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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended November 30, 2008

OR



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

For the transition period from
 to

Commission File Number 1-4887

TEXAS INDUSTRIES, INC.

(Exact Name of Registrant as Specified in Its Charter)



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

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

(Address of Principal Executive Offices)
                                (Zip Code)

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

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

Indicate by check mark whether the
Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company
in Rule 12b-2 of the Exchange Act. (Check one):



|                          |  |                   |  |                       |  |                          
|------------------------- |  | ----------------- |  | --------------------- |  | -------------------------
|Large Accelerated Filer X |  | Accelerated Filer |  | Non-accelerated Filer |  | Smaller Reporting Company

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).    Yes   NoX

There were 27,663,530 shares of the Registrants Common Stock, $1.00 par value, outstanding as of January 5, 2009.



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INDEX

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                              |  |                                                                                                            |  |   
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------- |  | --
|PART I. FINANCIAL INFORMATION |  | Page                                                                                                      
|                              |  |                                                                                                           
|Item 1.                       |  | Financial Statements                                                                                       |  |   
|                              |  |                                                                                                           
|                              |  | Consolidated Balance Sheets  November 30, 2008 and May 31, 2008                                           |  | 3 
|                              |  |                                                                                                           
|                              |  | Consolidated Statements of Operations  three and six months ended November 30, 2008 and November 30, 2007 |  | 4 
|                              |  |                                                                                                           
|                              |  | Consolidated Statements of Cash Flows  six months ended November 30, 2008 and November 30,
2007           |  | 5 
|                              |  |                                                                                                           
|                              |  | Notes to Consolidated Financial Statements                                                                 |  | 6 
|                              |  |                                                                                                           
|                              |  | Report of Independent Registered Public Accounting Firm                                                    |  | 24
|                              |  |                                                                                                           
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                      |  | 25
|                              |  |                                                                                                           
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                 |  | 34
|                              |  |                                                                                                           
|Item 4.                       |  | Controls and Procedures                                                                                    |  | 34
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                           
|                              |  |                                                                                                           
|Item 1.                       |  | Legal Proceedings                                                                                          |  | 35
|                              |  |                                                                                                           
|Item 1A.                      |  | Risk Factors                                                                                               |  | 35
|                              |  |                                                                                                           
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                |  | 35
|                              |  |                                                                                                           
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                        |  | 35
|                              |  |                                                                                                           
|Item 6.                       |  | Exhibits                                                                                                   |  | 36
|                              | 
|SIGNATURES                    |  |                                                                                                           



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

CONSOLIDATED
BALANCE SHEETS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                                           |  |   |                         |   |  |   |           |  
|------------------------------------------ |  | - | ----------------------- | - |  | - | --------- | -
|                                           |  |   | (Unaudited)November 30, |   |  |   | May 31,   |  
|In thousands                               |  |   | 2008                    |   |  |   | 2008      |  
|                                           |  |  
|ASSETS                                     |  |   |                         |   |  |   |           |  
|CURRENT ASSETS                             |  |   |                         |   |  |   |           |  
|Cash and cash equivalents                  |  | $ | 62,254                  |   |  | $ | 39,527    |  
|Receivables  net                          |  |   | 124,867                 |   |  |   | 155,676   |  
|Inventories                                |  |   | 141,774                 |   |  |   | 130,181   |  
|Deferred income taxes and prepaid expenses |  |   | 30,116                  |   |  |   | 30,398    |  
|                                           |  |   |                         |   |  |   |           |  
|TOTAL CURRENT ASSETS                       |  |   | 359,011                 |   |  |   | 355,782   |  
|                                           |  |  
|OTHER ASSETS                               |  |   |                         |   |  |   |           |  
|Goodwill                                   |  |   | 60,110                  |   |  |   | 60,110    |  
|Real estate and investments                |  |   | 33,478                  |   |  |   | 59,971    |  
|Deferred charges and other                 |  |   | 15,241                  |   |  |   | 11,332    |  
|                                           |  |   |                         |   |  |   |           |  
|                                           |  |   | 108,829                 |   |  |   | 131,413   |  
|                                           |  |  
|PROPERTY, PLANT AND EQUIPMENT              |  |   |                         |   |  |   |           |  
|Land and land improvements                 |  |   | 154,692                 |   |  |   | 139,544   |  
|Buildings                                  |  |   | 57,032                  |   |  |   | 56,976    |  
|Machinery and equipment                    |  |   | 1,233,454               |   |  |   | 1,208,905 |  
|Construction in progress                   |  |   | 273,654                 |   |  |   | 137,083   |  
|                                           |  |   |                         |   |  |   |           |  
|                                           |  |   | 1,718,832               |   |  |   | 1,542,508 |  
|Less depreciation and depletion            |  |   | 543,043                 |   |  |   | 514,744   |  
|                                           |  |   |                         |   |  |   |           |  
|                                           |  |   | 1,175,789               |   |  |   | 1,027,764 |  
|                                           |  |   |                         |   |  |   |           |  
|                                           |  | $ | 1,643,629               |   |  | $ | 1,514,959 |  
|                                           |  |   |                         |   |  |   |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY       |  |   |                         |   |  |   |           |  
|CURRENT LIABILITIES                        |  |   |                         |   |  |   |           |  
|Accounts payable                           |  | $ | 112,634                 |   |  | $ | 128,497   |  
|Accrued interest, wages and other          |  |   | 47,626                  |   |  |   | 47,846    |  
|Current portion of long-term debt          |  |   | 234                     |   |  |   | 7,725     |  
|                                           |  |   |                         |   |  |   |           |  
|TOTAL CURRENT LIABILITIES                  |  |   | 160,494                 |   |  |   | 184,068   |  
|                                           |  |  
|LONG-TERM DEBT                             |  |   | 539,978                 |   |  |   | 401,880   |  
|                                           |  |  
|DEFERRED INCOME TAXES AND OTHER CREDITS    |  |   | 108,536                 |   |  |   | 112,498   |  
|                                           |  |  
|SHAREHOLDERS EQUITY                       |  |   |                         |   |  |   |           |  
|Common stock, $1 par value                 |  |   | 27,663                  |   |  |   | 27,493    |  
|Additional paid-in capital                 |  |   | 467,250                 |   |  |   | 459,877   |  
|Retained earnings                          |  |   | 346,659                 |   |  |   | 336,279   |  
|Accumulated other comprehensive loss       |  |   | (6,951                  | ) |  |   | (7,136    | )
|                                           |  |   |                         |   |  |   |           |  
|                                           |  |   | 834,621                 |   |  |   | 816,513   |  
|                                           |  |   |                         |   |  |   |           |  
|                                           |  | $ | 1,643,629               |   |  | $ | 1,514,959 |  
|                                           |  |   |                         |   |  |   |           |  

See notes to consolidated financial statements.



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(Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                                    |  |                                |   |  |                              |   |  |              |   |  |              |  
|----------------------------------- |  | ------------------------------ | - |  | ---------------------------- | - |  | ------------ | - |  | ------------ | -
|                                    |  | Three months endedNovember 30, |   |  | Six months endedNovember 30, |  
|In thousands except per share       |  | 2008                           |   |  | 2007                         |   |  | 2008         |   |  | 2007         |  
|                                    |  |                                |   | 
|NET SALES                           |  | $221,799                       |   |  | $268,473                     |   |  | $478,191     |   |  | $531,927     |  
|                                    |  |                                |   | 
|Cost of products sold               |  | 194,006                        |   |  | 208,271                      |   |  | 417,760      |   |  | 425,708      |  
|                                    |  |                                |   |  |                              |   |  |              |   |  |              |  
|GROSS PROFIT                        |  | 27,793                         |   |  | 60,202                       |   |  | 60,431       |   |  | 106,219      |  
|                                    |  |                                |   | 
|Selling, general and administrative |  | 15,864                         |   |  | 21,064                       |   |  | 33,202       |   |  | 43,247       |  
|Interest                            |  | 9,296                          |   |  | --                           |   |  | 16,541       |   |  | --           |  
|Loss on debt retirements            |  | --                             |   |  | --                           |   |  | 907          |   |  | --           |  
|Other income                        |  | (2,211                         | ) |  | (3,442                       | ) |  | (10,452      | ) |  | (5,695       | )
|                                    |  |                                |   |  |                              |   |  |              |   |  |              |  
|                                    |  | 22,949                         |   |  | 17,622                       |   |  | 40,198       |   |  | 37,552       |  
|                                    |  |                                |   |  |                              |   |  |              |   |  |              |  
|INCOME BEFORE INCOME TAXES          |  | 4,844                          |   |  | 42,580                       |   |  | 20,233       |   |  | 68,667       |  
|                                    |  |                                |   | 
|Income taxes                        |  | 991                            |   |  | 13,265                       |   |  | 5,722        |   |  | 21,438       |  
|                                    |  |                                |   |  |                              |   |  |              |   |  |              |  
|NET INCOME                          |  | $    3,853                     |   |  | $  29,315                    |   |  | $  14,511    |   |  | $  47,229    |  
|                                    |  |                                |   |  |                              |   |  |              |   |  |              |  
|                                    |  |                                |   | 
|Net income per share                |  |                                |   |  |                              |   |  |              |   |  |              |  
|Basic                               |  | $        .14                   |   |  | $      1.07                  |   |  | $        .53 |   |  | $      1.73  |  
|Diluted                             |  | $        .14                   |   |  | $      1.05                  |   |  | $        .52 |   |  | $      1.69  |  
|                                    |  |                                |   |  |                              |   |  |              |   |  |              |  
|                                    |  |                                |   | 
|Average shares outstanding          |  |                                |   |  |                              |   |  |              |   |  |              |  
|Basic                               |  | 27,566                         |   |  | 27,348                       |   |  | 27,536       |   |  | 27,340       |  
|Diluted                             |  | 27,782                         |   |  | 27,849                       |   |  | 27,806       |   |  | 27,873       |  
|                                    |  |                                |   |  |                              |   |  |              |   |  |              |  
|                                    |  |                                |   | 
|Cash dividends per share            |  | $      .075                    |   |  | $      .075                  |   |  | $        .15 |   |  | $        .15 |  
|                                    |  |                                |   |  |                              |   |  |              |   |  |              |  

See notes to consolidated financial statements.



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(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                                                                             |  |                              |   |  |           |  
|---------------------------------------------------------------------------- |  | ---------------------------- | - |  | --------- | -
|                                                                             |  | Six months endedNovember 30, |  
|In thousands                                                                 |  | 2008                         |   |  | 2007      |  
|                                                                             |  |                             
|OPERATING ACTIVITIES                                                         |  |                              |   |  |           |  
|Net income                                                                   |  | $  14,511                    |   |  | $  47,229 |  
|Adjustments to reconcile net income to cash provided by operating activities |  |                              |   |  |           |  
|Depreciation, depletion and amortization                                     |  | 34,016                       |   |  | 27,164    |  
|Gains on asset disposals                                                     |  | (427                         | ) |  | (917      | )
|Deferred income taxes                                                        |  | 4,052                        |   |  | 1,127     |  
|Stock-based compensation expense (credit)                                    |  | (7,829                       | ) |  | (1,325    | )
|Excess tax benefits from stock-based compensation                            |  | (1,766                       | ) |  | (3,383    | )
|Loss on debt retirements                                                     |  | 907                          |   |  | --        |  
|Other  net                                                                  |  | (1,067                       | ) |  | (945      | )
|Changes in operating assets and liabilities                                  |  |                              |   |  |           |  
|Receivables  net                                                            |  | 30,074                       |   |  | (21,357   | )
|Inventories                                                                  |  | (11,593                      | ) |  | 8,643     |  
|Prepaid expenses                                                             |  | 914                          |   |  | 1,920     |  
|Accounts payable and accrued liabilities                                     |  | (23,454                      | ) |  | 2,320     |  
|                                                                             |  |                              |   |  |           |  
|Net cash provided by operating activities                                    |  | 38,338                       |   |  | 60,476    |  
|                                                                             |  |                             
|INVESTING ACTIVITIES                                                         |  |                              |   |  |           |  
|Capital expenditures  expansions                                            |  | (123,420                     | ) |  | (138,364  | )
|Capital expenditures  other                                                 |  | (51,911                      | ) |  | (36,724   | )
|Cash designated for property acquisitions                                    |  | 28,733                       |   |  | --        |  
|Proceeds from asset disposals                                                |  | 865                          |   |  | 2,366     |  
|Investments in life insurance contracts                                      |  | 2,263                        |   |  | 65,529    |  
|Other  net                                                                  |  | 175                          |   |  | 55        |  
|                                                                             |  |                              |   |  |           |  
|Net cash used by investing activities                                        |  | (143,295                     | ) |  | (107,138  | )
|                                                                             |  |                             
|FINANCING ACTIVITIES                                                         |  |                              |   |  |           |  
|Long-term borrowings                                                         |  | 327,250                      |   |  | 189,000   |  
|Debt retirements                                                             |  | (197,610                     | ) |  | (130,237  | )
|Debt issuance costs                                                          |  | (3,476                       | ) |  | (1,033    | )
|Stock option exercises                                                       |  | 3,885                        |   |  | 730       |  
|Excess tax benefits from stock-based compensation                            |  | 1,766                        |   |  | 3,383     |  
|Common dividends paid                                                        |  | (4,131                       | ) |  | (4,103    | )
|                                                                             |  |                              |   |  |           |  
|Net cash provided by financing activities                                    |  | 127,684                      |   |  | 57,740    |  
|                                                                             |  |                              |   |  |           |  
|Increase in cash and cash equivalents                                        |  | 22,727                       |   |  | 11,078    |  
|                                                                             |  |                             
|Cash and cash equivalents at beginning of period                             |  | 39,527                       |   |  | 15,138    |  
|                                                                             |  |                              |   |  |           |  
|Cash and cash equivalents at end of period                                   |  | $  62,254                    |   |  | $  26,216 |  
|                                                                             |  |                              |   |  |           |  

