(Cover - picture of the Bass Performance Hall)

                      Justin Industries 1998 Annual Report
===============================================================================

Contents

2   Letter to Shareholders
4   Building Materials Report on Operations
10  Footwear Report on Operations
16  Management's Discussion and Analysis
21  Consolidated Financial Statements
32  Eleven-Year Financial Summary
34  Shareholder Information
35  Directors and Officers
36  Manufacturing and Distribution Locations


                                CORPORATE PROFILE

JUSTIN INDUSTRIES, headquartered in Fort Worth, Texas, is a leader in each of
its principal businesses:

  BUILDING MATERIALS - including Acme Brick Company, one of the nation's largest
producers of face brick; Featherlite Building Products Corporation, the
Southwest's leader in manufactured concrete building products; and American Tile
Supply Company, a major Texas distributor of ceramic and marble floor and wall
tile.

  FOOTWEAR - consisting of Justin Boot Company, Tony Lama Company, Nocona Boot
Company, and Chippewa Shoe Company, whose products give Justin Industries a
national identity as the preeminent producer of western boots and quality work,
sport, and casual footwear.

  Northland Publishing, a distinguished publisher of western and southwestern
Americana, art, Native American culture, and children's books, is also part of
Justin Industries.

  Justin Industries common stock is traded in the Nasdaq National Market System
using the symbol "JSTN."

(Picture of Bass Performance Hall)

The Nancy Lee and Perry R. Bass Performance Hall, featured on the cover and
throughout the 1998 Justin Annual Report, is the pride of downtown Fort Worth.
The facade of the magnificent Bass Hall and the forty-eight-foot angels by
sculptor Marton Varo are made with Featherlite's Cordova Cream Limestone.  The
exquisite mix of art and architecture on such a grand scale creates a majestic
introduction to the performing arts experience.

<TABLE>
FINANCIAL HIGHLIGHTS                                                          
<CAPTION>                                                                  

-----------------------------------------------------------------------------------------
                                              %                  %                  %
                                    1998    Change     1997    Change     1996    Change
-----------------------------------------------------------------------------------------
<S>                               <C>       <C>      <C>       <C>      <C>       <C>
Net Sales                         $454,811  +  3.4   $439,787  -  1.8   $447,772  -  3.0
Net Income                          26,542  +   .8     26,323  + 12.7     23,365  -  8.9
Basic Earnings Per Share              1.01  +  1.0       1.00  + 13.6        .88  -  7.4
Diluted Earnings Per Share            1.00  +  1.0        .99  + 13.8        .87  -  7.4
Return on Shareholders' Equity        9.7%  -  6.7      10.4%  +  5.1       9.9%  - 14.7
Capital Expenditures                30,271  + 39.0     21,782  - 11.9     24,738  -  4.9
Working Capital                    175,895  +  5.7    166,397  +   .8    165,053  -  9.0
Total Assets                       396,892  +  5.5    376,067  +  4.4    360,078  -  4.3
Long-Term Debt                      30,750  + 29.5     23,750  + 27.8     32,890  - 42.4
Shareholders' Equity               292,568  +  7.2    272,980  +  8.0    252,856  +  6.9
Book Value Per Share                 11.12  +  7.4      10.35  +  8.3       9.56  +  7.7
Cash Dividends Per Share               .20  + 11.1        .18  + 12.5        .16       -
-----------------------------------------------------------------------------------------
<FN>
                                          in thousands of dollars, except per share data
</TABLE>

===============================================================================

(Picture of angel on the Bass Performance Hall)

"Lend me the stone strength of the past and I will lend you the wings of the
future"
                                            -    Robinson Jeffers

===============================================================================

TO OUR SHAREHOLERS                                            February 4, 1999

A STRONG ECONOMY IN TEXAS and surrounding states boosted residential
construction rates to their highest levels since 1985 and enabled our Acme Brick
Company subsidiary to reach all-time high revenues and earnings in 1998. Acme's
achievements, coupled with another solid contribution by Featherlite Building
Products Corporation, produced an overall increase in Justin Industries'
profitability for the year.
  
  In addition to selling more bricks and concrete blocks in 1998 than in the
previous year, our Building Materials operations also realized revenue gains
from the sale of purchased products, glass block grid systems, and the beautiful
limestone from Featherlite's Texas Quarries division, an example of which you
have seen on the cover of this annual report. Total sales from the Building
Materials operations grew 10% in 1998 with operating profits reaching a record
of almost $50 million.
  
  While we have been pleased with the performance of Acme and Featherlite in
recent years, our expectations for growth in revenues and profitability in
Justin Industries' other operations have not been met. Late in the fourth
quarter, we sold Tradewinds Technologies, Inc. after determining that the
prospects for any meaningful near-term improvements in the evaporative cooler
business were not very good. To date, American Tile Supply Company, which we
acquired in 1994, has not produced the results we had anticipated. Competition
in the tile business has affected margins, and expenses associated with opening
new locations have impacted the bottom line as well. Domestic tile usage,
however, continues to grow at a strong pace, and we believe that our expansion
plans for major markets will improve our competitive position and significantly
enhance prospects for growth and profitability in this business.
  
  A great deal of attention continues to be focused on our Footwear operations.
These businesses have faced more than their share of challenges over the last
few years. Sales of Footwear products peaked for us in 1993 at just under $300
million as the growth in popularity of country music helped create greater
interest in western attire. Since that time, demand for cowboy boots has
declined, and our profits have suffered as well. Consolidation in the industry
put more pressure on pricing and margins in 1998, and difficulties encountered
in implementing a new computer system crippled our distribution center at the
busiest time of the year, causing a loss of almost $10 million in revenues.
  
                                    (Page 2)
===============================================================================
  
  Our Footwear companies continue to address these business conditions and
problems with great energy. To bring down costs, the workforce was reduced 12%
during the year. We now have only about half the number of Footwear operations
employees that we had in 1993. Improvements in quality-control procedures at
Tony Lama have significantly reduced the excess costs incurred from defective
product, which will help raise margins. Our computer difficulties were brought
under control late in the year, and we hope to have all the issues resolved soon
so we can begin to realize the business improvements that are expected to result
from the extensive information technology investments.
  
  As we discussed with you last year, one goal of our Footwear group is to
reduce its dependence on western fashion trends. In 1998, we made continued
progress in this endeavor. Sales of the "Justin Original Workboot" more than
doubled in 1998 in spite of the fourth-quarter shipping problems. For the year,
this product accounted for over 20% of Footwear unit shipments. Growth in the
other non-western lines of Sport Lacers and Chukkas was also very good. As a
result, revenues from all non-western lines approximated 40% of total Footwear
volume in 1998. In 1999, we plan to expand distribution channels for these
Footwear lines. We also intend to broaden our western boot offerings to reach
more potential customers who look for the high quality our brands are known for,
but at lower price points. These boots will be manufactured outside of the
United States under strict quality-control guidelines.
  
  We are enthusiastic about the 1999 prospects for our Building Materials
companies. If the economy remains strong, construction levels should continue to
be very good. The January 1999 acquisition of Texas Clay Industries increased
brick capacity 7%. In addition, a new central Texas plant is scheduled for
completion in the fall, which will provide additional capacity. While we cannot
predict a turnaround in the western boot business, we are confident that our
market share remains the highest in the industry, and with the plans for
increased product lines and expanded distribution, we hope to see improvements
in 1999.

(Picture of the Chairman and the President of Justin Industries)

/S/ JOHN JUSTIN
JOHN JUSTIN
Chairman and Chief Executive Officer

/S/ J. T. DICKENSON
J. T. DICKENSON
President and Chief Operating Officer

                                    (Page 3)
===============================================================================

BUILDING MATERIALS                                         REPORT ON OPERATIONS
-------------------------------------------------------------------------------
ACME BRICK                        FEATHERLITE              AMERICAN TILE SUPPLY


JUSTIN INDUSTRIES' Building Materials Group had its best year ever in 1998 as
revenues and profits reached new heights. For the year, this segment's sales
grew 10% and operating profits grew 13% over 1997.
  
ACME BRICK COMPANY achieved all-time record sales and profits in 1998. In
addition to brick shipments, sales of ceramic tile and related products as well
as manufactured Innovative Building Products (IBP) glass block grid systems also
reached record highs. The company entered 1999 with a record backlog of orders.
  
  Helping to accomplish these records was Acme's continued expansion and
renovation of several distribution facilities. Construction began on an office,
warehouse, and showroom in North Little Rock, Arkansas, which will house both
Acme Brick and American Tile Supply. Also, a large tile warehouse was added to
the existing Oklahoma City sales facility. In 1998, Acme purchased a brick
distributor in Temple, Texas. This Central Texas facility is strategically
located in one of the more rapidly growing population centers in the state,
between the Austin and the Fort Worth/Dallas metroplex areas. Acme also
purchased and renovated an existing facility in Russellville, Arkansas, and
completed a major addition to the Shreveport, Louisiana, location. New office
sites in Wichita, Kansas; Lafayette, Louisiana; and Fort Worth, Texas, were
purchased and preliminary construction plans are under way.
  
  For a second successful year, Acme's advertising efforts were concentrated on
supporting the Troy Aikman Foundation. Television commercials featuring the
professional football star Troy Aikman and sportscaster Pat Summerall aired in
each of Acme's major markets. These commercials, along with billboards, print
advertising, and point-of-sales materials, again communicated to prospective
home buyers that for each Acme Brick home purchased during the year, Acme would
make a cash contribution to the Troy Aikman Foundation to benefit children. A
new marketing campaign called "The House That Juan Built" teamed Acme Brick with
Juan Gonzalez, the American League Most Valuable Player, in an effort to promote
Habitat for Humanity.
  
  Acme's marketing research in 1998 reinforced the effectiveness of a twenty-
two-year commitment to consumer advertising. A representative sample of new home
buyers from several of Acme's major markets was asked the question, "If you had
the opportunity to choose a brand of brick, which one would be your first
choice?" An impressive 84% of new home buyers chose Acme. The strongest
competitor's brand was only chosen ten times out of one hundred.

                                    (Page 4)
===============================================================================

(Picture of house and owners)

"Acme brick was the perfect choice for our Mediterranean-style home.  It's
absolutely beautiful."

                                            -    Jerry and Deidra Pozez

===============================================================================
          
          -----------------------------------------------------------
          (Picture of Juan Gonzalez and a child examining brick wall
          being built for a house)
          
          In 1998, Acme Brick Company teamed up with Texas Ranger Juan
          Gonzalez and Eller Media Outdoor Company to build thirty
          homes during the next two years for Habitat for Humanity.
          One of the nation's largest home builders, Habitat for
          Humanity builds affordable housing for worthy recipients,
          who repay the home loans interest-free.
          
            Mr. Gonzalez, the American League Most Valuable Player
          in 1998, provides considerable recognition for a program
          we're calling "The House That Juan Built."  Acme Brick
          Company will donate all brick required to build the homes.
          Acme has contributed to Habitat for Humanity for many years,
          but now strengthens its commitment to this worthwhile cause
          with a formal program of involvement.
          
            Acme Brick Company and Justin Industries, leaders in
          business and community, are proud to support the efforts of
          organizations that encourage growth and stability for all
          people.
          -----------------------------------------------------------


  A new marketing program highlights Acme Brick as the official brick of the
millennium. Many products are being associated with the year 2000, but few, if
any, of these other products will see the year 3000. In contrast, many of Acme's
products will likely be around to witness the next millennium and beyond. The
high-quality clays used to produce Acme Brick have already proven their
longevity. Most of Acme's clay deposits are 300 million years old, give or take
a few millennia. Few, if any, man-made products can match the enduring qualities
of hard-fired Acme Brick. To honor the event, Acme has created a commemorative
millennium brick, which will be given to Acme customers and associates.
  
  The title of "official brick" is not new to Acme. For several years, Acme has
been the official brick of the Dallas Cowboys, the Dallas Mavericks, the Kansas
City Chiefs, and the St. Louis Rams.
  
  Plans to increase production capacity in order to support demand were
initiated in 1998. Late in the year, construction began on a new molded "soft
mud" brick plant near Austin, Texas. This strategically located site was chosen
because of the geographic location and the availability of high-quality,
multicolored clays, which can produce unique products. The plant is scheduled to
begin production during the fourth quarter of 1999.

                                    (Page 6)
===============================================================================

  Major renovations of the Fort Smith, Arkansas, plant were undertaken in 1998.
Growth in northwest Arkansas has strengthened this market and the distinctive
product line that can be produced in an upgraded facility will enable Acme to be
more competitive well into the new millennium. The Kanopolis, Kansas, plant is
in the final stages of a project to increase production by over 20% and lower
manufacturing costs.
  
