to costs and expenses for the three-month and six-month periods ended November 30, 2010 and November 30, 2009, was as follows:


		FSP Benefit
In thousands		2010				2009

Three months ended November 30
Service cost	$		472		$		468
Interest cost			525				562
Recognized actuarial loss adjustment			131				--
Participant contributions			(108	)			(109	)

	$		1,020		$		921


Six months ended November 30
Service cost	$		944		$		937
Interest cost			1,050				1,123
Recognized actuarial loss adjustment			262				--
Participant contributions			(200	)			(204	)

	$		2,056		$		1,856

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8. Income Taxes

Income taxes for the interim periods ended November 30, 2010 and November 30, 2009 have been included in the accompanying financial statements on the basis of an estimated annual rate. The estimated annualized rate does not include the tax impact of the loss on debt retirements which has been recognized as a discrete item in the six-month period ended November 30, 2010. The estimated annualized rate excluding this charge is 41.0% for fiscal year 2011 compared to 41.4% for fiscal year 2010. 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. We made income tax payments of less than $0.1 million in each of the six-month periods ended November 30, 2010 and November 30, 2009. We received income tax refunds of $0.2 million and $1.1 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively.

Management reviews our deferred tax position and in particular our deferred tax assets whenever circumstances indicate that the assets may not be realized in the future and would record a valuation allowance unless such deferred tax assets were deemed more likely than not to be recoverable. The ultimate realization of these deferred tax assets is dependent upon various factors including the generation of taxable income during future periods. As of November 30, 2010, we have concluded based on all available evidence that a valuation allowance is not required. Should the Company continue to experience losses, deferred tax assets could exceed deferred tax liabilities and a valuation allowance may become necessary.

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 and state tax authorities for years prior to 2007.

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


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.”

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

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

Since August 2008, additional lawsuits have been filed in the same court against Texas Industries, Inc. or one or more of our subsidiaries containing allegations of personal injury and wrongful death by over 2,800 individual plaintiffs who were allegedly exposed to chrome 6 and other toxic or harmful substances in the air, water and soil caused by emissions from the Crestmore plant. The court has dismissed Texas Industries, Inc. from the suits, but most of our subsidiaries operating in California remain as defendants.

Since January 2009, additional lawsuits have been filed against Texas Industries, Inc. 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 300 individual plaintiffs. The court has also dismissed Texas Industries, Inc. from these suits. Prior to the filing of the lawsuits, the air quality management district in whose jurisdiction the plant lies conducted air sampling from locations around the plant. None of the samples contained chrome 6 levels above 1.0 ng/m³.

The plaintiffs allege causes of action that 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. At the date of this report, none of the plaintiffs in these cases has alleged in their pleadings any specific amount or range of damages. Some of the suits include additional defendants, such as the owner of another cement plant located approximately four miles from the Crestmore plant or former owners of the Crestmore and Oro Grande plants.

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

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

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.

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


		Three months ended November 30,								Six months ended November 30,
In thousands		2010				2009				2010				2009
Net sales
Cement
Sales to external customers	$		57,138		$		57,594		$		120,373		$		129,631
Intersegment sales			11,440				10,589				24,587				23,748
Aggregates
Sales to external customers			34,759				31,480				77,833				74,720
Intersegment sales			6,323				4,807				13,219				11,668
Consumer products
Sales to external customers			56,214				53,861				122,027				122,541
Intersegment sales			606				592				1,271				1,450
Eliminations			(18,369	)			(15,988	)			(39,077	)			(36,866	)

Total net sales	$		148,111		$		142,935		$		320,233		$		326,892


Segment operating profit
Cement	$		1,948		$		10,135		$		5,912		$		22,541
Aggregates			3,323				2,229				8,457				10,868
Consumer products			(2,383	)			281				(1,632	)			5,032

Total segment operating profit			2,888				12,645				12,737				38,441

Corporate			(7,435	)			(5,931	)			(12,427	)			(15,224	)
Interest			(13,886	)			(13,364	)			(28,297	)			(26,608	)
Loss on debt retirements			(613	)			--				(29,619	)			--

Loss before income taxes	$		(19,046	)	$		(6,650	)	$		(57,606	)	$		(3,391	)


Depreciation, depletion and amortization
Cement	$		9,181		$		9,286		$		18,330		$		18,627
Aggregates			4,956				4,994				9,728				10,061
Consumer products			1,709				1,807				3,365				3,703
Corporate			284				290				568				580

Total depreciation, depletion and amortization	$		16,130		$		16,377		$		31,991		$		32,971


Capital expenditures
Cement	$		10,832		$		73		$		12,579		$		4,791
Aggregates			3,727				1,928				4,904				2,408
Consumer products			5,271				17				5,467				168
Corporate			413				51				449				75

Total capital expenditures	$		20,243		$		2,069		$		23,399		$		7,442


Net sales by product
Cement	$		50,197		$		51,141		$		104,747			$	116,472
Stone, sand and gravel			17,577				15,887				38,054				37,536
Ready-mix concrete			43,347				41,702				95,431				95,721
Other products			21,242				21,189				47,122				48,558
Delivery fees			15,748				13,016				34,879				28,605

Total net sales	$		148,111		$		142,935		$		320,233		$		326,892

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

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Cement segment operating profit includes $3.4 million in the three-month period ended November 30, 2009 and $1.7 million and $3.4 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively, from sales of emission credits associated with our Crestmore cement plant in Riverside, California.

Cement capital expenditures, including capitalized interest, incurred in connection with the expansion of our Hunter, Texas cement plant was $11.2 million and $4.5 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively. Other capital expenditures incurred represent normal replacement and 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.