See notes to consolidated financial statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Texas Industries, Inc. and subsidiaries is a leading supplier of heavy construction materials in the United States through our three
business segments: cement, aggregates and consumer products. Our principal products are gray portland cement, produced and sold through our cement segment; stone, sand and gravel, produced and sold through our aggregates segment; and ready-mix
concrete, produced and sold through our consumer products segment. Other products include expanded shale and clay lightweight aggregates, produced and sold through our aggregates segment, and packaged concrete mix, mortar, sand and related products,
produced and sold through our consumer products segment. Our facilities are concentrated primarily in Texas, Louisiana and California. When used in these notes the terms Company, we, us, or our mean
Texas Industries, Inc. and subsidiaries unless the context indicates otherwise.

1. Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended November 30, 2008,
are not necessarily indicative of the results that may be expected for the year ended May 31, 2009. For further information, refer to the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of Texas
Industries, Inc. for the year ended May 31, 2008.

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

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

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

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

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

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

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



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

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

Goodwill having a carrying value of $58.4 million at November 30, 2008 and May 31, 2008 resulted from the acquisition of
Riverside Cement Company and is identified with our California cement operations. Goodwill having a carrying value of $1.7 million at November 30, 2008 and May 31, 2008 resulted from the acquisition of ready-mix operations in Texas and
Louisiana and is identified with our consumer products operations.

In light of current market conditions, we assessed our
California cement operations for impairment during our November 2008 quarter. Our assessment indicated that there was no impairment of goodwill. The assessment was based in part on assumptions regarding the timing of economic recovery in our
California market. The current market conditions and economic climate are very volatile and it is possible that the current recession could last longer and have a bigger impact on our operations than was anticipated. Should the recession become more
severe or last longer than anticipated, we could recognize an impairment charge in the future with respect to goodwill. Management will continue to evaluate and monitor the economic environment and perform its annual impairment test in the fourth
quarter of our current fiscal year.

Real Estate and Investments.Surplus real estate and real estate acquired for
development of high quality industrial, office or multi-use parks totaled $6.0 million at both November 30, 2008 and May 31, 2008.

Investments include life insurance contracts purchased in connection with certain of our benefit plans. The contracts, recorded at their net cash surrender value, totaled $8.3 million (net of distributions of $93.4
million plus accrued interest) at November 30, 2008 and $6.0 million (net of distributions of $88.1 million plus accrued interest) at May 31, 2008. We can elect to receive distributions chargeable against the cash surrender value of the
policies in the form of borrowings or withdrawals or we can elect to surrender the policies and receive their net cash surrender value. Distributions totaling $5.4 million and $70.3 million were received in the six-month periods ended
November 30, 2008 and November 30, 2007, respectively.

Investments at both November 30, 2008 and
May 31, 2008 include $19.2 million representing the long-term portion of a note due May 31, 2010. The note was received in connection with the sale of land associated with our expanded shale and clay operations in south Texas in 2006.

In addition, investments at May 31, 2008 include $28.7 million of cash investments representing the proceeds from
sales of aggregate property which were held in escrow by a qualified intermediary trust for reinvestment in deferred like-kind-exchange transactions. Designated property acquisitions totaling $25.5 million were completed during the six-month period
ended November 30, 2008. The remaining $3.2 million of cash investments is no longer designated for property acquisitions and is included in cash and cash equivalents.

Deferred Charges and Other.Deferred charges are composed primarily of debt issuance costs that totaled $10.1 million at November 30, 2008 and $6.4 million at May 31, 2008. The
costs are amortized over the term of the related debt.

Other Credits.Other credits totaled $58.6 million at
November 30, 2008 and $66.8 million at May 31, 2008 and are composed primarily of liabilities related to our retirement plans, deferred compensation agreements and asset retirement obligations.



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Asset Retirement Obligations.We record a liability for legal obligations
associated with the retirement of our long-lived assets in the period in which it is incurred if a reasonable estimate of fair value of the obligation can be made. The discounted fair value of the obligation incurred in each period is added to the
carrying amount of the associated assets and depreciated over the lives of the assets. The liability is accreted at the end of each period through a charge to operating expense. A gain or loss on settlement is recognized if the obligation is settled
for other than the carrying amount of the liability.

We incur legal obligations for asset retirement as part of our normal
operations related to land reclamation, plant removal and Resource Conservation and Recovery Act closures. Determining the amount of an asset retirement liability requires estimating the future cost of contracting with third parties to perform the
obligation. The estimate is significantly impacted by, among other considerations, managements assumptions regarding the scope of the work required, labor costs, inflation rates, market-risk premiums and closure dates.

Changes in asset retirement obligations are as follows:



|                               |  |                              |  |        |  
|------------------------------ |  | ---------------------------- |  | ------ | -
|                               |  | Six months endedNovember 30, | 
|In thousands                   |  | 2008                         |  | 2007   |  
|                               |  |                             
|Balance at beginning of period |  | $3,961                       |  | $4,987 |  
|Additions                      |  | --                           |  | 259    |  
|Accretion expense              |  | 161                          |  | 197    |  
|Settlements                    |  | --                           |  | (457   | )
|                               |  |                              |  |        |  
|Balance at end of period       |  | $4,122                       |  | $4,986 |  
|                               |  |                              |  |        |  

Accumulated Other Comprehensive Loss.Amounts recognized in accumulated
other comprehensive loss represent adjustments related to a defined benefit retirement plan and a postretirement health benefit plan covering approximately 600 employees and retirees of our California cement subsidiary. The amounts totaled $7.0
million (net of tax of $4.1 million) at November 30, 2008 and $7.1 million (net of tax of $4.2 million) at May 31, 2008.

Comprehensive income for the three-month and six-month periods ending November 30, 2008 and November 30, 2007 consisted of net income and amounts in accumulated other comprehensive loss recognized in the periods as components of
net periodic postretirement benefit cost, net of tax. Comprehensive income was $3.9 million and $29.3 million in the three-month periods ended November 30, 2008 and November 30, 2007, respectively, and $14.7 million and $47.2 million in
the six-month periods ended November 30, 2008 and November 30, 2007, respectively.

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

Other Income.We have entered into various oil and gas lease agreements on property we own in north Texas.
The terms of the agreements include the payment of a lease bonus and royalties on any oil and gas produced. However, we cannot guaranty what the level of royalties, if any, will be. Lease bonus payments received resulted in income of $0.1 million
and $0.7 million in the three-month periods ended November 30, 2008 and November 30, 2007, respectively, and $4.7 million and $0.7 million in the six-month periods ended November 30, 2008 and November 30, 2007, respectively.
Routine sales of surplus operating assets and real estate resulted in gains of $0.1 million and $1.3 million in the three-month periods ended November 30, 2008 and November 30, 2007, respectively, and $0.4 million and $2.0 million in the
six-month periods ended November 30, 2008 and November 30, 2007, respectively. In addition, other income in the six-month period ended November 30, 2008 includes a gain of $1.7 million from the sale of emission credits associated with
our California cement operations.

Income Taxes. Accounting for income taxes uses the liability method of
recognizing and classifying deferred income taxes. Texas Industries, Inc. (the parent company) joins in filing a consolidated return with its subsidiaries. Current and deferred tax expense is allocated among the members of the group based on a
stand-alone calculation of the tax of the individual member. Accrued interest and penalties related to unrecognized tax benefits are recognized in income tax expense.



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

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

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

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

Basic and Diluted EPS are calculated as follows:



|                                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|----------------------------------------------------------------------------------------- |  | ------------------------------ | - |  | ---------------------------- | - |  | ---------- | - |  | --------- | -
|                                                                                          |  | Three months endedNovember 30, |   |  | Six months endedNovember 30, |  
|In thousands except per share                                                             |  | 2008                           |   |  | 2007                         |   |  | 2008       |   |  | 2007      |  
|                                                                                          |  |                                |   | 
|Basic earnings                                                                            |  |                                |   |  |                              |   |  |            |   |  |           |  
|Net income                                                                                |  | $3,853                         |   |  | $29,315                      |   |  | $14,511    |   |  | $47,229   |  
|Unvested restricted share participation                                                   |  | (2                             | ) |  | (13                          | ) |  | (9         | ) |  | (23       | )
|                                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|Basic income                                                                              |  | $3,851                         |   |  | $29,302                      |   |  | $14,502    |   |  | $47,206   |  
|                                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|Diluted earnings                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|Net income                                                                                |  | $3,853                         |   |  | $29,315                      |   |  | $14,511    |   |  | $47,229   |  
|Unvested restricted share participation                                                   |  | (2                             | ) |  | (13                          | ) |  | (9         | ) |  | (23       | )
|                                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|Diluted income                                                                            |  | $3,851                         |   |  | $29,302                      |   |  | $14,502    |   |  | $47,206   |  
|                                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|                                                                                          |  |                                |   | 
|Shares                                                                                    |  |                                |   |  |                              |   |  |            |   |  |           |  
|Weighted-average shares outstanding                                                       |  | 27,570                         |   |  | 27,353                       |   |  | 27,543     |   |  | 27,347    |  
|Contingently issuable shares                                                              |  | 9                              |   |  | 7                            |   |  | 9          |   |  | 7         |  
|Unvested restricted shares                                                                |  | (13                            | ) |  | (12                          | ) |  | (16        | ) |  | (14       | )
|                                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|Basic weighted-average shares                                                             |  | 27,566                         |   |  | 27,348                       |   |  | 27,536     |   |  | 27,340    |  
|Stock option, restricted share and award dilution                                         |  | 216                            |   |  | 501                          |   |  | 270        |   |  | 533       |  
|                                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|Diluted weighted-average shares*                                                          |  | 27,782                         |   |  | 27,849                       |   |  | 27,806     |   |  | 27,873    |  
|                                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|                                                                                          |  |                                |   | 
|Net income per share                                                                      |  |                                |   |  |                              |   |  |            |   |  |           |  
|Basic                                                                                     |  | $      .14                     |   |  | $    1.07                    |   |  | $      .53 |   |  | $    1.73 |  
|Diluted                                                                                   |  | $      .14                     |   |  | $    1.05                    |   |  | $      .52 |   |  | $    1.69 |  
|                                                                                          |  |                                |   |  |                              |   |  |            |   |  |           |  
|*  Shares excluded due to antidilutive effect Stock options, restricted shares and awards |  | 779                            |   |  | --                           |   |  | 487        |   |  | --        |  



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

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

2. Working Capital

Working capital totaled $198.5 million at November 30,
2008, compared to $171.7 million at May 31, 2008. Selected components of working capital are summarized below.

