TXI Texas Industries Inc.

Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter ended November 30, 2011. Results for the quarter were a net loss of $21.0 million or $.75 per share and included a one-time, pre-tax charge of $3.2 million ($.11 per share after-tax) relating to the Company's cost cutting and efficiency initiatives announced last September. Additionally, the reduction of the tax rate, compared to a year ago, increased the loss by $.30 per share. Results for the quarter ended November 30, 2010 were a net loss of $11.2 million or $.40 per share.

General Comments

"While the general economy is showing signs of some improvement, it has yet to manifest itself in increased construction activity in our markets," stated Mel Brekhus, Chief Executive Officer. "This is consistent with my expectation of a slow and prolonged recovery in the construction industry."

"I am pleased with the progress we have made on our cost cutting and efficiency initiatives. Our total headcount is down 11% compared to August 31, 2011. Projects are underway to improve efficiencies throughout our operations and our efforts to reduce costs through improved purchasing practices are showing good results. There is obviously much more work to be accomplished in order to reach our goals of a 15% gross profit margin and SG&A expense at 8% of sales by the end of fiscal year 2013 but we are off to a very good start," added Brekhus.

A teleconference will be held tomorrow, January 5, 2012 at 10:00 Central Standard Time to further discuss quarter results. A real-time webcast of the conference is available by logging on to TXI's website at www.txi.com.

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

Cement Operations  

	Three months ended  November 30,		Six months ended  November 30,
In thousands except per unit	2011	2010	2011	2010
Operating Results
Total cement sales	$ 68,994	$ 61,599	$ 144,972	$ 129,289
Total other sales and delivery fees	8,240	6,979	17,899	15,671
Total segment sales	77,234	68,578	162,871	144,960
Cost of products sold	78,050	63,121	156,282	133,184
Gross profit (loss)	(816)	5,457	6,589	11,776
Selling, general and administrative	(4,165)	(4,018)	(8,243)	(8,811)
Restructuring charges	(1,074)	--	(1,074)	--
Other income	700	509	3,890	2,947
Operating Profit (Loss)	$ (5,355)	$ 1,948	$ 1,162	$ 5,912
Cement
Shipments (tons)	884	784	1,853	1,657
Prices ($/ton)	$ 78.07	$ 78.49	$ 78.25	$ 78.02
Cost of sales ($/ton)	$ 78.34	$ 73.39	$ 74.90	$ 72.25

Three months ended November 30, 2011

Cement operating loss for the three-month period ended November 30, 2011 was $5.4 million. Cement operating profit for the three-month period ended November 30, 2010 was $1.9 million. The operating results in the current period were impacted by the recognition of restructuring charges and an increase in cost of products sold due to lower cement clinker production and to higher repair and maintenance costs as a result of scheduled maintenance downtime at our north Texas cement plant.

Total segment sales for the three-month period ended November 30, 2011 were $77.2 million compared to $68.6 million for the prior year period. Cement sales increased $7.4 million from the prior year period. Our Texas market area accounted for approximately 67% of cement sales in the current period compared to 73% of cement sales in the prior year period. Average cement prices increased 2% in our Texas market area and decreased 5% in our California market area. Shipments increased 1% in our Texas market area and 44% in our California market area.

Cost of products sold for the three-month period ended November 30, 2011 increased $14.9 million from the prior year period primarily due to higher shipments and a 7% increase in cement unit costs. Cement unit costs were impacted by 21% lower cement clinker production and higher repair and maintenance costs due to scheduled maintenance downtime at our north Texas cement plant.

Selling, general and administrative expense for the three-month period ended November 30, 2011 increased $0.1 million from the prior year period primarily due to higher compensation expense.

Restructuring charges of $1.1 million were recorded in the three-month period ended November 30, 2011. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Other income for the three-month period ended November 30, 2011 increased $0.2 million from the prior year period primarily due to higher royalty income.

