<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549


                                    FORM 10-Q

(Mark One)


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

       For the quarterly period ended August 31, 2002


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

       For the transition period from ________________ to ________________


       Commission File Number 1-4887


                             TEXAS INDUSTRIES, INC.
             (Exact name of registrant as specified in the charter)


          Delaware                                        75-0832210
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)


        1341 West Mockingbird Lane, Suite 700W, Dallas, Texas 75247-6913
        (Address of principal executive offices)              (Zip Code)


        Registrant's telephone number, including area code (972) 647-6700




     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___

     As of October 7, 2002, 21,044,710 shares of Registrant's Common Stock,
$1.00 par value, were outstanding.

                                  Page 1 of 24

<PAGE>

                                      INDEX

                     TEXAS INDUSTRIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION                                                                           Page
-----------------------------
<S>                                                                                                     <C>
Item 1.       Financial Statements

              Consolidated Balance Sheets -- August 31, 2002 and May 31, 2002 .........................  3

              Consolidated Statements of Income -- three months ended August 31, 2002
                  and August 31, 2001 .................................................................  4

              Consolidated Statements of Cash Flows -- three months ended August 31, 2002
                  and August 31, 2001 .................................................................  5

              Notes to Consolidated Financial Statements ..............................................  6

              Independent Accountants' Review Report .................................................. 13

Item 2.       Management's Discussion and Analysis of Operating Results
                  and Financial Condition ............................................................. 14

Item 3.       Quantitative and Qualitative Disclosures About Market Risk -- the information required
                  by this item is included in Item 2 .................................................. --

Item 4.       Controls and Procedures ................................................................. 19

PART II.  OTHER INFORMATION
---------------------------

Item 6.       Exhibits and Reports on Form 8-K ........................................................ 19

SIGNATURES
----------

CERTIFICATIONS
--------------
</TABLE>

                                       -2-

<PAGE>

                           CONSOLIDATED BALANCE SHEETS
                     TEXAS INDUSTRIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                             (Unaudited)
                                                                              August 31,     May 31,
-----------------------------------------------------------------------------------------------------
In thousands                                                                     2002         2002
-----------------------------------------------------------------------------------------------------
<S>                                                                         <C>           <C>
ASSETS
CURRENT ASSETS
  Cash                                                                     $     7,197    $     7,430
  Receivables                                                                   57,633         56,138
  Inventories                                                                  278,365        276,482
  Deferred taxes and prepaid expenses                                           41,810         31,192
                                                                            ----------     ----------
            TOTAL CURRENT ASSETS                                               385,005        371,242

OTHER ASSETS
  Goodwill                                                                     146,474        146,474
  Real estate and investments                                                   41,869         41,524
  Deferred charges and intangibles                                              32,073         29,679
                                                                            ----------     ----------
                                                                               220,416        217,677

PROPERTY, PLANT AND EQUIPMENT
  Land and land improvements                                                   210,358        209,557
  Buildings                                                                    102,859        102,358
  Machinery and equipment                                                    1,790,808      1,779,863
  Construction in progress                                                      49,451         45,450
                                                                            ----------     ----------
                                                                             2,153,476      2,137,228
  Less allowances for depreciation                                             976,112        952,870
                                                                            ----------     ----------
                                                                             1,177,364      1,184,358
                                                                            ----------     ----------
                                                                           $ 1,782,785    $ 1,773,277
                                                                            ==========     ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Trade accounts payable                                                   $   122,482    $   111,037
  Accrued interest, wages and other items                                       52,852         48,363
  Current portion of long-term debt                                              9,230          9,228
                                                                            ----------     ----------
            TOTAL CURRENT LIABILITIES                                          184,564        168,628

LONG-TERM DEBT                                                                 464,917        474,963

DEFERRED INCOME TAXES AND OTHER CREDITS                                        169,213        167,276

COMPANY-OBLIGATED MANDATORILY REDEEMABLE
  PREFERRED SECURITIES OF SUBSIDIARY HOLDING
  SOLELY COMPANY CONVERTIBLE DEBENTURES                                        200,000        200,000

SHAREHOLDERS' EQUITY
  Common stock, $1 par value                                                    25,067         25,067
  Additional paid-in capital                                                   260,220        260,091
  Retained earnings                                                            571,433        569,096
  Accumulated other comprehensive loss                                          (1,073)            --
  Cost of common stock in treasury                                             (91,556)       (91,844)
                                                                            ----------     ----------
                                                                               764,091        762,410
                                                                            ----------     ----------
                                                                           $ 1,782,785    $ 1,773,277
                                                                            ==========     ==========
</TABLE>

See notes to consolidated financial statements.