  In the important area of safety, Acme's production department completed one
year and almost 3,000,000 man-hours with no lost-time accidents this past July.
A year without lost-time accidents has long been a goal of the production
department, and its attainment received national recognition. The Kanopolis
plant's twenty-four-year no lost-time record, coupled with the more than eight
years of no lost time at five other plants, sets the pace for the entire
industry.
  
  The aspect of environment continues to increase in importance. In 1998, a
department was formed to monitor compliance and management-related issues
pertaining to the environment. This enables the company to work with
representatives involved in establishing criteria for industry environmental
standards on a national basis.

AMERICAN TILE SUPPLY COMPANY finished 1998 with record sales volume. Revenue
gains were accomplished in spite of intense new competition.
  
  Two new locations were opened in 1998. Construction was completed on a new
28,000-square-foot ceramic tile warehouse and showroom in North Houston, which
opened in September. This location strengthens the American Tile drive to become
the dominant ceramic tile supplier in the Houston market.
  
  The Natural Stone division relocated into a 54,000-square-foot north Dallas
warehouse and designer showroom in July 1998. The existing product line of
marble, granite, slate, and other natural stone tiles was expanded to include
slab material purchased from fifteen countries around the world.
  
  In 1999, a new location will open in Little Rock, Arkansas. The American Tile
focus for 1999 will be on strengthening new operations and expanding business in
existing locations by developing new marketing programs.
  
FEATHERLITE BUILDING PRODUCTS CORPORATION sold over twenty-five million block in
1998, an all-time high. The continued robust construction market, coupled with
Featherlite's investment in increased production capacity, has allowed its
revenues to grow to record levels. Featherlite has some of the most modern and
efficient masonry products facilities in the Southwest with an annual capacity
of over thirty million block on a single shift. Featherlite has introduced a
second shift at some of its facilities in order to meet local demand and in
order to take advantage of plant automation. With its present facilities,
Featherlite should be able to sustain continued growth for years to come.

                                    (Page 7)
===============================================================================

  Featherlite is continually seeking to offer new products and services. One of
the new items developed and introduced in 1998 is the "Hill Country Stone" line
of burnished block. This oversized unit has gained rapid acceptance among
architects and should become a significant part of Featherlite's already
successful line of burnished block products. The licensed Mesa(R) Retaining Wall
System, introduced in 1997, exceeded sales expectations in 1998. This product is
used extensively in Department of Transportation, commercial, and residential
projects. Sales of this system should increase in the future. In 1998,
Featherlite introduced its website, www.featherlitetexas.com. The site helps
visitors locate sales offices, view products, download specifications, and
request technical information and samples of Featherlite's wide range of unique
architectural, burnished, and limestone products.
  
  Texas Quarries, Featherlite's architectural limestone division, is the
Southwest's leading producer of high-quality dimensional stone, ashlar, and
patio stone. Texas Quarries has developed a very profitable niche in the Central
Texas high-end residential market for its unique "Texas Mix" and "Cordova Cream"
ashlar stone. Sales have grown annually by 25% over the past seven years to a
1998 volume of one and a half million dollars. In 1999, the addition of a new
slabbing saw and crane will allow Texas Quarries to offer this product to other
Texas markets.
  
  Through its Total Quality Management program, Featherlite encourages its
employees to strive for excellence. In 1997, the company introduced the STOP
program, a system of monitoring and promoting safe practices in the workplace,
and in 1998, for the first time in its history, Featherlite had no lost-time
accidents in any of its facilities. Featherlite is proud of this achievement by
its employees and looks forward to another safe and prosperous year in 1999.

                                    (Page 8)
===============================================================================

(Picture of Bass Performance Hall and sculptor)

"Monumental sculpture requires the finest materials.  Featherlite delivers."
                                            -    Marton Varo
                                                 Sculptor
                                            
===============================================================================

FOOTWEAR                                                  REPORT ON OPERATIONS
-------------------------------------------------------------------------------
       JUSTIN            TONY LAMA             NOCONA            CHIPPEWA


JUSTIN INDUSTRIES' Footwear companies, rich in heritage and tradition, continue
to cherish their role as the leading brands in the western boot markets. During
1998, a difficult year in which many western footwear companies were
consolidated or sold, Justin, Tony Lama, and Nocona capitalized on the strong
brand recognition earned over many decades to enhance their leadership position
in the industry.
  
  In 1998, the Justin Industries Footwear companies continued to develop
exciting new products. These products have been well received in existing
channels of distribution, providing an opportunity to expand into new retail
areas. Within these locations, both new and established, concept shops or
stores-within-stores have been extremely successful in promoting positive brand
imagery. These concept shops highlight all the exciting features and benefits
each brand offers.
  
  The first full year of sales of the "Justin Original Workboot" exceeded
expectations. Additions to the "Justin Original Workboot" line increased sales
and generated new customers. The addition of KEVLAR outsoles, with "Double
Comfort" technology, makes the "Justin Original Workboot" the most durable,
comfortable footwear on the market. Categories such as Chukkas, Double-Comfort
Westerns, and Ropers were also areas of growth for Justin Boot Company. In 1999,
Justin will be the first western footwear company ever licensed to manufacture
Gore-Tex(R) products.
  
  Justin continued to leverage its brand through opportunities in non-footwear
areas. The successful licensing of apparel in 1998 produced growth in revenues
and earnings and provided additional visibility for the Justin name. In 1999,
Justin Boot Company will source additional new product lines internationally.
This select product group will offer the retailer a wider price range of Justin
quality products.
  
TONY LAMA COMPANY, a superior brand name in western footwear, has generated
renewed interest in western wear with its "Cowboy Up" program, which focuses on
Tony Lama's own heritage as the premier manufacturer of cowboy boots. Tony Lama
has developed a new line of "leisure" footwear products to be introduced in the
first quarter of 1999, and has revised its policy for custom-order business to
better adjust to the customers' needs and the needs of Tony Lama.
  
  In late 1998, steps taken to improve Tony Lama's manufacturing efficiency
began to yield results. Costs have come down through a reduction in overhead,
increased attention to quality control, and the installation of more modern
equipment. Also, reduced levels of work-in-process in the factory and better
defined objectives and goals have allowed Tony Lama to shorten its manufacture
time, which should help improve inventory turns.
  
                                    (Page 10)
===============================================================================
  
(Picture of bull rider)

"Whether inside or outside the arena, Tony Lama boots are the real performers."
                                            -    Norman Curry
                                                 Professional Bull Rider
  
===============================================================================

(Picture of building contractor)

"In construction, strength and durability are essential for success. My Justin
workboots are tough enough to handle anything the job site has to offer."
                                            -    Fred Parker
                                                 Building Contractor

===============================================================================

  To capture the first-time buyer of high-quality cowboy boots, Tony Lama plans
to introduce a new line of "price-point boots" produced in Mexico. Much work has
been done in 1998 to ensure Tony Lama branded products from Mexico meet the
rigorous quality and fine styling that loyal Tony Lama customers demand. These
sourced products will generate increased revenues and profits while offering
exceptional value to the consumer.
  
  Tony Lama's "Heavenly Soft Cushion Comfort" system has been successful.
Customers now have the option of boots made with the traditional fit or the
softer, cushioned insole.
  
NOCONA BOOT COMPANY'S market niche can be described by the phrase, "When your
fit is as individual as you are." From AAA to EEE, Nocona can offer customers an
array of leathers, toes, heels, and sizes.
  
  Nocona's exotic skin boots are a key part of its business. From the selection
of the skin to the construction of the product, Nocona offers a truly
superlative exotic boot. Its variety of product and supple top leathers such as
European goat and Italian calf skin elevate the group to one of the most
luxurious exotic categories offered today.
  
  In the fourth quarter of 1998, Nocona began production of Chippewa premium
snake boots and is expected to produce up to 125 pair per day. Nocona's
attention to quality and its experience with producing finely finished footwear
makes the company a natural fit for Chippewa's premium snake boots. This
additional production will also absorb factory overhead.
  
  In 1998, Nocona Boot Company marketed a new logo, new hang tags, and new
company colors. The new look presented a richer image, enhancing Nocona's
reputation as a specialty bootmaker. Nocona continues to sponsor organizations
like the National Cutting Horse Association (NCHA) to maintain recognition with
its upscale consumers, and its Mobile Fit Center program has helped obtain wider
consumer appeal.
  
THE CHIPPEWA SHOE COMPANY has built a strong reputation over many decades.
Chippewa has made its footwear with the finest, most reliable materials
available and is the leading outdoor lifestyle product, offering a rugged,
handmade appearance.
  
  Chippewa's rugged styling and reputation for high quality continue to appeal
to hunters needing snake protection, loggers needing durability and warmth, and
motorcycle enthusiasts looking for strength and style. Consumers in need of a
reliable product look to Chippewa for steel toes, performance outsoles,
cushioned footbeds, and insulated water-resistant linings. Chippewa is truly the
best footwear for any outdoor need.
  
  Chippewa is focusing on controlling its advertising expenditures by
addressing consumer demands on a geographic basis. This approach will aid in
sell-through at retail, further enhancing the Chippewa reputation as the best
outdoor lifestyle product on the market.

                                    (Page 13)
===============================================================================

  In 1999, Chippewa will manufacture and market a collection of Buck Knivesr
footwear. The Buck Knivesr brand name and reputation for quality should generate
new revenue and facilitate Chippewa's penetration into the sporting goods
market.
  
  The company has an endorsement affiliation with Capital recording artist John
Berry. The platinum-selling singer is a natural to represent lifestyle footwear.
Like Chippewa boots, John's music is both cutting edge and classic. His 1996
album Standing on the Edge reached number one on the country charts. Chippewa
also has an agreement with celebrity hunter/outdoorsman Dez Young, host and
producer of TNN's Hunting with Hank. The program is enjoyed weekly by several
million potential Chippewa customers.
  
  Various programs will be initiated in 1999 at Justin Industries' Footwear
companies to better position each brand in the marketplace and improve
profitability in what has been a declining market for a few years. There will be
an intense focus on operating efficiently in 1999. Inventory management measures
will be implemented to improve inventory turns, which will have a positive
effect on margins and reduce carrying costs. In addition to inventory control,
there are further cost-saving synergies to be realized through additional
consolidation of operations among the various brands.
  
  Further opportunities to operate efficiently include advanced manufacturing
techniques. Modern equipment plays an important role in the ongoing attempts to
reduce manufacturing costs while increasing quality. Newly acquired information
technology systems will provide management with better tools to make sound
business decisions while responding to a changing market.

                                    (Page 14)
===============================================================================

(Picture of stockbroker)

"My job is complicated enough. When it comes to footwear, I like to keep it
simple. I wear only two kinds - golf shoes and Justin boots."

                                            -    Fred Currie
                                                 Stockbroker

===============================================================================
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                                       
JUSTIN INDUSTRIES realized modest increases in revenues and earnings in 1998. A
decline in sales and profitability in the Company's Footwear operations was
offset by gains at Acme Brick Company as residential construction activity in
the Company's markets increased in 1998. Net income of $26.5 million improved 1%
over 1997. As in 1997, the Company's results were adversely affected by
operating losses in excess of $1 million at its Tradewinds Technologies, Inc.
subsidiary. A decision was made to sell Tradewinds and effective December 31,
1998, the operations and assets of this business were sold for approximately
$3.2 million in cash. The Company's Footwear operations incurred an operating
loss for the first time since 1982. The 1998 loss was attributable to lost sales
and profits, as well as additional expenses incurred, due to problems with new
computer software systems that primarily hampered shipping from the distribution
center in the fourth quarter.

Operations

Consolidated net sales of $454.8 million in 1998 were 3.4% greater than those of
1997. 1997 revenues of $439.8 million were 1.8% below that of 1996.
  
  Building Materials' revenues in 1998 were $292.7 million, an increase of
10.3% over 1997 and an all-time high. Net sales of $265.3 million in 1997
exceeded those of 1996 by 1.5%. The Building Materials group includes Acme Brick
Company and its subsidiary, American Tile Supply Company; Featherlite Building
Products Corporation; and Tradewinds Technologies, Inc., which, as discussed
above, was sold in 1998. The Building Materials group, as described herein,
aggregates the Building Materials reportable segment with the All Other
category, excluding parent operations, as reported in Note 9 to the Consolidated
Financial Statements. Sales of Acme's brick products comprise over one-half of
Building Materials' revenues. In 1998, Acme sold more brick than in any previous
year, as unit shipments increased 9.3% over those in 1997. Residential housing
starts in markets served by Acme increased approximately 20% in 1998 from 1997
levels. Average brick selling prices in 1998 were 4.2% above those of 1997.
Brick shipments in 1997 were 1.2% below those of 1996 as construction activity
was less than the previous year. Average brick selling prices in 1997 were 1.7%
higher than they were in 1996, offsetting the volume decline. Acme's sales of
products purchased for resale in 1998 were 12.2% greater than in 1997 as sales
of tile and related products reached record highs for Acme. In 1997, purchased
product sales were 15.2% above the 1996 level. Revenues at American Tile Supply
grew 1.6% in 1998, following a 1997 increase of less than 1% from 1996.
  