		November 30,			May 31,
In thousands		2010			2010

Identifiable assets
Cement	$		1,084,826	$		1,093,301
Aggregates			217,719			229,084
Consumer products			87,190			85,641
Corporate			195,803			123,721

Total assets	$		1,585,538	$		1,531,747

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

11. Condensed Consolidating Financial Information

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

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

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

Condensed consolidating balance sheet at November 30, 2010

Cash and cash equivalents	$		138,717		$		1,036	$		--		$		139,753
Receivables - net			13,253				83,418			--				96,671
Inventories			--				152,681			--				152,681
Deferred income taxes and prepaid expenses			(125	)			23,476			--				23,351

Total current assets			151,845				260,611			--				412,456
Property, plant and equipment - net			--				1,140,722			--				1,140,722
Goodwill			--				1,715			--				1,715
Real estate and investments			1,419				6,007			--				7,426
Deferred charges and other			14,540				8,679			--				23,219
Investment in subsidiaries			950,153				--			(950,153	)			--
Long-term intercompany receivables			272,784				18,749			(291,533	)			--

Total assets	$		1,390,741		$		1,436,483	$		(1,241,686	)	$		1,585,538


Accounts payable	$		34		$		41,766	$		--		$		41,800
Accrued interest, compensation and other			24,733				38,574			--				63,307
Current portion of long-term debt			--				95			--				95

Total current liabilities			24,767				80,435			--				105,202
Long-term debt			650,268				2,173			--				652,441
Long-term intercompany payables			18,749				272,784			(291,533	)			--
Deferred income taxes and other credits			(28,443	)			130,938			--				102,495
Shareholders’ equity			725,400				950,153			(950,153	)			725,400

Total liabilities and shareholders’ equity	$		1,390,741		$		1,436,483	$		(1,241,686	)	$		1,585,538


Condensed consolidating balance sheet at May 31, 2010

Cash and cash equivalents	$		72,492		$		2,454	$		--		$		74,946
Receivables - net			13,253				98,931			--				112,184
Inventories			--				142,419			--				142,419
Deferred income taxes and prepaid expenses			152				23,274			--				23,426

Total current assets			85,897				267,078			--				352,975
Property, plant and equipment – net			--				1,154,509			--				1,154,509
Goodwill			--				1,715			--				1,715
Real estate and investments			767				6,007			--				6,774
Deferred charges and other			8,805				6,969			--				15,774
Investment in subsidiaries			945,210				--			(945,210	)			--
Long-term intercompany receivables			288,174				18,755			(306,929	)			--

Total assets	$		1,328,853		$		1,455,033	$		(1,252,139	)	$		1,531,747


Accounts payable	$		84		$		56,130	$		--		$		56,214
Accrued interest, compensation and other			18,725				32,730			--				51,455
Current portion of long-term debt			--				234			--				234

Total current liabilities			18,809				89,094			--				107,903
Long-term debt			536,411				2,209			--				538,620
Long-term intercompany payables			18,755				288,174			(306,929	)			--
Deferred income taxes and other credits			(6,370	)			130,346			--				123,976
Shareholders’ equity			761,248				945,210			(945,210	)			761,248

Total liabilities and shareholders’ equity	$		1,328,853		$		1,455,033	$		(1,252,139	)	$		1,531,747

- 21 -


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

Condensed consolidating statement of operations for the three months ended November 30, 2010

Net sales	$		--		$		148,111		$		--		$		148,111
Cost of products sold			--				136,044				--				136,044

Gross profit			--				12,067				--				12,067
Selling, general and administrative			2,107				16,436				--				18,543
Interest			17,269				827				(4,210	)			13,886
Loss on debt retirements			613				--				--				613
Other income			(83	)			(1,846	)			--				(1,929	)
Intercompany other income			(873	)			(3,337	)			4,210				--

			19,033				12,080				--				31,113

Loss before the following items			(19,033	)			(13	)			--				(19,046	)
Income tax benefit			(6,749	)			(1,096	)			--				(7,845	)

			(12,284	)			1,083				--				(11,201	)
Equity in earnings of subsidiaries			1,083				--				(1,083	)			--

Net loss	$		(11,201	)	$		1,083		$		(1,083	)	$		(11,201	)


Condensed consolidating statement of operations for the three months ended November 30, 2009

Net sales	$		--		$		142,935		$		--		$		142,935
Cost of products sold			--				126,063				--				126,063

Gross profit			--				16,872				--				16,872
Selling, general and administrative			500				15,386				--				15,886
Interest			13,191				1,046				(873	)			13,364
Loss on debt retirements			--				--				--				--
Other income			(14	)			(5,714	)			--				(5,728	)
Intercompany other income			(873	)			--				873				--

			12,804				10,718				--				23,522

Loss before the following items			(12,804	)			6,154				--				(6,650	)
Income tax benefit			(5,368	)			2,420				--				(2,948	)

			(7,436	)			3,734				--				(3,702	)
Equity in earnings of subsidiaries			3,734				--				(3,734	)			--

Net loss	$		(3,702	)	$		3,734		$		(3,734	)	$		(3,702	)

- 22 -


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

Condensed consolidating statement of operations for the six months ended November 30, 2010

Net sales	$		--		$		320,233		$		--		$		320,233
Cost of products sold			--				292,058				--				292,058

Gross profit			--				28,175				--				28,175
Selling, general and administrative			2,767				31,917				--				34,684
Interest			31,634				1,755				(5,092	)			28,297
Loss on debt retirements			29,619				--				--				29,619
Other income			(126	)			(6,693	)			--				(6,819	)
Intercompany other income			(1,755	)			--				5,092				--

			62,139				23,642				--				85,781

Loss before the following items			(62,139	)			4,533				--				(57,606	)
Income tax benefit			(22,909	)			196				--				(22,713	)

			(39,230	)			4,337				--				(34,893	)
Equity in earnings of subsidiaries			4,337				--				(4,337	)			--

Net loss	$		(34,893	)	$		4,337		$		(4,337	)	$		(34,893	)


Condensed consolidating statement of operations for the six months ended November 30, 2009

Net sales	$		--		$		326,892		$		--		$		326,892
Cost of products sold			--				275,915				--				275,915

Gross profit			--				50,977				--				50,977
Selling, general and administrative			3,338				32,802				--				36,140
Interest			26,262				2,101				(1,755	)			26,608
Loss on debt retirements			--				--				--				--
Other income			(26	)			(8,354	)			--				(8,380	)
Intercompany other income			(1,755	)			--				1,755				--

