Texas Industries 10-Q 2009 Q3 Quarterly report

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 February 28, 2009

OR

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

For the transition period from                                to                                

Commission File Number 1-4887

TEXAS INDUSTRIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	75-0832210
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

1341 West Mockingbird Lane, Suite 700W, Dallas, Texas 75247-6913

(Address of Principal Executive Offices)                                (Zip Code)

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

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes X   No      

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, 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 27,704,083 shares of the Registrant’s Common Stock, $1.00 par value, outstanding as of March 23, 2009.

INDEX

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets – February 28, 2009 and May 31, 2008	3
	Consolidated Statements of Operations -- three and nine months ended February 28, 2009 and February 29, 2008	4
	Consolidated Statements of Cash Flows -- nine months ended February 28, 2009 and February 29, 2008	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	35
Item 4.	Controls and Procedures	35
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6.	Exhibits	37
SIGNATURES

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PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

CONSOLIDATED BALANCE SHEETS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES

	(Unaudited) February 28,			May 31,
In thousands	2009			2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	33,865		$	39,527
Receivables – net		104,199			155,676
Inventories		150,321			130,181
Deferred income taxes and prepaid expenses		17,733			30,398
TOTAL CURRENT ASSETS		306,118			355,782
OTHER ASSETS
Goodwill		60,110			60,110
Real estate and investments		32,361			59,971
Deferred charges and other		17,023			11,332
		109,494			131,413
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements		157,204			139,544
Buildings		57,767			56,976
Machinery and equipment		1,242,984			1,208,905
Construction in progress		306,116			137,083
		1,764,071			1,542,508
Less depreciation and depletion		554,360			514,744
		1,209,711			1,027,764
	$	1,625,323		$	1,514,959
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	100,646		$	128,497
Accrued interest, wages and other		35,083			47,846
Current portion of long-term debt		238			7,725
TOTAL CURRENT LIABILITIES		135,967			184,068
LONG-TERM DEBT		540,767			401,880
DEFERRED INCOME TAXES AND OTHER CREDITS		104,010			112,498
SHAREHOLDERS’ EQUITY
Common stock, $1 par value		27,704			27,493
Additional paid-in capital		468,870			459,877
Retained earnings		354,864			336,279
Accumulated other comprehensive loss		(6,859	)		(7,136	)
		844,579			816,513
	$	1,625,323		$	1,514,959

See notes to consolidated financial statements.

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(Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES

	Three months ended						Nine months ended
	February 28,			February 29,			February 28,			February 29,
In thousands except per share	2009			2008			2009			2008
NET SALES	$	178,659		$	230,535		$	656,850		$	762,462
Cost of products sold		150,028			190,980			567,788			616,688
GROSS PROFIT		28,631			39,555			89,062			145,774
Selling, general and administrative		15,982			20,717			49,184			63,964
Interest		8,344			--			24,885			--
Loss on debt retirements		--			--			907			--
Other income		(7,944	)		(2,086	)		(18,396	)		(7,781	)
		16,382			18,631			56,580			56,183
INCOME BEFORE INCOME TAXES		12,249			20,924			32,482			89,591
Income taxes		1,967			6,300			7,689			27,738
NET INCOME	$	10,282		$	14,624		$	24,793		$	61,853
Net income per share
Basic	$	.37		$	.53		$	.90		$	2.26
Diluted	$	.37		$	.53		$	.89		$	2.22
Average shares outstanding
Basic		27,680			27,398			27,584			27,359
Diluted		27,757			27,810			27,790			27,852
Cash dividends per share	$	.075		$	.075		$	.225		$	.225

See notes to consolidated financial statements.

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(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES

	Nine months ended
	February 28,			February 29,
In thousands	2009			2008
OPERATING ACTIVITIES
Net income	$	24,793		$	61,853
Adjustments to reconcile net income to cash provided by operating activities
Depreciation, depletion and amortization		51,199			40,980
Gains on asset disposals		(6,238	)		(1,196	)
Deferred income taxes		1,202			4,654
Stock-based compensation expense (credit)		(9,168	)		(2,688	)
Excess tax benefits from stock-based compensation		(1,771	)		(3,519	)
Loss on debt retirements		907			--
Other – net		1,384			1,307
Changes in operating assets and liabilities
Receivables – net		46,940			(9,045	)
Inventories		(20,140	)		(2,268	)
Prepaid expenses		518			2,206
Accounts payable and accrued liabilities		(17,089	)		(15,967	)
Net cash provided by operating activities		72,537			76,317
INVESTING ACTIVITIES
Capital expenditures – expansions		(181,657	)		(193,160	)
Capital expenditures – other		(59,214	)		(48,520	)
Cash designated for property acquisitions		28,733			--
Proceeds from asset disposals		7,442			3,928
Investments in life insurance contracts		2,479			88,140
Other – net		11			218
Net cash used by investing activities		(202,206	)		(149,394	)
FINANCING ACTIVITIES
Long-term borrowings		327,250			213,000
Debt retirements		(197,676	)		(144,313	)
Debt issuance costs		(5,470	)		(1,152	)
Stock option exercises		4,341			2,678
Excess tax benefits from stock-based compensation		1,771			3,519
Common dividends paid		(6,209	)		(6,161	)
Net cash provided by financing activities		124,007			67,571
Decrease in cash and cash equivalents		(5,662	)		(5,506	)
Cash and cash equivalents at beginning of period		39,527			15,138
Cash and cash equivalents at end of period	$	33,865		$	9,632

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 nine-month period ended February 28, 2009, are not necessarily indicative of the results that may be expected for the year ended May 31, 2009. 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, 2008.

Principles of Consolidation. The consolidated financial statements include the accounts of Texas Industries, Inc. and all subsidiaries. The consolidated financial statements also include the accounts of a former qualified intermediary trust, in which we were the primary beneficiary. The trust accounts were established in connection with our tax deferred like-kind-exchange property transactions under Section 1031 of the Internal Revenue Code. Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

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

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

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

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

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

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

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

Goodwill. Management tests goodwill for impairment annually by reporting unit in the fourth quarter of our fiscal year. If the carrying amount of the goodwill exceeds its fair value, an impairment loss is recognized. In applying a fair-value-based test, estimates are made of the expected future cash flows to be derived from the reporting unit. Similar to the review for impairment of other long-lived assets, the resulting fair value determination is significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors.

Goodwill having a carrying value of $58.4 million at February 28, 2009 and May 31, 2008 resulted from the acquisition of Riverside Cement Company and is identified with our California cement operations. Goodwill having a carrying value of $1.7 million at February 28, 2009 and May 31, 2008 resulted from the acquisition of ready-mix operations in Texas and Louisiana and is identified with our consumer products operations.

In light of current market conditions, we assessed our California cement operations for impairment during our November 2008 quarter. Our assessment indicated that there was no impairment of goodwill. The assessment was based in part on assumptions regarding the timing of economic recovery in our California market. Management continued to evaluate and monitor the economic environment during our February 2009 quarter and the general assumptions used in our assessment have not changed. The current market conditions and economic climate are very volatile and it is possible that the current recession could last longer and have a bigger impact on our operations than was anticipated. Should the recession become more severe or last longer than anticipated, we could recognize an impairment charge in the future with respect to goodwill. Management will perform its annual impairment test in the fourth quarter of our current fiscal year.

Real Estate and Investments.Surplus real estate and real estate acquired for development of high quality industrial, office or multi-use parks totaled $6.0 million at both February 28, 2009 and May 31, 2008.

Investments include life insurance contracts purchased in connection with certain of our benefit plans. The contracts, recorded at their net cash surrender value, totaled $7.1 million (net of distributions of $93.0 million plus accrued interest) at February 28, 2009 and $6.0 million (net of distributions of $88.1 million plus accrued interest) at May 31, 2008. We can elect to receive distributions chargeable against the cash surrender value of the policies in the form of borrowings or withdrawals or we can elect to surrender the policies and receive their net cash surrender value. Distributions totaling $5.7 million and $92.6 million were received in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively.

Investments at both February 28, 2009 and May 31, 2008 include $19.2 million representing the long-term portion of a note due May 31, 2010. The note was received in connection with the sale of land associated with our expanded shale and clay operations in south Texas in 2006.

In addition, investments at May 31, 2008 include $28.7 million of cash investments representing the proceeds from sales of aggregate property which were held in escrow by a qualified intermediary trust for reinvestment in deferred like-kind-exchange transactions. Designated property acquisitions totaling $25.5 million were completed during the nine-month period ended February 28, 2009. The remaining $3.2 million of cash investments is no longer held in escrow and the qualified intermediary trust has been terminated.

Deferred Charges and Other.Deferred charges are composed primarily of debt issuance costs that totaled $9.5 million at February 28, 2009 and $6.4 million at May 31, 2008. The costs are amortized over the term of the related debt.

Other Credits.Other credits totaled $56.9 million at February 28, 2009 and $66.8 million at May 31, 2008 and are composed primarily of liabilities related to our retirement plans, deferred compensation agreements and asset retirement obligations.

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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:

	Nine months ended
	February 28,		February 29,
In thousands	2009		2008
Balance at beginning of period	$	3,961	$	4,987
Additions		171		259
Accretion expense		198		302
Settlements		--		(524	)
Balance at end of period	$	4,330	$	5,024

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 $6.9 million (net of tax of $4.0 million) at February 28, 2009 and $7.1 million (net of tax of $4.2 million) at May 31, 2008.

Comprehensive income for the three-month and nine-month periods ending February 28, 2009 and February 29, 2008 consisted of net income and amounts in accumulated other comprehensive loss recognized in the periods as components of net periodic postretirement benefit cost, net of tax. Comprehensive income was $10.4 million and $14.6 million in the three-month periods ended February 28, 2009 and February 29, 2008, respectively, and $25.1 million and $61.9 million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively.