  Revenues for Featherlite in 1998 were 6.3% higher than in 1997, while 1997
net sales exceeded those of 1996 by .5%. In 1998, Featherlite sold more concrete
block than in any previous year. Unit sales of these products were 10.1% greater
than in 1997. The average selling price in 1998 was 1% more than in 1997. While
block unit sales and pricing in 1997 were up 1% and 3.4%, respectively, a
reduction in sales of purchased products offset much of the gain in block
revenues. Featherlite's cut limestone division, Texas Quarries, realized revenue
gains of 3.6% and 14.4% in 1998 and 1997, respectively. Sales of products
produced from this division have more than doubled in the last five years.
  
  Sales at Tradewinds Technologies, Inc. were $3.7 million, $3.3 million, and
$4.1 million in 1998, 1997, and 1996, respectively.
  
  Net sales in the Footwear segment of $162.1 million were 7.1% below 1997
revenues of $174.5 million. Revenues in 1997 were 6.4% less than the 1996 total
of $186.5 million. Unit shipments of Footwear products in 1998 were 4.0% less
than in 1997, while the average price fell approximately 4.1% due to product mix
changes as wholesale prices were higher in 1998 than in 1997. Increased sales of
lower-priced, non-western footwear resulted in the lower overall 1998 selling
prices. As the popularity of western footwear has declined in recent years, the
Company has intensified its efforts in developing non-western lines. These
categories include the Justin Original Workboot, Sport-Lacer and Chukkas, as
well as Chippewa shoes. In 1998, these generally lower-priced products accounted
for approximately 40% of unit shipments. Unit sales of Footwear products in 1997
declined 10.9% from 1996, while the average unit selling price in-creased 4.5%.
Product mix changes, lower discounts, and small price increases affected the
average price increase.

(Graph - Net Sales by Line of Business)

                                    (Page 16)
===============================================================================

  As a percentage of net sales, cost of goods sold Company-wide was 63.7% in
1998 compared to 63.4% in 1997 and 65.4% in 1996. The improvement in 1997 was
attributed to a change in total sales mix between Building Materials and
Footwear and due to significant gains in Footwear margins.
  
  Gross profit margins in the Building Materials group were 41.1% in 1998 and
41.2% in both 1997 and 1996. Increased volume and higher prices produced
improvements in Acme's gross profit margins in 1998. Acme also realized greater
margins in 1997 than in 1996 due primarily to higher pricing, as volume in 1997
was less than in 1996. Gross profit margins at both Featherlite and American
Tile Supply declined slightly in 1998 from 1997 levels. Featherlite's lower
margins were due to start-up costs associated with the new Dallas plant and
lower margins in the cut limestone operations due to product mix. Gross profit
margins at Featherlite were the same in 1997 and 1996. American Tile Supply's
gross margins fell in 1997 compared to 1996 due to competitive conditions, as
well as product mix changes.
  
  Footwear gross profit margins in 1998 were 27.6%, compared to 29.6% in 1997
and 25.4% in 1996. Reduced volume in 1998 adversely affected margins. In
addition, gross profit margins were impacted early in the year by production
problems associated with manufacturing Chippewa products and write-downs of
certain raw materials due to market conditions. Margins in 1997 improved over
1996 due to reductions in customer discounts and product returns.
  
  Selling, general, and administrative expenses as a percentage of sales were
26.9% in 1998 and 1997 and 25.7% in 1996. The absence of any significant
variance from 1997 to 1998 resulted from reductions in advertising expenses in
the Footwear operations offset by expenses incurred due to Footwear's computer
problems. Advertising and promotion expenses were about $2 million higher in
1997 compared to 1996. Expenses in 1997 included approximately $600,000 in
litigation costs incurred in successfully defending a class-action lawsuit
involving Tradewinds.
  
  Interest expense in 1998 was $1.80 million compared to $1.77 million in 1997.
There was very little change in average debt outstanding and effective interest
rates during these periods. Higher debt levels throughout 1996, as well as
overall higher rates, resulted in interest expense for that year of $3.37
million, or almost twice the 1998 and 1997 amounts. Based on average month-end
borrowings outstanding, the average effective interest rate was 5.1% in 1998 and
1997 and 5.5% in 1996. Note 5 to the Consolidated Financial Statements on page
26 describes the Company's borrowing arrangements.
  
  Income tax expense, as a percentage of pre-tax income, was 35.4% in 1998 and
1997 and 36.2% in 1996. The federal statutory rate was 35% for all three years.
See Note 8 to the Consolidated Financial Statements on page 28 for a
reconciliation of the actual tax rate to the federal statutory tax rate, and
other information relating to income tax.
  
  The table on page 34, Quarterly Financial Data, presents summarized operating
results for each quarter in the two years ended December 31, 1998. The Company's
businesses are seasonal in nature, with Building Materials' operations
generating greater activity in the second and third quarters and Footwear
operations accelerating in the third and fourth. As a result, first-quarter
earnings are generally the lowest and fourth-quarter earnings the highest, which
was the case in 1997. Quarterly net income in 1998 was greater than the
comparable quarters of the prior year in each period, except the fourth quarter.
Earnings for the fourth quarter of 1998 were negatively impacted because of the
effects of problems previously reported in the new warehouse computer systems
causing a significant shortfall in Footwear's shipments during the quarter.
Management estimates that sales were impacted by almost $10 million during the
quarter, and net income was negatively affected by approximately $2.3 million,
or $.09 per share on a diluted basis.

(Graph - Net Income)

                                    (Page 17)
===============================================================================

  The Company's Building Materials operations are dependent on levels of
construction activity that are influenced somewhat by interest rates. Changes in
interest rates, therefore, can affect the Company's future earnings prospects.
  
  Inflation has not had a significant impact on the Company's operations in
recent years; however, the Company attempts to recover any cost increases
through improvements to its manufacturing processes and through increases in
price where competitively feasible.

Financial Condition, Liquidity, and Capital Resources

The Company continued to maintain a very sound financial condition throughout
1998. The Balance Sheet Trends table on page 20 presents the percentage
relationship of the major asset, liability, and equity accounts. In 1998, total
assets increased approximately 5.5% to $396.9 million. Working capital at year-
end 1998 was $175.9 million, an increase of 5.7%. The increase in working
capital resulted from the final payment on a term loan, which eliminated any
current maturities of long-term debt. The current ratio at December 31, 1998
improved to 4.2 to 1, the highest ratio since 1993. Shareholders' equity grew
$19.6 million in 1998 to $292.6 million, or $11.12 a share. Total interest-
bearing debt of $30.8 million was $1 million lower than the year-end 1997
amount. As a percentage of shareholders' equity, borrowings were 10.5% compared
to 11.6% at year-end 1997.
  
  Net cash provided by operating activities was $46.3 million in 1998, compared
to $46.4 million in 1997 and $62.9 million in 1996. Major reductions in Footwear
inventories in 1996 were a significant source of cash in that year. In 1998, the
Company invested $30.3 million in fixed asset additions. Most of these funds
were expended in the Building Materials operations to expand production capacity
and add or upgrade sales distribution facilities. In 1998, the Company purchased
195,900 shares of treasury stock at an average cost of $13. The Company may
purchase up to an additional 1.57 million shares of stock pursuant to Board of
Directors' authorization.
  
  Dividends declared in 1998 were $.20 per share, compared to $.18 in 1997 and
$.16 in 1996.
  
  Operations provide the Company's primary source of cash. In addition, the
Company has credit facilities available from commercial banks. The Company
believes that its borrowing arrangements are adequate to support its
requirements for the foreseeable future. Unused lines of credit available to the
Company at December 31, 1998 totaled $66 million.
  
  In January 1999, Acme acquired the assets of Texas Clay Industries for a
total purchase price of approximately $13.3 million. The assets acquired
consisted of approximately $1.1 million in accounts receivable, $600,000 in
inventory and $10.8 million in land, buildings, and equipment related to one
brick plant and associated clay reserves located near the Fort Worth/Dallas
metroplex. Sales generated by this plant in 1998 approximated $11.7 million. In
addition, Acme has committed to spending approximately $18.7 million in 1999 to
complete construction of a new brick plant near Austin, Texas, scheduled to
begin production during the fourth quarter of 1999. These additional production
facilities will increase Acme's annual brick production capacity by
approximately 14% and will be funded out of operations.

(Graph - Interest-Bearing Debt)
(Graph - Capital Expenditures)

                                    (Page 18)
===============================================================================

General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of normal business
activities.
  
  Based on various assessments during the past two years, the Company
determined that only minor modifications or replacement of portions of its IT
software systems and non-IT systems, such as those used in production, would be
necessary in order to properly utilize dates beyond December 31, 1999. Many of
these changes have already been made. Although the Company anticipates all
remaining modifications or replacements will be completed early in 1999, if such
modifications and replacements were not made, or were not completed in a timely
manner, management believes the Year 2000 issue would still not have a material
impact on the operations of the Company. It is estimated that the Company has
spent less than $300,000 over the past year in modifications or replacements in
order to become compliant. Remaining costs are expected to be insignificant.
  
  The Company is still in the assessment phase in determining Year 2000
compliance of significant customers, vendors, and suppliers (external agents).
The Company expects to complete this assessment in the first quarter of 1999. To
date, the Company is not aware of any external agent with a Year 2000 issue that
would materially affect the Company's results of operations, liquidity, or
capital resources. However, the Company has no means of ensuring that external
agents will be Year 2000 ready. The inability of external agents to complete
their Year 2000 resolution process in a timely fashion could materially impact
the Company. The effect of non-compliance by external agents is not
determinable.

Backlogs

The Company maintains information on sales backlogs in order to plan for future
production levels and to project sales volume. At December 31, 1998, the backlog
for clay brick was $46.5 million, compared with $28.6 million at year-end 1997.
The sales backlog for Footwear products at year-end 1998 was $9.0 million,
compared with $4.6 million in 1997.

Safe Harbor Provisions

In accordance with the safe harbor provisions of the securities law regarding
forward-looking statements, except for the historical information contained
herein, this Annual Report contains forward-looking statements that involve
risks and uncertainties. Justin's actual results could differ materially from
those discussed herein. Factors that could cause or contribute to such
differences could include, but are not limited to, changes in demand, prices,
and raw materials costs; changes in the economic conditions of the various
markets the Company serves; changes in the amount and severity of inclement
weather; changes in third-parties' ability to remedy problems in their computer
systems supplied to the company; and the other risks detailed herein and in the
Company's reports filed with the Securities and Exchange Commission.