			27,819				26,549				--				54,368

Loss before the following items			(27,819	)			24,428				--				(3,391	)
Income tax benefit			(10,924	)			9,520				--				(1,404	)

			(16,895	)			14,908				--				(1,987	)
Equity in earnings of subsidiaries			14,908				--				(14,908	)			--

Net loss	$		(1,987	)	$		14,908		$		(14,908	)	$		(1,987	)

- 23 -


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

Condensed consolidating statement of cash flows for the six months ended November 30, 2010

Net cash provided by operating activities	$		(25,335	)	$		35,361		$		--	$		10,026

Investing activities
Capital expenditures - expansions			--				(11,198	)			--			(11,198	)
Capital expenditures - other			--				(12,201	)			--			(12,201	)
Proceeds from asset disposals			--				3,037				--			3,037
Investments in life insurance contracts			3,704				--				--			3,704
Other - net			--				(859	)			--			(859	)

Net cash provided (used) by investing activities			3,704				(21,221	)			--			(17,517	)

Financing activities
Long-term borrowings			650,000				--				--			650,000
Debt retirements			(561,394	)			(174	)			--			(561,568	)
Debt issuance costs			(12,426	)			--				--			(12,426	)
Stock option exercises			464				--				--			464
Excess tax benefits from stock-based compensation			--				--				--			--
Common dividends paid			(4,172	)			--				--			(4,172	)
Net intercompany financing activities			15,384				(15,384	)			--			--

Net cash provided (used) by financing activities			87,856				(15,558	)			--			72,298

Increase in cash and cash equivalents			66,225				(1,418	)			--			64,807

Cash and cash equivalents at beginning of period			72,492				2,454				--			74,946

Cash and cash equivalents at end of period	$		138,717		$		1,036		$		--	$		139,753


Condensed consolidating statement of cash flows for the six months ended November 30, 2009

Net cash provided by operating activities	$		(18,155	)	$		58,087		$		--	$		39,932

Investing activities
Capital expenditures - expansions			--				(4,543	)			--			(4,543	)
Capital expenditures - other			--				(2,899	)			--			(2,899	)
Proceeds from asset disposals			--				1,443				--			1,443
Investments in life insurance contracts			6,726				--				--			6,726
Other - net			--				(2	)			--			(2	)

Net cash provided (used) by investing activities			6,726				(6,001	)			--			725

Financing activities
Long-term borrowings			--				--				--			--
Debt retirements			--				(144	)			--			(144	)
Debt issuance costs			(2,039	)			--				--			(2,039	)
Stock option exercises			356				--				--			356
Excess tax benefits from stock-based compensation			248				--				--			248
Common dividends paid			(2,080	)			--				--			(2,080	)
Net intercompany financial activities			54,512				(54,512	)			--			--

Net cash provided (used) by financing activities			50,997				(54,656	)			--			(3,659	)

Increase in cash and cash equivalents			39,568				(2,570	)			--			36,998

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

Cash and cash equivalents at end of period	$		56,794		$		--		$		--	$		56,794

- 24 -

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Texas Industries, Inc.

We have reviewed the accompanying consolidated balance sheet of Texas Industries, Inc. and subsidiaries (the Company) as of November 30, 2010, and the related consolidated statements of operations for the three- and six-month periods ended November 30, 2010 and 2009 and cash flows for the six-month periods ended November 30, 2010 and 2009. 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, 2010, 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 21, 2010, 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, 2010, 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

January 7, 2011

- 25 -

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.

During the three-month and six-month periods ended November 30, 2010, construction activity has remained at low levels in both our California and Texas market areas. We have continued to focus on cost reduction, management of our cash position and management of production levels, which we believe has had a significant positive impact on our operating results.

Consolidated sales for the three-month period ended November 30, 2010 were $148.1 million, an increase of $5.2 million from the prior year period. Consolidated cost of products sold for the three-month period ended November 30, 2010 was $136.0 million, an increase of $10.0 million from the prior year period. Consolidated gross profit for the three-month period ended November 30, 2010 was $12.1 million, a decrease of $4.8 million from the prior year period. Lower sales prices for our major products offset in part by higher shipments reduced consolidated gross profit approximately $4 million.

Consolidated sales for the six-month period ended November 30, 2010 were $320.2 million, a decrease of $6.7 million from the prior year period. Consolidated cost of products sold for the six-month period ended November 30, 2010 was $292.1 million, an increase of $16.1 million from the prior year period. Consolidated gross profit for the six-month period ended November 30, 2010 was $28.2 million, a decrease of $22.8 million from the prior year period. Lower sales prices for our major products offset in part by higher shipments reduced consolidated gross profit approximately $20 million.

Consolidated selling, general and administrative expense for the three-month period ended November 30, 2010 was $18.5 million, an increase of $2.7 million from the prior year period. Provisions for bad debts increased $0.5 million and stock-based compensation increased $3.0 million from the prior year period. 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 the fair value of these awards increased expense $1.5 million for the three-month period ended November 30, 2010 and decreased expense $1.5 million for the three-month period ended November 30, 2009. We hold life insurance policies in connection with certain of our benefit plans. Proceeds received from the policies in the three-month period ended November 30, 2010 decreased expense $0.2 million from the prior year period. Our focus on reducing controllable costs lowered other expenses $0.6 million in the three-month period ended November 30, 2010 from the prior year period.

Consolidated selling, general and administrative expense for the six-month period ended November 30, 2010 was $34.7 million, a decrease of $1.5 million from the prior year period. Provisions for bad debts increased $0.4 million and stock-based compensation increased $0.2 million from the prior year period. Changes in the fair value stock-based awards did not significantly impact expense in the six-month periods ended November 30, 2010 and November 30, 2009. We hold life insurance policies in connection with certain of our benefit plans. Proceeds received from the policies in the six-month period ended November 30, 2010 decreased expense $0.6 million from the prior year period. Our focus on reducing controllable costs lowered other expenses $1.5 million in the six-month period ended November 30, 2010 from the prior year period.