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

Other Income.Routine sales of surplus operating assets and real estate resulted in gains of $5.8 million and $0.3 million in the three-month periods ended February 28, 2009 and February 29, 2008, respectively, and $6.2 million and $2.3 million in the nine-month periods ended February 28, 2009 and February 29, 2008, 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. However, we cannot guaranty what the level of royalties, if any, will be. Lease bonus payments received resulted in income of $4.7 million and $0.8 million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. In addition, other income in the nine-month period ended February 28, 2009 includes a gain of $1.7 million from the sale of emission credits associated with our California cement operations.

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.

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Stock-based Compensation.Effective June 1, 2006, we adopted SFAS No. 123R, “Share-Based Payment,” utilizing the modified prospective transition method. Under this transition method, we account for awards granted prior to adoption, but for which the vesting period is not complete, on a prospective basis with expense being recognized in our statement of operations based on the grant date fair value estimated in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation.” We use the Black-Scholes option-pricing model to determine the fair value of stock options granted as of the date of grant. Options with graded vesting are valued as single awards and the related compensation cost is recognized using a straight-line attribution method over the shorter of the vesting period or required service period adjusted for estimated forfeitures. We use the average stock price on the date of grant to determine the fair value of restricted stock awards paid. A liability, which is included in other credits, is recorded for stock appreciation rights, deferred compensation agreements and stock awards expected to be paid in cash, based on the average stock price at the end of each period until such awards are paid.

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

Contingently issuable shares relate to deferred compensation agreements in which directors elected to defer annual and meeting fees and vested shares under our former stock awards program. The deferred compensation is denominated in shares of our common stock and issued in accordance with the terms of the agreement subsequent to retirement or separation from us. The shares are considered contingently issuable because the director has an unconditional right to the shares to be issued. Vested stock award shares are issued in the year in which the employee reaches age 60.

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

Basic and Diluted EPS are calculated as follows:

	Three months ended						Nine months ended
	February 28,			February 29,			February 28,			February 29,
In thousands except per share	2009			2008			2009			2008
Basic earnings
Net income	$	10,282		$	14,624		$	24,793		$	61,853
Unvested restricted share participation		(5	)		(7	)		(14	)		(30	)
Basic income	$	10,277		$	14,617		$	24,779		$	61,823
Diluted earnings
Net income	$	10,282		$	14,624		$	24,793		$	61,853
Unvested restricted share participation		(5	)		(7	)		(14	)		(30	)
Diluted income	$	10,277		$	14,617		$	24,779		$	61,823
Shares
Weighted-average shares outstanding		27,683			27,405			27,590			27,366
Contingently issuable shares		10			7			9			7
Unvested restricted shares		(13	)		(14	)		(15	)		(14	)
Basic weighted-average shares		27,680			27,398			27,584			27,359
Stock option, restricted share and award dilution		77			412			206			493
Diluted weighted-average shares*		27,757			27,810			27,790			27,852
Net income per share
Basic	$	.37		$	.53		$	.90		$	2.26
Diluted	$	.37		$	.53		$	.89		$	2.22
*  Shares excluded due to antidilutive effect Stock options, restricted shares and awards		895			200			623			67

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Recent Accounting Developments. In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, “Fair Value Measurements.” This standard defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. We adopted this SFAS effective June 1, 2008. The adoption of SFAS No. 157 did not have a current material impact on our consolidated financial statements.

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

2. Working Capital

Working capital totaled $170.2 million at February 28, 2009, compared to $171.7 million at May 31, 2008. Selected components of working capital are summarized below.

Receivables consist of:

	February 28,		May 31,
In thousands	2009		2008
Accounts receivable	$	100,418	$	142,749
Notes receivable including accrued interest		844		618
Refund claims and other		2,937		12,309
	$	104,199	$	155,676

Accounts receivable are presented net of allowances for doubtful receivables of $2.8 million at February 28, 2009 and $2.1 million at May 31, 2008. Provisions for bad debts charged to expense were $1.4 million and $0.7 million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. Uncollectible accounts written off totaled $0.7 million and $0.3 million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. Notes receivable included in current receivables relate to routine sales of surplus operating assets and real estate.

Inventories consist of:

	February 28,		May 31,
In thousands	2009		2008
Finished products	$	15,331	$	15,342
Work in process		63,933		53,806
Raw materials		22,645		19,956
Total inventories at LIFO cost		101,909		89,104
Parts and supplies		48,412		41,077
Total inventories	$	150,321	$	130,181

Inventories are stated at cost (not in excess of market) with finished products, work in process and raw material inventories using the last-in, first-out (“LIFO”) method and parts and supplies inventories using the average cost method. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation. If the average cost method (which approximates current replacement cost) had been used for all of these inventories, inventory values would have been higher by $41.3 million at February 28, 2009 and $32.6 million at May 31, 2008.

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Accrued interest, wages and other items consist of:

	February 28,		May 31,
In thousands	2009		2008
Interest	$	5,301	$	7,078
Employee compensation		13,796		27,421
Income taxes		5,291		1,688
Property taxes and other		10,695		11,659
	$	35,083	$	47,846

3. Long-Term Debt

Long-term debt consists of:

	February 28,			May 31,
In thousands	2009			2008
Senior secured revolving credit facility expiring in 2012	$	--		$	--
7.25% Senior notes due 2013
Notes issued July 6, 2005 at par value		250,000			250,000
Additional notes issued August 18, 2008, net of unamortized discount of $18.4 million at February 28, 2009 (effective interest rate 8.98%)		281,574			--
Senior term loan prepaid August 18, 2008		--			150,000
Other		315			322
		531,889			400,322
Capital lease obligation		9,116			9,283
Less current portion		(238	)		(7,725	)
	$	540,767		$	401,880

Senior Secured Revolving Credit Facility.On November 21, 2008, we amended our August 15, 2007 credit agreement to, among other things, increase the permitted leverage ratio, secure our obligations under the credit facility and limit the amount that can be borrowed under the credit agreement to the lesser of a borrowing base equal to the sum of 80% of our accounts receivable and 50% of our inventory or the $200 million stated principal amount of the credit agreement. The credit facility expires on August 15, 2012. The borrowing base at February 28, 2009 was $158.5 million. It includes a $50 million sub-limit for letters of credit. Any outstanding letters of credit are deducted from the borrowing availability under the facility. No borrowings were outstanding at February 28, 2009; however, $22.4 million of the facility was utilized to support letters of credit. Amounts drawn under the facility bear interest either at the LIBOR rate plus a margin of 2.5% to 3.5%, or at a base rate (which is the highest of (a) the federal funds rate plus 0.5%, (b) the prime rate and (c) the one-month LIBOR rate plus 1.0%) plus a margin of 1.5% to 2.5%. The interest rate margins are subject to adjustments based on our leverage ratio. Commitment fees are payable currently at an annual rate of 0.5% on the unused portion of the facility. We may terminate the facility at any time.

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 accounts, inventory, equipment, intellectual property and other personal property, and in all of our equity interests in present and future domestic subsidiaries and 66% of the equity interest in any future foreign subsidiaries, if any.

The credit facility contains covenants restricting, among other things, prepayment or redemption of the senior notes, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. Cash dividends paid on our common stock are limited to an annual amount of $10.0 million. We are required to comply with certain financial tests and to maintain certain financial ratios, such as leverage and interest coverage ratios. We were in compliance with all of these loan covenants as of February 28, 2009.

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7.25% Senior Notes.On August 18, 2008, we sold $300 million aggregate principal amount of additional 7.25% senior notes at an offering price of 93.25%. The additional notes were issued under our existing indenture dated July 6, 2005. The net proceeds were used to repay our $150 million senior term loan and borrowings outstanding under our senior secured revolving credit facility in the amount of $29.5 million, with additional proceeds available for general corporate purposes. We recognized a loss on debt retirement of $0.9 million representing a write-off of debt issuance costs associated with the mandatory prepayment of the term loan. At February 28, 2009, we had $550 million aggregate principal amount of 7.25% senior notes outstanding. Under the indenture, at any time on or prior to July 15, 2009, we may redeem the notes at a redemption price equal to the sum of the principal amount thereof, plus accrued interest and a make-whole premium. On and after July 15, 2009, we may redeem the notes at a premium of 103.625% in 2009, 101.813% in 2010 and 100% in 2011 and thereafter. If we experience a change of control, we may be required to offer to purchase the notes at a purchase price equal to 101% of the principal amount, plus accrued interest.

All of our consolidated subsidiaries have unconditionally guaranteed the 7.25% senior notes. The indenture governing the notes contains covenants that will limit our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness, pay dividends or make other distributions or repurchase or redeem our stock, make investments, sell assets, incur liens, enter into agreements restricting our subsidiaries’ ability to pay dividends, enter into transactions with affiliates and consolidate, merge or sell all or substantially all of our assets.

Other.Maturities of long-term debt, excluding the capital lease obligation, for each of the five years succeeding February 28, 2009 are none for 2010 through 2013 and $550.0 million for 2014. The total amount of interest paid was $33.8 million and $22.7 million during the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. Interest capitalized was $9.7 million and $20.8 million during the nine-month periods ended February 28, 2009 and February 29, 2008, respectively.

4. Commitments

During October 2007, we commenced construction on a project to expand our Hunter, Texas cement plant. As of February 28, 2009, we have expended $247.0 million, excluding capitalized interest of $11.6 million related to the project.

In light of current economic and market conditions, we are delaying completion of the project. We believe it is likely that cement demand levels in Texas will not permit the new kiln to operate profitably if the project is completed as originally scheduled. We expect cement demand to rebound in the future and we will resume construction when future economic and market conditions indicate it is appropriate. We anticipate beginning the commissioning of the project within 12 months of resuming construction.

The pause in construction will begin in May 2009, at which time we expect to have expended approximately $300 million, excluding capitalized interest of approximately $16 million related to the project. The delay is expected to defer approximately $40 million to $60 million of capital expenditures.