(Graph - Book Value per Share)
(Graph - Shareholders' Equity)

                                    (Page 19)
===============================================================================

<TABLE>
Balance Sheet Trends                                                         
<CAPTION>
Percent of Total Assets                                                      
                                                                                
ASSETS:                             1998      1997      1996      1995      1994
----------------------------------------------------------------------------------
<S>                               <C>       <C>       <C>       <C>       <C>
  Receivables                         20%       19%       22%       21%       22%
  Inventories                         34        38        36        42        43
  Property, plant, and equipment      31        29        29        26        23
  All other assets                    15        14        13        11        12
                                  -------   -------   -------   -------   -------
                                     100%      100%      100%      100%      100%
                                  =======   =======   =======   =======   =======
                                                                                
LIABILITIES AND EQUITY:                                                      
---------------------------------------------------------------------------------- 
  Interest-bearing debt                8%        8%       12%       19%       21%
  All other liabilities               18        19        18        18        20
  Equity                              74        73        70        63        59
                                  -------   -------   -------   -------   -------
                                     100%      100%      100%      100%      100%
                                  =======   =======   =======   =======   =======                                          
</TABLE>

<TABLE>
Operating Trends                                                               
<CAPTION>                                                                      
Percent of Net Sales

                              1998      1997      1996      1995      1994
----------------------------------------------------------------------------
<S>                         <C>       <C>       <C>       <C>       <C>
Net sales                     100.0%    100.0%    100.0%    100.0%    100.0%
Cost of sales                  63.7      63.4      65.4      65.2      65.1
                            --------  --------  --------  --------  --------
Gross profit                   36.3      36.6      34.6      34.8      34.9
Operating expenses             26.9      26.9      25.7      25.0      22.1
Interest                         .4        .4        .7       1.1        .9
Income taxes                    3.2       3.3       3.0       3.1       4.3
                            --------  --------  --------  --------  --------
Net income                      5.8%      6.0%      5.2%      5.6%      7.6%
                            ========  ========  ========  ========  ========
</TABLE>      

<TABLE>
Five - Year Analysis of                                       
Sales and Operating Profit
by Product Lines
<CAPTION>
(in thousands of dollars)                

                                  1998                 1997                 1996                 1995                 1994
                           -------------------  -------------------  -------------------  -------------------  -------------------
                             Amount   Percent     Amount   Percent     Amount   Percent     Amount   Percent     Amount   Percent
----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>        <C>       <C>
Building Materials:
  Net sales                $292,726       64%   $265,313       60%   $261,315       58%   $240,094       52%   $224,213      46%
  Operating profit           48,932      101      43,245       90      44,233       97      42,107       82      44,600      66
Footwear:                                                                                                                     
  Net sales                 162,085       36     174,474       40     186,457       42     221,354       48     258,796      54
  Operating profit (loss)      (524)      (1)      4,795       10       1,591        3       9,234       18      22,871      34
---------------------------------------------------------------------------------------------------------------------------------
Totals:                                                                                                                   
  Net sales                $454,811      100%   $439,787      100%   $447,772      100%   $461,448      100%   $483,009     100%
  Operating profit           48,408      100%     48,040      100%     45,824      100%     51,341      100%     67,471     100%
Less interest and parent                                                                                                
  Company operations          7,327                7,293                9,202               11,137                9,995          
---------------------------------------------------------------------------------------------------------------------------------
Income before                                                                                                             
  Income taxes             $ 41,081             $ 40,747             $ 36,622             $ 40,204             $ 57,476 
---------------------------------------------------------------------------------------------------------------------------------
<FN>
The Company provides additional information as shown above aggregating its
business units slightly differently than that prescribed by Financial Accounting
Standards Board Statement No. 131 in its definition of reportable segments. The
Building Materials product line as shown above aggregates the Building Materials
reportable segment with the All Other category, excluding parent operations, as
reported in Note 9 to the Company's Consolidated Financial Statements.
</TABLE>

                                    (Page 20)
===============================================================================

                        CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
CONSOLIDATED BALANCE SHEET                                        
<CAPTION>                                                                   
In Thousands of Dollars, Except Share Data, at December 31,                    1998       1997
--------------------------------------------------------------------------------------------------
<S>                                                                         <C>         <C>
ASSETS
--------------------------------------------------------------------------------------------------
Current assets:                                                                                 
  Cash                                                                      $   5,100   $   5,113
  Accounts receivable, less allowance for doubtful accounts                                     
    Of $3,534 and $3,097, respectively                                         80,155      73,153
  Inventories                                                                 136,575     141,648
  Federal and state income taxes                                                7,093       7,946
  Prepaid expenses                                                              2,472       2,454
--------------------------------------------------------------------------------------------------
      Total current assets                                                    231,395     230,314
                                                                                                
Other assets, at cost                                                          40,766      32,740
Assets held for sale                                                            2,809       2,829
Property, plant, and equipment, at cost:                                                        
  Land                                                                         20,704      20,062
  Buildings and equipment                                                     277,134     266,988
  Construction in progress                                                     10,913       3,000
--------------------------------------------------------------------------------------------------
                                                                              308,751     290,050
  Less accumulated depreciation                                               186,829     179,866
--------------------------------------------------------------------------------------------------
      Net property, plant, and equipment                                      121,922     110,184
                                                                            $ 396,892   $ 376,067
==================================================================================================
                                                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY                                                            
--------------------------------------------------------------------------------------------------
Current liabilities:
  Trade accounts payable                                                    $  18,925   $  18,412
  Accrued payroll items                                                        12,132      12,984
  Accrued insurance                                                            10,449      10,803
  Accrued state and local taxes                                                 3,065       2,553
  Other accrued expenses                                                        9,612       9,846
  Dividends payable                                                             1,317       1,319
  Current portion of long-term debt                                                 -       8,000
--------------------------------------------------------------------------------------------------
      Total current liabilities                                                55,500      63,917
                                                                                                
Long-term debt, less current portion                                           30,750      23,750
Deferred income taxes                                                          18,074      15,420
Shareholders' equity:                                                                           
  Voting preferred stock, $2.50 par value; 1,000,000 shares authorized --                       
    Series Two convertible, 100 shares issued and outstanding                       -           -
  Common stock, $2.50 par value; 100,000,000 shares authorized,                                 
    27,869,888 shares issued                                                   69,674      69,674
  Capital in excess of par value                                               15,685      16,040
  Retained earnings                                                           223,915     202,645
  Treasury stock, at cost, 1,565,736 and 1,490,915 shares, respectively       (16,706)    (15,379)
--------------------------------------------------------------------------------------------------
      Total shareholders' equity                                              292,568     272,980
--------------------------------------------------------------------------------------------------
                                                                            $ 396,892   $ 376,067
==================================================================================================
<FN>                                               
See accompanying notes.                   
</TABLE>

                                    (Page 21)
===============================================================================

<TABLE>
CONSOLIDATED STATEMENT OF INCOME                                              
<CAPTION>                                                                    
In Thousands of Dollars, Except per Share Data,                
For Years Ending on December 31,                      1998       1997       1996
-----------------------------------------------------------------------------------
<S>                                                 <C>        <C>        <C>
Net sales                                           $454,811   $439,787   $447,772
Costs and expenses:                                                              
  Cost of goods sold                                 289,591    278,769    292,858
  Selling, general, and administrative expenses      122,339    118,505    114,925
  Interest expense                                     1,800      1,766      3,367
-----------------------------------------------------------------------------------
                                                     413,730    399,040    411,150
-----------------------------------------------------------------------------------
Income before income taxes                            41,081     40,747     36,622
Income taxes                                          14,539     14,424     13,257
-----------------------------------------------------------------------------------
Net income                                          $ 26,542   $ 26,323   $ 23,365
===================================================================================
Basic earnings per share                            $   1.01   $   1.00   $    .88
===================================================================================
Diluted earnings per share                          $   1.00   $    .99   $    .87
===================================================================================
<FN>                                                                          
See accompanying notes.                                                       
</TABLE>

<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY                           
<CAPTION>                                                                   
In Thousands of Dollars, Except Share Data, for                           
Years Ending on December 31, 1998, 1997 and 1996                           Capital in                   
                                                    Preferred     Common    excess of    Retained    Treasury
                                                      stock        stock    par value    Earnings      stock
--------------------------------------------------------------------------------------------------------------
<S>                                                 <C>         <C>         <C>         <C>         <C>
Balance January 1, 1996                              $      -    $ 69,674    $ 16,800    $161,932    $(11,917)
--------------------------------------------------------------------------------------------------------------
Purchase of 323,000 shares of stock for treasury            -           -           -           -      (3,821)
Issuance of 140,785 shares of stock from treasury                                                          
  upon exercise of stock options                            -           -        (323)          -       1,375
Net income                                                  -           -           -      23,365           -
Cash dividends declared -- $.16 per share                   -           -           -      (4,229)          -
--------------------------------------------------------------------------------------------------------------
Balance December 31, 1996                            $      -    $ 69,674    $ 16,477    $181,068    $(14,363)
--------------------------------------------------------------------------------------------------------------
Purchase of 231,700 shares of stock for treasury            -           -           -           -      (2,562)
Issuance of 157,585 shares of stock from treasury                                                           
  upon exercise of stock options                            -           -        (437)          -       1,546
Net income                                                  -           -           -      26,323           -
Cash dividends declared -- $.18 per share                   -           -           -      (4,746)          -
--------------------------------------------------------------------------------------------------------------
Balance December 31, 1997                            $      -    $ 69,674    $ 16,040    $202,645    $(15,379)
--------------------------------------------------------------------------------------------------------------
Purchase of 195,900 shares of stock for treasury            -           -           -           -      (2,558)
Issuance of 121,079 shares of stock from treasury                                                           
  upon exercise of stock options                            -           -        (355)          -       1,231
Net income                                                  -           -           -      26,542           -
Cash dividends declared -- $.20 per share                   -           -           -      (5,272)          -
--------------------------------------------------------------------------------------------------------------
Balance December 31, 1998                            $      -    $ 69,674    $ 15,685    $223,915    $(16,706)
==============================================================================================================
<FN>                                                                           
See accompanying notes.                                                        
</TABLE>

                                    (Page 22)
===============================================================================

<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS                                          
<CAPTION>
In Thousands of Dollars for Years Ending on December 31,          1998        1997       1996
------------------------------------------------------------------------------------------------
<S>                                                            <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                   $ 26,542    $ 26,323    $ 23,365
  Adjustments to reconcile net income to cash provided                                        
      by operating activities:
    Depreciation                                                 17,619      16,850      15,792
    Amortization                                                  1,215         804         496
    Provision for losses on accounts receivable                   1,349       1,624       2,707
    Net periodic pension credit                                    (814)     (1,166)       (871)
    Gain on sale of property, plant, and equipment                 (322)       (280)       (238)
    Deferred income taxes                                         2,149       5,518         411
    Changes in current assets and liabilities:                                                
      (Increase) decrease in accounts receivable                 (7,791)      5,623      (4,809)
      (Increase) decrease in inventories                          5,618     (12,209)     29,184
      (Increase) decrease in other current assets                 1,418        (617)     (1,807)
      Increase (decrease) in accounts payable and                                             
          accrued expenses                                         (683)      3,965      (1,331)
------------------------------------------------------------------------------------------------
        Net cash provided by operating activities                46,300      46,435      62,899
                                                                                              
CASH FLOWS FROM INVESTING ACTIVITIES:                                                         
  Proceeds from the sale of property, plant, and equipment        1,399         453         710
  Purchase of property, plant, and equipment                    (30,271)    (21,782)    (24,738)
  (Increase) decrease in other long-term assets                  (7,351)     (4,662)        463
  Payment for purchase of business, net of cash acquired         (2,134)     (2,073)          -
------------------------------------------------------------------------------------------------
        Net cash used in investing activities                   (38,357)    (28,064)    (23,565)

CASH FLOWS FROM FINANCING ACTIVITIES:                                                         
  Borrowings                                                     50,000      12,000      43,000
  Repayment of borrowings                                       (51,000)    (22,535)    (74,288)
  Dividends paid                                                 (5,274)     (4,485)     (4,242)
  Purchase of treasury stock                                     (2,558)     (2,562)     (3,821)
  Proceeds from exercise of stock options                           876       1,109       1,052
------------------------------------------------------------------------------------------------
        Net cash used in financing activities                    (7,956)    (16,473)    (38,299)
------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                     (13)      1,898       1,035
Cash at beginning of year                                         5,113       3,215       2,180
------------------------------------------------------------------------------------------------
Cash at end of year                                            $  5,100    $  5,113    $  3,215
================================================================================================

SUPPLEMENTAL DISCLOSURES OF CASH INFORMATION:                                                 
  Cash paid during the year for:                                                              
    Interest                                                   $  1,805    $  1,884    $  3,296
    Income taxes, net of refunds                               $ 10,664    $  7,939    $ 15,242
                                                                                               
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING                                                   
AND FINANCING ACTIVITIES:                                                                     
  Purchase of business:                                                                       
    Fair value of assets acquired                              $  2,402    $  5,329    $      -
    Cash paid for assets and related costs                       (2,134)     (5,172)          -
------------------------------------------------------------------------------------------------
      Liabilities assumed                                      $    268    $    157    $      -
================================================================================================
<FN>                                                                    
See accompanying notes.                                                  
</TABLE>

                                    (Page 23)
===============================================================================
                                        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           Year Ending on December 31

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  NATURE OF OPERATIONS. Justin Industries, Inc. (the "Company") is a
manufacturing and distribution company whose principal lines of business are 1)
building materials-including face brick, concrete block, and floor and wall
tile, and 2) footwear products, primarily western-style boots. 1998 revenues in
the building materials product lines were 64% of consolidated net sales, and the
footwear product lines comprised 36% of the total. Building materials are sold
directly through company sales offices primarily in a seven-state area
consisting of Texas, Oklahoma, Arkansas, Louisiana, Kansas, Missouri, and
Tennessee. Approximately 70% of Building Materials' sales are in Texas. Building
Materials' sales are dependent upon construction levels within market areas
served, with face brick sales specifically influenced by housing starts.
Footwear products are sold primarily through independent western-wear retailers
in the United States, with sales in Texas of approximately 38%.
  
  PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the Company and its subsidiaries. All material intercompany
accounts and transactions are eliminated upon consolidation. Certain
reclassifications have been made in December 31, 1997 and 1996 amounts to
conform with the 1998 presentation.
  
  USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
  
  INVENTORIES. Inventories are valued at the lower of cost or market. Finished
products and work-in-process are costed using an average cost method, while raw
materials and manufacturing supplies are costed on the first-in, first-out
method.
  
  PROPERTY, PLANT, AND EQUIPMENT. Depreciation is computed principally by the
straight-line method for financial reporting purposes. The annual depreciation
provision has been based upon the following estimated lives:

     Buildings 10 to 20 years
     Equipment  3 to 15 years

  OTHER ASSETS. Included in other assets in the accompanying balance sheet are
trademarks/tradenames; the excess of acquisition cost over fair value of net
assets of businesses acquired; and the cost of software purchased and configured
for internal use. Trademarks/tradenames and the excess of acquisition cost over
fair value of net assets of businesses acquired are amortized on a straight-line
basis ranging from 20 to 40 years. The cost of software purchased and configured
for internal use is amortized on a straight-line basis over 8 years. This
software consists primarily of Enterprise Resource Planning systems, which began
operation in the fourth quarter of 1998 in the Footwear segment, and
payroll/human resources systems, which have been utilized by all the Company's
operations since January 4, 1999.
  
  ASSETS HELD FOR SALE. Assets held for sale relate primarily to raw land that
is being marketed by third parties on behalf of the Company.
  
  REVENUE RECOGNITION. Revenue from sale of products is recognized primarily
upon passage of title to the customer, which generally coincides with physical
delivery and acceptance.
  
  ADVERTISING. The Company's policy is to expense advertising costs as
incurred. Total advertising expense for the years ended December 31, 1998, 1997,
and 1996 was $14,849,000, $18,073,000, and $15,989,000, respectively.
  
  PENSION AND EMPLOYEE BENEFIT PLANS. The Company and its subsidiaries have
pension plans for the benefit of virtually all employees. Benefits are primarily
based on years of service and the employees' average compensation during the
last five years of employment. The Company's policy is to fund pension cost
accrued, but not in excess of the maximum allowable deduction for federal income
tax purposes.
  
  The Company grants stock options for a fixed number of shares to employees
and non-employee directors with an exercise price equal to the fair value of the
shares at the date of grant. The Company has elected to follow Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB
25) and related interpretations  in accounting for its employee stock options
because, as  discussed in Note 6, the alternative fair value accounting provided
for under Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation, requires use of option valuation models that were not
developed for use in valuing employee stock options. Under APB 25, because the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recognized. Proceeds from common stock issued pursuant to the Company's employee
stock option plans are credited to common stock or treasury stock and capital in
excess of par value at the time an option is exercised.

                                    (Page 24)
===============================================================================

  STATEMENT OF CASH FLOWS. For purposes of reporting cash flows, cash includes
cash on hand and unrestricted time deposits that have an original maturity of
three months or less.
  
  ADOPTION OF ACCOUNTING STANDARDS. In June 1997, the Financial Accounting
Standards Board issued Statement No. 131, Disclosures about Segments of an
Enterprise and Related Information. Statement No. 131 establishes annual and
interim reporting requirements for an enterprise's operating segments and
related disclosures about its products and services, geographical areas in which
it operates, and major customers. The accompanying disclosures concerning
reportable segments in Note 9 have been restated for previous periods to comply
with this statement.
  
  In February 1998, the Financial Accounting Standards Board issued Statement
No. 132, Employers' Disclosures about Pensions and Other Postretirement
Benefits. Statement No. 132 changes disclosure requirements concerning pension
and other postretirement benefit plans. The Company has no postretirement health
benefit plans. The accompanying  disclosures concerning the Company's pension
plans have been restated for previous periods to comply with this statement.
  
  PENDING ADOPTION OF ACCOUNTING STANDARDS. In June 1998, the Financial
Accounting Standards Board issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which is required to be adopted in years
beginning after June 15, 1999. Because of the Company's minimal use of
derivatives, management does not anticipate that the adoption of the new
statement will have a significant effect on earnings or the financial position
of the Company.
  
  In March 1998, the AICPA issued Statement of Position ("SOP") 98-1,
Accounting For the Costs of Computer Software Developed For or Obtained For
Internal Use, effective for fiscal years beginning after December 15, 1998.
Because of the Company's existing policy to capitalize the cost of software and
related costs in a manner very similar to that required in SOP 98-1, management
does not anticipate that the adoption of the new SOP will have a significant
effect on earnings or the financial position of the Company.

2.   EARNINGS PER SHARE

  The following table sets forth the computation of basic and diluted earnings
per share: (in thousands, except per  share data)

                                                1998       1997       1996
                                              --------   --------   --------
Numerator for basic and diluted                                             
earnings per share                            $ 26,542   $ 26,323   $ 23,365
                                              ========   ========   ========
Denominator for basic earnings per share--                                  
  weighted average shares                       26,358     26,356     26,522  
Effect of dilutive securities:                                              
  Employee stock options                           270        309        311
  Convertible preferred stock                        3          3          3
                                              --------   --------   --------
Dilutive potential common shares                   273        312        314
                                              --------   --------   --------
Denominator for diluted earnings per share--                                
  adjusted weighted average shares                                          
  and assumed conversions                       26,631     26,668     26,836
                                              ========   ========   ========
Basic earnings per share                      $   1.01   $   1.00   $    .88
                                              ========   ========   ========
Diluted earnings per share                    $   1.00   $    .99   $    .87
                                              ========   ========   ========

  For additional disclosures regarding the outstanding preferred stock and the
employee stock options, see Note 6.
  
  Options to purchase 561,000 shares of common stock at a weighted-average
price of $15.26 per share were outstanding at December 31, 1998, but were not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the common stock
and, therefore, the effect would be antidilutive.

3.   INVENTORIES

  Inventories include the following: (in thousands of dollars)

                                     1998           1997
                                  ----------     ----------
Finished products                  $ 106,706      $ 105,100
Work-in-process                        4,663          6,040
Raw materials and supplies            25,206         30,508
                                  ----------     ----------
                                   $ 136,575      $ 141,648
                                   =========     ==========

4.   OTHER ASSETS

  Other assets consist of the following: (in thousands of dollars)

                                               1998        1997
                                             --------    --------
Trademarks/tradenames                        $ 12,651    $ 12,651
Excess of acquisition cost over
  fair value of net assets of
  businesses acquired                           6,275       5,140
Prepaid pension cost                            9,351       8,525
Software purchased and            
  configured for internal use                  13,005       5,259
Other                                           3,767       4,559
                                            ---------    --------
                                               45,049      36,134
Accumulated amortization                        4,283       3,394
                                            ---------    --------
                                             $ 40,766    $ 32,740
                                            =========    ========

                                    (Page 25)
===============================================================================

5.   BORROWINGS

  Long-term debt consists of the following: (in thousands of dollars)

                                               1998        1997
                                             --------    --------
Revolving credit loans                       $ 14,000    $  7,000
Term loan                                           -       8,000
Industrial Revenue Bonds                       16,250      16,250
Note payable to bank                              500         500
                                             --------    --------
                                               30,750      31,750
Less current portion                                -       8,000
                                             --------    --------
                                             $ 30,750    $ 23,750
                                             ========    ========

  The Company may borrow up to a total of $52,000,000 in revolving credit loans
pursuant to an agreement among four commercial banks originally entered into in
May 1989. The revolving credit loans are repayable beginning in April 2001 when
outstanding amounts are converted to term loans payable over three years. The
conversion date may be extended annually for an additional twelve months by
consent of all participating banks.
  
  Borrowings under the revolving credit agreement bear interest at rates
determined on certain margins based on prime, certificates of deposit, and the
London Interbank Offered Rate ("LIBOR"). Interest on all of these borrowings at
December 31, 1998 was based on LIBOR in effect at the time of origination plus
50 basis points and averaged 6.2%. Interest rate margins may fluctuate in
increments of 12.5 basis points based on attaining certain quarterly funded
debt-to-equity ratios stipulated in the loan agreement. The loans are unsecured;
however, the loan agreement contains certain minimum requirements as to working
capital, cash flow from operations, and tangible net worth, redemption of
outstanding stock, and change in control of the Company. As of December 31,
1998, the Company was in compliance with all such requirements and restrictions.
  
  The Industrial Revenue Bonds are payable in 2014, plus interest at varying
rates based on certain indices (approximately 4% at December 31, 1998), secured
by property, plant, and equipment with a net book value of approximately
$7,615,000. In certain circumstances, the Company may be required to purchase up
to $16,250,000 of its Industrial Revenue Bonds prior to their maturity. In such
circumstances, the Company may borrow the purchase price under long-term standby
letter of credit agreements and also has the right to resell the bonds.
  
  Note payable to bank at December 31, 1998 is an unsecured borrowing due in
2000. Interest is based on LIBOR plus 50 basis points and was 5.9% at December
31, 1998.
  
  The aggregate maturities of long-term debt through 2003 are as follows: 1999,
$0; 2000, $500,000; 2001, $2,333,000; 2002, $4,667,000; and 2003, $4,667,000.
  
  At December 31, 1998, unused lines of credit for short-term and revolving
credit agreements were approximately $66,000,000. Outstanding standby letters of
credit at December 31, 1998 amounted to approximately $19,256,000.
  
  Interest rates on the majority of the Company's borrowings float with
prevailing market rates; therefore, the fair value of such debt approximates
carrying value at December 31, 1998 and 1997. Based on fixed interest rates
currently available to the Company for bank loans and industrial reve-nue bonds
with similar terms and maturities, the fair value of fixed-rate borrowings
approximates carrying value at December 31, 1998 and 1997.

6.   SHAREHOLDERS' EQUITY

  The Company has qualified incentive stock option plans and non-qualified
stock option agreements with certain of its employees and non-employee directors
to purchase its common stock. The plans for employees, as amended, provide for
the granting of either incentive stock options or stock options which are not
qualified under the Internal Revenue Code, at the discretion of the Compensation
Committee of the Board of Directors. In addition, they provide for exercise of
stock options without regard to the sequence of dates of original grants. All
outstanding stock options are non-qualified and expire over a period of ten
years. Options are granted at the fair market value of the underlying common
stock at the date of grant. Employee-granted options vest over a five-year
period while director options vest after one year. Currently, the Board has
authorized and shareholders have approved 90,000 shares for future grants of
options. However, at the December 1998 Board meeting, the Board approved another
one million shares to be reserved for a new 1999 Performance Incentive Plan,
subject to shareholder approval at the next annual meeting of the shareholders
in April 1999. A summary of the Company's stock option activity and related
information for the years ended December 31, 1998, 1997, and 1996 is as follows:

                                    (Page 26)
===============================================================================

<TABLE>
<CAPTION>
                                      1998                   1997                   1996
                              --------------------   --------------------   ---------------------
                                         Weighted-              Weighted-              Weighted-
                                          Average                Average                Average
                                          Exercise               Exercise               Exercise
                                Shares     Price       Shares     Price       Shares     Price
                              ---------  ---------   ---------  ---------   ---------  ---------
<S>                           <C>        <C>         <C>        <C>         <C>        <C>                                  
Outstanding at January 1      1,584,778     $10.36   1,516,252     $ 9.12   1,524,067     $ 8.72
Granted                         288,850     $11.93     277,975     $14.19     201,400     $11.51
Canceled                        (14,565)    $13.60     (33,650)    $15.07     (68,060)    $15.03
Exercised                      (132,841)    $ 4.61    (175,799)    $ 4.77    (141,155)    $ 5.33
                              ---------  ---------   ---------  ---------   ---------  ---------
Outstanding at December 31    1,726,222     $11.04   1,584,778     $10.36   1,516,252      $9.12
                              =========  ==========  =========  =========   =========  =========
                                                                                                
Exercisable at end of year    1,054,752     $10.12   1,047,073      $9.24   1,027,152      $7.92
                              =========  ==========  =========  =========   =========  =========
Weighted-average fair value                                                                     
of options granted during                                                                       
the year                          $4.40                  $5.24                  $4.43           
                              =========              =========              =========           
</TABLE>

  The following table segregates outstanding options into groups based on
exercise price ranges of less than and more than $10 per share.