                                      -3-

<PAGE>

                                   (Unaudited)
                        CONSOLIDATED STATEMENTS OF INCOME
                     TEXAS INDUSTRIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                     Three months ended
                                                                         August 31,
---------------------------------------------------------------------------------------------
In thousands except per share                                        2002             2001
---------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>
NET SALES                                                         $  338,955       $  361,562

COSTS AND EXPENSES (INCOME)
  Cost of products sold                                              296,689          314,641
  Selling, general and administrative                                 26,423           28,212
  Interest                                                             8,836           12,364
  Other income                                                        (1,382)          (3,738)
                                                                  ----------       ----------
                                                                     330,566          351,479
                                                                  ----------       ----------
            INCOME BEFORE THE FOLLOWING ITEMS                          8,389           10,083

Income taxes                                                           2,686            3,284
                                                                  ----------       ----------
                                                                       5,703            6,799

Dividends on preferred securities - net of tax                        (1,788)          (1,788)
                                                                  ----------       ----------
            NET INCOME                                            $    3,915       $    5,011
                                                                  ==========       ==========

BASIC
  Average shares                                                      21,109           21,014

  Earnings per share                                              $      .19       $      .24
                                                                  ==========       ==========

DILUTED
  Average shares                                                      21,327           21,485

  Earnings per share                                              $      .18       $      .23
                                                                  ==========       ==========

Cash dividends per share                                          $     .075       $     .075
                                                                  ==========       ==========
</TABLE>

See notes to consolidated financial statements.

                                       -4-

<PAGE>

                                   (Unaudited)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     TEXAS INDUSTRIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                     Three months ended
                                                                         August 31,
--------------------------------------------------------------------------------------------
In thousands                                                        2002             2001
--------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>
OPERATING ACTIVITIES
  Net income                                                      $   3,915        $   5,011
  Gain on disposal of assets                                            (51)            (123)
  Non-cash items
     Depreciation, depletion and amortization                        24,298           27,183
     Deferred taxes                                                   1,580            1,494
     Other - net                                                      1,115            2,583
  Changes in operating assets and liabilities
     Receivables                                                     (1,694)           3,304
     Inventories and prepaid expenses                               (12,484)          18,123
     Accounts payable and accrued liabilities                        15,020           23,365
     Real estate and investments                                       (580)            (329)
                                                                  ---------        ---------
         Net cash provided by operations                             31,119           80,611

INVESTING ACTIVITIES
  Capital expenditures                                              (17,423)          (6,759)
  Proceeds from disposal of assets                                      424            3,064
  Other - net                                                        (2,551)          (1,757)
                                                                  ---------        ---------
         Net cash used by investing                                 (19,550)          (5,452)

FINANCING ACTIVITIES
  Proceeds of long-term borrowing                                    60,630          100,950
  Debt retirements                                                  (70,675)        (170,991)
  Purchase of treasury shares                                            (2)            (206)
  Common dividends paid                                              (1,578)          (1,567)
  Other - net                                                          (177)           1,758
                                                                  ---------        ---------
         Net cash used by financing                                 (11,802)         (70,056)
                                                                  ---------        ---------
Increase (decrease) in cash                                            (233)           5,103

Cash at beginning of period                                           7,430            8,734
                                                                  ---------        ---------
Cash at end of period                                             $   7,197        $  13,837
                                                                  =========        =========
</TABLE>

See notes to consolidated financial statements.

                                       -5-

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

     Texas Industries, Inc. ("TXI" or the "Company") is a leading supplier of
construction materials through two business segments: cement, aggregate and
concrete products (the "CAC" segment) and structural steel and specialty bar
products (the "Steel" segment). Through the CAC segment, the Company produces
and sells cement, stone, sand and gravel, expanded shale and clay aggregate and
concrete products from facilities concentrated in Texas, Louisiana, and
California, with several products marketed throughout the United States. Through
the Steel segment, the Company produces and sells structural steel, piling
products, specialty bar products, merchant bar-quality rounds, reinforcing bar
and channels from facilities located in Texas and Virginia, for markets in North
America.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended August 31,
2002, are not necessarily indicative of the results that may be expected for the
year ended May 31, 2003. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended May 31, 2002.

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

     Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and all subsidiaries.

     Cash Equivalents. For cash flow purposes, temporary investments which have
maturities of less than 90 days when purchased are considered cash equivalents.

     Property, Plant and Equipment. Property, plant and equipment is recorded at
cost. Provisions for depreciation are computed generally using the straight-line
method. Provisions for depletion of mineral deposits are computed on the basis
of the estimated quantity of recoverable raw materials. Useful lives for the
Company's primary operating facilities range from 10 to 20 years. Maintenance
and repairs are charged to expense as incurred. Costs incurred for scheduled
shut-downs to refurbish Steel facilities are amortized over the production
period, typically 12 to 24 months.

     Goodwill. Goodwill identified with CAC resulted from the acquisition of
Riverside Cement Company. Goodwill identified with Steel resulted from the
acquisition of Chaparral Steel Company. Goodwill is tested for impairment
annually by each reporting unit. An independent evaluation determined that in
each case the fair value of the respective reporting unit exceeds its carrying
value. The carrying value of goodwill by business segment is summarized as
follows:

       -------------------------------------------------------------------------
        In thousands                                    August       May
       -------------------------------------------------------------------------

         CAC
            Gross carrying value                      $  66,766      66,766
            Accumulated amortization                     (5,458)     (5,458)
                                                      ---------   ---------
                                                         61,308      61,308
         Steel
            Gross carrying value                        112,265     112,265
            Accumulated amortization                    (27,099)    (27,099)
                                                      ---------   ---------
                                                         85,166      85,166
                                                      ---------   ---------
                                                      $ 146,474   $ 146,474
                                                      =========   =========

                                       -6-

<PAGE>

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued

     Real Estate and Investments. Surplus real estate and real estate acquired
for development of high quality industrial, office and multi-use parks totaled
$14.3 million at both August 31, 2002 and May 31, 2002. Investments, composed
primarily of life insurance contracts which may be used to fund certain Company
benefit agreements, totaled $27.6 million and $27.2 million at August 31, 2002
and May 31, 2002, respectively.