5. Shareholders’ Equity

Common stock consists of:

	February 28,	May 31,
In thousands	2009	2008
Shares authorized	100,000	100,000
Shares outstanding	27,704	27,493
Shares reserved for stock options and other	2,864	3,109

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There are authorized 100,000 shares of Cumulative Preferred Stock, no par value, of which 20,000 shares are designated $5 Cumulative Preferred Stock (Voting), redeemable at $105 per share and entitled to $100 per share upon dissolution. An additional 40,000 shares are designated Series B Junior Participating Preferred Stock. The Series B Preferred Stock is not redeemable and ranks, with respect to the payment of dividends and the distribution of assets, junior to (i) all other series of the Preferred Stock unless the terms of any other series shall provide otherwise and (ii) the $5 Cumulative Preferred Stock. No shares of Cumulative Preferred Stock or Series B Junior Participating Preferred Stock were outstanding as of February 28, 2009. Pursuant to a Rights Agreement, in November 2006, we distributed a dividend of one preferred share purchase right for each outstanding share of our Common Stock. Each right entitles the holder to purchase from us one one-thousandth of a share of the Series B Junior Participating Preferred Stock at a price of $300, subject to adjustment. The rights will expire on November 1, 2016 unless the date is extended or the rights are earlier redeemed or exchanged by us pursuant to the Rights Agreement.

6. Stock-Based Compensation Plans

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

Options become exercisable in installments beginning one year after the date of grant and expire ten years after the date of grant. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. Options with graded vesting are valued as single awards and the compensation cost recognized using a straight-line attribution method over the shorter of the vesting period or required service period adjusted for estimated forfeitures. The following table sets forth the information about the weighted-average grant date fair value of options granted during the nine-month periods ended February 28, 2009 and February 29, 2008.

	Nine months ended
	February 28,	February 29,
	2009	2008
Weighted average grant date fair value	$9.26	$17.59
Weighted average assumptions used:
Expected volatility	.398	.317
Expected lives	6.5	6.1
Risk-free interest rates	1.60%	3.21%
Expected dividend yields	1.21%	.59%

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 nine-month period ended February 28, 2009, follows:

	Shares Under Option		Weighted-Average Option Price
Outstanding at May 31, 2008	1,464,831		$	39.08
Granted	397,700			25.15
Exercised	(220,436	)		22.08
Canceled	(29,739	)		41.68
Outstanding at February 28, 2009	1,612,356		$	37.92
Exercisable at February 28, 2009	812,560		$	35.27

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The following table summarizes information about stock options outstanding as of February 28, 2009.

	Range of Exercise Prices
	$16.04 - $27.39	$31.15 - $48.60	$50.63 - $70.18
Options outstanding
Shares outstanding	766,236	251,270	594,850
Weighted-average remaining life in years	6.78	4.45	7.61
Weighted-average exercise price	$21.86	$41.08	$57.28
Options exercisable
Shares exercisable	377,536	204,484	230,540
Weighted-average remaining life in years	3.59	4.00	7.31
Weighted-average exercise price	$19.02	$40.03	$57.67

Outstanding options expire on various dates to January 14, 2019. We have reserved 1,236,417 shares for future awards under the 2004 Plan as of February 28, 2009.

As of February 28, 2009, the aggregate intrinsic value (the difference in the closing market price of our common stock of $16.10 and the exercise price to be paid by the optionee) of stock options outstanding was less than $0.1 million. The aggregate intrinsic value of exercisable stock options at that date was less than $0.1 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 $0.8 million and $2.8 million for the three-month periods ended February 28, 2009 and February 29, 2008, respectively, and $2.8 million and $4.6 million for the nine-month periods ended February 28, 2009 and February 29, 2008, respectively.

We have provided additional stock-based compensation to employees and directors under stock appreciation rights contracts, deferred compensation agreements, restricted stock payments and a former stock awards program. At February 28, 2009, outstanding stock appreciation rights totaled 155,979 shares, deferred compensation agreements to be settled in cash totaled 99,717 shares, deferred compensation agreements to be settled in common stock totaled 9,305 shares, unvested restricted stock payments totaled 18,000 shares and stock awards totaled 5,645 shares. Other credits included $2.3 million at February 28, 2009 and $14.4 million at May 31, 2008 representing accrued stock-based compensation which is expected to be settled in cash.

Total stock-based compensation included in selling, general and administrative expense (credit) was $(1.3) million and $(1.4) million in the three-month periods ended February 28, 2009 and February 29, 2008, respectively, and $(9.2) million and $(2.7) million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. The impact of changes in our company’s stock price on stock-based awards accounted for as liabilities reduced stock-based compensation $2.4 million and $2.8 million in the three-month periods ended February 28, 2009 and February 29, 2008, respectively, and $12.1 million and $6.6 million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. The total tax expense recognized in our statements of operations for stock-based compensation was $0.7 million and $0.8 million in the three-month periods ended February 28, 2009 and February 29, 2008, respectively, and $4.0 million and $1.8 million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. The total tax benefit realized for stock-based compensation was less than $0.1 million and $0.1 million in the three-month periods ended February 28, 2009 and February 29, 2008, respectively, and $1.8 million and $3.5 million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively.

As of February 28, 2009, $10.8 million of total unrecognized compensation cost related to stock options, stock appreciation rights contracts, restricted stock payments and stock awards is expected to be recognized. We currently expect to recognize in the years succeeding February 28, 2009 approximately $4.0 million of this stock-based compensation expense in 2010, $3.0 million in 2011, $2.0 million in 2012, $1.2 million in 2013 and $0.6 million in 2014.

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7. Retirement Plans

Riverside Defined Benefit Plans.Approximately 600 employees and retirees of our California cement subsidiary, Riverside Cement Company, are covered by a defined benefit pension plan and a postretirement health benefit plan. Unrecognized prior service costs and actuarial gains or losses for these plans are recognized in a systematic manner over the remaining service periods of active employees expected to receive benefits under these plans. The amount of the defined benefit pension plan and postretirement health benefit plan expense charged to costs and expenses for the three-month and nine-month periods ended February 28, 2009 and February 29, 2008, was as follows:

	Pension Benefit						Health Benefit
In thousands	2009			2008			2009			2008
Three months ended February 28/29
Service cost	$	179		$	144		$	21		$	31
Interest cost		791			695			110			100
Expected return on plan assets		(812	)		(882	)		--			--
Amortization of prior service cost		--			--			(196	)		(212	)
Amortization of net actuarial loss		175			55			168			164
	$	333		$	12		$	103		$	83
Nine months ended February 28/29
Service cost	$	538		$	432		$	65		$	91
Interest cost		2,374			2,085			329			299
Expected return on plan assets		(2,438	)		(2,645	)		--			--
Amortization of prior service cost		--			--			(589	)		(634	)
Amortization of net actuarial loss		524			165			504			492
	$	998		$	37		$	309		$	248

Financial Security Defined Benefit Plans.We have a series of financial security plans that are non-qualified defined benefit plans providing retirement and death benefits to substantially all of our executive and key managerial employees. The plans are contributory but not funded. The amount of financial security plan benefit expense charged to costs and expenses for the three-month and nine-month periods ended February 28, 2009 and February 29, 2008, was as follows:

	FSP Benefit
In thousands	2009			2008
Three months ended February 28/29
Service cost	$	400		$	742
Interest cost		545			474
Participant contributions		(90	)		(87	)
	$	855		$	1,129
Nine months ended February 28/29
Service cost	$	1,198		$	2,228
Interest cost		1,636			1,422
Participant contributions		(268	)		(284	)
	$	2,566		$	3,366

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8. Income Taxes

Income taxes for the interim periods ended February 28, 2009 and February 29, 2008 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 benefit of separately stated items in the amount of $0.6 million in the interim periods ended February 28, 2009. The primary reason the tax rate differs from the 35% federal statutory corporate rate is due to percentage depletion that is tax deductible, state income taxes and deductions for income from qualified domestic production activities. Our estimated effective tax rate for fiscal year 2009 is 25.5% compared to 31.1% for fiscal year 2008. We made income tax payments of $2.1 million and $26.8 million during the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. We received income tax refunds of $13.4 million and $0.6 million during the nine-month periods ended February 28, 2009 and February 29, 2008, respectively.

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

In addition to our federal income tax return, we file income tax returns in various state jurisdictions. We are no longer subject to federal or state income tax examinations by tax authorities for years prior to 2004. The examination of our federal income tax returns for 2004 through 2006 was completed in February 2009. The results of this audit did not have a material effect on our financial position.

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

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

In late April 2008, a lawsuit was filed in Riverside County Superior Court of the State of California styledVirginia 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, punitive and exemplary damages and 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.

In addition to theShellman lawsuit, our three subsidiaries have been served with three additional lawsuits filed in the same court in mid July 2008. Each purports to be a class action complaint for medical monitoring for a putative class defined as students who attended or presently attend a specified school in the vicinity of our Crestmore plant and who were allegedly exposed to chrome 6 emissions from the plant. The putative class in each of these cases is a subset of the putative class in theShellman case, and the allegations and request for relief are nearly identical to those in theShellman case. As a consequence, the court has stayed these three lawsuits until theShellman lawsuit is finally determined.

In August 2008, a lawsuit was filed in the same court against several of our subsidiaries by an individual who, prior to her recent death, had lived in the general vicinity of the Crestmore plant and had suffered strokes and lung cancer. The plaintiff alleges causes of action for nuisance, trespass, negligence, negligence per se, and willful misconduct based on the alleged exposure to chrome 6 and other toxic or harmful substances in the air, surface water and ground water caused by our plant. The plaintiff requests general and punitive damages for property damage, physical injury, emotional distress, medical costs and loss of earnings.

In October and November 2008, four additional lawsuits were filed against three of our subsidiaries in the same court making allegations similar to theShellman lawsuit. The four additional suits involve claims for personal injury and wrongful death by approximately 760 individual plaintiffs who were allegedly exposed to chrome 6 emissions from the Crestmore plant. The plaintiffs allege causes of action for, among other things, negligence, intentional and negligent infliction of emotional distress, trespass, public and private nuisance, strict liability, fraudulent concealment, wrongful death and loss of consortium. The plaintiffs request, among other things, general and punitive damages, medical expenses, loss of earnings, property damages and medical monitoring costs.