                                                  Price Ranges
                                       ----------------------------------
                                       $4.58 to $10.00   $10.00 to $18.00
                                       ---------------   ----------------
All Outstanding Options:                                 
  Number of shares                         435,257          1,290,965
  Weighted-average exercise price            $5.20             $13.01
  Weighted-average remaining          
    contractual life                           2.1                7.5
Exercisable Options:                                           
  Number of shares                         435,257            619,495
  Weighted-average exercise price            $5.20             $13.58

  Pro forma information regarding net income and earnings per share is required
by Statement of Financial Accounting Standards No. 123, and has been determined
as if the Company had accounted for its employee stock options under the fair
value method of that statement. The fair value for these options was estimated
at the date of grant using a binomial option pricing model with the following
weighted-average assumptions for 1998, 1997, and 1996, respectively: risk-free
interest rates of 6.4%, 6.4%, and 6.2%; dividend yields of 1.5%, 1.5%, and 1.6%;
volatility factors of the expected market price of the Company's common stock of
 .342, .329, and .342; and a weighted-average expected life of the option of 5.3,
5.5, and 6 years.
  
  Binomial option valuation models are used in estimating the fair value of
traded options which have no vesting restrictions and are fully transferable. In
addition, option valuation models require the input of highly subjective
assumptions including the expected stock price volatility. Because the Company's
employee stock options have characteristics significantly different from those
of traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.
  
  For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense on a straight line basis over the options'
vesting period. The pro forma effects on net income for 1998, 1997, and 1996 are
not representative of the pro forma effect on net income in future years because
they do not take into consideration pro forma compensation expense related to
grants made prior to 1995. The Company's pro forma information follows: (in
thousands of dollars, except for earnings per share information)

                                         1998        1997       1996
                                       --------    --------   --------
                                                               
Pro forma net income                    $26,114     $26,068    $23,208
                                       ========    ========   ========
                                                               
Pro forma basic earnings per share         $.99        $.99       $.88
                                       ========    ========   ========
                                                               
Pro forma diluted earnings per share       $.98        $.98       $.87
                                       ========    ========   ========

  The preferred stock is convertible into 2,826 shares of common stock at
December 31, 1998. The Board of Directors is empowered to set the dividend,
redemption, and liquidation rights pertaining to the preferred stock and to
establish the voting rights and any special rights or restrictions.
  
  One Common Stock Purchase Right is outstanding for each share of common
stock. Following Board of Directors approval, a) the rights will be exercisable
at an exercise price of $13.33 if a person or group acquires 20% or more of the
Company's common stock or announces a tender offer that would result in
ownership of 30% or more of the common stock, or b) the rights may be redeemed
at five cents per right at any time before a 20% position has been acquired. The
rights expire on October 6, 1999.

7.   RETIREMENT PLANS

  The following tables set forth various information concerning the Company's
pension plans and amounts recognized in the Company's balance sheet at December
31, 1998 and 1997: (in thousands of dollars)

                                    (Page 27)
===============================================================================

                                                    1998            1997
                                                 -----------     -----------
                                                                           
Vested benefit obligation                         $ (61,695)      $ (54,296)
Accumulated benefit obligation                    $ (64,447)      $ (56,693)
                                                                
Projected benefit obligation                      $ (75,103)      $ (63,397)
Fair value of plan assets                           116,205         108,092
                                                 -----------     -----------
Funded status                                        41,102          44,695
Unrecognized net asset                                 (788)         (1,576)
Unrecognized prior service cost                        (783)           (959)
Unrecognized actuarial gains                        (30,180)        (33,635)
                                                 -----------     -----------
Prepaid pension cost                              $   9,351       $   8,525
                                                 ===========     ===========
                                                                           
Benefit obligation as of January 1                $  63,397       $  56,458
Service cost                                          2,598           2,141
Interest cost                                         4,669           4,260
Actuarial liability cost                              7,601           3,528
Benefits paid                                        (3,162)         (2,990)
                                                 -----------     -----------
Benefit obligation as of December 31              $  75,103       $  63,397
                                                 ===========     ===========
                                                                           
Fair value of plan assets at January 1            $ 108,092       $  90,572
Actual return on plan assets                         11,263          20,500
Employer contributions                                   12              10
Benefits paid                                        (3,162)         (2,990)
                                                 -----------     -----------
Fair value of plan assets at December 31          $ 116,205       $ 108,092
                                                 ===========     ===========
                                                                           
Prepaid pension cost at January 1                 $   8,525       $   7,349
Net periodic pension credit                             814           1,166
Contributions                                            12              10
                                                 -----------     -----------
Prepaid pension cost at December 31               $   9,351       $   8,525
                                                 ===========     ===========

  Plan assets at December 31, 1998 are invested primarily in listed stocks and
bonds or cash equivalents. The Company's own common stock (1,011,400 shares)
accounts for approximately $13,275,000, or 11.4%, of the fair value of plan
assets at December 31, 1998. Dividends paid to the pension trust related to
these shares amounted to approximately $202,000 in 1998 and $182,000 in 1997.
  
  Net periodic pension credit includes the following components: (in thousands
of dollars)
  
                                           1998        1997        1996
                                         --------    --------    --------
                                                                         
Service cost -
  benefits earned during
    the period                           $ 2,598     $ 2,141     $ 2,184
Interest cost on projected
  benefit obligation                       4,669       4,260       3,883
Expected return on assets                 (7,203)     (6,632)     (6,078)
Amortization:
    Net asset                               (788)       (788)       (788)
    Unrecognized prior service cost          (83)        (73)        (68)
    Unrecognized gain                         (7)        (74)         (4)
                                         --------    --------    --------
Net periodic pension credit              $  (814)    $(1,166)    $  (871)
                                         ========    ========    ========

  The weighted-average discount rates used in determining the actuarial present
value of the projected benefit obligations were 6.75% in 1998 and 7.25% in 1997.
The rate of increase in future compensation was 4% in 1998 and 1997. The
expected long-term rate of return on assets was 9% for all years above.
  
  The Company also has an Employee Stock Ownership Plan (ESOP) for the benefit
of virtually all employees. Eligible employees may contribute up to the lesser
of 15% of their compensation or the maximum amount authorized by the Company
($8,000 in 1998, except for certain highly compensated employees who were
limited to 5% of compensation or a maximum of $8,000, and $9,500 in 1997 and
1996). In 1998, 1997, and 1996, 50% of the amount contributed by all employees
was matched by the Company, up to 5% of total compensation. Pursuant to Internal
Revenue Service Regulation 401(k), the employees' contributions are on a pre-tax
basis. For 1999, employees may contribute to the plan on the same basis as in
1998.
  
  The amount of Company contributions made to the ESOP and charged to expense
was $1,210,000, $1,159,000, and $1,181,000 in 1998, 1997, and 1996,
respectively.

8.   INCOME TAXES

  Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of December 31, 1998 and
1997 are as follows: (in thousands of dollars)
  
                                            1998         1997
                                          --------     --------
Deferred tax assets:                                         
  Insurance accruals                       $ 4,311      $ 4,578
  Asset valuation allowances                 3,670        3,254
  Employee benefit plans                       208          196
  Other                                        950          606
                                          --------     --------
                                           $ 9,139      $ 8,634
                                          ========     ========
Deferred tax liabilities:                                    
  Intangible assets                        $ 7,337      $ 5,097
  Depreciation                               8,483        8,229
  Employee benefit plans                     2,254        2,094
                                          --------     --------
                                           $18,074      $15,420
                                          ========     ========

  Significant components of the provision for income taxes are as follows: (in
thousands of dollars)

                                 1998        1997        1996
                               --------    --------    --------
                                                          
Current                         $12,390     $ 8,906     $12,846
Deferred                          2,149       5,518         411
                               --------    --------    --------
Total income tax expense        $14,539     $14,424     $13,257
                               ========    ========    ========

                                    (Page 28)
===============================================================================

  In addition, the Company recognized income tax benefits of $428,000,
$527,000, and $304,000 in 1998, 1997, and 1996, respectively, upon the exercise
by employees of non-qualified stock options. Such benefits were recognized as an
increase in shareholders' equity when realized.
  
  A reconciliation of the statutory federal income tax rate and the effective
tax rate follows:

                                 1998        1997        1996
                               --------    --------    --------
                                                        
Statutory tax rate                35.0%       35.0%       35.0%
Depletion                         (1.7)       (1.3)       (1.5)
State taxes                        1.1          .8         1.6
Non-deductible expenses             .8          .7          .9
Other                               .2          .2          .2
                               --------    --------    --------
Effective tax rate                35.4%       35.4%       36.2%
                               ========    ========    ========

  In connection with the acquisition of Tony Lama, the Company acquired a tax
net operating loss carryforward. None of the tax net operating loss carryforward
was utilized in 1998, 1997, or 1996. Approximately $802,000 of the acquired
carryforward is available to offset future taxable income. The carryforward will
expire in 2004. Future utilization of such carryforward will be recognized
through adjustment of the value of acquired net assets.

9.   FINANCIAL INFORMATION BY REPORTABLE SEGMENT

  The Company has two reportable segments as defined by the Financial
Accounting Standards Board Statement No. 131: Building Materials and Footwear.
These reportable segments offer products in two different industries. The
reportable segments are managed separately because they manufacture and
distribute distinct products with different production processes and different
channels of distribution. The Company evaluates each segment's performance and
allocates resources based on profits or losses from operations before interest,
non-operational intercompany charges, and taxes. The accounting policies of the
reportable segments are the same as those described in the Summary of
Significant Accounting Policies. There are no significant intersegment sales or
transfers.
  
  The Building Materials segment consists of three primary operating companies
that manufacture and distribute clay brick, concrete block, and other masonry-
related products and distribute ceramic and marble floor and wall tile
throughout the Southwest United States. The Company's Footwear segment primarily
consists of four wholesale footwear divisions and a retail footwear division.
Sales in this segment primarily consist of western and work boots and shoes and
are made throughout the United States by company salesmen and independent sales
representatives to retail distributors or through the segment's nine factory-
outlet retail stores.
  
  The Company provides additional information in this Annual Report aggregating
its business units slightly differently than that prescribed by Statement No.
131 in its definition of reportable segments. The Five-Year Analysis of Sales
and Operating Profit by Product Lines on page 20 and the Eleven-Year Financial
Summary on pages 32 and 33 aggregates the Building Materials reportable segment
with the All Other category reported below, excluding parent operations.
  
  The following information is presented as required by Statement No. 131: (in
thousands of dollars)

                               Building                             
                               Materials   Footwear    All Other    Total
         1998                 ----------  ----------  ----------  ----------
Net sales (1) (2)              $289,006    $162,085    $  3,720    $454,811
Operating profit (loss) (3)      50,205        (524)     (6,800)     42,881
Depreciation and                                                         
  amortization expense           13,843       4,551         440      18,834
Identifiable assets             196,834     169,645      30,413     396,892
Expenditures for long-lived                                               
  assets                         24,523       5,111         637      30,271
----------------------------------------------------------------------------
                                                                          
         1997                                                         
Net sales (1) (2)              $262,053    $174,474    $  3,260    $439,787
Operating profit (loss) (3)      44,365       4,795      (6,647)     42,513
Depreciation and                                                         
  amortization expense           12,541       4,278         835      17,654
Identifiable assets             181,210     163,046      31,811     376,067
Expenditures for long-lived                                              
  assets                         18,942       2,561         279      21,782
----------------------------------------------------------------------------
                                                                         
         1996                                                         
Net sales (1) (2)              $257,174    $186,457    $  4,141    $447,772
Operating profit (loss) (3)      44,330       1,591      (5,932)     39,989
Depreciation and                                                         
  amortization expense           10,840       4,694         754      16,288
Identifiable assets             167,128     159,981      32,969     360,078
Expenditures for long-lived                                              
  assets                         23,082       1,178         478      24,738
----------------------------------------------------------------------------

                                        1998        1997        1996
                                      --------    --------    --------
Reconciliation                                                      
  Total operating profit above         $42,881     $42,513     $39,989
  Interest expense                       1,800       1,766       3,367
                                      --------    --------    --------
  Consolidated income before                                        
    income taxes                       $41,081     $40,747     $36,622
                                      ========    ========    ========

(1) Net sales from reportable segments below the quantitative thresholds are
attributable to the Company's evaporative cooler business. This segment has
never met the quantitative thresholds for determining reportable segments. This
business was sold effective December 31, 1998.

                                    (Page 29)
===============================================================================

(2) Net sales from the Building Materials reportable segment and the All Other
category are aggregated to derive net sales as shown in the Five-Year Analysis
of Sales and Operating Profit by Product Lines on page 20 and the Eleven-Year
Financial Summary on pages 32 and 33.