     Debt Issuance Cost. Debt issuance costs totaling $9.5 million and $9.9
million at August 31, 2002 and May 31, 2002, respectively, are associated with
various debt issues and amortized over the terms of the related debt.

     Intangibles. Intangibles include non-compete agreements and other
intangibles with finite lives being amortized on a straight-line basis over
periods of 5 to 15 years. Their carrying value, adjusted for write-offs, totaled
$3.2 million and $3.5 million, net of accumulated amortization of $5.4 million
and $5.1 million at August 31, 2002 and May 31, 2002, respectively. Amortization
expense of $300,000 was incurred in each of the three-month periods ended August
31, 2002 and 2001. Annual amortization expense for each of the five succeeding
years is $800,000, $400,000, $400,000, $300,000 and $300,000.

     Other Credits. Other credits totaling $33.1 million and $32.1 million at
August 31, 2002 and May 31, 2002, respectively, are composed primarily of
liabilities related to the Company's retirement plans and deferred compensation
agreements.

     Accumulated Other Comprehensive Loss. Accumulated other comprehensive loss
represents a minimum pension liability adjustment related to a defined benefit
retirement plan covering certain employees and retirees of an acquired
subsidiary. The minimum pension liability adjustment was $1.1 million net of tax
of $600,000 at August 31, 2002. Comprehensive income which consists of net
income and the minimum pension liability adjustment to shareholders' equity was
$2.8 million for the three month period ended August 31, 2002.

     Net Sales. Sales are recognized when title has transferred and products are
delivered. Sales are presented net of delivery costs as follows:

                                                              August 31,
        ---------------------------------------------------------------------
        In thousands                                       2002         2001
        ---------------------------------------------------------------------

        Revenues including delivery fees                $ 365,997   $ 389,435
        Freight and delivery costs                        (27,042)    (27,873)
                                                         --------    --------
        Net sales                                       $ 338,955   $ 361,562
                                                         ========    ========

     Income Taxes. Accounting for income taxes uses the liability method of
recognizing and classifying deferred income taxes. The Company joins in filing a
consolidated return with its subsidiaries. Current and deferred tax expense is
allocated among the members of the group based on a stand-alone calculation of
the tax of the individual member.

     Earnings Per Share ("EPS"). Basic EPS is computed by dividing net income by
the weighted average number of common shares outstanding during the period
including certain contingently issuable shares. Diluted EPS adjusts net income
for the net dividends on preferred securities of subsidiary and the outstanding
shares for the dilutive effect of the preferred securities, stock options and
awards.

                                       -7-

<PAGE>

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued

     Basic and Diluted EPS are calculated as follows:

                                                                August 31,
         ---------------------------------------------------------------------
         In thousands except per share                       2002        2001
         ---------------------------------------------------------------------

         Earnings:
            Net income                                     $  3,915   $  5,011
                                                            =======    =======
         Shares:
            Weighted-average shares outstanding              21,035     20,869
            Contingently issuable shares                         74        145
                                                            -------    -------
                Basic weighted-average shares                21,109     21,014

            Stock option and award dilution                     218        471
                                                            -------    -------
                Diluted weighted-average shares *            21,327     21,485
                                                            =======    =======

         Basic earnings per share                          $    .19   $    .24
                                                            =======    =======

         Diluted earnings per share                        $    .18   $    .23
                                                            =======    =======

         * Shares excluded due to antidilutive effect:
                Preferred securities                          2,889      2,889
                Stock options and awards                        990        595


WORKING CAPITAL

     Working capital totaled $200.4 million at August 31, 2002 and $202.6
million at May 31, 2002.

     Receivables consist of:

         ---------------------------------------------------------------------
         In thousands                                      August         May
         ---------------------------------------------------------------------

         Notes and interest receivables                  $  12,811   $  13,100
         Tax refund claims                                   4,364       4,364
         Accounts receivable                                40,458      38,674
                                                          --------    --------
                                                         $  57,633   $  56,138
                                                          ========    ========


     Accounts receivable are presented net of allowances for doubtful
receivables of $5.0 million at August and $4.7 million at May.

     The Company has an agreement to sell, on a revolving basis, an interest in
a defined pool of trade receivables of up to $125 million. The agreement is
subject to annual renewal. The maximum amount outstanding varies based upon the
level of eligible receivables. Fees are variable and follow commercial paper
rates. The interest sold totaled $125 million at August and May. The sales are
reflected as accounts receivable reductions and as operating cash flows. As
collections reduce previously sold interests, new accounts receivable are
customarily sold. Fees and expenses of $800,000 and $1.4 million are included in
selling, general and administrative expenses in the three-month periods ended
August 31, 2002 and 2001, respectively. The Company, as agent for the purchaser,
retains collection and administration responsibilities for the participating
interests of the defined pool.