- 26 -

Consolidated other income for the three-month period ended November 30, 2010 was $1.9 million, a decrease of $3.8 million from the prior year period. We sold emissions credits associated with our Crestmore cement plant in Riverside, California that resulted in gains of $3.4 million in the three-month period ended November 30, 2009.

Consolidated other income for the six-month period ended November 30, 2010 was $6.8 million, a decrease of $1.6 million from the prior year period. Routine sales of surplus operating assets and real estate resulted in gains of $1.6 million and $1.4 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively. In addition, we sold emissions credits associated with our Crestmore cement plant in Riverside, California that resulted in gains of $1.7 million and $3.4 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively.

Consolidated operating profit for the three-month periods ended November 30, 2010 and November 30, 2009 was $2.9 million and $12.6 million, respectively. Consolidated operating profit for the six-month periods ended November 30, 2010 and November 30, 2009 was $12.7 million and $38.4 million, respectively. The following is a summary of operating results for our business segments and certain other information related to our principal products and non-operating income and expenses.

Cement Operations


	Three months ended November 30,						Six months ended November 30,
In thousands except per unit	2010			2009			2010			2009

Operating Results
Total cement sales	$	61,599		$	61,726		$	129,289		$	140,186
Total other sales and delivery fees		6,979			6,457			15,671			13,193

Total segment sales		68,578			68,183			144,960			153,379
Cost of products sold		63,121			58,359			133,184			128,218

Gross profit		5,457			9,824			11,776			25,161
Selling, general and administrative		(4,018	)		(4,359	)		(8,811	)		(9,033	)
Other income		509			4,670			2,947			6,413

Operating Profit	$	1,948		$	10,135		$	5,912		$	22,541

Cement
Shipments (tons)		784			738			1,657			1,653
Prices ($/ton)	$	78.49		$	83.64		$	78.02		$	84.78
Cost of sales ($/ton)	$	73.39		$	71.98		$	72.25		$	70.16

Three months ended November 30, 2010

Cement operating profit for the three-month period ended November 30, 2010 was $1.9 million, a decrease of $8.2 million from the prior year period. Lower sales prices offset in part by higher shipments reduced operating profit approximately $3 million. In addition, other income decreased $4.2 million from the prior year period.

Total segment sales for the three-month period ended November 30, 2010 were $68.6 million compared to $68.2 million for the prior year period. Cement sales were comparable to the prior year period as construction activity has remained at low levels in both our Texas and California market areas. Our Texas market area accounted for approximately 73% of cement sales in the current period compared to 69% of cement sales in the prior year period. Average cement prices decreased 6% in our Texas market area and 7% in our California market area. Shipments increased 12% in our Texas market area and decreased 6% in our California market area.

Cost of products sold for the three-month period ended November 30, 2010 increased $4.8 million from the prior year period. Cement unit costs increased 2% from the prior year period primarily due to higher repair and maintenance costs offset in part by the effect of higher shipments.

Selling, general and administrative expense for the three-month period ended November 30, 2010 decreased $0.3 million from the prior year period. The decrease was primarily due to lower provisions for bad debts and defined benefit plan expense.

- 27 -

Other income for the three-month period ended November 30, 2010 decreased $4.2 million from the prior year period. The decrease was primarily due to $0.6 million lower royalty income and $3.4 million lower gains from sales of emissions credits associated with our Crestmore cement plant in Riverside, California.

Six months ended November 30, 2010

Cement operating profit for the six-month period ended November 30, 2010 was $5.9 million, a decrease of $16.6 million from the prior year period. Lower sales prices offset in part by slightly higher shipments reduced operating profit approximately $11 million. In addition, other income decreased $3.5 million from the prior year period.

Total segment sales for the six-month period ended November 30, 2010 were $145.0 million compared to $153.4 million for the prior year period. Cement sales decreased $10.9 million from the prior year period as construction activity has remained at low levels 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 70% of cement sales in the prior year period. Average cement prices decreased 7% in our Texas market area and 10% in our California market area. Shipments in our Texas and California market areas were comparable to the prior year period.

Cost of products sold for the six-month period ended November 30, 2010 increased $5.0 million from the prior year period. Cement unit costs increased 3% from the prior year period primarily due to the higher raw material, repair and maintenance and energy costs.

Selling, general and administrative expense for the six-month period ended November 30, 2010 decreased $0.2 million from the prior year period. The decrease was primarily due to lower provisions for bad debts and defined benefit plan expense.

Other income for the six-month period ended November 30, 2010 decreased $3.5 million from the prior year period. The decrease was primarily due to $0.7 million lower royalty income, $0.8 million lower gains from routine sales of surplus operating assets and $1.7 million lower gains from sales of emissions credits associated with our Crestmore cement plant in Riverside, California.

Aggregate Operations


	Three months ended November 30,						Six months ended November 30,
In thousands except per unit	2010			2009			2010			2009

Operating Results
Total stone, sand and gravel sales	$	22,644		$	20,217		$	49,237		$	48,011
Total other sales and delivery fees		18,438			16,070			41,815			38,377

Total segment sales		41,082			36,287			91,052			86,388
Cost of products sold		35,002			32,001			78,412			71,156

Gross profit		6,080			4,286			12,640			15,232
Selling, general and administrative		(2,814	)		(2,489	)		(5,873	)		(5,194	)
Other income		57			432			1,690			830

Operating Profit	$	3,323		$	2,229		$	8,457		$	10,868


Stone, sand and gravel
Shipments (tons)		3,026			2,642			6,610			6,065
Prices ($/ton)	$	7.48		$	7.65		$	7.45		$	7.92
Cost of sales ($/ton)	$	6.53		$	7.03		$	6.48		$	6.61

Three months ended November 30, 2010

Aggregate operating profit for the three-month period ended November 30, 2010 was $3.3 million, an increase of $1.1 million from the prior year period. Higher shipments offset in part by lower sales prices increased operating profit approximately $1 million.