Receivables consist of:



|                                            |  |              |  |         
|------------------------------------------- |  | ------------ |  | --------
|                                            |  | November 30, |  | May 31, 
|In thousands                                |  | 2008         |  | 2008    
|                                            |  |             
|Accounts receivable                         |  | $119,147     |  | $142,749
|Notes receivable including accrued interest |  | 1,248        |  | 618     
|Refund claims and other                     |  | 4,472        |  | 12,309  
|                                            |  |              |  |         
|                                            |  | $124,867     |  | $155,676
|                                            |  |              |  |         

Accounts receivable are presented net of allowances for doubtful receivables of
$2.8 million at November 30, 2008 and $2.1 million at May 31, 2008. Provisions for bad debts charged to expense were $0.9 million and $0.5 million in the six-month periods ended November 30, 2008 and November 30, 2007,
respectively. Uncollectible accounts written off totaled $0.2 million and $0.1 million in the six-month periods ended November 30, 2008 and November 30, 2007, respectively. Notes receivable included in current receivables relate to routine
sales of surplus operating assets and real estate.

Inventories consist of:



|                               |  |              |  |          
|------------------------------ |  | ------------ |  | ---------
|                               |  | November 30, |  | May 31,  
|In thousands                   |  | 2008         |  | 2008     
|                               |  |             
|Finished products              |  | $  14,784    |  | $  15,342
|Work in process                |  | 59,827       |  | 53,806   
|Raw materials                  |  | 20,673       |  | 19,956   
|                               |  |              |  |          
|Total inventories at LIFO cost |  | 95,284       |  | 89,104   
|Parts and supplies             |  | 46,490       |  | 41,077   
|                               |  |              |  |          
|Total inventories              |  | $141,774     |  | $130,181 
|                               |  |              |  |          

Inventories are stated at cost (not in excess of market) with finished products,
work in process and raw material inventories using the last-in, first-out (LIFO) method and parts and supplies inventories using the average cost method. An actual valuation of inventory under the LIFO method can be made only at the end
of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on managements estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory
valuation. If the average cost method (which approximates current replacement cost) had been used for all of these inventories, inventory values would have been higher by $38.8 million at November 30, 2008 and $32.6 million at May 31,
2008.



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Accrued interest, wages and other items consist of:



|                         |  |              |  |         
|------------------------ |  | ------------ |  | --------
|                         |  | November 30, |  | May 31, 
|In thousands             |  | 2008         |  | 2008    
|                         |  |             
|Interest                 |  | $15,233      |  | $  7,078
|Employee compensation    |  | 12,200       |  | 27,421  
|Income taxes             |  | 192          |  | 1,688   
|Property taxes and other |  | 20,001       |  | 11,659  
|                         |  |              |  |         
|                         |  | $47,626      |  | $47,846 
|                         |  |              |  |         

3. Long-Term Debt

Long-term debt consists of:



|                                                                                                                                           |  |              |   |  |             |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | - |  | ----------- | -
|                                                                                                                                           |  | November 30, |   |  | May 31,     |  
|In thousands                                                                                                                               |  | 2008         |   |  | 2008        |  
|                                                                                                                                           |  |             
|Senior secured revolving credit facility expiring in 2012                                                                                  |  | $        --  |   |  | $        -- |  
|7.25% Senior notes due 2013                                                                                                                |  |              |   |  |             |  
|Notes issued July 6, 2005 at par value                                                                                                     |  | 250,000      |   |  | 250,000     |  
|Additional notes issued August 18, 2008, net of unamortized discount of $19.3 million at November 30, 2008 (effective interest rate
8.98%) |  | 280,715      |   |  | --          |  
|Senior term loan prepaid August 18, 2008                                                                                                   |  | --           |   |  | 150,000     |  
|Other                                                                                                                                      |  | 324          |   |  | 322         |  
|                                                                                                                                           |  |              |   |  |             |  
|                                                                                                                                           |  | 531,039      |   |  | 400,322     |  
|Capital lease obligation                                                                                                                   |  | 9,173        |   |  | 9,283       |  
|Less current portion                                                                                                                       |  | (234         | ) |  | (7,725      | )
|                                                                                                                                           |  |              |   |  |             |  
|                                                                                                                                           |  | $539,978     |   |  | $401,880    |  
|                                                                                                                                           |  |              |   |  |             |  

Senior Secured Revolving Credit Facility.On November 21, 2008, we
amended our August 15, 2007 credit agreement to, among other things, increase the permitted leverage ratio, secure our obligations under the credit facility and limit the amount that can be borrowed under the credit agreement to the lesser of a
borrowing base equal to the sum of 80% of our accounts receivable and 50% of our inventory or the $200 million stated principal amount of the credit agreement. The credit facility expires on August 15, 2012. The borrowing base at
November 30, 2008 was $170.8 million. It includes a $50 million sub-limit for letters of credit. Any outstanding letters of credit are deducted from the borrowing availability under the facility. No borrowings were outstanding at
November 30, 2008; however, $21.5 million of the facility was utilized to support letters of credit. Amounts drawn under the facility bear interest either at the LIBOR rate plus a margin of 2.5% to 3.5%, or at a base rate (which is the higher
of the federal funds rate plus 0.5%, the prime rate or the one-month LIBOR rate plus 1.0%) plus a margin of 1.5% to 2.5%. The interest rate margins are subject to adjustments based on our leverage ratio. Commitment fees are payable currently at an
annual rate of 0.5% on the unused portion of the facility. We may terminate the facility at any time.

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

The credit facility contains covenants restricting, among other things, prepayment or redemption of the senior notes, distributions,
dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. Cash dividends paid on our common stock are limited to an annual amount of $10.0 million. We are
required to comply with certain financial tests and to maintain certain financial ratios, such as leverage and interest coverage ratios. We were in compliance with all of these loan covenants as of November 30, 2008.



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7.25% Senior Notes.On August 18, 2008, we sold $300 million aggregate
principal amount of additional 7.25% senior notes at an offering price of 93.25%. The additional notes were issued under our existing indenture dated July 6, 2005. The net proceeds were used to repay our $150 million senior term loan and
borrowings outstanding under our senior secured revolving credit facility in the amount of $29.5 million, with additional proceeds available for general corporate purposes. We recognized a loss on debt retirement of $0.9 million representing a
write-off of debt issuance costs associated with the mandatory prepayment of the term loan. At November 30, 2008, we had $550 million aggregate principal amount of 7.25% senior notes outstanding. Under the indenture, at any time on or prior to
July 15, 2009, we may redeem the notes at a redemption price equal to the sum of the principal amount thereof, plus accrued interest and a make-whole premium. On and after July 15, 2009, we may redeem the notes at a premium of 103.625% in
2009, 101.813% in 2010 and 100% in 2011 and thereafter. If we experience a change of control, we may be required to offer to purchase the notes at a purchase price equal to 101% of the principal amount, plus accrued interest.

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

Other.Maturities of long-term debt, excluding the capital lease obligation, for each of the five years succeeding
November 30, 2008 are none for 2009 through 2012 and $550.0 million for 2013. The total amount of interest paid was $15.2 million and $12.2 million during the six-month periods ended November 30, 2008 and November 30, 2007,
respectively. Interest capitalized was $5.0 million and $13.3 million during the six-month periods ended November 30, 2008 and November 30, 2007, respectively.

4. Commitments

During October 2007, we commenced construction on a project to
expand our Hunter, Texas cement plant. As of November 30, 2008, we have expended $193.4 million, excluding capitalized interest of $6.9 million related to the project.

In light of current economic and market conditions we plan to delay construction on the project. We believe that if the project were completed when originally scheduled, cement demand levels in
Texas would likely not permit the new kiln to operate at a profitable level. We do expect the demand for cement to rebound in the future and to resume construction on the project when warranted by future economic and market conditions. We expect to
be able to begin the startup and commissioning of the project within 12 months after resumption of construction.

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

5. Shareholders Equity

Common stock consists of:



|                                            |  |              |  |        
|------------------------------------------- |  | ------------ |  | -------
|                                            |  | November 30, |  | May 31,
|In thousands                                |  | 2008         |  | 2008   
|                                            |  |             
|Shares authorized                           |  | 100,000      |  | 100,000
|Shares outstanding                          |  | 27,663       |  | 27,493 
|Shares reserved for stock options and other |  | 2,922        |  | 3,109  



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There are authorized 100,000 shares of Cumulative Preferred Stock, no par value, of which
20,000 shares are designated $5 Cumulative Preferred Stock (Voting), redeemable at $105 per share and entitled to $100 per share upon dissolution. An additional 40,000 shares are designated Series B Junior Participating Preferred Stock. The Series B
Preferred Stock is not redeemable and ranks, with respect to the payment of dividends and the distribution of assets, junior to (i) all other series of the Preferred Stock unless the terms of any other series shall provide otherwise and
(ii) the $5 Cumulative Preferred Stock. No shares of Cumulative Preferred Stock or Series B Junior Participating Preferred Stock were outstanding as of November 30, 2008. Pursuant to a Rights Agreement, in November 2006, we distributed a
dividend of one preferred share purchase right for each outstanding share of our Common Stock. Each right entitles the holder to purchase from us one one-thousandth of a share of the Series B Junior Participating Preferred Stock at a price of $300,
subject to adjustment. The rights will expire on November 1, 2016 unless the date is extended or the rights are earlier redeemed or exchanged by us pursuant to the Rights Agreement.

6. Stock-Based Compensation Plans

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

Options
become exercisable in installments beginning one year after the date of grant and expire ten years after the date of grant. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. Options
with graded vesting are valued as single awards and the compensation cost recognized using a straight-line attribution method over the shorter of the vesting period or required service period adjusted for estimated forfeitures. The weighted-average
grant date fair value of options granted during the six-month period ended November 30, 2008 was $23.95 based on weighted average assumptions for expected volatility of .360, expected lives of 10 years, risk-free interest rates of 4.00% and
expected dividend yields of .62%.

Expected volatility is based on an analysis of historical volatility of our common
stock. Expected lives of options are determined based on the historical share option exercise experience of our optionees. Risk-free interest rates are determined using the implied yield currently available for zero coupon U.S. treasury issues with
a remaining term equal to the expected life of the options. Expected dividend yields are based on the approved annual dividend rate in effect and the market price of our common stock at the time of grant.

A summary of option transactions for the six-month period ended November 30, 2008, follows:



|                                 |  |                    |   |  |                             
|-------------------------------- |  | ------------------ | - |  | ----------------------------
|                                 |  | Shares UnderOption |   |  | Weighted-AverageOption Price
|                                 |  |                   
|Outstanding at May 31, 2008      |  | 1,464,831          |   |  | $39.08                      
|Granted                          |  | 9,000              |   |  | 48.60                       
|Exercised                        |  | (170,175           | ) |  | 22.83                       
|Canceled                         |  | (25,406            | ) |  | 39.68                       
|                                 |  |                    |   |  |                             
|Outstanding at November 30, 2008 |  | 1,278,250          |   |  | $41.30                      
|                                 |  |                    |   |  |                             
|Exercisable at November 30, 2008 |  | 706,889            |   |  | $29.86                      
|                                 |  |                    |   |  |                             



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The following table summarizes information about stock options outstanding as of
November 30, 2008.



|                                         |  |                          |  |                 |  |                
|---------------------------------------- |  | ------------------------ |  | --------------- |  | ---------------
|                                         |  | Range of Exercise Prices
|                                         |  | $16.04 - $27.39          |  | $31.15 - $48.60 |  | $50.63 - $70.18
|Options outstanding                      |  |                          |  |                 |  |                
|Shares outstanding                       |  | 427,797                  |  | 251,803         |  | 598,650        
|Weighted-average remaining life in years |  | 3.46                     |  | 4.70            |  | 7.88           
|Weighted-average exercise price          |  | $19.08                   |  | $41.06          |  | $57.27         
|Options exercisable                      |  |                          |  |                 |  |                
|Shares exercisable                       |  | 427,797                  |  | 170,732         |  | 108,360        
|Weighted-average remaining life in years |  | 3.46                     |  | 3.89            |  | 7.23           
|Weighted-average exercise price          |  | $19.08                   |  | $38.83          |  | $58.27         

Outstanding options expire on various dates to August 1, 2018. We have
reserved 1,630,817 shares for future awards under the 2004 Plan as of November 30, 2008.