                                       -8-

<PAGE>

WORKING CAPITAL-Continued

     Inventories consist of:

         ---------------------------------------------------------------------
         In thousands                                   August        May
         ---------------------------------------------------------------------

         Finished products                           $  83,494       $  85,818
         Work in process                                58,745          56,504
         Raw materials and supplies                    136,126         134,160
                                                      --------        --------
                                                     $ 278,365       $ 276,482
                                                      ========        ========

     Inventories are stated at cost (not in excess of market) with a majority of
inventories using the last-in first-out method (LIFO). If the average cost
method (which approximates current replacement cost) had been used, inventory
values would have been higher by $6.3 million at August and May.

     Accrued interest, wages and other items consist of:

         ---------------------------------------------------------------------
         In thousands                                   August        May
         ---------------------------------------------------------------------

         Interest                                     $ 10,709       $   5,292
         Employee compensation                          15,788          21,273
         Income taxes                                    1,825           3,778
         Other                                          24,530          18,020
                                                       -------        --------
                                                      $ 52,852       $  48,363
                                                       =======        ========


LONG-TERM DEBT

     Long-term debt is comprised of the following:

<TABLE>
<CAPTION>
         -------------------------------------------------------------------------------------------------
         In thousands                                                              August          May
         -------------------------------------------------------------------------------------------------
<S>                                                                              <C>            <C>
         Revolving credit facility maturing in 2004, interest rates
               average 3.79%                                                     $  80,000      $   90,000
         Senior notes
               Notes due through 2017, interest rates average 7.28%                200,000         200,000
               Notes due through 2008, interest rates average 7.28%                 75,000          75,000
               Notes due through 2004, interest rates average 10.2%                 16,000          16,000
         Variable-rate industrial development revenue bonds
               Bonds maturing in 2028, interest rate approximately 2.5%             50,000          50,000
               Bonds maturing in 2029, interest rate approximately 2.5%             25,000          25,000
               Bonds maturing in 2029, interest rate approximately 2.5%             20,500          20,500
         Pollution control bonds, due through 2007, interest
            rate 3.56% (75% of prime)                                                4,535           4,535
         Other, maturing through 2009, interest rates
            from 7.5% to 10%                                                         3,112           3,156
                                                                                  --------       ---------
                                                                                   474,147         484,191
         Less current maturities                                                     9,230           9,228
                                                                                  --------       ---------
                                                                                 $ 464,917      $  474,963
                                                                                  ========       =========
</TABLE>

     Annual maturities of long-term debt for each of the five succeeding years
are $9.2, $134.3, $41.2, $45.9 and $40.9 million.

                                       -9-

<PAGE>

LONG-TERM DEBT-Continued

     The Company has available a bank-financed $350 million long-term revolving
credit facility. An interest rate at the applicable margin above either prime or
LIBOR is selected at the time of each borrowing. Commitment fees at a current
annual rate of .3% are paid on the unused portion of this facility. There is
$80.0 million currently outstanding under this facility. In addition, $110.9
million has been utilized to support letters of credit issued primarily to
secure the Company's variable-rate industrial development revenue bonds, which
allows the interest rates on these bonds to closely follow the tax-exempt
commercial paper rates.

     Loan agreements contain covenants that provide for restrictions on the
payment of dividends on common stock and place limitations on incurring certain
indebtedness, purchasing treasury stock, and making capital expenditures and
certain investments. Under the most restrictive of these agreements, the
Company's total debt is limited based on the ratio of debt to earnings before
interest, taxes, depreciation and amortization ("EBITDA"). At August 31, 2002,
$160.9 million of additional debt could have been incurred. In addition, the
aggregate amount of annual fixed charges which includes cash dividends on common
stock is limited based on the ratio of EBITDA to fixed charges. At August 31,
2002, $44.0 million of additional fixed charges could have been incurred. The
Company is in compliance with all loan covenant restrictions.

     The amount of interest paid for the three-month periods presented was $2.1
million in 2002 and $6.2 million in 2001.

PREFERRED SECURITIES OF SUBSIDIARY

     On June 5, 1998, TXI Capital Trust I (the "Trust"), a Delaware business
trust wholly owned by the Company, issued 4,000,000 of its 5.5% Shared
Preference Redeemable Securities ("Preferred Securities") to the public for
gross proceeds of $200 million. The combined proceeds from the issuance of the
Preferred Securities and the issuance to the Company of the common securities of
the Trust were invested by the Trust in $206.2 million aggregate principal
amount of 5.5% convertible subordinated debentures due June 30, 2028 (the
"Debentures") issued by the Company. The Debentures are the sole assets of the
Trust.

     Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of $2.75 per Preferred Security (equivalent to a
rate of 5.5% per annum of the stated liquidation amount of $50 per Preferred
Security). The Company has guaranteed, on a subordinated basis, distributions
and other payments due on the Preferred Securities, to the extent the Trust has
funds available therefor and subject to certain other limitations (the
"Guarantee"). The Guarantee, when taken together with the obligations of the
Company under the Debentures, the Indenture pursuant to which the Debentures
were issued, and the Amended and Restated Trust Agreement of the Trust
(including its obligations to pay costs, fees, expenses, debts and other
obligations of the Trust [other than with respect to the Preferred Securities
and the common securities of the Trust]), provide a full and unconditional
guarantee of amounts due on the Preferred Securities.