Aggregate Operations  

	Three months ended  November 30,		Six months ended  November 30,
In thousands except per unit	2011	2010	2011	2010
Operating Results
Total stone, sand and gravel sales	$ 20,993	$ 22,644	$ 43,193	$ 49,237
Expanded shale and clay sales and delivery fees	18,973	18,438	41,874	41,815
Total segment sales	39,966	41,082	85,067	91,052
Cost of products sold	35,313	35,002	73,821	78,412
Gross profit	4,653	6,080	11,246	12,640
Selling, general and administrative	(2,323)	(2,814)	(5,273)	(5,873)
Restructuring charges	(437)	--	(437)	--
Other income	207	57	479	1,690
Operating Profit	$ 2,100	$ 3,323	$ 6,015	$ 8,457
Stone, sand and gravel
Shipments (tons)	2,818	3,026	5,961	6,610
Prices ($/ton)	$ 7.45	$ 7.48	$ 7.25	$ 7.45
Cost of sales ($/ton)	$ 6.35	$ 6.53	$ 6.28	$ 6.48

Three months ended November 30, 2011

Aggregate operating profit for the three-month periods ended November 30, 2011 and November 30, 2010 was $2.1 million and $3.3 million, respectively.

Total segment sales for the three-month period ended November 30, 2011 were $40.0 million compared to $41.1 million for the prior year period. Stone, sand and gravel sales decreased $1.7 million from the prior year period. The effect of the disposition of aggregate operating assets through the asset exchange transaction completed in April 2011 decreased sales $2.2 million, shipments 8% and average prices 2% from the prior year period. Stone, sand and gravel sales from current operations increased $0.5 million from the prior year period on 1% higher shipments and 2% higher average prices. 

Cost of products sold for the three-month period ended November 30, 2011 increased $0.3 million from the prior year period. Stone, sand and gravel unit costs decreased 3% from the prior year period primarily due to the effect of the disposition of aggregate operating assets through the asset exchange transaction completed in April 2011.

Selling, general and administrative expense for the three-month period ended November 30, 2011 decreased $0.5 million from the prior year period primarily due to lower provisions for bad debts and legal and other professional expenses.

Restructuring charges of $0.4 million were recorded in the three-month period ended November 30, 2011. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Other income for the three-month period ended November 30, 2011 increased $0.2 million from the prior year period primarily due to higher gains from routine sales of surplus operating assets and oil and gas royalties and lease bonus payments.

Consumer Products Operations  

	Three months ended  November 30,		Six months ended  November 30,
In thousands except per unit	2011	2010	2011	2010
Operating Results
Total ready-mix concrete sales	$ 44,579	$ 43,377	$ 100,807	$ 95,483
Package products sales and delivery fees	13,542	13,443	28,338	27,815
Total segment sales	58,121	56,820	129,145	123,298
Cost of products sold	59,212	56,290	130,409	119,539
Gross profit (loss)	(1,091)	530	(1,264)	3,759
Selling, general and administrative	(2,436)	(3,047)	(6,810)	(5,723)
Restructuring charges	(536)	--	(536)	--
Other income	457	134	2,664	332
Operating Loss	$ (3,606)	$ (2,383)	$ (5,946)	$ (1,632)
Ready-mix concrete
Shipments (cubic yards)	587	575	1,328	1,244
Prices ($/cubic yard)	$ 75.85	$ 75.45	$ 75.89	$ 76.73
Cost of sales ($/cubic yard)	$ 80.66	$ 77.79	$ 79.69	$ 76.94

Three months ended November 30, 2011

Consumer products operating loss for the three-month periods ended November 30, 2011 and November 30, 2010 was $3.6 million and $2.4 million, respectively.  

Total segment sales for the three-month period ended November 30, 2011 were $58.1 million compared to $56.8 million for the prior year period. Ready-mix concrete sales increased $1.2 million from the prior year. Sales increased $3.4 million and shipments increased 8% due to the net effect of the asset exchange transactions completed in April and July 2011. Ready-mix concrete sales excluding the net effect of the asset exchange transactions decreased $2.2 million from the prior year period on 6% lower shipments and 1% higher average prices. 

Cost of products sold for the three-month period ended November 30, 2011 increased $2.9 million from the prior year period. Cost of products sold increased $3.7 million due to the net effect of the asset exchange transactions completed in April and July 2011. Cost of products sold excluding the net effect of the asset exchange transactions decreased $0.8 million. Ready-mix concrete unit costs increased 4% from the prior year period primarily due to higher diesel costs.

Selling, general and administrative expense for the three-month period ended November 30, 2011 decreased $0.6 million from the prior year period primarily due to lower provisions for bad debts.