In January 2009, a lawsuit was filed against Texas Industries, Inc. and four of our subsidiaries in the same court making allegations similar in nature to those in theShellman lawsuit but with respect to our Oro Grande, California cement plant. The suit involves claims for personal injury and wrongful death by approximately 90 individual plaintiffs who were allegedly exposed to chrome 6 emissions from our Oro Grande plant. The plaintiffs allege causes of action for, among other things, negligence, intentional and negligent infliction of emotional distress, trespass, public and private nuisance, strict liability, fraudulent concealment, wrongful death and loss of consortium. The plaintiffs request, among other things, general and punitive damages, medical expenses, loss of earnings, property damages and medical monitoring costs. Prior to the filing of the lawsuit, 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.

In March 2009, a lawsuit was filed in the same court against several of our subsidiaries by the wife of a 25-year employee of Riverside who died in 2007 from cancer of the throat allegedly caused by exposure to chrome 6 and other toxic chemicals at the Crestmore plant. The plaintiff alleges causes of action for wrongful death, negligence, negligence per se, and strict liability for ultra-hazardous activity. The plaintiff requests general, special and punitive damages, as well as loss of care, comfort and society.

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.

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On July 3, 2008, the California Attorney General and the Riverside County District Attorney filed a complaint styledThe People of the State of California v. TXI Riverside, Inc., TXI California, Inc. and Riverside Cement Holdings Company. The complaint against the two general partners in Riverside Cement Company and a subsidiary of Riverside Cement Company alleges that the defendants failed to warn persons of exposure to chrome 6 under California’s Safe Drinking Water and Toxic Enforcement Act of 1986, which is known as Proposition 65. It further alleges that defendants have known since at least 2006 that the clinker at the Crestmore plant contains chrome 6, causing exposure to persons present in the surrounding area. The complaint also alleges that this exposure without first giving warning to such persons violates Proposition 65 and constitutes unfair competition within the meaning of the California Business and Professions Code. The complaint requests the award of civil penalties and injunctive relief. We have reached a verbal settlement agreement with the plaintiffs in which we do not admit the allegations of the complaint, and do not admit any violation of law. However, in order to reduce our litigation costs and put the distractions of this suit behind us, we have agreed to continue to give the notices required by Proposition 65 to employees and others entering the plant and, in the future, to give required notices to others if our operations would then require such notices. In addition, we agreed to pay a penalty of $190,000, to reimburse plaintiffs’ expenses of $25,000 and to reimburse the Center for Environmental Health for costs and attorneys’ fees of $6,000. We are currently negotiating the terms of a written settlement agreement.

We are defendants in other lawsuits which arose in the normal course of business. In management’s judgment the ultimate liability, if any, from such other legal proceedings will not have a material 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, including certain operating overhead and other income items not allocated to a specific segment. Corporate includes those administrative, financial, legal, human resources and real estate activities which are not allocated to operations and are excluded from segment operating profit. Identifiable assets by segment are those assets that are used in each segment’s operation. Corporate assets consist primarily of cash and cash equivalents, real estate and other financial assets not identified with a business segment. We currently report cement treated material operations and transportation overhead activities, both of which are not significant to operating profit, in our cement segment. Cement treated material operations were previously reported in our aggregate segment. Our transportation overhead activities were previously reported as a part of unallocated overhead and other income-net. Prior period information has been reclassified to conform to the current period presentation.

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

	Three months ended						Nine months ended
	February 28,			February 29,			February 28,			February 29,
In thousands	2009			2008			2009			2008
Net sales
Cement
Sales to external customers	$	68,023		$	94,570		$	261,421		$	315,072
Intersegment sales		13,416			18,570			49,429			60,512
Aggregates
Sales to external customers		44,790			54,784			155,713			175,614
Intersegment sales		7,981			11,039			29,360			34,317
Consumer products
Sales to external customers		65,846			81,181			239,716			271,776
Intersegment sales		754			879			2,752			2,841
Eliminations		(22,151	)		(30,488	)		(81,541	)		(97,670	)
Total net sales	$	178,659		$	230,535		$	656,850		$	762,462
Segment operating profit
Cement	$	12,131		$	24,720		$	38,888		$	77,038
Aggregates		12,167			4,967			27,796			27,279
Consumer products		4,540			(481	)		4,769			8,203
Unallocated overhead and other income - net		(4,864	)		(2,708	)		(9,542	)		(6,905	)
Total segment operating profit		23,974			26,498			61,911			105,615
Corporate
Other income		404			545			3,149			3,283
Selling, general and administrative expense		(3,785	)		(6,119	)		(6,786	)		(19,307	)
		(3,381	)		(5,574	)		(3,637	)		(16,024	)
Interest		(8,344	)		--			(24,885	)		--
Loss on debt retirements		--			--			(907	)		--
Income before income taxes	$	12,249		$	20,924		$	32,482		$	89,591
Depreciation, depletion and amortization
Cement	$	9,531		$	6,244		$	28,257		$	18,198
Aggregates		5,576			5,345			16,648			15,845
Consumer products		1,817			2,061			5,546			6,347
Corporate		259			166			748			590
Total depreciation, depletion and amortization	$	17,183		$	13,816		$	51,199		$	40,980
Capital expenditures
Cement	$	61,006		$	59,359		$	197,220		$	207,763
Aggregates		3,704			3,919			39,066			22,075
Consumer products		787			2,937			4,260			10,732
Corporate		43			377			325			1,110
Total capital expenditures	$	65,540		$	66,592		$	240,871		$	241,680
Net sales by product
Cement	$	62,151		$	85,330		$	235,963		$	289,403
Stone, sand and gravel		20,190			29,128			77,816			94,222
Ready-mix concrete		53,292			69,560			196,878			233,597
Other products		27,168			26,938			83,410			83,462
Delivery fees		15,858			19,579			62,783			61,778
Total net sales	$	178,659		$	230,535		$	656,850		$	762,462

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

Aggregate segment operating profit in the three-month and nine-month periods ended February 28, 2009 includes a gain of $5.0 million from the sale of real estate associated with our aggregate operations in north Texas. Cement segment operating profit in the nine-month period ended February 28, 2009 includes $2.8 million in lease bonus payments received upon the execution of oil and gas lease agreements on property we own in north Texas. In addition, cement segment operating profit in the nine-month period ended February 28, 2009 includes a gain of $1.7 million from the sale of emission credits associated with our California cement operations.

Cement capital expenditures, including capitalized interest, incurred in connection with the expansion of our Hunter, Texas cement plant was $180.4 million and $38.8 million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. In addition, cement capital expenditures, including capitalized interest, incurred in connection with the expansion and modernization of our Oro Grande, California cement plant were $1.3 million and $154.4 million in the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. The project was completed in May 2008. Aggregate capital expenditures include $25.3 million in the nine-month period ended February 28, 2009 incurred to acquire aggregate operations in central Texas through a deferred like-kind-exchange transaction. Other capital expenditures incurred represent normal replacement and technological upgrades of existing equipment and acquisitions to sustain existing operations in each segment.

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

	February 28,		May 31,
In thousands	2009		2008
Identifiable assets
Cement	$	1,209,847	$	1,044,981
Aggregates		226,615		206,001
Consumer products		99,670		120,063
Corporate		89,191		143,914
Total assets	$	1,625,323	$	1,514,959

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

11. Condensed Consolidating Financial Information

On July 6, 2005 and August 18, 2008, Texas Industries, Inc. (the parent company) issued $250 million and $300 million aggregate principal amounts of its 7.25% Senior Notes, respectively. All 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.

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In thousands	Texas Industries, Inc.		Guarantor Subsidiaries		Eliminating Entries			Consolidated
Condensed consolidating balance sheet at February 28, 2009
Cash and cash equivalents	$	31,787	$	2,078	$	--		$	33,865
Receivables - net		--		104,199		--			104,199
Intercompany receivables		348,731		18,755		(367,486	)		--
Inventories		--		150,321		--			150,321
Deferred income taxes and prepaid expenses		462		17,271		--			17,733
Total current assets		380,980		292,624		(367,486	)		306,118
Goodwill		--		60,110		--			60,110
Real estate and investments		7,148		25,213		--			32,361
Deferred charges and other		9,964		7,059		--			17,023
Investment in subsidiaries		965,134		--		(965,134	)		--
Long-term intercompany receivables		50,000		--		(50,000	)		--
Property, plant and equipment – net		--		1,209,711		--			1,209,711
Total assets	$	1,413,226	$	1,594,717	$	(1,382,620	)	$	1,625,323
Accounts payable	$	34	$	100,612	$	--		$	100,646
Intercompany payables		18,755		348,731		(367,486	)		--
Accrued interest, wages and other		13,383		21,700		--			35,083
Current portion of long-term debt		--		238		--			238
Total current liabilities		32,172		471,281		(367,486	)		135,967
Long-term debt		531,889		8,878		--			540,767
Long-term intercompany payables		--		50,000		(50,000	)		--
Deferred income taxes and other credits		4,586		99,424		--			104,010
Shareholders’ equity		844,579		965,134		(965,134	)		844,579
Total liabilities and shareholders’ equity	$	1,413,226	$	1,594,717	$	(1,382,620	)	$	1,625,323
Condensed consolidating balance sheet at May 31, 2008
Cash and cash equivalents	$	34,675	$	4,852	$	--		$	39,527
Receivables - net		--		155,676		--			155,676
Intercompany receivables		232,683		18,765		(251,448	)		--
Inventories		--		130,181		--			130,181
Deferred income taxes and prepaid expenses		12,821		17,577		--			30,398
Total current assets		280,179		327,051		(251,448	)		355,782
Goodwill		--		60,110		--			60,110
Real estate and investments		6,000		53,971		--			59,971
Deferred charges and other		7,483		3,849		--			11,332
Investment in subsidiaries		924,530		--		(924,530	)		--
Long-term intercompany receivables		50,000		--		(50,000	)		--
Property, plant and equipment – net		--		1,027,764		--			1,027,764
Total assets	$	1,268,192	$	1,472,745	$	(1,225,978	)	$	1,514,959
Accounts payable	$	64	$	128,433	$	--		$	128,497
Intercompany payables		18,765		232,683		(251,448	)		--
Accrued interest, wages and other		12,358		35,488		--			47,846
Current portion of long-term debt		7,500		225		--			7,725
Total current liabilities		38,687		396,829		(251,448	)		184,068
Long-term debt		392,822		9,058		--			401,880
Long-term intercompany payables		--		50,000		(50,000	)		--
Deferred income taxes and other credits		20,170		92,328		--			112,498
Shareholders’ equity		816,513		924,530		(924,530	)		816,513
Total liabilities and shareholders’ equity	$	1,268,192	$	1,472,745	$	(1,225,978	)	$	1,514,959