(3) Operating profit from the Building Materials reportable segment and the All
Other category, excluding parent company operations, are aggregated to derive
operating profit as shown in the Five-Year Analysis of Sales and Operating
Profit by Product Lines on page 20 and the Eleven-Year Financial Summary on
pages 32 and 33.

10.  COMMITMENTS

  At December 31, 1998, approximate future minimum rental commitments for all
noncancellable operating leases are as follows: (in thousands of dollars)

                       1999            $ 3,091
                       2000              2,083
                       2001              1,165
                       2002                644
                       2003                425
                       Thereafter          549
                                     ---------
                                       $ 7,957
                                     =========

  Total rent expense for all operating leases amounted to approximately
$3,526,000, $3,785,000, and $4,063,000 in 1998, 1997, and 1996, respectively.
  
  At December 31, 1998, the Company had commitments for the purchase of Texas
Clay Industries, as further described in Note 11, and for the construction of a
new brick plant in South Texas. The total of these commitments amounted to
approximately $32 million.

11.  ACQUISITIONS AND DISPOSITION

  Effective December 31, 1998, the Company sold its evaporative cooler
business, Tradewinds Technologies, Inc., for cash of approximately $3.2 million.
The effects of the sale and the operations of Tradewinds, which are included in
All Other in the reportable segments disclosures, are immaterial to consolidated
operations.
  
  Effective January 1, 1997, the Company's subsidiary, Acme Brick Company,
purchased Innovative Building Products, Inc. and its related companies ("IBP")
for a total purchase price of approximately $5.3 million. Assets acquired
included $3.1 million in cash. IBP manufactures and distributes an installation
system for glass block. Operations of the business, which are immaterial to
consolidated operations, are included in the Consolidated Statement of Income
from date of acquisition.
  
  Effective July 1, 1998, the Company's subsidiary, Acme Brick Company,
purchased Witt Brick for a total purchase price of approximately $2.4 million.
Assets acquired primarily included accounts receivable and inventory. Witt Brick
is a brick distributor in Temple, Texas. Operations of the business, which are
immaterial to consolidated operations, are included in the Consolidated
Statement of Income from date of acquisition.
  
  Subsequent to year-end 1998, Acme Brick Company acquired the assets of Texas
Clay Industries, a division of Temtex Industries, Inc. The total purchase price
of approximately $13.3 million was paid $12.5 million in cash plus assumption of
approximately $800,000 in liabilities. The assets acquired consisted of
approximately $1.1 million in accounts receivable, $600,000 in inventory and
$10.8 million in land, buildings, and equipment related to one brick plant and
associated clay reserves in Malakoff, Texas, approximately 70 miles southeast of
the Fort Worth/Dallas metroplex area. Sales generated by this plant in 1998
approximated $11.7 million. The acquisition will be accounted for as a purchase
in 1999, and as such, the results of operations of the plant will be included
with that of the Company from the date of closing, January 5, 1999.

                                    (Page 30)
===============================================================================

REPORT OF ERNST & YOUNG LLP                               Independent Auditors

Board of Directors
Justin Industries, Inc.

We have audited the accompanying consolidated balance sheets of Justin
Industries, Inc. as of December 31, 1998 and 1997, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
  
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
  
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Justin Industries,
Inc. at December 31, 1998 and 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.



                                             /S/ ERNST & YOUNG LLP
Fort Worth, Texas
February 4, 1999

         ------------------------------------------------------------

              MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The Consolidated Financial Statements for Justin Industries, Inc. and its
subsidiaries are prepared by the Company in conformity with consistently
applied, generally accepted accounting principles. Management selects
appropriate accounting principles, makes necessary estimates, and uses its
judgment to ensure the objectivity, accuracy, and integrity of the data
presented. The Company has established and maintains systems of management
reporting and internal controls that are designed to provide reasonable
assurance that company policies are followed and that company assets are
safeguarded. These systems are constantly monitored and revised where necessary
to meet changing requirements and to strengthen controls while maintaining a
cost-effective method of providing credible and timely information necessary to
the operations of Justin Industries.
  
  The Board of Directors carries out its oversight responsibility for the
financial statements through its Audit Committee. This committee is composed of
directors who are neither officers nor employees of the Company. The committee
meets periodically with the independent auditors and representatives of
management to assure that each is carrying out its responsibilities. To ensure
the integrity of the Audit Committee function, the Company's outside auditors
have complete access to the committee, without company representatives present.
The results of their audits and their reviews of the adequacy of internal
controls and the quality of financial reporting are freely discussed during
these conferences.

                                    (Page 31)
===============================================================================

<TABLE>
ELEVEN-YEAR FINANCIAL SUMMARY                                         
<CAPTION>                                                                      
Years ending on December 31,                      1998        1997       1996       1995        1994       1993    
--------------------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>        <C>        <C>         <C>        <C>       
SUMMARY OF OPERATIONS: (see note)                                                                       
  (in thousands of dollars, except per share amounts)                                           
  Net sales:                                                                                            
    Building Materials                          292,726     265,313    261,315    240,094     224,213    179,740  
    Footwear                                    162,085     174,474    186,457    221,354     258,796    295,191  
--------------------------------------------------------------------------------------------------------------------
                                                454,811     439,787    447,772    461,448     483,009    474,931  
--------------------------------------------------------------------------------------------------------------------
  Operating profit:                                                                                     
    Building Materials                           48,932      43,245     44,233     42,107      44,600     31,445  
    Footwear                                       (524)      4,795      1,591      9,234      22,871     34,168  
--------------------------------------------------------------------------------------------------------------------
                                                 48,408      48,040     45,824     51,341      67,471     65,613  
--------------------------------------------------------------------------------------------------------------------
  Selected costs and expenses:                                                                          
    Cost of goods sold                          289,591     278,769    292,858    300,842     314,661    314,431  
    Selling, general, and administrative        122,339     118,505    114,925    115,370     106,814    100,465
    Interest                                      1,800       1,766      3,367      5,032       4,058      4,005  
    Depreciation                                 17,619      16,850     15,792     14,742      13,852     13,473  
    Income taxes                                 14,539      14,424     13,257     14,553      20,571     19,995  
--------------------------------------------------------------------------------------------------------------------
  Income:                                                                                               
    From continuing operations                   26,542      26,323     23,365     25,651      36,905     36,035 **
    Net income                                   26,542      26,323     23,365     25,651      36,905     37,141  
--------------------------------------------------------------------------------------------------------------------
  Basic earnings per share:                                                                             
    From continuing operations                     1.01        1.00        .88        .95        1.36       1.33 **
    Net income                                     1.01        1.00        .88        .95        1.36       1.37  
--------------------------------------------------------------------------------------------------------------------
  Diluted earnings per share:                                                                           
    From continuing operations                     1.00         .99        .87        .94        1.34       1.30 **
    Net income                                     1.00         .99        .87        .94        1.34       1.34  
--------------------------------------------------------------------------------------------------------------------
  Dividends declared per share                      .20         .18        .16        .16         .16        .16  
  Capital expenditures*                          30,271      21,782     24,738     26,020      18,627     17,278  
--------------------------------------------------------------------------------------------------------------------
YEAR-END STATISTICS: (in thousands of dollars)
  Working capital                               175,895     166,397    165,053    181,385     185,722    185,193  
  Net property, plant, and equipment            121,922     110,184    105,497     96,657      85,460     80,270  
  Total assets                                  396,892     376,067    360,078    376,409     374,921    346,680  
  Long-term debt                                 30,750      23,750     32,890     57,137      65,323     88,504  
  Shareholders' equity                          292,568     272,980    252,856    236,489     221,900    188,803  
KEY FINANCIAL RATIOS:                                                                                   
  Pre-tax profit margin (%)*                       9.03        9.27       8.18       8.71       11.90      11.80  
  Income-return on sales (%)*                      5.84        5.99       5.22       5.56        7.64       7.59  
  Return on shareholders' equity (%)*              9.72       10.40       9.88      11.56       19.55      23.21  
  Return on assets (%)*                            6.87        7.15       6.34       6.83       10.23      10.87  
  Effective income tax rate (%)*                   35.4        35.4       36.2       36.2        35.8       35.7  
  Ratio of long-term debt to                                                                            
    shareholders' equity                          .11:1       .09:1      .13:1      .24:1       .29:1      .47:1
  Ratio of total interest-bearing debt to                                                                      
    shareholders' equity                          .11:1       .12:1      .17:1      .31:1       .36:1      .49:1
  Ratio of current assets to current                                                                     
    liabilities                                   4.2:1       3.6:1      3.7:1      3.6:1       3.5:1      4.4:1
OTHER STATISTICS:                                                                                       
  Weighted average number of shares
    (in thousands)***                            26,631      26,668     26,836     27,235      27,592     27,653
  Book value per share                            11.12       10.35       9.56       8.88        8.15       6.95  
  Dividends as a percent of net income             19.9        18.0       18.1       16.8        11.8       11.7
  Market price of common stock:                                                                         
    High                                             17      15 1/4     13 1/2     12 1/8      16 3/4     25 3/8  
    Low                                          10 3/8      10 1/4      9 3/4      9 1/2       9 3/4     11 3/4  
====================================================================================================================
<FN>
* Continuing Operations (before accounting change in 1993)
** Before accounting change.
*** Used to calculate diluted earnings per share

Note: Book value per equivalent share of common stock has been computed on the
number of common shares outstanding at December 31. All per share information
has been adjusted for the 3-for-2 stock splits in 1989 and 1992, and a 2-for-1
stock split in 1993. Operating profit for the business units is income before
interest, allocation of parent-company overhead expenses, and income taxes. The
Company provides additional information as shown above aggregating its business
units slightly differently than that prescribed by Financial Accounting
Standards Board Statement No. 131 in its definition of reportable segments. The
Building Materials product line as shown above aggregates the Building Materials
reportable segment with the All Other category, excluding parent company
operations, as reported in Note 9 to the Company's Consolidated Financial
Statements.


ELEVEN-YEAR FINANCIAL SUMMARY                                              
<CAPTION>                                                                 
Years ending on December 31,                      1992        1991       1990       1989        1988
---------------------------------------------------------------------------------------------------------
<S>                                             <C>         <C>        <C>        <C>         <C>
SUMMARY OF OPERATIONS: (see note)
  (in thousands of dollars, except per share amounts)
  Net sales:                                                                              
    Building Materials                          158,808     123,004    118,943    113,662     108,864
    Footwear                                    294,459     245,346    181,370    142,707     123,455
---------------------------------------------------------------------------------------------------------
                                                453,267     368,350    300,313    256,369     232,319
---------------------------------------------------------------------------------------------------------
  Operating profit:                                                                       
    Building Materials                           16,423       4,979      3,698        604       4,369
    Footwear                                     36,054      22,934     17,748     15,650      12,223
---------------------------------------------------------------------------------------------------------
                                                 52,477      27,913     21,446     16,254      16,592
---------------------------------------------------------------------------------------------------------
  Selected costs and expenses:                                                            
    Cost of goods sold                          313,961     260,968    211,559    182,365     164,596
    Selling, general, and administrative         91,695      84,167     70,666     60,251      54,590
    Interest                                      5,214       9,482      6,815      6,402       4,574
    Depreciation                                 13,837      12,338     10,164     10,003      10,263
    Income taxes                                 15,304       5,280      3,697      2,432       2,696
---------------------------------------------------------------------------------------------------------
  Income:                                                                                 
    From continuing operations                   27,093       8,453      7,576      5,281       5,954
    Net income                                   27,093      19,233      7,293      7,198       7,469
---------------------------------------------------------------------------------------------------------
  Basic earnings per share:                                                               
    From continuing operations                     1.02         .33        .29        .21         .24
    Net income                                     1.02         .74        .28        .29         .30
---------------------------------------------------------------------------------------------------------
  Diluted earnings per share:                                                             
    From continuing operations                      .99         .32        .29        .21         .24
    Net income                                      .99         .73        .28        .28         .30
---------------------------------------------------------------------------------------------------------
  Dividends declared per share                      .14        .135       .135        .10         .09
  Capital expenditures*                          12,006      10,666     12,646      7,405       8,681
---------------------------------------------------------------------------------------------------------
YEAR-END STATISTICS: (in thousands of dollars)
  Working capital                               164,822     151,588    147,307     97,983     105,114
  Net property, plant, and equipment             76,544      78,750     84,653     64,261      67,682
  Total assets                                  316,368     295,947    292,923    211,308     214,403
  Long-term debt                                100,362     116,040    124,724     56,238      69,590
  Shareholders' equity                          155,270     127,549    111,135    106,431      98,687
KEY FINANCIAL RATIOS:                                                                     
  Pre-tax profit margin (%)*                       9.35        3.73       3.75       3.01        3.72
  Income-return on sales (%)*                      5.98        2.29       2.52       2.06        2.56
  Return on shareholders' equity (%)              21.24        7.61       7.12       5.35        6.41
  Return on assets (%)*                            8.85        2.87       3.00       2.48        2.75
  Effective income tax rate (%)*                   36.1        38.4       32.8       31.5        31.2
  Ratio of long-term debt to                                                             
    shareholders' equity                          .65:1       .91:1     1.12:1      .53:1       .71:1
  Ratio of total interest-bearing debt to                                                       
    shareholders' equity                          .70:1       .93:1     1.14:1      .56:1       .73:1
  Ratio of current assets to current                                                      
    liabilities                                   4.0:1       4.4:1      4.1:1      3.5:1       3.9:1
OTHER STATISTICS:                                                                         
  Weighted average number of shares              27,318      26,201     26,171     25,475      25,022
    (in thousands)***
  Book value per share                             5.75        4.92       4.31       4.15        3.98
  Dividends as a percent of net income             13.7        17.9       47.1       35.1        29.5
  Market price of common stock:                                                           
    High                                             19           6      5 7/8      5 5/8       3 5/8
    Low                                           5 5/8       3 5/8      3 5/8      3 3/8       2 5/8
=========================================================================================================
                                                                                          