- 28 -

Total segment sales for the three-month period ended November 30, 2010 were $41.1 million compared to $36.3 million for the prior year period. Stone, sand and gravel sales increased $2.4 million from the prior year period on 15% higher shipments and 2% lower average prices.

Cost of products sold for the three-month period ended November 30, 2010 increased $3.0 million from the prior year period primarily due to higher shipments. Stone, sand and gravel unit costs decreased 7% from the prior year period primarily due to the effect of higher shipments on unit costs offset in part by higher repair and maintenance costs.

Selling, general and administrative expense for the three-month period ended November 30, 2010 increased $0.3 million from the prior year period primarily due to higher provisions for bad debts.

Other income for the three-month period ended November 30, 2010 decreased $0.4 million from the prior year period primarily due to lower gains from routine sales of surplus operating assets.

Six months ended November 30, 2010

Aggregate operating profit for the six-month period ended November 30, 2010 was $8.5 million, a decrease of $2.4 million from the prior year period. Lower sales prices offset in part by higher shipments reduced operating profit approximately $1 million.

Total segment sales for the six-month period ended November 30, 2010 were $91.1 million compared to $86.4 million for the prior year period. Stone, sand and gravel sales increased $1.2 million from the prior year period on 6% lower average prices and 9% higher shipments.

Cost of products sold for the six-month period ended November 30, 2010 increased $7.3 million from the prior year period primarily due to higher shipments. Stone, sand and gravel unit costs decreased 2% from the prior year period primarily due to the effect of higher shipments on unit costs offset in part by higher repair and maintenance costs.

Selling, general and administrative expense for the six-month period ended November 30, 2010 increased $0.7 million from the prior year period primarily due to higher provisions for bad debts.

Other income for the six-month period ended November 30, 2010 increased $0.9 million from the prior year period primarily due to higher gains from routine sales of surplus operating assets.

Consumer Products Operations


	Three months ended November 30,						Six months ended November 30,
In thousands except per unit	2010			2009			2010			2009

Operating Results
Total ready-mix concrete sales	$	43,377		$	41,720		$	95,483		$	95,773
Total other sales and delivery fees		13,443			12,733			27,815			28,218

Total segment sales		56,820			54,453			123,298			123,991
Cost of products sold		56,290			51,691			119,539			113,407

Gross profit		530			2,762			3,759			10,584
Selling, general and administrative		(3,047	)		(2,749	)		(5,723	)		(5,953	)
Other income		134			268			332			401

Operating Profit (Loss)	$	(2,383	)	$	281		$	(1,632	)	$	5,032


Ready-mix concrete
Shipments (cubic yards)		575			501			1,244			1,113
Prices ($/cubic yard)	$	75.45		$	83.02		$	76.73		$	86.01
Cost of sales ($/cubic yard)	$	77.79		$	80.98		$	76.94		$	80.39

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Three months ended November 30, 2010

Consumer products operating loss for the three-month period ended November 30, 2010 was $2.4 million, a decrease in profit of $2.7 million from the prior year period. Lower sales prices offset in part by higher shipments reduced operating profit approximately $2 million.

Total segment sales for the three-month period ended November 30, 2010 were $56.8 million compared to $54.5 million for the prior year period. Ready-mix concrete sales for the three-month period ended November 30, 2010 increased $1.7 million from the prior year period on 9% lower average prices and 15% higher shipments.

Cost of products sold for the three-month period ended November 30, 2010 increased $4.6 million from the prior year period primarily due to higher shipments. Ready-mix concrete unit costs decreased 4% from the prior year period primarily due to the effect of higher shipments offset in part by higher fuel and repair and maintenance costs.

Selling, general and administrative expense for the three-month period ended November 30, 2010 increased $0.3 million from the prior year period primarily due to higher provisions for bad debts.

Other income for the three-month period ended November 30, 2010 decreased $0.1 million from the prior year period primarily due to lower gains from routine sales of surplus operating assets.

Six months ended November 30, 2010

Consumer products operating loss for the six-month period ended November 30, 2010 was $1.6 million, a decrease in profit of $6.7 million from the prior year period. Lower sales prices offset in part by higher shipments reduced operating profit approximately $8 million.

Total segment sales for the six-month period ended November 30, 2010 were $123.3 million compared to $124.0 million for the prior year period. Ready-mix concrete sales for the six-month period ended November 30, 2010 decreased $0.3 million from the prior year period on 11% lower average prices and 12% higher shipments.

Cost of products sold for the six-month period ended November 30, 2010 increased $6.1 million from the prior year period primarily due to higher shipments. Ready-mix concrete unit costs decreased 4% from the prior year period primarily due to the effect of higher shipments and lower raw material costs.

Selling, general and administrative expense for the six-month period ended November 30, 2010 decreased $0.2 million from the prior year period.

Other income for the six-month period ended November 30, 2010 decreased $0.1 million from the prior year period primarily due to lower gains from routine sales of surplus operating assets.

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Corporate


	Three months ended November 30,						Six months ended November 30,
In thousands	2010			2009			2010			2009

Other income	$	1,229		$	358		$	1,850		$	736
Selling, general and administrative		(8,664	)		(6,289	)		(14,277	)		(15,960	)

	$	(7,435	)	$	(5,931	)	$	(12,427	)	$	(15,224	)

Three months ended November 30, 2010

Other income for the three-month period ended November 30, 2010 increased $0.9 million from the prior year period primarily due to higher oil and gas lease bonus and royalty payments offset in part by lower interest income.

Selling, general and administrative expense for the three-month period ended November 30, 2010 increased $2.4 million from the prior year period. The increase was primarily the result of $3.0 million higher stock-based compensation. 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 $1.5 million in the three-month period ended November 30, 2010 and decreased stock-based compensation $1.5 million in the three-month period ended November 30, 2009. We hold life insurance policies in connection with certain of our benefit plans. Proceeds received from the policies in the three-month period ended November 30, 2010 decreased expense $0.2 million from the prior year period. Our focus on reducing controllable costs lowered other expenses $0.4 million in the three-month period ended November 30, 2010 from the prior year period.