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In thousands	Texas Industries, Inc.			Guarantor Subsidiaries			Eliminating Entries			Consolidated
Condensed consolidating statement of operations for the three months ended February 28, 2009
Net sales	$	--		$	178,659		$	--		$	178,659
Cost of products sold		--			150,028			--			150,028
Gross profit		--			28,631			--			28,631
Selling, general and administrative		666			15,316			--			15,982
Interest		12,889			--			(4,545	)		8,344
Loss on debt retirements		--			--			--			--
Other income		(49	)		(7,895	)		--			(7,944	)
Intercompany other income		(863	)		(3,682	)		4,545			--
		12,643			3,739			--			16,382
Income before the following items		(12,643	)		24,892			--			12,249
Income taxes		(8,875	)		10,842			--			1,967
		(3,768	)		14,050			--			10,282
Equity in earnings of subsidiaries		14,050			--			(14,050	)		--
Net income	$	10,282		$	14,050		$	(14,050	)	$	10,282
Condensed consolidating statement of operations for the three months ended February 29, 2008
Net sales	$	--		$	230,535		$	--		$	230,535
Cost of products sold		--			190,980			--			190,980
Gross profit		--			39,555			--			39,555
Selling, general and administrative		1,239			19,478			--			20,717
Interest		7,301			--			(7,301	)		--
Loss on debt retirements		--			--			--			--
Other income		(163	)		(1,923	)		--			(2,086	)
Intercompany other income		(863	)		(6,438	)		7,301			--
		7,514			11,117			--			18,631
Income before the following items		(7,514	)		28,438			--			20,924
Income taxes		(2,609	)		8,909			--			6,300
		(4,905	)		19,529			--			14,624
Equity in earnings of subsidiaries		19,529			--			(19,529	)		--
Net income	$	14,624		$	19,529		$	(19,529	)	$	14,624

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In thousands	Texas Industries, Inc.			Guarantor Subsidiaries			Eliminating Entries			Consolidated
Condensed consolidating statement of operations for the nine months ended February 28, 2009
Net sales	$	--		$	656,850		$	--		$	656,850
Cost of products sold		--			567,788			--			567,788
Gross profit		--			89,062			--			89,062
Selling, general and administrative		(1,853	)		51,037			--			49,184
Interest		34,040			--			(9,155	)		24,885
Loss on debt retirements		907			--			--			907
Other income		(383	)		(18,013	)		--			(18,396	)
Intercompany other income		(2,618	)		(6,537	)		9,155			--
		30,093			26,487			--			56,580
Income before the following items		(30,093	)		62,575			--			32,482
Income taxes		(14,560	)		22,249			--			7,689
		(15,533	)		40,326			--			24,793
Equity in earnings of subsidiaries		40,326			--			(40,326	)		--
Net income	$	24,793		$	40,326		$	(40,326	)	$	24,793
Condensed consolidating statement of operations for the nine months ended February 29, 2008
Net sales	$	--		$	762,462		$	--		$	762,462
Cost of products sold		--			616,688			--			616,688
Gross profit		--			145,774			--			145,774
Selling, general and administrative		3,200			60,764			--			63,964
Interest		20,142			--			(20,142	)		--
Loss on debt retirements		--			--			--			--
Other income		(329	)		(7,452	)		--			(7,781	)
Intercompany other income		(2,618	)		(17,524	)		20,142			--
		20,395			35,788			--			56,183
Income before the following items		(20,395	)		109,986			--			89,591
Income taxes		(7,303	)		35,041			--			27,738
		(13,092	)		74,945			--			61,853
Equity in earnings of subsidiaries		74,945			--			(74,945	)		--
Net income	$	61,853		$	74,945		$	(74,945	)	$	61,853

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In thousands	Texas Industries, Inc.			Guarantor Subsidiaries			Eliminating Entries		Consolidated
Condensed consolidating statement of cash flows for the nine months ended February 28, 2009
Net cash provided by operating activities	$	(129,541	)	$	202,078		$	--	$	72,537
Investing activities
Capital expenditures - expansions		--			(181,657	)		--		(181,657	)
Capital expenditures - other		--			(59,214	)		--		(59,214	)
Cash designated for property acquisitions		--			28,733			--		28,733
Proceeds from asset disposals		--			7,442			--		7,442
Investments in life insurance contracts		2,479			--			--		2,479
Other - net		--			11			--		11
Net cash used by investing activities		2,479			(204,685	)		--		(202,206	)
Financing activities
Long-term borrowings		327,250			--			--		327,250
Debt retirements		(197,509	)		(167	)		--		(197,676	)
Debt issuance costs		(5,470	)		--			--		(5,470	)
Stock option exercises		4,341			--			--		4,341
Excess tax benefits from stock-based compensation		1,771			--			--		1,771
Common dividends paid		(6,209	)		--			--		(6,209	)
Net cash provided by financing activities		124,174			(167	)		--		124,007
Decrease in cash and cash equivalents		(2,888	)		(2,774	)		--		(5,662	)
Cash and cash equivalents at beginning of period		34,675			4,852			--		39,527
Cash and cash equivalents at end of period	$	31,787		$	2,078		$	--	$	33,865
Condensed consolidating statement of cash flows for the nine months ended February 29, 2008
Net cash provided by operating activities	$	(156,414	)	$	232,731		$	--	$	76,317
Investing activities
Capital expenditures - expansions		--			(193,160	)		--		(193,160	)
Capital expenditures - other		--			(48,520	)		--		(48,520	)
Cash designated for property acquisitions		--			--			--		--
Proceeds from asset disposals		--			3,928			--		3,928
Investments in life insurance contracts		88,140			--			--		88,140
Other - net		--			218			--		218
Net cash used by investing activities		88,140			(237,534	)		--		(149,394	)
Financing activities
Long-term borrowings		213,000			--			--		213,000
Debt retirements		(144,170	)		(143	)		--		(144,313	)
Debt issuance costs		(1,152	)		--			--		(1,152	)
Stock option exercises		2,678			--			--		2,678
Excess tax benefits from stock-based compensation		3,519			--			--		3,519
Common dividends paid		(6,161	)		--			--		(6,161	)
Net cash provided by financing activities		67,714			(143	)		--		67,571
Decrease in cash and cash equivalents		(560	)		(4,946	)		--		(5,506	)
Cash and cash equivalents at beginning of period		6,095			9,043			--		15,138
Cash and cash equivalents at end of period	$	5,535		$	4,097		$	--	$	9,632

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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 February 28, 2009, and the related consolidated statements of operations for the three- and nine-month periods ended February 28, 2009 and February 29, 2008 and cash flows for nine-month periods ended February 28, 2009 and February 29, 2008. These financial statements are the responsibility of the Company’s management.

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

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

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Texas Industries, Inc. and subsidiaries as of May 31, 2008, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended [not presented herein], and in our report dated July 10, 2008, 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, 2008, 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

March 24, 2009

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

RESULTS OF OPERATIONS

We are a leading supplier of heavy construction materials in the United States through three business segments: cement, aggregates and consumer products. Our principal products are gray portland cement, produced and sold through our cement segment; stone, sand and gravel, produced and sold through our aggregates segment; and ready-mix concrete, produced and sold through our consumer products segment. Other products include expanded shale and clay 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. Unallocated overhead and other income includes income and operating overhead expenses such as environmental, engineering and other administrative activities that directly relate to some or all of our segments and are not allocated. Corporate includes non-operating income and expenses related to administrative, financial, legal, human resources and real estate activities.

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						Nine months ended
	February 28,			February 29,			February 28,			February 29,
In thousands except per unit	2009			2008			2009			2008
Operating Results
Total cement sales	$	75,557		$	103,891		$	285,368		$	349,900
Total other sales and delivery fees		5,882			9,249			25,482			25,684
Total segment sales		81,439			113,140			310,850			375,584
Cost of products sold		67,919			85,983			266,682			288,662
Gross profit		13,520			27,157			44,168			86,922
Selling, general and administrative		(2,788	)		(3,190	)		(12,830	)		(12,142	)
Other income		1,399			753			7,550			2,258
Operating Profit	$	12,131		$	24,720		$	38,888		$	77,038
Cement
Shipments (tons)		837			1,142			3,139			3,751
Prices ($/ton)	$	90.17		$	91.01		$	90.90		$	93.28
Cost of sales ($/ton)	$	73.92		$	67.13		$	77.76		$	70.38

Three months ended February 28, 2009

Operating profit for the three-month period ended February 28, 2009 was $12.1 million, a decrease of $12.6 million from the prior year period.

Total cement sales for the three-month period ended February 28, 2009 decreased $28.3 million from the prior year period as construction activity declined in both our Texas and California market areas. Our Texas market area accounted for approximately 74% of total cement sales in the current period compared to 71% of total cement sales in the prior year period. In our Texas market area, cement shipments decreased 28% from the prior year period and average prices increased 4%. In our California market area, cement shipments decreased 24% from the prior year period and average prices decreased 14%.

- 26 -

Cost of products sold for the three-month period ended February 28, 2009 decreased $18.1 million from the prior year period. The effect of lower shipments and lower labor, supply and maintenance costs was partially offset by higher depreciation at our Oro Grande, California cement plant and higher coal costs. Cement unit costs increased 10% from the prior year period primarily due to lower production levels.

Selling, general and administrative expense for the three-month period ended February 28, 2009 decreased $0.4 million from the prior year period primarily due to lower insurance expense offset in part by higher legal and other professional expenses.

Other income for the three-month period ended February 28, 2009 was comparable to the prior year period.

Nine months ended February 28, 2009

Operating profit for the nine-month period ended February 28, 2009 was $38.9 million, a decrease of $38.2 million from the prior year period.