     The Debentures are redeemable for cash under certain circumstances relating
to federal income tax matters, or at the option of the Company, in whole or in
part, at par, plus accrued and unpaid interest. Upon any redemption of the
Debentures, a like aggregate liquidation amount of Preferred Securities will be
redeemed. The Preferred Securities do not have a stated maturity date, although
they are subject to mandatory redemption upon maturity of the Debentures on June
30, 2028, or upon earlier redemption.

     Each Preferred Security is convertible at any time prior to the close of
business on June 30, 2028, at the option of the holder into shares of the
Company's common stock at a conversion rate of .72218 shares of the Company's
common stock for each Preferred Security (equivalent to a conversion price of
$69.235 per share of TXI Common Stock).

                                      -10-

<PAGE>

SHAREHOLDERS' EQUITY

     Common stock consists of:

        ----------------------------------------------------------------------
         In thousands                                        August       May
        ----------------------------------------------------------------------

         Shares authorized                                   40,000     40,000
         Shares outstanding at end of period                 21,042     21,026
         Shares held in treasury                              4,025      4,041
         Shares reserved for stock options and other          3,414      3,503


     There are authorized 100,000 shares of Cumulative Preferred Stock, no par
value, of which 20,000 shares are designated $5 Cumulative Preferred Stock
(Voting), redeemable at $105 per share and entitled to $100 per share upon
dissolution. An additional 25,000 shares are designated Series B Junior
Participating Preferred Stock. The Series B Preferred Stock is not redeemable
and ranks, with respect to the payment of dividends and the distribution of
assets, junior to (i) all other series of the Preferred Stock unless the terms
of any other series shall provide otherwise and (ii) the $5 Cumulative Preferred
Stock. Pursuant to a Rights Agreement, in November 1996, the Company distributed
a dividend of one preferred share purchase right for each outstanding share of
the Company's Common Stock. Each right entitles the holder to purchase from the
Company one two-thousandth of a share of the Series B Junior Participating
Preferred Stock at a price of $122.50, subject to adjustment. The rights will
expire on November 1, 2006 unless the date is extended or the rights are earlier
redeemed or exchanged by the Company pursuant to the Rights Agreement.

STOCK OPTION PLAN

     The Company's stock option plan as approved by shareholders provides that
non-qualified and incentive stock options to purchase Common Stock may be
granted to directors, officers and key employees at market prices at date of
grant. Outstanding options become exercisable in installments beginning one year
after date of grant and expire ten years later.

     A summary of option transactions for the three-month period ended August
31, 2002, follows:

        ------------------------------------------------------------------------
                                                                Weighted Average
                                        Shares Under Option       Option Price
        ------------------------------------------------------------------------

         Outstanding at June 1                2,399,153               $31.02
            Exercised                           (13,760)               25.86
            Cancelled                            (1,500)               28.55
                                             ----------                -----
         Outstanding at August 31             2,383,893               $31.05
                                             ==========                =====



     At August 31, 2002, there were 1,565,123 shares exercisable and 941,550
shares available for future grants. Outstanding options expire on various dates
to January 16, 2012.

INCOME TAXES

     Federal income taxes for the interim periods ended August 31, 2002 and
2001, have been included in the accompanying financial statements on the basis
of an estimated annual rate. The estimated annualized tax rate is 30.6% for 2002
compared to 31.7% for 2001. The primary reason that these respective tax rates
differ from the 35% statutory corporate rate is due to percentage depletion
which is tax deductible and state income tax expense. The Company made income
tax payments of $2.1 million in the three-month period ended August 31, 2002 and
received income tax refunds of $18.1 million in the three-month period ended
August 31, 2001.

                                      -11-

<PAGE>

LEGAL PROCEEDINGS AND CONTINGENT LIABILITIES

     The Company is subject to federal, state and local environmental laws and
regulations concerning among other matters, air emissions, furnace dust disposal
and wastewater discharge. The Company believes it is in substantial compliance
with applicable environmental laws and regulations, however, from time to time
the Company receives claims from federal and state environmental regulatory
agencies and entities asserting that the Company is or may be in violation of
certain environmental laws and regulations. Based on its experience and the
information currently available to it, the Company believes that such claims
will not have a material impact on its financial condition or results of
operations. Despite the Company's compliance and experience, it is possible that
the Company could be held liable for future charges which might be material but
are not currently known or estimable. In addition, changes in federal or state
laws, regulations or requirements or discovery of currently unknown conditions
could require additional expenditures by the Company.

     The Company and subsidiaries are defendants in lawsuits which arose in the
normal course of business. In management's judgment (based on the opinion of
counsel) the ultimate liability, if any, from such legal proceedings will not
have a material effect on the consolidated financial position or results of
operations of the Company.

BUSINESS SEGMENTS

     The Company has two reportable segments: cement, aggregate and concrete
products (the "CAC" segment) and steel (the "Steel" segment). The Company's
reportable segments are strategic business units that offer different products
and services. They are managed separately because of significant differences in
manufacturing processes, distribution and markets served. Through the CAC
segment the Company produces and sells cement, stone, sand and gravel, expanded
shale and clay aggregate and concrete products. Through the Steel segment, the
Company produces and sells structural steel, piling products, specialty bar
products, merchant bar-quality rounds, reinforcing bar and channels. Operating
profit is net sales less operating costs and expenses, excluding general
corporate expenses and interest expense. Operating results and certain other
financial data for the Company's business segments are presented on pages 14 and
15 under "Business Segments" of Management's Discussion and Analysis of
Financial Condition and Results of Operations, and are incorporated herein by
reference.