As of November 30,
2008, the aggregate intrinsic value (the difference in the closing market price of our common stock of $30.86 and the exercise price to be paid by the optionee) of stock options outstanding was $5.0 million. The aggregate intrinsic value of
exercisable stock options at that date was $5.0 million. The total intrinsic value for options exercised (the difference in the market price of our common stock on the exercise date and the price paid by the optionee to exercise the option) was $1.1
million and $0.3 million for the three-month periods ended November 30, 2008 and November 30, 2007, respectively, and $1.9 million and $1.7 million for the six-month periods ended November 30, 2008 and November 30, 2007,
respectively.

We have provided additional stock-based compensation to employees and directors under stock appreciation
rights contracts, deferred compensation agreements, restricted stock payments and a former stock awards program. At November 30, 2008, outstanding stock appreciation rights totaled 155,979 shares, deferred compensation agreements to be settled
in cash totaled 99,253 shares, deferred compensation agreements to be settled in common stock totaled 7,040 shares, unvested restricted stock payments totaled 8,500 shares and stock awards totaled 5,645 shares. Other credits included $4.7 million at
November 30, 2008 and $14.4 million at May 31, 2008 representing accrued stock-based compensation which is expected to be settled in cash.

Total stock-based compensation included in selling, general and administrative expense (credit) was $(3.8) million and $0.4 million in the three-month periods ended November 30, 2008 and November 30, 2007,
respectively, and $(7.8) million and $(1.3) million in the six-month periods ended November 30, 2008 and November 30, 2007, respectively. The impact of changes in our companys stock price on stock-based awards accounted for as
liabilities reduced stock-based compensation $4.6 million and $0.8 million in the three-month periods ended November 30, 2008 and November 30, 2007, respectively, and $9.7 million and $3.8 million in the six-month periods ended
November 30, 2008 and November 30, 2007, respectively. The total tax expense recognized in our statements of operations for stock-based compensation was $1.6 million and $0.1 million in the three-month periods ended November 30, 2008
and November 30, 2007, respectively, and $3.3 million and $0.9 million in the six-month periods ended November 30, 2008 and November 30, 2007, respectively. The total tax benefit realized for stock-based compensation was $0.6 million
and $0.1 million in the three-month periods ended November 30, 2008 and November 30, 2007, respectively, and $1.8 million and $3.4 million in the six-month periods ended November 30, 2008 and November 30, 2007, respectively.

As of November 30, 2008, $8.2 million of total unrecognized compensation cost related to stock options, stock
appreciation rights contracts, restricted stock payments and stock awards is expected to be recognized. We currently expect to recognize in the years succeeding November 30, 2008 approximately $3.3 million of this stock-based compensation
expense in 2009, $2.5 million in 2010, $1.6 million in 2011, $0.7 million in 2012 and $0.1 million in 2013.



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7. Retirement Plans

Riverside Defined Benefit Plans.Approximately 600 employees and retirees of our California cement subsidiary, Riverside Cement Company, are covered by a defined benefit pension plan and a postretirement health
benefit plan. Unrecognized prior service costs and actuarial gains or losses for these plans are recognized in a systematic manner over the remaining service periods of active employees expected to receive benefits under these plans. The amount of
the defined benefit pension plan and postretirement health benefit plan expense charged to costs and expenses for the three-month and six-month periods ended November 30, 2008 and November 30, 2007, was as follows:



|                                   |  |                 |   |  |                |   |  |         |   |  |         |  
|---------------------------------- |  | --------------- | - |  | -------------- | - |  | ------- | - |  | ------- | -
|                                   |  | Pension Benefit |   |  | Health Benefit |  
|In thousands                       |  | 2008            |   |  | 2007           |   |  | 2008    |   |  | 2007    |  
|                                   |  |                 |   | 
|Three months ended November 30     |  |                 |   |  |                |   |  |         |   |  |         |  
|Service cost                       |  | $    179        |   |  | $    144       |   |  | $    22 |   |  | $    30 |  
|Interest cost                      |  | 791             |   |  | 695            |   |  | 110     |   |  | 99      |  
|Expected return on plan assets     |  | (812            | ) |  | (881           | ) |  | --      |   |  | --      |  
|Amortization of prior service cost |  | --              |   |  | --             |   |  | (197    | ) |  | (211    | )
|Amortization of net actuarial loss |  | 174             |   |  | 55             |   |  | 168     |   |  | 164     |  
|                                   |  |                 |   |  |                |   |  |         |   |  |         |  
|                                   |  | $    332        |   |  | $      13      |   |  | $  103  |   |  | $    82 |  
|                                   |  |                 |   |  |                |   |  |         |   |  |         |  
|                                   |  |                 |   | 
|Six months ended November 30       |  |                 |   |  |                |   |  |         |   |  |         |  
|Service cost                       |  | $    359        |   |  | $    288       |   |  | $    44 |   |  | $    60 |  
|Interest cost                      |  | 1,583           |   |  | 1,390          |   |  | 219     |   |  | 199     |  
|Expected return on plan assets     |  | (1,626          | ) |  | (1,763         | ) |  | --      |   |  | --      |  
|Amortization of prior service cost |  | --              |   |  | --             |   |  | (393    | ) |  | (422    | )
|Amortization of net actuarial loss |  | 349             |   |  | 110            |   |  | 336     |   |  | 328     |  
|                                   |  |                 |   |  |                |   |  |         |   |  |         |  
|                                   |  | $    665        |   |  | $      25      |   |  | $  206  |   |  | $  165  |  
|                                   |  |                 |   |  |                |   |  |         |   |  |         |  

Financial Security Defined Benefit Plans.We have a series of financial
security plans that are non-qualified defined benefit plans providing retirement and death benefits to substantially all of our executive and key managerial employees. The plans are contributory but not funded. The amount of financial security plan
benefit expense charged to costs and expenses for the three-month and six-month periods ended November 30, 2008 and November 30, 2007, was as follows:



|                               |  |             |   |  |         |  
|------------------------------ |  | ----------- | - |  | ------- | -
|                               |  | FSP Benefit |  
|In thousands                   |  | 2008        |   |  | 2007    |  
|                               |  |            
|Three months ended November 30 |  |             |   |  |         |  
|Service cost                   |  | $   399     |   |  | $   743 |  
|Interest cost                  |  | 546         |   |  | 474     |  
|Participant contributions      |  | (90         | ) |  | (98     | )
|                               |  |             |   |  |         |  
|                               |  | $   855     |   |  | $1,119  |  
|                               |  |             |   |  |         |  
|                               |  |            
|Six months ended November 30   |  |             |   |  |         |  
|Service cost                   |  | $   798     |   |  | $1,486  |  
|Interest cost                  |  | 1,091       |   |  | 948     |  
|Participant contributions      |  | (178        | ) |  | (197    | )
|                               |  |             |   |  |         |  
|                               |  | $1,711      |   |  | $2,237  |  
|                               |  |             |   |  |         |  

8. Income Taxes

Income taxes for the interim periods ended November 30, 2008 and November 30, 2007 have been included in the accompanying financial statements on the basis of an estimated annual rate.
The primary reason that the tax rate differs from the 35% federal statutory corporate rate is due to percentage depletion that is tax deductible, state income taxes and deductions for income from qualified domestic production activities. Our
estimated effective tax rate for fiscal year 2009 is 28.3% compared to 31.2% for fiscal year 2008. We made income tax payments of $2.1 million and $21.3 million during the six-month periods ended November 30, 2008 and November 30, 2007,
respectively. We received income tax refunds of $0.3 million and $0.6 million during the six-month periods ended November 30, 2008 and November 30, 2007, respectively.



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

In addition to our federal income tax return, we file income tax returns in various state jurisdictions. We are no longer subject to
federal or state income tax examinations by tax authorities for years prior to 2004. Our federal income tax returns for 2004 through 2006 are currently under examination. We do not anticipate that any adjustments would have a material effect on our
financial position.

9. Legal Proceedings and Contingent Liabilities

We are subject to federal, state and local environmental laws, regulations and permits concerning, among other matters, air emissions and wastewater discharge. We intend to comply with these
laws, regulations and permits. However, from time to time we receive claims from federal and state environmental regulatory agencies and entities asserting that we are or may be in violation of certain of these laws, regulations and permits, or from
private parties alleging that our operations have injured them or their property. It is possible that we could be held liable for future charges which might be material but are not currently known or estimable. In addition, changes in federal or
state laws, regulations or requirements or discovery of currently unknown conditions could require additional expenditures by us.

In March 2008, the South Coast Air Quality Management District, or SCAQMD, informed one of our subsidiaries, Riverside Cement Company (Riverside), that it believes that dust blowing from open stockpiles of gray clinker or other operations
at our Crestmore plant in Riverside, California caused the level of hexavalent chromium, or chrome 6, in the vicinity of the plant to be elevated above ambient air levels. Chrome 6 has been identified by the State of California as a carcinogen.
Riverside immediately began taking steps, in addition to its normal dust control procedures, to reduce dust from plant operations and eliminate the use of open clinker stockpiles. The SCAQMD has placed an air monitoring station at the downwind
property line closest to the open clinker stockpiles. Over the period of February 12 to June 23, 2008, the average level of chrome 6 reported by the SCAQMD at this station was 1.26 nanograms per cubic meter, or ng/m3. Since that time, the
average level has decreased. The average level of chrome 6 reported by the SCAQMD at other air monitoring stations in areas around the plant ranged from 0.10 to 0.59 ng/m3 for the same sampling period. In public presentations, the SCAQMD
compared the level of exposure for various time periods at the air monitor on our property line with the following employee exposure standards established by regulatory agencies:



|                                                      |  |            
|----------------------------------------------------- |  | -----------
|Occupational Safety and Health Administration         |  | 5,000 ng/m3
|National Institute for Occupational Safety and Health |  | 1,000 ng/m3
|California Environmental Protection Agency            |  | 200 ng/m3  

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

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



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

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

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

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

On July 3, 2008, the California Attorney General and the Riverside County
District Attorney filed a complaint styled The People of the State of California v. TXI Riverside, Inc., TXI California, Inc. and Riverside Cement Holdings Company. The complaint against the two general partners in Riverside Cement Company
and a subsidiary of Riverside Cement Company alleges that the defendants failed to warn persons of exposure to chrome 6 under Californias Safe Drinking Water and Toxic Enforcement Act of 1986, which is known as Proposition 65. It further
alleges that defendants have known since at least 2006 that the clinker at the Crestmore plant contains chrome 6, causing exposure to persons present in the surrounding area. The complaint also alleges that knowingly and intentionally exposing
individuals to chrome 6 without first giving warning to them violates Proposition 65 and constitutes unfair competition within the meaning of the California Business and Professions Code. The complaint requests the award of civil penalties and
injunctive relief. We will vigorously defend the suit but no discovery has occurred, and we cannot predict what liability, if any, could arise from the complaint.

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

10. Business Segments

We have three business segments: cement, aggregates and consumer products. Our business segments are managed separately along product
lines. Through the cement segment we produce and sell gray portland cement as our principal product, as well as specialty cements. Through the aggregates segment we produce and sell stone, sand and gravel as our principal products, as well as
expanded shale and clay lightweight aggregates. Through the consumer products segment we produce and sell ready-mix concrete as our principal product, as well as packaged concrete mix, mortar, sand and related products. We account for intersegment
sales at market prices. Segment operating profit consists of net sales less operating costs and expenses, including certain operating overhead and other income items not allocated to a specific segment. Corporate includes those administrative,
financial, legal, human resources and real estate activities which are not allocated to operations and are excluded from segment operating profit. Identifiable assets by segment are those assets that are used in each segments operation.
Corporate assets consist primarily of cash and cash equivalents, real estate and other financial assets not identified with a business segment. We currently report cement treated material operations and transportation overhead activities, both of
which are not significant to operating profit, in our cement segment. Cement treated material operations were previously reported in our aggregate segment. Our transportation overhead activities were previously reported as a part of unallocated
overhead and other income-net. Prior period information has been reclassified to conform to the current period presentation.