Total cement sales for the nine-month period ended February 28, 2009 decreased $64.5 million from the prior year period as construction activity declined in our California market area. Construction activity also declined in our Texas market area during the November 2008 and February 2009 quarters. Our Texas area accounted for approximately 71% of total cement sales in the current period compared to 66% of total cement sales in the prior year period. In our Texas market area, cement shipments decreased 16% from the prior year period and average prices increased 3%. In our California market area, cement shipments decreased 18% from the prior year period and average prices decreased 13%.

Cost of products sold for the nine-month period ended February 28, 2009 decreased $22.0 million from the prior year period. The effect of lower shipments and lower labor, supply and maintenance costs was partially offset by higher depreciation at our Oro Grande, California cement plant and higher coal costs. Cement unit costs increased 10% from the prior year period primarily due to lower production levels.

Selling, general and administrative expense for the nine-month period ended February 28, 2009 increased $0.7 million from the prior year period primarily due to higher legal and other professional expenses offset in part by lower insurance expense and incentive compensation expense.

Other income for the nine-month period ended February 28, 2009 increased $5.3 million from the prior year period. Other income in the current period includes a lease bonus payment of $2.8 million received upon the execution of an oil and gas lease on property we own in north Texas. In addition, other income in the current period includes a gain of $1.7 million from the sale of emission credits associated with our California cement operations.

- 27 -

Aggregate Operations

	Three months ended						Nine months ended
	February 28,			February 29,			February 28,			February 29,
In thousands except per unit	2009			2008			2009			2008
Operating Results
Total stone, sand and gravel sales	$	26,889		$	37,699		$	103,235		$	120,827
Total other sales and delivery fees		25,882			28,124			81,838			89,104
Total segment sales		52,771			65,823			185,073			209,931
Cost of products sold		43,691			57,124			153,905			171,776
Gross profit		9,080			8,699			31,168			38,155
Selling, general and administrative		(2,379	)		(3,808	)		(9,708	)		(11,595	)
Other income		5,466			76			6,336			719
Operating Profit	$	12,167		$	4,967		$	27,796		$	27,279
Stone, sand and gravel
Shipments (tons)		3,267			5,010			13,073			16,424
Prices ($/ton)	$	8.23		$	7.52		$	7.90		$	7.36
Cost of sales ($/ton)	$	7.23		$	6.92		$	6.55		$	6.00

Three months ended February 28, 2009

Operating profit for the three-month period ended February 28, 2009 was $12.2 million, an increase of $7.2 million from the prior year period.

Total segment sales for the three-month period ended February 28, 2009 decreased $13.1 million from the prior year period as total stone, sand and gravel sales were down $10.8 million. Total stone, sand and gravel shipments decreased 35% from the prior year period and average prices increased 9%.

Cost of products sold for the three-month period ended February 28, 2009 decreased $13.4 million from the prior year period as labor hours were reduced in response to lower shipments and supplies and maintenance costs declined. Stone, sand and gravel unit costs increased 4% and shipments declined 35% from the prior year period.

Selling, general and administrative expense for the three-month period ended February 28, 2009 decreased $1.4 million from the prior year period primarily due to lower insurance expense and incentive compensation expense.

Other income for the three-month period ended February 28, 2009 increased $5.4 million from the prior year period. Other income in the current period includes a gain of $5.0 million from the sale of real estate associated with our north Texas aggregate operations.

Nine months ended February 28, 2009

Operating profit for the nine-month period ended February 28, 2009 was $27.8 million, an increase of $0.5 million from the prior year period.

Total segment sales for the nine-month period ended February 28, 2009 decreased $24.9 million from the prior year period as total stone, sand and gravel sales were down $17.6 million. Total stone, sand and gravel shipments decreased 20% from the prior year period and average prices increased 7%.

Cost of products sold for the nine-month period ended February 28, 2009 decreased $17.9 million from the prior year period as labor hours were reduced in response to lower shipments and supplies and maintenance costs declined. Stone, sand and gravel unit costs increased 9% and shipments declined 20% from the prior year period.

Selling, general and administrative expense for the nine-month period ended February 28, 2009 decreased $1.9 million from the prior year period primarily due to lower insurance expense and incentive compensation expense.

- 28 -

Other income for the nine-month period ended February 28, 2009 increased $5.6 million from the prior year period. Other income in the current period includes a gain of $5.0 million from the sale of real estate associated with our north Texas aggregate operations.

Consumer Products Operations

		Three months ended								Nine months ended
		February 28,				February 29,				February 28,				February 29,
In thousands except per unit		2009				2008				2009				2008
Operating Results
Total ready-mix concrete sales	$		53,306		$		69,699		$		197,032		$		233,922
Total other sales and delivery fees			13,294				12,361				45,436				40,695
Total segment sales			66,600				82,060				242,468				274,617
Cost of products sold			60,569				78,361				228,742				253,920
Gross profit			6,031				3,699				13,726				20,697
Selling, general and administrative			(2,142	)			(4,755	)			(10,173	)			(13,591	)
Other income			651				575				1,216				1,097
Operating Profit (Loss)	$		4,540		$		(481	)	$		4,769		$		8,203
Ready-mix concrete
Shipments (cubic yards)			614				857				2,330				2,905
Prices ($/cubic yard)	$		86.87		$		81.26		$		84.59		$		80.50
Cost of sales ($/cubic yard)	$		80.45		$		79.15		$		81.24		$		75.91

Three months ended February 28, 2009

Operating profit for the three-month period ended February 28, 2009 was $4.5 million, an increase of $5.0 million from the prior year period.

Total segment sales for the three-month period ended February 28, 2009 decreased $15.5 million as total ready-mix concrete sales were down $16.4 million. Total ready-mix concrete volumes decreased 28% from the prior year period and average prices increased 7%.

Cost of products sold for the three-month period ended February 28, 2009 decreased $17.8 million from the prior year period as labor hours were reduced in response to lower shipments and supplies, maintenance and diesel costs declined. Overall ready-mix concrete unit costs increased 2% and volumes declined 28% from the prior year period.

Selling, general and administrative expense for the three-month period ended February 28, 2009 decreased $2.6 million from the prior year period primarily due to lower insurance expense and incentive compensation expense.

Other income for the three-month period ended February 28, 2009 was comparable to the prior year period.

Nine months ended February 28, 2009

Operating profit for the nine-month period ended February 28, 2009 was $4.8 million, a decrease of $3.4 million from the prior year period.

Total segment sales for the nine-month period ended February 28, 2009 decreased $32.1 million as total ready-mix concrete sales were down $36.9 million. Total ready-mix concrete volumes decreased 20% from the prior year period and average prices increased 5%.

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Cost of products sold for the nine-month period ended February 28, 2009 decreased $25.2 million from the prior year period as labor hours were reduced in response to lower shipments and supplies and maintenance costs declined. Overall ready-mix concrete unit costs increased 7% from the prior year period primarily due to higher raw material costs, as well as higher distribution and transportation costs. Our raw material unit costs in the current period increased approximately 5% from the prior year period. Our cost of diesel fuel per gallon in the current period increased approximately 30% from the prior year period.

Selling, general and administrative expense for the nine-month period ended February 28, 2009 decreased $3.4 million from the prior year period primarily due to lower insurance expense and incentive compensation expense.

Other income for the nine-month period ended February 28, 2009 was comparable to the prior year period.

Unallocated Overhead and Other Income

	Three months ended						Nine months ended
	February 28,			February 29,			February 28,			February 29,
In thousands	2009			2008			2009			2008
Other income	$	24		$	137		$	145		$	424
Selling, general and administrative		(4,888	)		(2,845	)		(9,687	)		(7,329	)
	$	(4,864	)	$	(2,708	)	$	(9,542	)	$	(6,905	)

Unallocated overhead and other income relate primarily to certain environmental, engineering and other administrative operating activities not attributable to a specific segment. Unallocated selling, general and administration expense for the three-month and nine-month periods ended February 28, 2009 increased from the prior year periods $2.0 million and $2.4 million, respectively, primarily due to increased insurance expense for undeveloped claims.

Corporate

	Three months ended						Nine months ended
	February 28,			February 29,			February 28,			February 29,
In thousands	2009			2008			2009			2008
Other income	$	404		$	545		$	3,149		$	3,283
Selling, general and administrative		(3,785	)		(6,119	)		(6,786	)		(19,307	)
	$	(3,381	)	$	(5,574	)	$	(3,637	)	$	(16,024	)

Three months ended February 28, 2009

Other income for the three-month period ended February 28, 2009 was comparable to the prior year period.

Corporate selling, general and administrative expense for the three-month period ended February 28, 2009 decreased $2.3 million from the prior year period. The decrease was primarily the result of $1.7 million lower incentive compensation expense and $0.8 million lower retirement expense. Stock-based compensation was comparable to the prior year period. Our incentive plans are based on financial performance. Our stock-based compensation includes awards expected to be settled in cash, the expense for which is based on the average stock price at the end of each period until the awards are paid. The impact of changes in our stock price reduced stock-based compensation $2.4 million and $2.8 million during three-month periods ended February 28, 2009 and February 29, 2008, respectively.

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Nine months ended February 28, 2009

Other income for the nine-month period ended February 28, 2009 was comparable to the prior year period. The current nine-month period includes a bonus payment of $1.6 million received upon the execution of an oil and gas lease agreement on property we own in north Texas that is not associated with any business segment. The prior nine-month period includes a gain of $1.1 million from the sale of corporate real estate and a bonus payment of $0.7 million received upon the execution of an oil and gas lease agreement on property formerly owned by us but not associated with any business segment.

Corporate selling, general and administrative expense for the nine-month period ended February 28, 2009 decreased $12.5 million from the prior year period. The decrease was primarily the result of $5.5 million lower incentive compensation expense and $6.4 million lower stock-based compensation. Our incentive plans are based on financial performance. Our stock-based compensation includes awards expected to be settled in cash, the expense for which is based on the average stock price at the end of each period until the awards are paid. The impact of changes in our stock price reduced stock-based compensation $12.1 million and $6.6 million during nine-month periods ended February 28, 2009 and February 29, 2008, respectively.