Restructuring charges of $0.5 million were recorded in the three-month period ended November 30, 2011. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Other income for the three-month period ended November 30, 2011 increased $0.3 million from the prior year period primarily due to higher gains from routine sales of surplus operating assets.

Corporate  

	Three months ended  November 30,		Six months ended  November 30,
In thousands	2011	2010	2011	2010
Other income	$ 163	$ 1,229	$ 366	$ 1,850
Selling, general and administrative	(4,953)	(8,664)	(11,355)	(14,277)
Restructuring charges	(1,169)	--	(1,169)	--
	$ (5,959)	$ (7,435)	$ (12,158)	$ (12,427)

Three months ended November 30, 2011

Other income for the three-month period ended November 30, 2011 decreased $1.1 million from the prior year period primarily due to lower oil and gas royalty payments.

Selling, general and administrative expense for the three-month period ended November 30, 2011 decreased $3.7 million from the prior year period primarily due to lower stock-based compensation expense. Our stock-based compensation includes awards expected to be settled in cash, the expense for which is based on their fair value at the end of each period until the awards are paid. The impact of changes in our stock price on the fair value of these awards decreased expense $2.7 million for the three-month period ended November 30, 2011 and increased expense $1.5 million for the three-month period ended November 30, 2010.

Restructuring charges of $1.2 million were recorded in the three-month period ended November 30, 2011. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Interest

Interest expense incurred for the three-month period ended November 30, 2011 was $17.1 million, of which $8.3 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $8.8 million was expensed. 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, 2011 decreased $0.2 million from the prior year period primarily as a result of lower credit facility fees.   

An additional $19 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.

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 and to increase working capital. 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, 2011 and November 30, 2010 have been included in the accompanying financial statements on the basis of an estimated annual rate. The tax rate differs from the 35% federal statutory corporate rate primarily due to percentage depletion that is tax deductible, state income taxes and valuation allowances against deferred tax assets. The estimated annualized rate does not include the tax impact of the loss on debt retirements which was recognized as a discrete item in the six-month period ended November 30, 2010. The estimated annualized rate excluding this charge is 3.0% for fiscal year 2012 compared to 41.0% for fiscal year 2011. We received income tax refunds of less than $0.1 million and made income tax payments of $0.1 million in the six-month period ended November 30, 2011. We received income tax refunds of $0.2 million and made income tax payments of less than $0.1 million in the six-month period ended November 30, 2010.

Net deferred tax assets totaled $15.7 million at November 30, 2011 and $15.0 million at May 31, 2011, of which $13.7 million at November 30, 2011 and $12.3 million at May 31, 2011 were classified as current. Management reviews our deferred tax position and in particular our deferred tax assets whenever circumstances indicate that the assets may not be realized in the future and 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 depends upon various factors including the generation of taxable income during future periods. The Company's deferred tax assets exceeded deferred tax liabilities as of November 30, 2011 primarily as a result of the recent losses. Management has concluded that the sources of taxable income we are permitted to consider do not assure the realization of the entire amount of the increase in our net deferred tax assets expected during the year. Accordingly, a valuation allowance is required due to the uncertainty of realizing the deferred tax assets.

Certain statements contained in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the impact of competitive pressures and changing economic and financial conditions on our business, the cyclical and seasonal nature of our business, the level of construction activity in our markets, abnormal periods of inclement weather, unexpected periods of equipment downtime, unexpected operational difficulties, changes in the cost of raw materials, fuel and energy, changes in the cost or availability of transportation, changes in interest rates, the timing and amount of federal, state and local funding for infrastructure, delays in announced capacity expansions, ongoing volatility and uncertainty in the capital or credit markets, the impact of environmental laws, regulations and claims and changes in governmental and public policy, and the risks and uncertainties described in our reports on Forms 10-K, 10-Q and 8-K. Forward-looking statements speak only as of the date hereof, and we assume no obligation to publicly update such statements.

TXI is the largest producer of cement in Texas and a major cement producer in California. TXI is also a major supplier of construction aggregate, ready-mix concrete and concrete products.