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



|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|---------------------------------------------- |  | ------------------------------ | - |  | ---------------------------- | - |  | --------- | - |  | --------- | -
|                                               |  | Three months endedNovember 30, |   |  | Six months endedNovember 30, |  
|In thousands                                   |  | 2008                           |   |  | 2007                         |   |  | 2008      |   |  | 2007      |  
|Net sales                                      |  |                                |   |  |                              |   |  |           |   |  |           |  
|Cement                                         |  |                                |   |  |                              |   |  |           |   |  |           |  
|Sales to external customers                    |  | $  91,541                      |   |  | $110,072                     |   |  | $193,398  |   |  | $220,502  |  
|Intersegment sales                             |  | 16,507                         |   |  | 21,237                       |   |  | 36,013    |   |  | 41,942    |  
|Aggregates                                     |  |                                |   |  |                              |   |  |           |   |  |           |  
|Sales to external customers                    |  | 50,624                         |   |  | 61,281                       |   |  | 110,923   |   |  | 120,830   |  
|Intersegment sales                             |  | 9,881                          |   |  | 12,602                       |   |  | 21,379    |   |  | 23,278    |  
|Consumer products                              |  |                                |   |  |                              |   |  |           |   |  |           |  
|Sales to external customers                    |  | 79,634                         |   |  | 97,120                       |   |  | 173,870   |   |  | 190,595   |  
|Intersegment sales                             |  | 1,010                          |   |  | 911                          |   |  | 1,998     |   |  | 1,962     |  
|Eliminations                                   |  | (27,398                        | ) |  | (34,750                      | ) |  | (59,390   | ) |  | (67,182   | )
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Total net sales                                |  | $221,799                       |   |  | $268,473                     |   |  | $478,191  |   |  | $531,927  |  
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Segment operating profit                       |  |                                |   |  |                              |   |  |           |   |  |           |  
|Cement                                         |  | $    9,452                     |   |  | $  34,477                    |   |  | $  26,757 |   |  | $  52,318 |  
|Aggregates                                     |  | 6,693                          |   |  | 10,870                       |   |  | 15,629    |   |  | 22,312    |  
|Consumer products                              |  | 679                            |   |  | 4,607                        |   |  | 229       |   |  | 8,684     |  
|Unallocated overhead and other income  net    |  | (2,193                         | ) |  | (2,058                       | ) |  | (4,678    | ) |  | (4,197    | )
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Total segment operating profit                 |  | 14,631                         |   |  | 47,896                       |   |  | 37,937    |   |  | 79,117    |  
|Corporate                                      |  |                                |   |  |                              |   |  |           |   |  |           |  
|Other income                                   |  | 560                            |   |  | 2,063                        |   |  | 2,745     |   |  | 2,738     |  
|Selling, general and administrative expense    |  | (1,051                         | ) |  | (7,379                       | ) |  | (3,001    | ) |  | (13,188   | )
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|                                               |  | (491                           | ) |  | (5,316                       | ) |  | (256      | ) |  | (10,450   | )
|Interest                                       |  | (9,296                         | ) |  | --                           |   |  | (16,541   | ) |  | --        |  
|Loss on debt retirements                       |  | --                             |   |  | --                           |   |  | (907      | ) |  | --        |  
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Income before income taxes                     |  | $    4,844                     |   |  | $  42,580                    |   |  | $  20,233 |   |  | $  68,667 |  
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Depreciation, depletion and amortization       |  |                                |   |  |                              |   |  |           |   |  |           |  
|Cement                                         |  | $    9,393                     |   |  | $    6,033                   |   |  | $  18,726 |   |  | $  11,954 |  
|Aggregates                                     |  | 5,651                          |   |  | 5,386                        |   |  | 11,072    |   |  | 10,500    |  
|Consumer products                              |  | 1,856                          |   |  | 2,231                        |   |  | 3,729     |   |  | 4,286     |  
|Corporate                                      |  | 251                            |   |  | 196                          |   |  | 489       |   |  | 424       |  
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Total depreciation, depletion and amortization |  | $  17,151                      |   |  | $  13,846                    |   |  | $  34,016 |   |  | $  27,164 |  
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Capital expenditures                           |  |                                |   |  |                              |   |  |           |   |  |           |  
|Cement                                         |  | $  81,678                      |   |  | $  56,139                    |   |  | $136,214  |   |  | $148,404  |  
|Aggregates                                     |  | 2,845                          |   |  | 10,825                       |   |  | 35,362    |   |  | 18,156    |  
|Consumer products                              |  | 1,885                          |   |  | 4,222                        |   |  | 3,473     |   |  | 7,795     |  
|Corporate                                      |  | 187                            |   |  | 310                          |   |  | 282       |   |  | 733       |  
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Total capital expenditures                     |  | $  86,595                      |   |  | $  71,496                    |   |  | $175,331  |   |  | $175,088  |  
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Net sales by product                           |  |                                |   |  |                              |   |  |           |   |  |           |  
|Cement                                         |  | $  81,915                      |   |  | $101,350                     |   |  | $173,812  |   |  | $204,073  |  
|Stone, sand and gravel                         |  | 27,298                         |   |  | 33,439                       |   |  | 57,626    |   |  | 65,094    |  
|Ready-mix concrete                             |  | 64,743                         |   |  | 84,112                       |   |  | 143,586   |   |  | 164,037   |  
|Other products                                 |  | 26,050                         |   |  | 27,867                       |   |  | 56,242    |   |  | 56,524    |  
|Delivery fees                                  |  | 21,793                         |   |  | 21,705                       |   |  | 46,925    |   |  | 42,199    |  
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  
|Total net sales                                |  | $221,799                       |   |  | $268,473                     |   |  | $478,191  |   |  | $531,927  |  
|                                               |  |                                |   |  |                              |   |  |           |   |  |           |  



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

Other income in the six-month period ended November 30, 2008
includes $4.7 million in lease bonus payments received upon the execution of oil and gas lease agreements on property we own in north Texas, including $2.8 million associated with our cement operations, $0.1 million associated with our aggregate
operations, $0.2 million associated with our ready-mix concrete operations and $1.6 million associated with our corporate real estate activities. Other income for the six-month period ended November 30, 2008 also includes a gain of $1.7 million
from the sale of emission credits associated with our California cement operations.

Cement capital expenditures, including
capitalized interest, incurred in connection with the expansion of our Hunter, Texas cement plant was $122.1 million and $21.2 million in the six-month periods ended November 30, 2008 and November 30, 2007, respectively. In addition,
cement capital expenditures, including capitalized interest, incurred in connection with the expansion and modernization of our Oro Grande, California cement plant were $1.3 million and $117.2 million in the six-month periods ended November 30,
2008 and November 30, 2007, respectively. The project was completed in May 2008. Aggregate capital expenditures include $25.3 million in the six-month period ended November 30, 2008 incurred to acquire aggregate operations in central Texas
through a deferred like-kind-exchange transaction. Other capital expenditures incurred represent normal replacement and technological upgrades of existing equipment and acquisitions to sustain existing operations in each segment.

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



|                    |  |              |  |           
|------------------- |  | ------------ |  | ----------
|                    |  | November 30, |  | May 31,   
|In thousands        |  | 2008         |  | 2008      
|Identifiable assets |  |              |  |           
|Cement              |  | $1,172,657   |  | $1,044,981
|Aggregates          |  | 228,163      |  | 206,001   
|Consumer products   |  | 105,660      |  | 120,063   
|Corporate           |  | 137,149      |  | 143,914   
|                    |  |              |  |           
|Total assets        |  | $1,643,629   |  | $1,514,959
|                    |  |              |  |           

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

11. Condensed Consolidating Financial Information

On July 6, 2005 and August 18, 2008, Texas Industries, Inc. (the parent company) issued $250 million and $300 million aggregate principal amounts of its 7.25% Senior Notes, respectively. All consolidated
subsidiaries of the parent company are 100% owned and provide a joint and several, full and unconditional guarantee of the securities. There are no significant restrictions on the parent companys ability to obtain funds from any of the
guarantor subsidiaries in the form of a dividend or loan. Additionally, there are no significant restrictions on a guarantor subsidiarys ability to obtain funds from the parent company or its direct or indirect subsidiaries.

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



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|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|---------------------------------------------------------- |  | - | --------------------- |  | - | --------------------- |  | - | ------------------ | - |  | - | ------------
|In thousands                                               |  |   | TexasIndustries, Inc. |  |   | GuarantorSubsidiaries |  |   | EliminatingEntries |   |  |   | Consolidated
|                                                           |  |   |                       | 
|Condensed consolidating balance sheet at November 30, 2008 |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|                                                           |  |   |                       | 
|Cash and cash equivalents                                  |  | $ | 57,986                |  | $ | 4,268                 |  | $ | --                 |   |  | $ | 62,254      
|Receivables - net                                          |  |   | --                    |  |   | 124,867               |  |   | --                 |   |  |   | 124,867     
|Intercompany receivables                                   |  |   | 326,796               |  |   | 18,755                |  |   | (345,551           | ) |  |   | --          
|Inventories                                                |  |   | --                    |  |   | 141,774               |  |   | --                 |   |  |   | 141,774     
|Deferred income taxes and prepaid expenses                 |  |   | 12,987                |  |   | 17,129                |  |   | --                 |   |  |   | 30,116      
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|Total current assets                                       |  |   | 397,769               |  |   | 306,793               |  |   | (345,551           | ) |  |   | 359,011     
|Goodwill                                                   |  |   | --                    |  |   | 60,110                |  |   | --                 |   |  |   | 60,110      
|Real estate and investments                                |  |   | 8,266                 |  |   | 25,212                |  |   | --                 |   |  |   | 33,478      
|Deferred charges and other                                 |  |   | 10,591                |  |   | 4,650                 |  |   | --                 |   |  |   | 15,241      
|Investment in subsidiaries                                 |  |   | 950,991               |  |   | --                    |  |   | (950,991           | ) |  |   | --          
|Long-term intercompany receivables                         |  |   | 50,000                |  |   | --                    |  |   | (50,000            | ) |  |   | --          
|Property, plant and equipment  net                        |  |   | --                    |  |   | 1,175,789             |  |   | --                 |   |  |   | 1,175,789   
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|Total assets                                               |  | $ | 1,417,617             |  | $ | 1,572,554             |  | $ | (1,346,542         | ) |  | $ | 1,643,629   
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|                                                           |  |   |                       | 
|Accounts payable                                           |  | $ | 34                    |  | $ | 112,600               |  | $ | --                 |   |  | $ | 112,634     
|Intercompany payables                                      |  |   | 18,755                |  |   | 326,796               |  |   | (345,551           | ) |  |   | --          
|Accrued interest, wages and other                          |  |   | 19,610                |  |   | 28,016                |  |   | --                 |   |  |   | 47,626      
|Current portion of long-term debt                          |  |   | --                    |  |   | 234                   |  |   | --                 |   |  |   | 234         
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|Total current liabilities                                  |  |   | 38,399                |  |   | 467,646               |  |   | (345,551           | ) |  |   | 160,494     
|Long-term debt                                             |  |   | 531,039               |  |   | 8,939                 |  |   | --                 |   |  |   | 539,978     
|Long-term intercompany payables                            |  |   | --                    |  |   | 50,000                |  |   | (50,000            | ) |  |   | --          
|Deferred income taxes and other credits                    |  |   | 13,558                |  |   | 94,978                |  |   | --                 |   |  |   | 108,536     
|Shareholders equity                                       |  |   | 834,621               |  |   | 950,991               |  |   | (950,991           | ) |  |   | 834,621     
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|Total liabilities and shareholders equity                 |  | $ | 1,417,617             |  | $ | 1,572,554             |  | $ | (1,346,542         | ) |  | $ | 1,643,629   
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|                                                           |  |   |                       | 
|Condensed consolidating balance sheet at May 31, 2008      |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|                                                           |  |   |                       | 
|Cash and cash equivalents                                  |  | $ | 34,675                |  | $ | 4,852                 |  | $ | --                 |   |  | $ | 39,527      
|Receivables - net                                          |  |   | --                    |  |   | 155,676               |  |   | --                 |   |  |   | 155,676     
|Intercompany receivables                                   |  |   | 232,683               |  |   | 18,765                |  |   | (251,448           | ) |  |   | --          
|Inventories                                                |  |   | --                    |  |   | 130,181               |  |   | --                 |   |  |   | 130,181     
|Deferred income taxes and prepaid expenses                 |  |   | 12,821                |  |   | 17,577                |  |   | --                 |   |  |   | 30,398      
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|Total current assets                                       |  |   | 280,179               |  |   | 327,051               |  |   | (251,448           | ) |  |   | 355,782     
|Goodwill                                                   |  |   | --                    |  |   | 60,110                |  |   | --                 |   |  |   | 60,110      
|Real estate and investments                                |  |   | 6,000                 |  |   | 53,971                |  |   | --                 |   |  |   | 59,971      
|Deferred charges and other                                 |  |   | 7,483                 |  |   | 3,849                 |  |   | --                 |   |  |   | 11,332      
|Investment in subsidiaries                                 |  |   | 924,530               |  |   | --                    |  |   | (924,530           | ) |  |   | --          
|Long-term intercompany receivables                         |  |   | 50,000                |  |   | --                    |  |   | (50,000            | ) |  |   | --          
|Property, plant and equipment  net                        |  |   | --                    |  |   | 1,027,764             |  |   | --                 |   |  |   | 1,027,764   
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|Total assets                                               |  | $ | 1,268,192             |  | $ | 1,472,745             |  | $ | (1,225,978         | ) |  | $ | 1,514,959   
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|                                                           |  |   |                       | 
|Accounts payable                                           |  | $ | 64                    |  | $ | 128,433               |  | $ | --                 |   |  | $ | 128,497     
|Intercompany payables                                      |  |   | 18,765                |  |   | 232,683               |  |   | (251,448           | ) |  |   | --          
|Accrued interest, wages and other                          |  |   | 12,358                |  |   | 35,488                |  |   | --                 |   |  |   | 47,846      
|Current portion of long-term debt                          |  |   | 7,500                 |  |   | 225                   |  |   | --                 |   |  |   | 7,725       
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|Total current liabilities                                  |  |   | 38,687                |  |   | 396,829               |  |   | (251,448           | ) |  |   | 184,068     
|Long-term debt                                             |  |   | 392,822               |  |   | 9,058                 |  |   | --                 |   |  |   | 401,880     
|Long-term intercompany payables                            |  |   | --                    |  |   | 50,000                |  |   | (50,000            | ) |  |   | --          
|Deferred income taxes and other credits                    |  |   | 20,170                |  |   | 92,328                |  |   | --                 |   |  |   | 112,498     
|Shareholders equity                                       |  |   | 816,513               |  |   | 924,530               |  |   | (924,530           | ) |  |   | 816,513     
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             
|Total liabilities and shareholders equity                 |  | $ | 1,268,192             |  | $ | 1,472,745             |  | $ | (1,225,978         | ) |  | $ | 1,514,959   
|                                                           |  |   |                       |  |   |                       |  |   |                    |   |  |   |             