Interest

Interest expense incurred for the three-month period ended February 28, 2009 was $13.0 million, of which $4.7 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $8.3 million was expensed. Interest expense incurred for the three-month period ended February 29, 2008 was $7.5 million, all of which was capitalized in connection with our Hunter, Texas and Oro Grande, California cement plant expansion projects.

Interest expense incurred for the nine-month period ended February 28, 2009 was $34.6 million, of which $9.7 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $24.9 million was expensed. Interest expense incurred for the nine-month period ended February 29, 2008 was $20.8 million, all of which was capitalized in connection with our Hunter, Texas and Oro Grande, California cement plant expansion projects.

Interest expense incurred for the three-month and nine-month periods ended February 28, 2009 increased from the prior year periods $5.5 million and $13.8 million, respectively. The increases were due to higher average outstanding debt and borrowings on life insurance contracts. An additional $4.4 million in interest expense is currently estimated to be capitalized in connection with our Hunter expansion project during the remainder of our current fiscal year.

Loss on Debt Retirements

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

Income Taxes

Income taxes for the interim periods ended February 28, 2009 and February 29, 2008 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 benefit of separately stated items in the amount of $0.6 million in the interim periods ended February 28, 2009. The primary reason that the tax rate differs from the 35% federal statutory corporate rate is due to percentage depletion that is tax deductible, state income taxes and deductions for income from qualified domestic production activities. Our estimated effective tax rate for fiscal year 2009 is 25.5% compared to 31.1% for fiscal year 2008.

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LIQUIDITY AND CAPITAL RESOURCES

In addition to cash and cash equivalents of $33.9 million at February 28, 2009, our sources of liquidity include cash from operations and borrowings available under our $200 million senior secured revolving credit facility.

Senior Secured Revolving Credit Facility. On November 21, 2008, we amended our August 15, 2007 credit agreement to, among other things, increase the permitted leverage ratio, secure our obligations under the credit facility and limit the amount that can be borrowed under the credit agreement to the lesser of a borrowing base equal to the sum of 80% of our accounts receivable and 50% of our inventory or the $200 million stated principal amount of the credit agreement. The credit facility expires on August 15, 2012. The borrowing base at February 28, 2009 was $158.5 million. It includes a $50 million sub-limit for letters of credit. Any outstanding letters of credit are deducted from the borrowing availability under the facility. No borrowings were outstanding at February 28, 2009; however, $22.4 million of the facility was utilized to support letters of credit. Amounts drawn under the facility bear interest either at the LIBOR rate plus a margin of 2.5% to 3.5%, or at a base rate (which is the highest of (a) the federal funds rate plus 0.5%, (b) the prime rate and (c) the one-month LIBOR rate plus 1.0%) plus a margin of 1.5% to 2.5%. The interest rate margins are subject to adjustments based on our leverage ratio. Commitment fees are payable currently at an annual rate of 0.5% on the unused portion of the facility. We may terminate the facility at any time.

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 accounts, inventory, equipment, intellectual property and other personal property, and in all of our equity interests in present and future domestic subsidiaries and 66% of the equity interest in any future foreign subsidiaries, if any.

The credit facility contains covenants restricting, among other things, prepayment or redemption of the senior notes, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. Cash dividends paid on our common stock are limited to an annual amount of $10.0 million. We are required to comply with certain financial tests and to maintain certain financial ratios, such as leverage and interest coverage ratios. We were in compliance with all of these loan covenants as of February 28, 2009.

Contractual Obligations.On August 18, 2008, we sold $300 million aggregate principal amount of additional 7.25% senior notes due in 2013 at an offering price of 93.25%. The additional notes were issued under our existing indenture dated July 6, 2005. The net proceeds were used to repay our $150 million senior term loan and borrowings outstanding under our senior secured revolving credit facility in the amount of $29.5 million, with additional proceeds available for general corporate purposes. The following is a summary of our estimated additional future payments as a result of this new commitment, net of obligations prepaid out of the proceeds of the sale, for fiscal year periods subsequent to May 31, 2008.

	Future Payments by Period
In thousands	Total			2009			2010			2011			2012-2013			After 2013
Borrowings
New long-term debt	$	300,000		$	--		$	--		$	--		$	--		$	300,000
Interest		108,750			10,875			21,750			21,750			43,500			10,875
Effect of Prepayments
Long-term debt		(150,000	)		--			--			--			(150,000	)		--
Interest		(22,835	)		(5,375	)		(6,514	)		(5,752	)		(5,194	)		--
	$	235,915		$	5,500		$	15,236		$	15,998		$	(111,694	)	$	310,875

In October 2007, we commenced construction on a project to expand our Hunter, Texas cement plant. We are expanding the Hunter plant by approximately 1.4 million tons of advanced dry process annual cement production capacity. The 900,000 tons of existing annual cement production capacity will remain in operation. As of February 28, 2009, we have expended $247.0 million, excluding capitalized interest of $11.6 million related to the project.

In light of current economic and market conditions, we are delaying completion of the project. We believe it is likely that cement demand levels in Texas will not permit the new kiln to operate profitably if the project is completed as originally scheduled. We expect cement demand to rebound in the future and we will resume construction when future economic and market conditions indicate it is appropriate. We anticipate beginning the commissioning of the project within 12 months of resuming construction.

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The pause in construction will begin in May 2009, at which time we expect to have expended approximately $300 million, excluding capitalized interest of approximately $16 million related to the project. The delay is expected to defer approximately $40 million to $60 million of capital expenditures.

In July 2008, we negotiated three contracts for the purchase of coal for use in our cement and expanded shale and clay lightweight aggregate plants in Texas beginning with calendar year 2009. Each contract requires us to purchase all of our coal requirements at a fixed price (escalated annually) through calendar year 2011. In September 2008, we negotiated a contract for the purchase of coal for use in our Oro Grande, California cement plant beginning in June 2009. The contract requires us to purchase all of our coal requirements at a fixed price (escalated annually) through May 2014. These contracts do not require that minimum amounts of material be purchased.

We expect cash and cash equivalents, cash from operations and available borrowings under our senior secured revolving credit facility to be sufficient to provide funds for capital expenditure commitments currently estimated at $285 million to $305 million for fiscal year 2009 (including the expansion of the Hunter, Texas plant), 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 was $72.5 million and $76.3 million for the nine-month period ended February 28, 2009 and February 29, 2008, respectively. The decrease was primarily the result of lower income from operations offset in part by higher depreciation due to the completion of our Oro Grande, California cement plant in May 2008.

Net cash used by investing activities was $202.2 million and $149.4 million for the nine-month period ended February 28, 2009 and February 29 2008 respectively.

Capital expenditures, including capitalized interest, incurred in connection with the expansion of our Hunter, Texas cement plant were $180.4 million and $38.8 million for the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. Capital expenditures, including capitalized interest, incurred in connection with the expansion and modernization of our Oro Grande, California cement plant were $1.3 million and $154.4 million for the nine-month periods ended February 28, 2009 and February 29, 2008, respectively.

Capital expenditures for normal replacement and technological upgrades of existing equipment and acquisitions to sustain our existing operations were $59.2 million and $48.5 million for the nine-month periods ended February 28, 2009 and February 29, 2008, respectively. Capital expenditures in the current period include $25.3 million incurred to acquire aggregate operations in central Texas through a deferred like-kind-exchange transaction. Completion of our deferred like-kind-exchange transactions reduced the cash designated for property acquisitions that was being held by a qualified intermediary trust by $28.7 million.

Net cash provided by financing activities was $124.0 million and $67.6 million for the nine-month period ended February 28, 2009 and February 29, 2008, respectively.

On August 18, 2008, we sold $300 million aggregate principal amount of additional 7.25% senior notes due in 2013 at an offering price of 93.25%. The net proceeds were used to repay our $150 million senior term loan and borrowings outstanding under our senior secured revolving credit facility in the amount of $29.5 million.

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 entitled “Legal Proceedings and Contingent Liabilities” 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.

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Market Risk

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

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

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

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

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

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

Goodwill. Management tests goodwill for impairment annually by reporting unit in the fourth quarter of our fiscal year. If the carrying amount of the goodwill exceeds its fair value, an impairment loss is recognized. In applying a fair-value-based test, estimates are made of the expected future cash flows to be derived from the reporting unit. Similar to the review for impairment of other long-lived assets, the resulting fair value determination is significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors.

In light of current market conditions, we assessed our California cement operations for impairment during our November 2008 quarter. Our assessment indicated that there was no impairment of goodwill. The assessment was based in part on assumptions regarding the timing of economic recovery in our California market. Management continued to evaluate and monitor the economic environment during our February 2009 quarter and the general assumptions used in our assessment have not changed. The current market conditions and economic climate are very volatile and it is possible that the current recession could last longer and have a bigger impact on our operations than was anticipated. Should the recession become more severe or last longer than anticipated, we could recognize an impairment charge in the future with respect to goodwill. Management will perform its annual impairment test in the fourth quarter of our current fiscal year.

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Recent Accounting Developments

In September 2006, the Financial Accounting Standards Board issued SFAS No. 157, “Fair Value Measurements.” This standard defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. We adopted this SFAS effective June 1, 2008. The adoption of SFAS No. 157 did not have a current material impact on our consolidated financial statements.

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

Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the

Private Securities Litigation Reform Act of 1995

Certain statements contained in this quarterly report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the impact of competitive pressures and changing economic and financial conditions on our business, the cyclical and seasonal nature of our business, the level of construction activity in our markets, abnormal periods of inclement weather, unexpected periods of equipment downtime, unexpected operational difficulties, changes in the cost of raw materials, fuel and energy, changes in 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.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is included in Part I, Item 2 of this report.

Item 4.  Controls and Procedures

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

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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 entitled “Legal Proceedings and Contingent Liabilities” presented in Part I, Item 1 of this report and incorporated herein by reference.

Item 1A. Risk Factors

The first two risks described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended May 31, 2008 are modified by the discussion in this report about the suspension of the construction project at our Hunter, Texas cement plant and the decline in demand for our products in Texas that we experienced beginning in the quarter ended November 30, 2008 due to the decline in construction activity. A sustained period of declining construction activity in our markets could materially and adversely affect our operating results.