Six months ended November 30, 2010

Other income for the six-month period ended November 30, 2010 increased $1.1 million from the prior year period primarily due to higher oil and gas lease bonus and royalty payments offset in part by lower interest income.

Selling, general and administrative expense for the six-month period ended November 30, 2010 decreased $1.7 million from the prior year period. We hold life insurance policies in connection with certain of our benefit plans. Proceeds received from the policies in the six-month period ended November 30, 2010 decreased expense $0.6 million from the prior year period. Our focus on reducing controllable costs lowered other expenses $1.1 million in the six-month period ended November 30, 2010 from the prior year period.

Interest

Interest expense incurred for the three-month period ended November 30, 2010 was $17.3 million, of which $3.4 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $13.9 million was expensed. Interest expense incurred for the three-month period ended November 30, 2009 was $13.4 million, all of which was expensed.

Interest expense incurred for the six-month period ended November 30, 2010 was $31.7 million, of which $3.4 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $28.3 million was expensed. Interest expense incurred for the six-month period ended November 30, 2009 was $26.6 million, all of which was expensed.

Interest expense incurred for the three-month and six-month periods ended November 30, 2010 increased from the prior year periods primarily as a result of higher average outstanding debt at higher interest rates due to the refinancing of our 7.25% senior notes. An additional $15 million of interest expense is estimated to be capitalized in connection with our Hunter, Texas cement plant expansion project during the remainder of our current fiscal year.

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Loss on Debt Retirements

On July 27, 2010, we commenced a cash tender offer for all of the outstanding $550 million aggregate principal amount of our 7.25% senior notes due 2013 and a solicitation of consents to amend the indenture governing the 7.25% notes. Pursuant to the tender offer and consent solicitation, we purchased $536.6 million aggregate principal amount of the 7.25% notes, and paid an aggregate of $547.7 million in purchase price and consent fees. On September 9, 2010, we redeemed the remaining $13.4 million aggregate principal amount of the 7.25% notes at a price of 101.813% of the principal amount thereof, plus accrued and unpaid interest on the 7.25% notes to the redemption date. We used the net proceeds from the issuance and sale of $650 million aggregate principal amount of our 9.25% senior notes to pay the purchase or redemption price of the 7.25% notes and the consent fees. As of November 30, 2010, we recognized a loss on debt retirement of $29.6 million representing $11.4 million in consent fees, redemption price premium and transaction costs and a write-off of $18.2 million of unamortized debt discount and original issuance costs associated with the 7.25% notes.

Income Taxes

Income taxes for the interim periods ended November 30, 2010 and November 30, 2009 have been included in the accompanying financial statements on the basis of an estimated annual rate. The estimated annualized rate does not include the tax impact of the loss on debt retirements which has been recognized as a discrete item in the six-month period ended November 30, 2010. The estimated annualized rate excluding this charge is 41.0% for fiscal year 2011 compared to 41.4% for fiscal year 2010. 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. We made income tax payments of less than $0.1 million in each of the six-month periods ended November 30, 2010 and November 30, 2009. We received income tax refunds of $0.3 million and $1.1 million in the six-month periods ended November 30, 2010 and November 30, 2009, respectively.

LIQUIDITY AND CAPITAL RESOURCES

In addition to cash and cash equivalents of $139.8 million at November 30, 2010, our sources of liquidity include cash from operations and borrowings available under our senior secured revolving credit facility.

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

- 33 -

Contractual Obligations. On August 10, 2010, we sold $650 million aggregate principal amount of 9.25% senior notes due in 2020. On November 10, 2010, we extended an agreement to purchase coal for use at our Texas cement and expanded shale and clay plants. The agreement requires minimum amounts of material be purchased during the two years beginning January 1, 2012. The following is a summary of our estimated additional future payments as a result of these new commitments, net of obligations prepaid out of the proceeds of the sale of the 9.25% senior notes, for fiscal year periods subsequent to May 31, 2010.


	Future Payments by Period
In thousands	Total			2011			2012			2013			2014-2015			After 2015
Borrowings
New long-term debt	$	650,000		$	--		$	--		$	--		$	--		$	650,000
Interest		602,085			30,898			60,125			60,125			120,250			330,687
Effect of Prepayments
Long-term debt		(550,000	)		--			--			--			(550,000	)		--
Interest		(116,778	)		(17,090	)		(39,875	)		(39,875	)		(19,938	)		--

		585,307			13,808			20,250			20,250			(449,688	)		980,687
Supply and service contracts		20,554			--			4,219			10,252			6,083			--

	$	605,861		$	13,808		$	24,469		$	30,502		$	(443,605	)	$	980,687

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 the Hunter plant expansion and other capital expenditures which are currently estimated at $15 million to $25 million for fiscal year 2011, 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 six-month period ended November 30, 2010 was $10.0 million. Net cash provided by operating activities for the six-month period ended November 30, 2009 was $39.9 million. The decrease was primarily the result of lower income from operations and changes in working capital items.

Net cash used by investing activities for the six-month period ended November 30, 2010 was $17.5 million. Net cash provided by investing activities for the six-month period ended November 30, 2009 was $0.7 million.

Capital expenditures incurred in connection with the expansion of our Hunter, Texas cement plant were $11.2 million and $4.5 million for the six-month periods ended November 30, 2010 and November 30, 2009, respectively. Capital expenditures for normal replacement and upgrades of existing equipment and acquisitions to sustain our existing operations were $12.2 million and $2.9 million for the six-month periods ended November 30, 2010 and November 30, 2009, respectively.

We have elected to receive distributions from life insurance contracts purchased in connection with certain of our benefit plans. Proceeds from distributions and policy settlements for the six-month periods ended November 30, 2010 and November 30, 2009 were $7.2 million and $10.1 million, respectively, which were offset in part by premiums and fees paid to maintain the policies.