                                      -12-

<PAGE>

                                    EXHIBIT A

                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT

Board of Directors
Texas Industries, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of Texas
Industries, Inc. and subsidiaries (the Company) as of August 31, 2002 and the
related condensed consolidated statements of income and cash flows for the
three-month periods ended August 31, 2002 and 2001. These financial statements
are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to above for them to be in conformity with accounting principles generally
accepted in the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of Texas
Industries, Inc. and subsidiaries as of May 31, 2002, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
year then ended [not presented herein] and in our report dated July 9, 2002, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of May 31, 2002, is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.

                                                  /s/ Ernst & Young LLP
                                                  ---------------------

Dallas, Texas
September 18, 2002

                                      -13-

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Comparison of operations and financial condition for the three-month period
ended August 31, 2002 to the three-month period ended August 31, 2001.

BUSINESS SEGMENTS

     The Company is a leading supplier of construction materials through two
business segments: cement, aggregate and concrete products (the "CAC" segment);
and structural steel and specialty bar products (the "Steel" segment). Through
the CAC segment, the Company produces and sells cement, stone, sand and gravel,
expanded shale and clay aggregate and concrete products. Through the Steel
segment, the Company produces and sells structural steel, piling products,
specialty bar products, merchant bar-quality rounds, reinforcing bar and
channels.

     Corporate resources include administration, financial, legal,
environmental, human resources and real estate activities that are not allocated
to operations and are excluded from operating profit.

<TABLE>
<CAPTION>
                                                                            Three months ended
                                                                                August 31,
      --------------------------------------------------------------------------------------------
      In thousands                                                        2002             2001
      --------------------------------------------------------------------------------------------
      <S>                                                             <C>              <C>
      TOTAL SALES
           Cement                                                     $    93,785      $    94,492
           Ready-mix                                                       59,007           65,995
           Stone, sand & gravel                                            28,136           34,555
           Structural mills                                               119,919          127,407
           Bar mill                                                        31,085           29,966

      UNITS SHIPPED
           Cement (tons)                                                    1,327            1,320
           Ready-mix (cubic yards)                                          1,010            1,111
           Stone, sand & gravel (tons)                                      4,951            6,113
           Structural mills (tons)                                            367              404
           Bar mill (tons)                                                     99              101

      NET SALES
           Cement                                                     $    76,417      $    75,117
           Ready-mix                                                       58,925           65,933
           Stone, sand & gravel                                            19,854           25,590
           Other products                                                  28,492           32,482
                                                                        ---------         --------
           TOTAL CAC                                                      183,688          199,122

           Structural mills                                               119,919          127,407
           Bar mill                                                        31,085           29,966
           Other                                                            4,263            5,067
                                                                        ---------         --------
           TOTAL STEEL                                                    155,267          162,440
                                                                        ---------         --------
           TOTAL NET SALES                                            $   338,955      $   361,562
                                                                        =========         ========
</TABLE>

                                      -14-

<PAGE>

<TABLE>
<CAPTION>
                                                                               Three months ended
                                                                                   August 31,
       ----------------------------------------------------------------------------------------------
         In thousands                                                         2002             2001
       ----------------------------------------------------------------------------------------------
<S>                                                                        <C>              <C>
         CAC OPERATIONS
              Gross profit                                                 $  51,769        $  61,514
              Less: Depreciation, depletion &
                      amortization                                            11,922           12,299
                    Selling, general & administrative                         12,020           12,301
                    Other income                                                (601)            (458)
                                                                           ---------        ---------
              OPERATING PROFIT                                                28,428           37,372

         STEEL OPERATIONS
              Gross profit                                                    13,986           11,717
              Less: Depreciation & amortization                               11,938           14,516
                    Selling, general & administrative                          5,978            6,932
                    Other income                                                (723)          (2,837)
                                                                           ---------        ---------
              OPERATING LOSS                                                  (3,207)          (6,894)
                                                                           ---------        ---------
         TOTAL OPERATING PROFIT                                               25,221           30,478

         CORPORATE RESOURCES
              Other income                                                        58              443
              Less: Depreciation & amortization                                  438              368
                    Selling, general & administrative                          7,616            8,106
                                                                           ---------        ---------
                                                                              (7,996)          (8,031)

         INTEREST EXPENSE                                                     (8,836)         (12,364)
                                                                           ---------        ---------

         INCOME BEFORE TAXES & OTHER ITEMS                                 $   8,389        $  10,083
                                                                           =========        =========
</TABLE>

RESULTS OF OPERATIONS

Operating Profit - August 2002 Quarter Compared to August 2001 Quarter

     Operating profit at $25.2 million decreased 17% from the prior year period.
CAC profit declined $8.9 million as lower ready-mix and aggregate shipments were
offset in part by improved cement margins due to lower energy and maintenance
costs. Steel operating results improved $3.7 million as higher realized prices
and lower depreciation expense was offset in part by increased scrap costs and
lower shipments. Although demand for building materials in the Company's CAC
markets has declined it remains at satisfactory levels. Overall demand for
structural steel is down from prior year levels due to the lower level of
non-residential construction. Since it is not possible to predict with any
confidence when these markets will change, the Company is focused on reducing
costs, maintaining desirable market share and continuing to generate operating
cash flows.