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 entitled “Long-Term Debt” presented in Part I, Item 1 of this report and incorporated herein by reference.

Issuer Purchases of Equity Securities. We are restricted by our loan covenants from purchasing our Common Stock on the open market. However, in connection with so-called “stock swap exercises” of employee stock options, shares are surrendered or deemed surrendered to the Company to pay the exercise price or to satisfy tax withholding obligations. The following table presents information with respect to such transactions which occurred during the three-month period ended February 28, 2009

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
December 1, 2008 – December 31, 2008	--	$	--	--	--
January 1, 2009 - January 31, 2009	17,360		27.35	--	--
February 1, 2009 – February 28, 2009	--		--	--	--
Total	17,360	$	27.35	--	--

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Item 6.  Exhibits

The following exhibits are included herein:

3.1	Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K dated August 28, 1996, File No. 001-04887)
3.2	Bylaws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed January 16, 2009)
3.3	Amended and Restated Certificate of Designations of Series B Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on November 1, 2006)
4.1	Form of Rights Agreement dated as of November 1, 2006, between Texas Industries, Inc. and Mellon Investor Services, LLC (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on October 20, 2006, File No. 001-04887)
4.2	Form of the Company’s 7 1/4% Senior Note due 2013 (CUSIP 882491 AK9) (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
4.3	Form of the Company’s Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
4.4	Registration Rights Agreement, dated July 6, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
4.5	Indenture, dated July 6, 2005, among the Company, the Guarantors and Wells Fargo, National Association, as Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
4.6	Form of the Company’s 7 1/4% Senior Note due 2013 (CUSIP 882491 AM5) and Notation of Guarantee (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
4.7	Form of the Company’s 7 1/4% Senior Note due 2013 (CUSIP U88244 AC9) and Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
4.8	Registration Rights Agreement, dated August 18, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
4.9	First Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
4.10	Second Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.5 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
10.1	Purchase Agreement, dated June 29, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
10.2	First Amended and Restated Credit Agreement, dated August 15, 2007, among the Company, Bank of America, N.A., as Administrative Agent and lender, L/C Issuer and Swing Line Lender, UBS Securities LLC, as Syndication Agent, and certain lenders (incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed on August 17, 2007, File No. 001-04887)
10.3	Separation and Distribution Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

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10.4	Amendment No. 1 to Separation and Distribution Agreement dated as of July 27, 2005 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated July 27, 2005, File No. 001-04887)
10.5	Tax Sharing and Indemnification Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
10.6	Employment Agreement of Mel G. Brekhus (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 22, 2007)
10.7	Texas Industries, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 as filed May 19, 1994, File No. 033-53715)
10.8	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)
10.9	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)
10.10	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)
10.11	TXI Annual Incentive Plans-Fiscal Year 2009 (incorporated by reference to Exhibit 10.11 to Annual Report on Form 10-K filed July 11, 2008)
10.12	TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2009 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 25, 2006)
10.13	TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2010 (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on July 13, 2007)
10.14	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)
10.15	Master Performance-Based Incentive Plan (incorporated by reference to Appendix A to definitive proxy statement filed on August 25, 2006)
10.16	Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on August 12, 2005, File No. 001-04887)
10.17	Form of SAR Agreement for Non-Employee Directors under Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.16 to Annual Report on Form 10-K filed on August 12, 2005, File No. 001-04887)
10.18	Form of Amendment No. 1 to SAR Agreement for Non-Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K dated April 19, 2006)
10.19	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)
10.20	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)
10.21	Contract, dated September 27, 2005, between Riverside Cement Company and Oro Grande Contractors (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated September 27, 2005, noting that portions of the exhibit were omitted pursuant to a request for confidential treatment)

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10.22	Deferred Compensation Plan for Directors of Texas Industries, Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 18, 2006)
10.23	Form of 2005 Executive Financial Security Plan (Annuity Formula) (incorporated by reference to Exhibit 10.25 to Quarterly Report on Form 10-Q filed on January 5, 2007)
10.24	Form of 2005 Executive Financial Security Plan (Lump Sum Formula) (incorporated by reference to Exhibit 10.26 to Quarterly Report on Form 10-Q filed on January 5, 2007)
10.25	Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated April 19, 2006)
10.26	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)
10.27	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)
10.28	First Amendment to First Amended and Restated Credit Agreement dated as of January 28, 2008 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and lender and other lenders (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 28, 2008)
10.29	Second Amendment to First Amended and Restated Credit Agreement dated as of March 20, 2008 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and lender and other lenders (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K dated March 20, 2008)
10.30	Purchase Agreement dated August 7, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated August 13, 2008, File No. 001-04887)
10.31	Third Amendment to First Amended and Restated Credit Agreement, dated November 21, 2008, among the Company, Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated November 21, 2008)
10.32	Security Agreement, dated November 21, 2008, among the Company, the Guarantors and Bank of America, N. A. (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K dated November 21, 2008)
10.33	Amendment No. 1 to Employment Agreement of Mel G. Brekhus dated March 26, 2009
12.1	Computation of Ratios of Earnings to Fixed Charges
15.1	Letter re: Unaudited Interim Financial Information
31.1	Certification of Chief Executive Officer
31.2	Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer

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

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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.
March 27, 2009	/s/ Kenneth R. Allen
	Kenneth R. Allen
	Vice President - Finance and Chief Financial Officer
	(Principal Financial Officer)

March 27, 2009	/s/ T. Lesley Vines
	T. Lesley Vines
	Vice President – Corporate Controller
	(Principal Accounting Officer)

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INDEX TO EXHIBITS

Exhibit No.

3.1	Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K dated August 28, 1996, File No. 001-04887)
3.2	Bylaws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed January 16, 2009)
3.3	Amended and Restated Certificate of Designations of Series B Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on November 1, 2006)
4.1	Form of Rights Agreement dated as of November 1, 2006, between Texas Industries, Inc. and Mellon Investor Services, LLC (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed on October 20, 2006, File No. 001-04887)
4.2	Form of the Company’s 7 1/4% Senior Note due 2013 (CUSIP 882491 AK9) (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
4.3	Form of the Company’s Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
4.4	Registration Rights Agreement, dated July 6, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
4.5	Indenture, dated July 6, 2005, among the Company, the Guarantors and Wells Fargo, National Association, as Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
4.6	Form of the Company’s 7 1/4% Senior Note due 2013 (CUSIP 882491 AM5) and Notation of Guarantee (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
4.7	Form of the Company’s 7 1/4% Senior Note due 2013 (CUSIP U88244 AC9) and Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
4.8	Registration Rights Agreement, dated August 18, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
4.9	First Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
4.10	Second Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.5 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)
10.1	Purchase Agreement, dated June 29, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
10.2	First Amended and Restated Credit Agreement, dated August 15, 2007, among the Company, Bank of America, N.A., as Administrative Agent and lender, L/C Issuer and Swing Line Lender, UBS Securities LLC, as Syndication Agent, and certain lenders (incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed on August 17, 2007, File No. 001-04887)
10.3	Separation and Distribution Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)

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Index to Exhibits-(Continued)

Exhibit No.

10.4	Amendment No. 1 to Separation and Distribution Agreement dated as of July 27, 2005 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated July 27, 2005, File No. 001-04887)
10.5	Tax Sharing and Indemnification Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
10.6	Employment Agreement of Mel G. Brekhus (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 22, 2007)
10.7	Texas Industries, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 as filed May 19, 1994, File No. 033-53715)
10.8	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)
10.9	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)
10.10	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)
10.11	TXI Annual Incentive Plans-Fiscal Year 2009 (incorporated by reference to Exhibit 10.11 to Annual Report on Form 10-K filed July 11, 2008)
10.12	TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2009 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 25, 2006)
10.13	TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2010 (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on July 13, 2007)
10.14	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)
10.15	Master Performance-Based Incentive Plan (incorporated by reference to Appendix A to definitive proxy statement filed on August 25, 2006)
10.16	Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on August 12, 2005, File No. 001-04887)
10.17	Form of SAR Agreement for Non-Employee Directors under Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.16 to Annual Report on Form 10-K filed on August 12, 2005, File No. 001-04887)
10.18	Form of Amendment No. 1 to SAR Agreement for Non-Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K dated April 19, 2006)
10.19	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)
10.20	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)

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Index to Exhibits-(Continued)

Exhibit No.

10.21	Contract, dated September 27, 2005, between Riverside Cement Company and Oro Grande Contractors (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated September 27, 2005, noting that portions of the exhibit were omitted pursuant to a request for confidential treatment)
10.22	Deferred Compensation Plan for Directors of Texas Industries, Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 18, 2006)
10.23	Form of 2005 Executive Financial Security Plan (Annuity Formula) (incorporated by reference to Exhibit 10.25 to Quarterly Report on Form 10-Q filed on January 5, 2007)
10.24	Form of 2005 Executive Financial Security Plan (Lump Sum Formula) (incorporated by reference to Exhibit 10.26 to Quarterly Report on Form 10-Q filed on January 5, 2007)
10.25	Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated April 19, 2006)
10.26	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)
10.27	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)
10.28	First Amendment to First Amended and Restated Credit Agreement dated as of January 28, 2008 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and lender and other lenders (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 28, 2008)
10.29	Second Amendment to First Amended and Restated Credit Agreement dated as of March 20, 2008 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line Lender, L/C Issuer and lender and other lenders (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K dated March 20, 2008)
10.30	Purchase Agreement dated August 7, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated August 13, 2008, File No. 001-04887)
10.31	Third Amendment to First Amended and Restated Credit Agreement, dated November 21, 2008, among the Company, Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated November 21, 2008)
10.32	Security Agreement, dated November 21, 2008, among the Company, the Guarantors and Bank of America, N. A. (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K dated November 21, 2008)
10.33	Amendment No. 1 to Employment Agreement of Mel G. Brekhus dated March 26, 2009
12.1	Computation of Ratios of Earnings to Fixed Charges
15.1	Letter re: Unaudited Interim Financial Information
31.1	Certification of Chief Executive Officer
31.2	Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer

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