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##### Table of Contents

|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|-------------------------------------------------------------------------------------------- |  | - | --------------------- | - |  | - | --------------------- | - |  | - | ------------------ | - |  | - | ------------ | -
|In thousands                                                                                 |  |   | TexasIndustries, Inc. |   |  |   | GuarantorSubsidiaries |   |  |   | EliminatingEntries |   |  |   | Consolidated |  
|                                                                                            
|Condensed consolidating statement of operations for the three months ended November 30, 2008 | 
|                                                                                             |  |   |                       |  
|Net sales                                                                                    |  | $ | --                    |   |  | $ | 221,799               |   |  | $ | --                 |   |  | $ | 221,799      |  
|Cost of products sold                                                                        |  |   | --                    |   |  |   | 194,006               |   |  |   | --                 |   |  |   | 194,006      |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Gross profit                                                                                 |  |   | --                    |   |  |   | 27,793                |   |  |   | --                 |   |  |   | 27,793       |  
|                                                                                             |  |   |                       |  
|Selling, general and administrative                                                          |  |   | (989                  | ) |  |   | 16,853                |   |  |   | --                 |   |  |   | 15,864       |  
|Interest                                                                                     |  |   | 12,306                |   |  |   | --                    |   |  |   | (3,010             | ) |  |   | 9,296        |  
|Loss on debt retirements                                                                     |  |   | --                    |   |  |   | --                    |   |  |   | --                 |   |  |   | --           |  
|Other income                                                                                 |  |   | (202                  | ) |  |   | (2,009                | ) |  |   | --                 |   |  |   | (2,211       | )
|Intercompany other income                                                                    |  |   | (873                  | ) |  |   | (2,137                | ) |  |   | 3,010              |   |  |   | --           |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                             |  |   | 10,242                |   |  |   | 12,707                |   |  |   | --                 |   |  |   | 22,949       |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Income before the following items                                                            |  |   | (10,242               | ) |  |   | 15,086                |   |  |   | --                 |   |  |   | 4,844        |  
|Income taxes                                                                                 |  |   | (3,034                | ) |  |   | 4,025                 |   |  |   | --                 |   |  |   | 991          |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                             |  |   | (7,208                | ) |  |   | 11,061                |   |  |   | --                 |   |  |   | 3,853        |  
|Equity in earnings of subsidiaries                                                           |  |   | 11,061                |   |  |   | --                    |   |  |   | (11,061            | ) |  |   | --           |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Net income                                                                                   |  | $ | 3,853                 |   |  | $ | 11,061                |   |  | $ | (11,061            | ) |  | $ | 3,853        |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                            
|Condensed consolidating statement of operations for the three months ended November 30, 2007 | 
|                                                                                             |  |   |                       |  
|Net sales                                                                                    |  | $ | --                    |   |  | $ | 268,473               |   |  | $ | --                 |   |  | $ | 268,473      |  
|Cost of products sold                                                                        |  |   | --                    |   |  |   | 208,271               |   |  |   | --                 |   |  |   | 208,271      |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Gross profit                                                                                 |  |   | --                    |   |  |   | 60,202                |   |  |   | --                 |   |  |   | 60,202       |  
|                                                                                             |  |   |                       |  
|Selling, general and administrative                                                          |  |   | 1,707                 |   |  |   | 19,357                |   |  |   | --                 |   |  |   | 21,064       |  
|Interest                                                                                     |  |   | 6,975                 |   |  |   | --                    |   |  |   | (6,975             | ) |  |   | --           |  
|Loss on debt retirements                                                                     |  |   | --                    |   |  |   | --                    |   |  |   | --                 |   |  |   | --           |  
|Other income                                                                                 |  |   | (140                  | ) |  |   | (3,302                | ) |  |   | --                 |   |  |   | (3,442       | )
|Intercompany other income                                                                    |  |   | (873                  | ) |  |   | (6,102                | ) |  |   | 6,975              |   |  |   | --           |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                             |  |   | 7,669                 |   |  |   | 9,953                 |   |  |   | --                 |   |  |   | 17,622       |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Income before the following items                                                            |  |   | (7,669                | ) |  |   | 50,249                |   |  |   | --                 |   |  |   | 42,580       |  
|Income taxes                                                                                 |  |   | (2,778                | ) |  |   | 16,043                |   |  |   | --                 |   |  |   | 13,265       |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                             |  |   | (4,891                | ) |  |   | 34,206                |   |  |   | --                 |   |  |   | 29,315       |  
|Equity in earnings of subsidiaries                                                           |  |   | 34,206                |   |  |   | --                    |   |  |   | (34,206            | ) |  |   | --           |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Net income                                                                                   |  | $ | 29,315                |   |  | $ | 34,206                |   |  | $ | (34,206            | ) |  | $ | 29,315       |  
|                                                                                             |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  



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##### Table of Contents

|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|------------------------------------------------------------------------------------------ |  | - | --------------------- | - |  | - | --------------------- | - |  | - | ------------------ | - |  | - | ------------ | -
|In thousands                                                                               |  |   | TexasIndustries, Inc. |   |  |   | GuarantorSubsidiaries |   |  |   | EliminatingEntries |   |  |   | Consolidated |  
|                                                                                          
|Condensed consolidating statement of operations for the six months ended November 30, 2008 | 
|                                                                                           |  |   |                       |  
|Net sales                                                                                  |  | $ | --                    |   |  | $ | 478,191               |   |  | $ | --                 |   |  | $ | 478,191      |  
|Cost of products sold                                                                      |  |   | --                    |   |  |   | 417,760               |   |  |   | --                 |   |  |   | 417,760      |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Gross profit                                                                               |  |   | --                    |   |  |   | 60,431                |   |  |   | --                 |   |  |   | 60,431       |  
|                                                                                           |  |   |                       |  
|Selling, general and administrative                                                        |  |   | (2,519                | ) |  |   | 35,721                |   |  |   | --                 |   |  |   | 33,202       |  
|Interest                                                                                   |  |   | 21,151                |   |  |   | --                    |   |  |   | (4,610             | ) |  |   | 16,541       |  
|Loss on debt retirements                                                                   |  |   | 907                   |   |  |   | --                    |   |  |   | --                 |   |  |   | 907          |  
|Other income                                                                               |  |   | (334                  | ) |  |   | (10,118               | ) |  |   | --                 |   |  |   | (10,452      | )
|Intercompany other income                                                                  |  |   | (1,755                | ) |  |   | (2,855                | ) |  |   | 4,610              |   |  |   | --           |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                           |  |   | 17,450                |   |  |   | 22,748                |   |  |   | --                 |   |  |   | 40,198       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Income before the following items                                                          |  |   | (17,450               | ) |  |   | 37,683                |   |  |   | --                 |   |  |   | 20,233       |  
|Income taxes                                                                               |  |   | (5,685                | ) |  |   | 11,407                |   |  |   | --                 |   |  |   | 5,722        |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                           |  |   | (11,765               | ) |  |   | 26,276                |   |  |   | --                 |   |  |   | 14,511       |  
|Equity in earnings of subsidiaries                                                         |  |   | 26,276                |   |  |   | --                    |   |  |   | (26,276            | ) |  |   | --           |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Net income                                                                                 |  | $ | 14,511                |   |  | $ | 26,276                |   |  | $ | (26,276            | ) |  | $ | 14,511       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                          
|Condensed consolidating statement of operations for the six months ended November 30, 2007 | 
|                                                                                           |  |   |                       |  
|Net sales                                                                                  |  | $ | --                    |   |  | $ | 531,927               |   |  | $ | --                 |   |  | $ | 531,927      |  
|Cost of products sold                                                                      |  |   | --                    |   |  |   | 425,708               |   |  |   | --                 |   |  |   | 425,708      |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Gross profit                                                                               |  |   | --                    |   |  |   | 106,219               |   |  |   | --                 |   |  |   | 106,219      |  
|                                                                                           |  |   |                       |  
|Selling, general and administrative                                                        |  |   | 1,961                 |   |  |   | 41,286                |   |  |   | --                 |   |  |   | 43,247       |  
|Interest                                                                                   |  |   | 12,841                |   |  |   | --                    |   |  |   | (12,841            | ) |  |   | --           |  
|Loss on debt retirements                                                                   |  |   | --                    |   |  |   | --                    |   |  |   | --                 |   |  |   | --           |  
|Other income                                                                               |  |   | (166                  | ) |  |   | (5,529                | ) |  |   | --                 |   |  |   | (5,695       | )
|Intercompany other income                                                                  |  |   | (1,755                | ) |  |   | (11,086               | ) |  |   | 12,841             |   |  |   | --           |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                           |  |   | 12,881                |   |  |   | 24,671                |   |  |   | --                 |   |  |   | 37,552       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Income before the following items                                                          |  |   | (12,881               | ) |  |   | 81,548                |   |  |   | --                 |   |  |   | 68,667       |  
|Income taxes                                                                               |  |   | (4,694                | ) |  |   | 26,132                |   |  |   | --                 |   |  |   | 21,438       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|                                                                                           |  |   | (8,187                | ) |  |   | 55,416                |   |  |   | --                 |   |  |   | 47,229       |  
|Equity in earnings of subsidiaries                                                         |  |   | 55,416                |   |  |   | --                    |   |  |   | (55,416            | ) |  |   | --           |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  
|Net income                                                                                 |  | $ | 47,229                |   |  | $ | 55,416                |   |  | $ | (55,416            | ) |  | $ | 47,229       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |   |  |   |              |  