     Net Sales. Consolidated net sales for the August 2002 quarter were $339.0
million compared to $361.6 million for the prior year period. CAC sales at
$183.7 million were down 8%. Total cement sales declined slightly on 2% lower
average trade prices. Ready-mix sales declined $7.0 million on 9% lower volume
and 2% lower average prices. Aggregate sales declined $6.4 million on 19% lower
shipments and 2% lower average prices. Wet weather and softening demand in the
Company's Texas markets reduced ready-mix and aggregate shipments in the
quarter. Steel sales at $155.3 million were down 4%. Structural steel sales
declined $7.5 million on 9% lower shipments at 4% higher realized prices. Bar
mill sales increased $1.1 million on 6% higher prices.

     Operating Costs. Consolidated cost of products sold including depreciation,
depletion and amortization was $296.7 million, a decrease of $17.9 million from
the prior year period. CAC costs were $143.5 million, a decrease of $5.9
million, due to a 7% reduction in unit cement manufacturing costs and lower
ready-mix volume. Steel costs were $153.2 million, a decrease of $12.0 million,
as lower shipments were offset in part by higher scrap costs.

                                      -15-

<PAGE>

     CAC selling, general and administrative expenses including depreciation and
amortization at $12.4 million decreased $400,000 and Steel expenses at $6.0
million decreased $900,000 due to lower general expenses.

Corporate Resources

     Selling, general and administrative expenses including depreciation and
amortization at $8.1 million decreased $400,000 on lower costs associated with
the Company's agreement to sell receivables. Other income decreased $400,000 on
lower interest income.

Interest Expense

     Interest expense at $8.8 million decreased $3.5 million from the prior year
period due primarily to lower average borrowings under the Company's revolving
credit facility and to a lesser extent lower interest rates.

Income Taxes

     The Company's current effective tax rate is estimated at 30.6% compared to
31.7% in the prior year period. The primary reason that the tax rate differs
from the 35% statutory corporate rate is due to percentage depletion that is tax
deductible and state income tax expense.

Dividends on Preferred Securities - Net of Tax

     Dividends on preferred securities of subsidiary net of tax benefit amounted
to $1.8 million in each period.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's sources of liquidity, in addition to cash from operations,
include a credit facility and an agreement to sell trade accounts receivable.

     The Company has available a $350 million revolving credit facility that
expires in March 2004. At August 31, 2002, $80.0 million was outstanding under
the credit facility and an additional $110.9 million had been utilized to
support letters of credit. The credit facility agreement limits the Company's
total debt based on the ratio of debt to earnings before interest, taxes,
depreciation and amortization. At August 31, 2002, $160.9 million of additional
debt could have been incurred.

     The Company has an agreement to sell, on a revolving basis, an interest in
a defined pool of trade accounts receivable of up to $125 million. At August 31,
2002, the entire amount available under this agreement had been sold.

     The Company historically has financed its major capital expansion projects
with cash from operations and long-term borrowing. Working capital requirements
and capital expenditures for normal replacement and technological upgrades of
existing equipment and expansions of its operations are funded with cash from
operations. The fiscal year 2003 capital expenditure budget for these activities
is estimated currently at approximately $75 million. In addition, the Company
leases certain mobile and other equipment used in its operations under operating
leases that in the normal course of business are renewed or replaced by other
leases. The Company's contractual obligations for long-term debt, operating
leases and preferred securities of subsidiary are essentially unchanged from May
31, 2002 except for the $10 million reduction in the outstanding balance on the
revolving credit facility.

     The Company expects cash from operations, borrowings under its current or
similar revolving credit facility and its agreement to sell trade accounts
receivable to be sufficient to provide funds for capital expenditure
commitments, scheduled debt repayments and working capital needs.

                                      -16-

<PAGE>

Cash Flows

     Net cash provided by operating activities was $31.1 million, a decrease of
$49.5 million from the prior year period. The decrease was primarily the result
of changes in Steel inventories and prepaid expenses. In the current period, a
scheduled shutdown to refurbish the Steel production facilities increased
prepaid expenses $10.8 million. In the prior year period, Steel inventories were
reduced $17.2 million as the Company lowered Steel production to bring inventory
levels in line with market conditions. The prior year period operating cash flow
also included the collection of a tax refund claim of $18.1 million that offset
an increase in Steel receivables of $16.4 million due to higher shipments.

     Net cash used by investing activities was $19.6 million, compared to $5.5
million during the prior year period, consisting principally of capital
expenditures for normal replacement and technological upgrades of existing
equipment and expansions of the Company's operations. Capital expenditures for
these activities in the August 2002 quarter were $17.4 million, an increase of
$10.7 million from the prior year period.

     Net cash used by financing activities was $11.8 million, compared to $70.1
million during the prior year period. The outstanding balance on the Company's
revolving credit facility was reduced $10.0 million. The Company's quarterly
cash dividend of $.075 per common share remained unchanged from the prior year.