Net cash provided by financing activities for the six-month period ended November 30, 2010 was $72.3 million. Net cash used by financing activities for the six-month period ended November 30, 2009 was $3.7 million.

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Dividends paid on our common stock for the six-month periods ended November 30, 2010 and November 30, 2009 were $4.2 million and $2.1 million, respectively. Common dividends paid for the six month period ended November 30, 2009 does not include our second quarterly cash dividend of $0.075 per share declared on November 18, 2009 but not payable until December 7, 2010.

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. See Part II, Item 1A, Risk Factors, in this report.

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.

The estimated fair value of each class of financial instrument as of November 30, 2010 and May 31, 2010 approximates its carrying value except for long-term debt having fixed interest rates. The fair value of our long-term debt is estimated based on broker/dealer quoted market prices. As of November 30, 2010, the fair value of our long-term debt, including the current portion, was approximately $681.8 million compared to the carrying amount of $652.5 million. As of May 31, 2010, the fair value of our long-term debt, including the current portion, was approximately $534.8 million compared to the carrying amount of $538.9 million.

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 additional 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, 2010.

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Recently Issued Accounting Guidance

There is no recently issued accounting guidance that we expect will materially impact our financial statements during the current fiscal year.

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. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan,” “anticipate,” and other similar words. 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 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, 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information regarding the fair value of our fixed rate debt is included under Market Risk in Part I, Item 2 of this report and incorporated herein by reference.

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, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of November 30, 2010.

There were no 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.

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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 1A. Risk Factors

We may incur substantial expenditures to comply with changes in environmental laws and regulations.

In 2006, California adopted the “California Global Warming Solutions Act of 2006”, which requires the California Air Resources Board (CARB) to achieve a statewide reduction in emissions of greenhouse gases in California to 1990 levels by 2020. A significant portion of our cement production capacity is in California. CARB recently adopted new regulations under the act, but the interpretation and impact of the new regulations are still uncertain in some areas and at this time we cannot predict what the cost or effect of the regulations will be on our business.

In August 2010, the EPA issued a final rule amendment that dramatically reduces the permitted levels of emissions of mercury, total hydrocarbons, particulate matter and hydrochloric acid from cement plants. The amendments are scheduled to take full effect in September 2013. The Portland Cement Association and we have challenged the validity of the rule amendment in court. We cannot predict whether the challenge will be successful or whether it will delay the effective date of the rule.

Determining the current level of compliance of our cement plants with the new standards will require a significant amount of additional testing and analysis. Until this process is complete, we will not be able to determine with certainty the areas in which one or more of our plants do not currently meet these standards. Based on information currently available to us, we believe that our plant in Oro Grande, California may not meet the mercury emission standard, and the existing kiln at our plant in Hunter, Texas will not meet the particulate matter standard. We expect that the new kiln that is under construction at the Hunter plant, when it is completed, will meet the new particulate matter standard. We cannot assure you that these are the only cases in which one of our plants will not meet the new standards.

We have begun the process of identifying and analyzing mercury monitoring and control equipment. We are not aware of any control equipment that is presently operating in and has been proven effective in meeting the new standard in cement plant applications. Therefore, we cannot currently predict the total cost or schedule for installing such equipment at the Oro Grande plant. We expect the existing kiln at the Hunter plant will require a new bag house to bring it into compliance with the new particulate matter standard. The cost and schedule for installing such equipment have not yet been determined. At this time, we cannot assure you that new monitoring and control equipment will be available and installed before the new standards take effect, or that such equipment, when installed, will reduce emissions sufficiently to meet the new standards.

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

Market and Shareholders Information. 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.

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Item 5. Other Information

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Financial Reform Act”) was enacted. Section 1503 of the Financial Reform Act requires that we disclose in this report certain information about each of our quarries, such as the number of certain types of violations and orders issued under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”) by the federal Mine Safety and Health Administration (“MSHA”).

The following table provides the required information for our quarries for which there is reportable information for the three-month period ended November 30, 2010. Our remaining 18 quarries did not have any reportable information.


Quarry Site (MSHA ID)	Total # of S&S violations under Mine Act §104	Total # of orders under Mine Act §104(b)	Total # of unwarrantable failure citations and orders under Mine Act §104(d)	Total # of violations under Mine Act §110(b)(2)	Total # of orders under Mine Act §107(a)	Total dollar value of proposed assessments from MSHA ($ in thousands)	Total # of mining related fatalities	Received written notice under Mine Act §104(e) (yes/no)?	Pending legal action before the Federal Mine Safety and Health Review Commission (yes/no)?
Oro Grande, CA (0400011)	1	0	0	0	0	*	0	no	no
Webberville, TX (4104363)	1	0	0	0	0	*	0	no	no

*MSHA had not proposed any assessment at the time of filing of this report.

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Item 6. Exhibits

The following exhibits are included herein:


3.1		Composite Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K filed on July 21, 2010)

3.2		Bylaws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on January 14, 2010)

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 the Company’s 9 ¹ / 4 % Senior Note due 2020 and Notation of Guarantee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K filed on August 11, 2010)

4.2		Registration Rights Agreement, dated as of August 10, 2010, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K filed on August 11, 2010)

4.3		Indenture, dated as of August 10, 2010, among the Company, the Guarantors and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on August 11, 2010)

10.1		Purchase Agreement, dated July 27, 2010, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on August 2, 2010)

10.2		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 10.3 to Quarterly Report on Form 10-Q filed on January 7, 2010)

10.3		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)

10.4		Second Amendment to Second Amended and Restated Credit Agreement, dated March 24, 2010, 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 10.33 to Quarterly Report on Form 10-Q filed on March 26, 2010)

10.5		Third Amendment to Second Amended and Restated Credit Agreement, dated April 12, 2010, 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 April 23, 2010)

10.6		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 10.5 to Quarterly Report on Form 10-Q filed on January 7, 2010)

10.7		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 filed on July 8, 2005)

10.8		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 filed on August 1, 2005)

10.9		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 filed on July 8, 2005)