- 22 -



---

##### Table of Contents

|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|------------------------------------------------------------------------------------------ |  | - | --------------------- | - |  | - | --------------------- | - |  | - | ------------------ |  | - | ------------ | -
|In thousands                                                                               |  |   | TexasIndustries, Inc. |   |  |   | GuarantorSubsidiaries |   |  |   | EliminatingEntries |  |   | Consolidated |  
|                                                                                          
|Condensed consolidating statement of cash flows for the six months ended November 30, 2008 | 
|                                                                                           |  |   |                       |  
|Net cash provided by operating activities                                                  |  | $ | (106,746              | ) |  | $ | 145,084               |   |  | $ | --                 |  | $ | 38,338       |  
|                                                                                           |  |   |                       |  
|Investing activities                                                                       |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Capital expenditures - expansions                                                          |  |   | --                    |   |  |   | (123,420              | ) |  |   | --                 |  |   | (123,420     | )
|Capital expenditures - other                                                               |  |   | --                    |   |  |   | (51,911               | ) |  |   | --                 |  |   | (51,911      | )
|Cash designated for property acquisitions                                                  |  |   | --                    |   |  |   | 28,733                |   |  |   | --                 |  |   | 28,733       |  
|Proceeds from asset disposals                                                              |  |   | --                    |   |  |   | 865                   |   |  |   | --                 |  |   | 865          |  
|Investments in life insurance contracts                                                    |  |   | 2,263                 |   |  |   | --                    |   |  |   | --                 |  |   | 2,263        |  
|Other - net                                                                                |  |   | --                    |   |  |   | 175                   |   |  |   | --                 |  |   | 175          |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Net cash used by investing activities                                                      |  |   | 2,263                 |   |  |   | (145,558              | ) |  |   | --                 |  |   | (143,295     | )
|                                                                                           |  |   |                       |  
|Financing activities                                                                       |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Long-term borrowings                                                                       |  |   | 327,250               |   |  |   | --                    |   |  |   | --                 |  |   | 327,250      |  
|Debt retirements                                                                           |  |   | (197,500              | ) |  |   | (110                  | ) |  |   | --                 |  |   | (197,610     | )
|Debt issuance costs                                                                        |  |   | (3,476                | ) |  |   | --                    |   |  |   | --                 |  |   | (3,476       | )
|Stock option exercises                                                                     |  |   | 3,885                 |   |  |   | --                    |   |  |   | --                 |  |   | 3,885        |  
|Excess tax benefits from stock-based compensation                                          |  |   | 1,766                 |   |  |   | --                    |   |  |   | --                 |  |   | 1,766        |  
|Common dividends paid                                                                      |  |   | (4,131                | ) |  |   | --                    |   |  |   | --                 |  |   | (4,131       | )
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Net cash provided by financing activities                                                  |  |   | 127,794               |   |  |   | (110                  | ) |  |   | --                 |  |   | 127,684      |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Increase in cash and cash equivalents                                                      |  |   | 23,311                |   |  |   | (584                  | ) |  |   | --                 |  |   | 22,727       |  
|Cash and cash equivalents at beginning of period                                           |  |   | 34,675                |   |  |   | 4,852                 |   |  |   | --                 |  |   | 39,527       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Cash and cash equivalents at end of period                                                 |  | $ | 57,986                |   |  | $ | 4,268                 |   |  | $ | --                 |  | $ | 62,254       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|                                                                                          
|Condensed consolidating statement of cash flows for the six months ended November 30, 2007 | 
|                                                                                           |  |   |                       |  
|Net cash provided by operating activities                                                  |  | $ | (106,779              | ) |  | $ | 167,255               |   |  | $ | --                 |  | $ | 60,476       |  
|                                                                                           |  |   |                       |  
|Investing activities                                                                       |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Capital expenditures - expansions                                                          |  |   | --                    |   |  |   | (138,364              | ) |  |   | --                 |  |   | (138,364     | )
|Capital expenditures - other                                                               |  |   | --                    |   |  |   | (36,724               | ) |  |   | --                 |  |   | (36,724      | )
|Cash designated for property acquisitions                                                  |  |   | --                    |   |  |   | --                    |   |  |   | --                 |  |   | --           |  
|Proceeds from asset disposals                                                              |  |   | --                    |   |  |   | 2,366                 |   |  |   | --                 |  |   | 2,366        |  
|Investments in life insurance contracts                                                    |  |   | 65,529                |   |  |   | --                    |   |  |   | --                 |  |   | 65,529       |  
|Other - net                                                                                |  |   | --                    |   |  |   | 55                    |   |  |   | --                 |  |   | 55           |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Net cash used by investing activities                                                      |  |   | 65,529                |   |  |   | (172,667              | ) |  |   | --                 |  |   | (107,138     | )
|                                                                                           |  |   |                       |  
|Financing activities                                                                       |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Long-term borrowings                                                                       |  |   | 189,000               |   |  |   | --                    |   |  |   | --                 |  |   | 189,000      |  
|Debt retirements                                                                           |  |   | (130,147              | ) |  |   | (90                   | ) |  |   | --                 |  |   | (130,237     | )
|Debt issuance costs                                                                        |  |   | (1,033                | ) |  |   | --                    |   |  |   | --                 |  |   | (1,033       | )
|Stock option exercises                                                                     |  |   | 730                   |   |  |   | --                    |   |  |   | --                 |  |   | 730          |  
|Excess tax benefits from stock-based compensation                                          |  |   | 3,383                 |   |  |   | --                    |   |  |   | --                 |  |   | 3,383        |  
|Common dividends paid                                                                      |  |   | (4,103                | ) |  |   | --                    |   |  |   | --                 |  |   | (4,103       | )
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Net cash provided by financing activities                                                  |  |   | 57,830                |   |  |   | (90                   | ) |  |   | --                 |  |   | 57,740       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Increase in cash and cash equivalents                                                      |  |   | 16,580                |   |  |   | (5,502                | ) |  |   | --                 |  |   | 11,078       |  
|Cash and cash equivalents at beginning of period                                           |  |   | 6,095                 |   |  |   | 9,043                 |   |  |   | --                 |  |   | 15,138       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  
|Cash and cash equivalents at end of period                                                 |  | $ | 22,675                |   |  | $ | 3,541                 |   |  | $ | --                 |  | $ | 26,216       |  
|                                                                                           |  |   |                       |   |  |   |                       |   |  |   |                    |  |   |              |  



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Texas Industries, Inc.

We have reviewed the accompanying consolidated balance sheet of Texas Industries, Inc. and subsidiaries (the Company) as of November 30, 2008, and
the related consolidated statements of operations for the three- and six-month periods ended November 30, 2008 and 2007 and cash flows for six-month periods ended November 30, 2008 and 2007. These financial statements are the
responsibility of the Companys management.

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

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

We have previously
audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Texas Industries, Inc. and subsidiaries as of May 31, 2008, and the related consolidated statements of
operations, shareholders equity, and cash flows for the year then ended [not presented herein], and in our report dated July 10, 2008, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of May 31, 2008, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Fort Worth, Texas

January 7, 2009



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

RESULTS OF OPERATIONS

We are a leading
supplier of heavy construction materials in the United States through three business segments: cement, aggregates and consumer products. Our principal products are gray portland cement, produced and sold through our cement segment; stone, sand and
gravel, produced and sold through our aggregates segment; and ready-mix concrete, produced and sold through our consumer products segment. Other products include expanded shale and clay lightweight aggregates, produced and sold through our
aggregates segment, and packaged concrete mix, mortar, sand and related products, produced and sold through our consumer products segment. Our facilities are concentrated primarily in Texas, Louisiana and California.

Management uses segment operating profit as its principal measure to assess performance and to allocate resources. Business segment
operating profit consists of net sales less operating costs and expenses that are directly attributable to the segment. Unallocated overhead and other income includes income and operating overhead expenses such as environmental, engineering and
other administrative activities that directly relate to some or all of our segments and are not allocated. Corporate includes non-operating income and expenses related to administrative, financial, legal, human resources and real estate activities.

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

Cement Operations



|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|----------------------------------- |  | - | ------------------------------ | - |  | - | ---------------------------- | - |  | - | ------- | - |  | - | ------- | -
|                                    |  |   | Three months endedNovember 30, |   |  |   | Six months endedNovember 30, |  
|In thousands except per unit        |  |   | 2008                           |   |  |   | 2007                         |   |  |   | 2008    |   |  |   | 2007    |  
|                                    |  |   |                                |  
|Operating Results                   |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Total cement sales                  |  | $ | 98,407                         |   |  | $ | 122,586                      |   |  | $ | 209,811 |   |  | $ | 246,009 |  
|Total other sales and delivery fees |  |   | 9,641                          |   |  |   | 8,723                        |   |  |   | 19,600  |   |  |   | 16,435  |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Total segment sales                 |  |   | 108,048                        |   |  |   | 131,309                      |   |  |   | 229,411 |   |  |   | 262,444 |  
|Cost of products sold               |  |   | 94,206                         |   |  |   | 93,572                       |   |  |   | 198,763 |   |  |   | 202,679 |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Gross profit                        |  |   | 13,842                         |   |  |   | 37,737                       |   |  |   | 30,648  |   |  |   | 59,765  |  
|Selling, general and administrative |  |   | (5,338                         | ) |  |   | (3,941                       | ) |  |   | (10,042 | ) |  |   | (8,952  | )
|Other income                        |  |   | 948                            |   |  |   | 681                          |   |  |   | 6,151   |   |  |   | 1,505   |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Operating Profit                    |  | $ | 9,452                          |   |  | $ | 34,477                       |   |  | $ | 26,757  |   |  | $ | 52,318  |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Cement                              |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Shipments (tons)                    |  |   | 1,083                          |   |  |   | 1,319                        |   |  |   | 2,301   |   |  |   | 2,609   |  
|Prices ($/ton)                      |  | $ | 90.87                          |   |  | $ | 92.88                        |   |  | $ | 91.17   |   |  | $ | 94.27   |  
|Cost of sales ($/ton)               |  | $ | 79.04                          |   |  | $ | 64.41                        |   |  | $ | 79.15   |   |  | $ | 71.80   |  

Three months ended November 30, 2008

Operating profit for the three-month period ended November 30, 2008 was $9.5 million, a decrease of $25.0 million from the prior year
period.

Total cement sales for the three-month period ended November 30, 2008 decreased $24.2 million from the prior
year period as construction activity declined in both our Texas and California market areas. Our Texas market area accounted for approximately 70% of total cement sales in the current period compared to 68% of total cement sales in the prior year
period. In our Texas market area cement shipments decreased 19% from the prior year period and average prices increased 3%. In our California market area cement shipments decreased 14% from the prior year period and average prices decreased 14%.



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##### Table of Contents

Cost of products sold for the three-month period ended November 30, 2008 increased
$0.6 million from the prior year period. The effect of lower shipments was offset by higher unit costs. Cement unit costs increased 23% from the prior year period. In addition to higher energy costs, scheduled maintenance at our north Texas cement
plant of $8.0 million and higher depreciation at our Oro Grande, California cement plant of $3.3 million contributed to increased costs.

Selling, general and administrative expense for the three-month period ended November 30, 2008 increased $1.4 million from the prior year period primarily due to higher legal and other professional expenses.

Other income for the three-month period ended November 30, 2008 increased $0.3 million from the prior year period
primarily due to higher oil and gas royalty income.

Six months ended November 30, 2008

Operating profit for the six-month period ended November 30, 2008 was $26.8 million, a decrease of $25.6 million from the prior year
period.

Total cement sales for the six-month period ended November 30, 2008 decreased $36.2 million from the prior
year period as construction activity declined in our California market area. Construction activity also declined in our Texas market area during the November 2008 quarter. Our Texas area accounted for approximately 70% of total cement sales in the
current period compared to 65% of total cement sales in the prior year period. In our Texas market area cement shipments decreased 10% from the prior year period and average prices increased 2%. In our California market area cement shipments
decreased 16% from the prior year period and average prices decreased 13%.

Cost of products sold for the six-month period
ended November 30, 2008 decreased $3.9 million from the prior year period. The effect of lower shipments was offset in part by higher unit costs. Cement unit costs increased 10% from the prior year period. In addition to higher energy costs,
scheduled maintenance at our cement plants of $4.0 million and higher depreciation at our Oro Grande, California cement plant of $6.6 million contributed to increased costs. The higher energy costs were partially offset by operating efficiencies
that lowered the energy usage per ton of clinker produced.

Selling, general and administrative expense for the six-month
period ended November 30, 2008 increased $1.1 million from the prior year period primarily due to higher legal and other professional expenses offset in part by lower incentive compensation expense.

Other income for the six-month period ended November 30, 2008 increased $4.6 million from the prior year period. Other income in the
current period includes a lease bonus payment of $2.8 million received upon the execution of an oil and gas lease on property we own in north Texas. In addition, other income in the current period includes a gain of $1.7 million from the sale of
emission credits associated with our California cement operations.