<FN>
* Continuing Operations (before accounting change in 1993)
** Before accounting change.
*** Used to calculate diluted earnings per share

Note: Book value per equivalent share of common stock has been computed on the
number of common shares outstanding at December 31. All per share information
has been adjusted for the 3-for-2 stock splits in 1989 and 1992, and a 2-for-1
stock split in 1993. Operating profit for the business units is income before
interest, allocation of parent-company overhead expenses, and income taxes. The
Company provides additional information as shown above aggregating its business
units slightly differently than that prescribed by Financial Accounting
Standards Board Statement No. 131 in its definition of reportable segments. The
Building Materials product line as shown above aggregates the Building Materials
reportable segment with the All Other category, excluding parent company
operations, as reported in Note 9 to the Company's Consolidated Financial
Statements.
</TABLE>
                                (Pages 32 and 33)
===============================================================================

                              SHARHOLDER INFORMATION

ANNUAL MEETING

The annual meeting of shareholders will be held on Friday, April 16, 1999, at
the Fort Worth Club Building, twelfth floor, 306 West Seventh Street, Fort
Worth, Texas, at 10:30 a.m. All shareholders are cordially invited to attend and
are urged to be represented by proxy if unable to attend.

STOCK, TRANSFER, DIVIDEND, DISBURSEMENT, SHAREHOLDER
SAVINGS, AND DIVIDEND REINVESTMENT

The Bank of New York is the company's transfer agent responsible for stock
transfer and dividend payment transactions. In addition, The Bank of New York
manages the company's Shareholder Savings and Dividend Reinvestment activities
through its Buy Direct Plan. Information and questions regarding any of these
programs can be answered by contacting Bank of New York at (800) 524-4458 or by
e-mail at Shareowner-svcs@bankofny.com.

Address shareholder inquiries to:            Send certificates for transfer and
                                             address changes to:

Shareholder Relations Department-11E         Receive and Deliver Department-11W
P.O. Box 11258                               P.O. Box 11002
Church Street Station                        Church Street Station
New York, New York 10286                     New York, New York 10286

Answers to many of your shareholder questions and requests for forms are
available by visiting the company's website at www.justinind.com or The Bank of
New York's website at www.stock.bankofny.com.

FORM 10-K/10-Q

Investors who wish to receive a copy of the Company's annual report on Form 10-K
or quarterly 10-Q reports filed with the Securities and Exchange Commission, or
other shareholder mailings, may obtain them upon request to Investor Relations,
Justin Industries, Inc., P.O. Box 425, Fort Worth, Texas 76101 (817) 336-5125,
or by accessing the Company's website at www.justinind.com.

STOCK LISTING

Justin Industries, Inc. common stock trades on the Nasdaq National Market tier
of The Nasdaq Stock Market under the symbol "JSTN."

INDEPENDENT AUDITORS

Ernst & Young LLP, 500 Throckmorton Street, Suite 2200, Fort Worth, Texas
76102.

EXECUTIVE OFFICES

Justin Industries, Inc., 2821 West Seventh Street, Fort Worth, Texas  76107
(817) 336-5125.

QUARTERLY FINANCIAL DATA

The following table presents summarized quarterly operating results for the two-
year period ending December 31, 1998. See Management's Discussion and Analysis
for information regarding factors affecting operating results for the fourth
quarter of 1998.

(Unaudited - In thousands, except per share data)

<TABLE>
<CAPTION>
                                     1998                                       1997
                    --------------------------------------    --------------------------------------
Quarter Ended         3/31      6/30      9/30      12/31       3/31      6/30      9/30      12/31
                    --------  --------  --------  --------    --------  --------  --------  --------
<S>                 <C>       <C>       <C>       <C>         <C>       <C>       <C>       <C>
Net sales           $103,780  $119,090  $116,992  $114,949    $ 97,606  $110,886  $114,157  $117,138
Gross profit          36,597    44,392    43,174    41,057      33,371    41,752    42,307    43,588
Net income             4,455     8,264     7,912     5,911       3,049     7,527     7,103     8,644
Per share:                                                                                         
  Basic                  .17       .31       .30       .22         .12       .29       .27       .33
  Diluted                .17       .31       .30       .22         .11       .28       .27       .32
  Dividends paid         .05       .05       .05       .05         .04       .04       .04       .05
</TABLE>


MARKET MAKERS
as of February 4, 1999

Baldwin, Anthony & McIntyre
B-Trade Services LLC
First Southwest Company
Gruntal & Co. Incorporated
Herzog, Heine, Guduld, Inc.
Island System Corporation
Jefferies & Company, Inc.
Knight Securities L.P.
Merrill Lynch, Pierce, Fenner and Smith, Inc.
PaineWebber Inc.
Parker/Hunter Inc.
Sherwood Securities Corp.
Southwest Securites Inc.
Spear, Leeds & Kellogg


MARKET PRICE OF COMMON STOCK                       
                                                   
                             Price
  Year       -------------------------------------
Quarter         High          Low          Close
  1996                                             
   1           11 7/8       10 11/16      11 5/8
   2           13 1/2       11 1/4        13 1/8
   3           13 3/8       10 1/2        10 7/8
   4           12 1/8        9 3/4        11 1/2
  1997                                             
   1           12 3/8       10 1/4        11 1/8
   2           13 7/8       10 7/8        12 3/4
   3           15 1/4       12 1/2        13 7/16
   4           15           12 5/8        13 5/8
  1998                                             
   1           15 3/4       12            14 1/16
   2           17           13 1/4        16 1/8
   3           16 1/4       12 19/32      15 3/8
   4           15 1/16      10 3/8        13 1/8

                                    (Page 34)
===============================================================================

                              DIRECTORS AND OFFICERS

                                    DIRECTORS
                                        
                                   John Justin
            Chairman and Chief Executive Officer of Justin Industries
                                        
                                 J. T. Dickenson
           President and Chief Operating Officer of Justin Industries
                                        
                                 Marvin Gearhart
              Chairman of the Board of Rock Bit International, Inc.
                                        
                                 Robert E. Glaze
                              Personal Investments
                                        
                                  Dee J. Kelly
                   Shareholder and Director of the law firm of
                              Kelly, Hart & Hallman
                                        
                               Joseph R. Musolino
                    Vice Chairman-Texas, of NationsBank N. A.
                                        
                                  John V. Roach
                            Chairman of the Board of
                                Tandy Corporation
                                        
                              Dr. William E. Tucker
                              Personal Investments
                                        
                                                                   
                                   COMMITTEES
                                        
                                 Audit Committee

                                 Marvin Gearhart
                                 Robert E. Glaze
                               Joseph R. Musolino
                                        
                                        
                             Compensation Committee
                                        
                                  John V. Roach
                              Dr. William E. Tucker
                                        
                                        
                           Strategic Planning Committee
                                        
                                 J. T. Dickenson
                                  John V. Roach
                              Dr. William E. Tucker
                                        
                                        
                                    OFFICERS
                                        
                                   John Justin
                Chairman of the Board and Chief Executive Officer
                                        
                                 J. T. Dickenson
                      President and Chief Operating Officer
                                        
                                Richard J. Savitz
                 Vice President Finance, Treasurer and Secretary
                                        
                              Edward L. Stout, Jr.
                         Vice President Brick Operations
                                        
                                 Judy B. Hunter
                            Vice President-Controller
                                        
                                 W. O. Burrough
                               Assistant Treasurer
                                        
                                        
                                        
                                  IN TRIBUTE TO
                               BAYARD H. FRIEDMAN
                                        
                       We were saddened by the passing of
                               Bayard H. Friedman
              in October 1998. Bayard had been a director of Justin
                 Industries since 1969. At various periods of his
              directorship, Mr. Friedman served as a member of the
                   Audit, Compensation, and Strategic Planning
             Committees. We mourn his loss and will greatly miss his
               dedication, valuable guidance, and sound judgment.

                                    (Page 35)
===============================================================================

                     MANUFACTURING AND DISTRIBUTION LOCATIONS

ACME BRICK COMPANY
Manufacturing--Brick

   Bennett, Texas (2)
   Bridgeport, Texas
   Denton, Texas
   Elgin, Texas
   Garrison, Texas
   Malakoff, Texas (January 1999)
   McQueeney, Texas
   San Felipe (Houston), Texas
   Fort Smith, Arkansas
   Malvern, Arkansas
   Perla, Arkansas (2)
   Kanopolis, Kansas
   Weir, Kansas
   Jamestown, Louisiana
   Oklahoma City, Oklahoma
   Tulsa, Oklahoma

Manufacturing--Concrete Block

   Baton Rouge, Louisiana

Manufacturing--IBP Grids

   Fort Worth, Texas

Distribution

   Abilene, Texas
   Amarillo, Texas
   Austin, Texas
   Beaumont, Texas
   Corpus Christi, Texas
   Dallas, Texas
   Denton, Texas
   Fort Worth, Texas
   Houston, Texas
   Longview, Texas
   Lubbock, Texas
   Midland, Texas
   San Antonio, Texas
   Temple, Texas
   Texarkana, Texas
   Wichita Falls, Texas
   Alexandria, Louisiana
   Baton Rouge, Louisiana
   Lafayette, Louisiana
   Lake Charles, Louisiana
   Monroe, Louisiana
   New Orleans, Louisiana
   Shreveport, Louisiana
   Fort Smith, Arkansas
   Jonesboro, Arkansas
   Little Rock, Arkansas
   Russellville, Arkansas
   Springdale, Arkansas
   Joplin, Missouri
   Springfield, Missouri
   St. Louis, Missouri
   Oklahoma City, Oklahoma
   Tulsa, Oklahoma
   Kansas City, Kansas
   Wichita, Kansas
   Memphis, Tennessee (2)

AMERICAN TILE SUPPLY COMPANY
Distribution

   Austin, Texas
   Dallas, Texas, area (8)
   Fort Worth, Texas, area (3)
   Houston, Texas, area (3)
   Longview, Texas
   San Antonio, Texas
   Temple, Texas (January 1999)

FEATHERLITE BUILDING PRODUCTS CORPORATION
Manufacturing--Concrete Block

   Abilene, Texas
   Austin, Texas, area
   Beaumont/Port Arthur, Texas
   Dallas, Texas
   El Paso, Texas
   Lubbock, Texas
   San Antonio, Texas

Manufacturing--Architectural Stone

   Cedar Park, Texas
   (d/b/a Texas Quarries)

Distribution

   Amarillo, Texas
   Corpus Christi, Texas
   Las Cruces, New Mexico

JUSTIN BOOT COMPANY
Manufacturing

   Fort Worth, Texas
   Carthage, Missouri
   Cassville, Missouri

NOCONA BOOT COMPANY
Manufacturing

   Nocona, Texas

TONY LAMA COMPANY
Manufacturing

   El Paso, Texas

CHIPPEWA SHOE COMPANY
Manufacturing

   El Paso, Texas

NORTHLAND PUBLISHING COMPANY, INC.

   Flagstaff, Arizona

This report was produced by Northland Publishing, a Justin Company.  Photography
by Britt Stokes.

                                    (Page 36)
===============================================================================

(Picture - angel on Bass Performance Hall)

===============================================================================