The Texas Industries, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6602

(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	2011	2010	2011	2010
NET SALES	$ 156,071	$ 148,111	$ 337,811	$ 320,233
Cost of products sold	153,325	136,044	321,240	292,058
GROSS PROFIT	2,746	12,067	16,571	28,175
Selling, general and administrative	13,877	18,543	31,681	34,684
Restructuring charges	3,216	--	3,216	--
Interest	8,838	13,886	18,298	28,297
Loss on debt retirements	--	613	--	29,619
Other income	(1,527)	(1,929)	(7,399)	(6,819)
	24,404	31,113	45,796	85,781
LOSS BEFORE INCOME TAXES	(21,658)	(19,046)	(29,225)	(57,606)
Income tax benefit	(621)	(7,845)	(768)	(22,713)
NET LOSS	$ (21,037)	$ (11,201)	$ (28,457)	$ (34,893)
Net loss per share
Basic	$ (.75)	$ (.40)	$ (1.02)	$ (1.25)
Diluted	$ (.75)	$ (.40)	$ (1.02)	$ (1.25)
Average shares outstanding
Basic	27,882	27,807	27,878	27,797
Diluted	27,882	27,807	27,878	27,797
Cash dividends declared per share	$ --	$ .075	$ .075	$ .15

CONSOLIDATED BALANCE SHEETS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
	(Unaudited)
	November 30,	May 31,
In thousands	2011	2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ 67,462	$ 116,432
Receivables – net	82,378	85,817
Inventories	128,154	140,646
Deferred income taxes and prepaid expenses	20,529	22,040
TOTAL CURRENT ASSETS	298,523	364,935
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements	180,090	158,232
Buildings	57,330	59,320
Machinery and equipment	1,215,341	1,222,560
Construction in progress	400,275	357,638
	1,853,036	1,797,750
Less depreciation and depletion	662,186	642,329
	1,190,850	1,155,421
OTHER ASSETS
Goodwill	1,715	1,715
Real estate and investments	11,472	6,749
Deferred income taxes and other charges	22,481	22,191
	35,668	30,655
	$ 1,525,041	$ 1,551,011
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$ 57,389	$ 56,787
Accrued interest, compensation and other	63,829	58,848
Current portion of long-term debt	499	73
TOTAL CURRENT LIABILITIES	121,717	115,708
LONG-TERM DEBT	654,138	652,403
OTHER CREDITS	80,919	87,318
SHAREHOLDERS' EQUITY
Common stock, $1 par value; authorized 100,000 shares; issued and outstanding 27,894 and 27,887 shares, respectively	27,894	27,887
Additional paid-in capital	484,453	481,706
Retained earnings	168,203	198,751
Accumulated other comprehensive loss	(12,283)	(12,762)
	668,267	695,582
	$ 1,525,041	$ 1,551,011

(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
	Six months ended  November 30,
In thousands	2011	2010
OPERATING ACTIVITIES
Net loss	$ (28,457)	$ (34,893)
Adjustments to reconcile net loss to cash provided by operating activities
Depreciation, depletion and amortization	31,385	31,991
Gains on asset disposals	(2,751)	(1,555)
Deferred income tax benefit	(945)	(22,964)
Stock-based compensation expense (credit)	(1,229)	2,288
Loss on debt retirements	--	29,619
Other – net	(5,185)	(2,855)
Changes in operating assets and liabilities
Receivables – net	3,696	16,112
Inventories	12,189	(10,262)
Prepaid expenses	2,854	1,232
Accounts payable and accrued liabilities	930	1,313
Net cash provided by operating activities	12,487	10,026
INVESTING ACTIVITIES
Capital expenditures – expansions	(35,966)	(11,198)
Capital expenditures – other	(26,300)	(12,201)
Proceeds from asset disposals	1,649	3,037
Investments in life insurance contracts	2,989	3,704
Other – net	(128)	(859)
Net cash used by investing activities	(57,756)	(17,517)
FINANCING ACTIVITIES
Long-term borrowings	--	650,000
Debt retirements	(36)	(561,568)
Debt issuance costs	(1,732)	(12,426)
Stock option exercises	158	464
Common dividends paid	(2,091)	(4,172)
Net cash provided (used) by financing activities	(3,701)	72,298
Increase (decrease) in cash and cash equivalents	(48,970)	64,807
Cash and cash equivalents at beginning of period	116,432	74,946
Cash and cash equivalents at end of period	$ 67,462	$ 139,753

CONTACT: T. Lesley Vines, Jr.
         Vice President
         Corporate Controller & Treasurer
         972.647.6722
         Email: lvines@txi.com