OTHER ITEMS

Environmental Matters

     The Company is subject to federal, state and local environmental laws and
regulations concerning, among other matters, air emissions, furnace dust
disposal and wastewater discharge. The Company believes it is in substantial
compliance with applicable environmental laws and regulations, however, from
time to time the Company receives claims from federal and state environmental
regulatory agencies and entities asserting that the Company is or may be in
violation of certain environmental laws and regulations. Based on its experience
and the information currently available to it, the Company believes that such
claims will not have a material impact on its financial condition or results of
operations. Despite the Company's compliance and experience, it is possible that
the Company could be held liable for future charges which might be material but
are not currently known or estimable. In addition, changes in federal or state
laws, regulations or requirements or discovery of currently unknown conditions
could require additional expenditures by the Company.

Market Risk

     The Company does not enter into derivatives or other financial instruments
for trading or speculative purposes. Because of the short duration of the
Company's investments, changes in market interest rates would not have a
significant impact on their fair value. The current fair value of the Company's
long-term debt, including current maturities, does not exceed its carrying
value. Market risk, when estimated as the potential increase in fair value
resulting from a hypothetical 10% decrease in the Company's weighted average
long-term borrowing rate, would not have a significant impact on the carrying
value of long-term debt. Expected maturity dates and average interest rates of
long-term debt are essentially unchanged from May 31, 2002.

Critical Accounting Policies

     The preparation of financial statements and accompanying notes in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported. Changes in the
facts and circumstances could have a significant impact on the resulting
financial statements. The critical accounting policies that affect its more
complex judgments and estimates are described in the Company's Annual Report on
Form 10-K for the year ended May 31, 2002.

                                      -17-

<PAGE>

New Accounting Pronouncements

     Effective June 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets." Its adoption did not have an immediate effect on the
financial statements of the Company.

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995

     Certain statements contained in this quarterly report are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to risks, uncertainties and other factors,
which could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. Potential risks and
uncertainties include, but are not limited to, the impact of competitive
pressures and changing economic and financial conditions on the Company's
business, construction activity in the Company's markets, abnormal periods of
inclement weather, changes in the cost of raw materials, fuel, and energy and
the impact of environmental laws and other regulations. For further information
refer to the Company's Annual Report on Form 10-K for the year ended May 31,
2002.

                                      -18-

<PAGE>

Item 4.   Controls and Procedures

     Based on their most recent evaluation, which was completed within 90 days
of the filing of this Form 10-Q, the Company's Chief Executive Officer and Chief
Financial Officer believe the Company's disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) are effective to ensure that
information required to be disclosed by the Company in this report is
accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding required disclosure. There were no significant
changes in the Company's internal controls or other factors that could
significantly affect these controls subsequent to the date of their evaluation
and there were no corrective actions with regard to significant deficiencies and
material weaknesses.

PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

     The following exhibits are included herein:

         (15)  Letter re: Unaudited Interim Financial Information

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

     The Registrant filed the following report on Form 8-K during the
three-month period ended August 31, 2002:

         August 22, 2002, reporting (i) the certifications made by the Chief
         Executive Officer and the Chief Financial Officer pursuant to Section
         906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) to
         accompany the Registrant's Annual Report on Form 10-K for the fiscal
         year ended May 31, 2002; and (ii) the sworn statements submitted by the
         Principal Executive Officer and Principal Financial Officer pursuant to
         the Securities and Exchange Commission Order No. 4-460.

                                      -19-

<PAGE>

                                   SIGNATURES

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

                                    TEXAS INDUSTRIES, INC.




October 11, 2002                    /s/  Richard M. Fowler
----------------                    ----------------------
                                    Richard M. Fowler
                                    Executive Vice President - Finance and Chief
                                     Financial Officer
                                    (Principal Financial Officer)




October 11, 2002                    /s/  James R. McCraw
----------------                    --------------------
                                    James R. McCraw
                                    Vice President - Accounting and Information
                                     Services
                                    (Principal Accounting Officer)

                                      -20-

<PAGE>

                                 CERTIFICATIONS

I, Robert D. Rogers, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of Texas Industries,
         Inc.;

     2.  Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

     3.  Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

     4.  The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

              a)  designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

              b)  evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

              c)  presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

              a)  all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

              b)  any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

     6.  The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date:  October 11, 2002

                                    /s/                 Robert D. Rogers
                                    --------------------------------------------
                                    Robert D. Rogers
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)

                                      -21-

<PAGE>

I, Richard M. Fowler, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of Texas Industries,
         Inc.;

     2.  Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

     3.  Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

     4.  The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

              a)  designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this quarterly report is being prepared;

              b)  evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this quarterly report (the "Evaluation
                  Date"); and

              c)  presented in this quarterly report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

              a)  all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

              b)  any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

     6.  The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date: October 11, 2002

                                    /s/           Richard M. Fowler
                                    --------------------------------------------
                                    Richard M. Fowler
                                    Executive Vice President - Finance and Chief
                                     Financial Officer
                                    (Principal Financial Officer)

                                      -22-

<PAGE>

                                INDEX TO EXHIBITS

Exhibits                                                                    Page

   15.  Letter re: Unaudited Interim Financial Information...............     24

                                      -23-