10.10		Employment Agreement of Mel G. Brekhus dated as of April 14, 2010 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on April 16, 2010)

10.11		Texas Industries, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 filed on May 19, 1994)

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10.12		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)

10.13		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)

10.14		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)

10.15		TXI Annual Incentive Plans-Fiscal Year 2011 (incorporated by reference to Exhibit 10.16 to Annual Report on Form 10-K filed on July 21, 2010)

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		TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2013 (incorporated by reference to Exhibit 10.19 to Annual Report on Form 10-K filed on July 21, 2010)

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

10.20		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)

10.21		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)

10.22		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 filed on April 25, 2006)

10.23		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)

10.24		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)

10.25		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 filed on September 30, 2005)

10.26		Deferred Compensation Plan for Directors of Texas Industries, Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 24, 2006)

10.27		Form of 2005 Executive Financial Security Plan (Annuity Formula), as amended (incorporated by reference to Exhibit 10.26 to Quarterly Report on Form 10-Q filed on January 7, 2010)

10.28		Form of 2005 Executive Financial Security Plan (Lump Sum Formula), as amended (incorporated by reference to Exhibit 10.27 to Quarterly Report Form 10-Q filed on January 7, 2010)

10.29		Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed on April 25, 2006)

10.30		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)

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10.31		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)

10.32		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)

10.33		Standstill Agreement dated July 16, 2010 among the Company, NNS Holding and Mr. Nassef Sawiris (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on July 20, 2010)

12.1		Computation of Ratios of Earnings to Fixed Charges

15.1		Letter re unaudited Interim Financial Information

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1		Section 1350 Certification of Chief Executive Officer

32.2		Section 1350 Certification of Chief Financial Officer

101		The following financial information from Texas Industries, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of November 30, 2010 and May 31, 2010, (ii) Consolidated Statements of Operations for the three months and six months ended November 30, 2010 and November 30, 2009, (iii) Consolidated Statements of Cash Flows for the six months ended November 30, 2010 and November 30, 2009, and (iv) the Notes to Consolidated Financial Statements.

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SIGNATURES

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


		TEXAS INDUSTRIES, INC.

January 7, 2011		/s/ Kenneth R. Allen
		Kenneth R. Allen
		Vice President – Finance, Chief Financial Officer and Treasurer
		(Principal Financial Officer)

January 7, 2011		/s/ T. Lesley Vines
		T. Lesley Vines
		Vice President – Corporate Controller and Assistant Treasurer
		(Principal Accounting Officer)

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INDEX TO EXHIBITS


Exhibit Number

	3.1	Composite Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K filed on July 21, 2010)

	3.2	Bylaws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on January 14, 2010)

	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 the Company’s 9 ¹ / 4 % Senior Note due 2020 and Notation of Guarantee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K filed on August 11, 2010)

	4.2	Registration Rights Agreement, dated as of August 10, 2010, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K filed on August 11, 2010)

	4.3	Indenture, dated as of August 10, 2010, among the Company, the Guarantors and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on August 11, 2010)

	10.1	Purchase Agreement, dated July 27, 2010, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on August 2, 2010)

	10.2	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 10.3 to Quarterly Report on Form 10-Q filed on January 7, 2010)

	10.3	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)

	10.4	Second Amendment to Second Amended and Restated Credit Agreement, dated March 24, 2010, 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 10.33 to Quarterly Report on Form 10-Q filed on March 26, 2010)

	10.5	Third Amendment to Second Amended and Restated Credit Agreement, dated April 12, 2010, 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 April 23, 2010)

	10.6	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 10.5 to Quarterly Report on Form 10-Q filed on January 7, 2010)

	10.7	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 filed on July 8, 2005)

	10.8	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 filed on August 1, 2005)

	10.9	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 filed on July 8, 2005)

	10.10	Employment Agreement of Mel G. Brekhus dated as of April 14, 2010 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on April 16, 2010)

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Index to Exhibits-(Continued)


Exhibit Number

	10.11	Texas Industries, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 filed on May 19, 1994)

	10.12	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)

	10.13	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)

	10.14	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)

	10.15	TXI Annual Incentive Plans-Fiscal Year 2011 (incorporated by reference to Exhibit 10.16 to Annual Report on Form 10-K filed on July 21, 2010)

	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	TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2013 (incorporated by reference to Exhibit 10.19 to Annual Report on Form 10-K filed on July 21, 2010)

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

	10.20	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)

	10.21	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)

	10.22	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 filed on April 25, 2006)

	10.23	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)

	10.24	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)

	10.25	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 filed on September 30, 2005)

	10.26	Deferred Compensation Plan for Directors of Texas Industries, Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 24, 2006)

	10.27	Form of 2005 Executive Financial Security Plan (Annuity Formula), as amended (incorporated by reference to Exhibit 10.26 to Quarterly Report on Form 10-Q filed on January 7, 2010)

	10.28	Form of 2005 Executive Financial Security Plan (Lump Sum Formula), as amended (incorporated by reference to Exhibit 10.27 to Quarterly Report Form 10-Q filed on January 7, 2010)

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Index to Exhibits-(Continued)


Exhibit Number

	10.29	Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed on April 25, 2006)

	10.30	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)

	10.31	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)

	10.32	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)

	10.33	Standstill Agreement dated July 16, 2010 among the Company, NNS Holding and Mr. Nassef Sawiris (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on July 20, 2010)

	12.1	Computation of Ratios of Earnings to Fixed Charges

	15.1	Letter re unaudited Interim Financial Information

	31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

	31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

	32.1	Section 1350 Certification of Chief Executive Officer

	32.2	Section 1350 Certification of Chief Financial Officer

	101	The following financial information from Texas Industries, Inc.’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of November 30, 2010 and May 31, 2010, (ii) Consolidated Statements of Operations for the three months and six months ended November 30, 2010 and November 30, 2009, (iii) Consolidated Statements of Cash Flows for the six months ended November 30, 2010 and November 30, 2009, and (iv) the Notes to Consolidated Financial Statements.