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##### Table of Contents

Aggregate Operations



|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|----------------------------------- |  | - | ------------------------------ | - |  | - | ---------------------------- | - |  | - | ------- | - |  | - | ------- | -
|                                    |  |   | Three months endedNovember 30, |   |  |   | Six months endedNovember 30, |  
|In thousands except per unit        |  |   | 2008                           |   |  |   | 2007                         |   |  |   | 2008    |   |  |   | 2007    |  
|                                    |  |   |                                |  
|Operating Results                   |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Total stone, sand and gravel sales  |  | $ | 35,667                         |   |  | $ | 43,324                       |   |  | $ | 76,346  |   |  | $ | 83,128  |  
|Total other sales and delivery fees |  |   | 24,838                         |   |  |   | 30,559                       |   |  |   | 55,956  |   |  |   | 60,980  |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Total segment sales                 |  |   | 60,505                         |   |  |   | 73,883                       |   |  |   | 132,302 |   |  |   | 144,108 |  
|Cost of products sold               |  |   | 50,769                         |   |  |   | 59,610                       |   |  |   | 110,214 |   |  |   | 114,652 |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Gross profit                        |  |   | 9,736                          |   |  |   | 14,273                       |   |  |   | 22,088  |   |  |   | 29,456  |  
|Selling, general and administrative |  |   | (3,506                         | ) |  |   | (3,640                       | ) |  |   | (7,329  | ) |  |   | (7,787  | )
|Other income                        |  |   | 463                            |   |  |   | 237                          |   |  |   | 870     |   |  |   | 643     |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Operating Profit                    |  | $ | 6,693                          |   |  | $ | 10,870                       |   |  | $ | 15,629  |   |  | $ | 22,312  |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Stone, sand and gravel              |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Shipments (tons)                    |  |   | 4,605                          |   |  |   | 5,863                        |   |  |   | 9,806   |   |  |   | 11,414  |  
|Prices ($/ton)                      |  | $ | 7.74                           |   |  | $ | 7.39                         |   |  | $ | 7.79    |   |  | $ | 7.28    |  
|Cost of sales ($/ton)               |  | $ | 6.38                           |   |  | $ | 5.76                         |   |  | $ | 6.33    |   |  | $ | 5.60    |  

Three months ended November 30, 2008

Operating profit for the three-month period ended November 30, 2008 was $6.7 million, a decrease of $4.2 million from the prior year
period as construction activity declined in our market areas.

Total segment sales for the three-month period ended
November 30, 2008 decreased $13.4 million from the prior year period as total stone, sand and gravel sales were down $7.7 million. Total stone, sand and gravel shipments decreased 21% from the prior year period and average prices increased 5%.

Cost of products sold for the three-month period ended November 30, 2008 decreased $8.8 million from the prior year
period primarily due to lower shipments. Stone, sand and gravel unit costs increased primarily due to the impact of production levels on unit costs.

Selling, general and administrative expense for the three-month period ended November 30, 2008 decreased $0.1 million from the prior year period primarily due to lower incentive compensation expense.

Other income for the three-month period ended November 30, 2008 increased $0.2 million from the prior year period primarily due
to higher oil and gas income.

Six months ended November 30, 2008

Operating profit for the six-month period ended November 30, 2008 was $15.6 million, a decrease of $6.7 million from the prior year period as construction activity declined in our market
areas during the November 2008 quarter.

Total segment sales for the six-month period ended November 30, 2008
decreased $11.8 million from the prior year period as total stone, sand and gravel sales were down $6.8 million. Total stone, sand and gravel shipments decreased 14% from the prior year period and average prices increased 7%.

Cost of products sold for the six-month period ended November 30, 2008 decreased $4.4 million from the prior year period primarily
due to lower shipments. Stone, sand and gravel unit costs increased primarily due to the impact of production levels on unit costs.

Selling, general and administrative expense for the six-month period ended November 30, 2008 decreased $0.5 million from the prior year period primarily due to lower incentive compensation expense.

Other income for the six-month period ended November 30, 2008 increased $0.2 million from the prior year period primarily due to
higher oil and gas income.



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##### Table of Contents

Consumer Products Operations



|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|----------------------------------- |  | - | ------------------------------ | - |  | - | ---------------------------- | - |  | - | ------- | - |  | - | ------- | -
|                                    |  |   | Three months endedNovember 30, |   |  |   | Six months endedNovember 30, |  
|In thousands except per unit        |  |   | 2008                           |   |  |   | 2007                         |   |  |   | 2008    |   |  |   | 2007    |  
|Operating Results                   |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Total ready-mix concrete sales      |  | $ | 64,832                         |   |  | $ | 84,233                       |   |  | $ | 143,726 |   |  | $ | 164,223 |  
|Total other sales and delivery fees |  |   | 15,812                         |   |  |   | 13,798                       |   |  |   | 32,142  |   |  |   | 28,334  |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Total segment sales                 |  |   | 80,644                         |   |  |   | 98,031                       |   |  |   | 175,868 |   |  |   | 192,557 |  
|Cost of products sold               |  |   | 76,429                         |   |  |   | 89,839                       |   |  |   | 168,173 |   |  |   | 175,559 |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Gross profit                        |  |   | 4,215                          |   |  |   | 8,192                        |   |  |   | 7,695   |   |  |   | 16,998  |  
|Selling, general and administrative |  |   | (3,716                         | ) |  |   | (3,931                       | ) |  |   | (8,031  | ) |  |   | (8,836  | )
|Other income                        |  |   | 180                            |   |  |   | 346                          |   |  |   | 565     |   |  |   | 522     |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Operating Profit (Loss)             |  | $ | 679                            |   |  | $ | 4,607                        |   |  | $ | 229     |   |  | $ | 8,684   |  
|                                    |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Ready-mix concrete                  |  |   |                                |   |  |   |                              |   |  |   |         |   |  |   |         |  
|Shipments (cubic yards)             |  |   | 769                            |   |  |   | 1,050                        |   |  |   | 1,716   |   |  |   | 2,048   |  
|Prices ($/cubic yard)               |  | $ | 84.37                          |   |  | $ | 80.19                        |   |  | $ | 83.78   |   |  | $ | 80.18   |  
|Cost of sales ($/cubic yard)        |  | $ | 81.96                          |   |  | $ | 75.18                        |   |  | $ | 81.52   |   |  | $ | 74.55   |  

Three months ended November 30, 2008

Operating profit for the three-month period ended November 30, 2008 was $0.7 million, a decrease of $3.9 million from the prior year
period as construction activity declined in our market areas.

Total segment sales for the three-month period ended
November 30, 2008 decreased $17.4 million as total ready-mix concrete sales were down $19.4 million. Total ready-mix concrete volumes decreased 27% from the prior year period and average prices increased 5%.

Cost of products sold for the three-month period ended November 30, 2008 decreased $13.4 million from the prior year period
primarily due to lower shipments. Overall ready-mix concrete unit costs increased 9% from the prior year period primarily due to higher raw material costs, as well as higher distribution and transportation costs. Our raw material unit costs in the
current period increased approximately 7% from the prior year period. Our cost of diesel fuel per gallon in the current period increased approximately 33% from the prior year period.

Selling, general and administrative expense for the three-month period ended November 30, 2008 decreased $0.2 million from the prior
year period primarily due to lower incentive compensation expense.

Other income for the three-month period ended
November 30, 2008 decreased $0.2 million from the prior year period as a result of lower gains from the routine sale of surplus operating assets.

Six months ended November 30, 2008

Operating profit for the six-month period ended November 30,
2008 was $0.2 million, a decrease of $8.5 million from the prior year period as construction activity declined in our market areas during the November 2008 quarter.

Total segment sales for the six-month period ended November 30, 2008 decreased $16.7 million as total ready-mix concrete sales were down $20.5 million. Total ready-mix concrete volumes
decreased 16% from the prior year period and average prices increased 4%.

Cost of products sold for the six-month period
ended November 30, 2008 decreased $7.4 million from the prior year period primarily due to lower shipments during the November 2008 quarter. Overall ready-mix concrete unit costs increased 9% from the prior year period primarily due to higher
raw material costs, as well as higher distribution and transportation costs. Our raw material unit costs in the current period increased approximately 7% from the prior year period. Our cost of diesel fuel per gallon in the current period increased
approximately 59% from the prior year period.



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##### Table of Contents

Selling, general and administrative expense for the six-month period ended
November 30, 2008 decreased $0.8 million from the prior year period primarily due to lower incentive compensation expense.

Other income for the six-month period ended November 30, 2008 was comparable to the prior year period. Other income in the current period includes lease bonus payments of $0.2 million received upon the execution of oil and gas lease
agreements on property we own in north Texas offsetting lower gains from the routine sales of surplus assets.

Unallocated Overhead and Other Income



|                                    |  |                                |   |  |                              |   |  |          |   |  |          |  
|----------------------------------- |  | ------------------------------ | - |  | ---------------------------- | - |  | -------- | - |  | -------- | -
|                                    |  | Three months endedNovember 30, |   |  | Six months endedNovember 30, |  
|In thousands                        |  | 2008                           |   |  | 2007                         |   |  | 2008     |   |  | 2007     |  
|                                    |  |                                |   | 
|Other income                        |  | $      60                      |   |  | $    115                     |   |  | $    121 |   |  | $    287 |  
|Selling, general and administrative |  | (2,253                         | ) |  | (2,173                       | ) |  | (4,799   | ) |  | (4,484   | )
|                                    |  |                                |   |  |                              |   |  |          |   |  |          |  
|                                    |  | $(2,193                        | ) |  | $(2,058                      | ) |  | $(4,678  | ) |  | $(4,197  | )
|                                    |  |                                |   |  |                              |   |  |          |   |  |          |  

Unallocated overhead and other income relate primarily to certain environmental,
engineering and other administrative operating activities not attributable to a specific segment.

Corporate



|                                    |  |                                |   |  |                              |   |  |          |   |  |           |  
|----------------------------------- |  | ------------------------------ | - |  | ---------------------------- | - |  | -------- | - |  | --------- | -
|                                    |  | Three months endedNovember 30, |   |  | Six months endedNovember 30, |  
|In thousands                        |  | 2008                           |   |  | 2007                         |   |  | 2008     |   |  | 2007      |  
|                                    |  |                                |   | 
|Other income                        |  | $      560                     |   |  | $ 2,063                      |   |  | $ 2,745  |   |  | $   2,738 |  
|Selling, general and administrative |  | (1,051                         | ) |  | (7,379                       | ) |  | (3,001   | ) |  | (13,188   | )
|                                    |  |                                |   |  |                              |   |  |          |   |  |           |  
|                                    |  | $     (491                     | ) |  | $(5,316                      | ) |  | $   (256 | ) |  | $(10,450  | )
|                                    |  |                                |   |  |                              |   |  |          |   |  |           |  

Three months ended November 30, 2008

Other income for the three-month period ended November 30, 2008 decreased $1.5 million from the prior year period. The prior year
period includes a gain of $0.8 million from the sale of corporate real estate and a bonus payment of $0.7 million received upon the execution of an oil and gas lease agreement on property formerly owned by us that was not associated with any
business segment.

Selling, general and administrative expense for the three-month period ended November 30, 2008
decreased $6.3 million from the prior year period. The decrease was primarily the result of $1.4 million lower incentive compensation expense and $4.1 million lower stock-based compensation. Our incentive plans are based on financial performance.
Our stock-based compensation includes awards expected to be settled in cash, the expense for which is based on the average stock price at the end of each period until the awards are paid. The impact of changes in our stock price reduced stock-based
compensation $4.6 million and $0.8 million during three-month periods ended November 30, 2008 and November 30, 2007, respectively.

Six months
ended November 30, 2008

Other income for the six-month period ended November 30, 2008 was comparable to that
of the prior year period. The current year period includes a bonus payment of $1.6 million received upon the execution of an oil and gas lease agreement on property we own in north Texas that is not associated with any business segment. The prior
year period includes a gain of $0.8 million from the sale of corporate real estate and a bonus payment of $0.7 million received upon the execution of an oil and gas lease agreement on property formerly owned by us but not associated with any
business segment.



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##### Table of Contents

Selling, general and administrative expense for the six-month period ended
November 30, 2008 decreased $10.2 million from the prior year period. The decrease was primarily the result of $3.8 million lower incentive compensation expense and $6.5 million lower stock-based compensation. Our incentive plans are based on
financial performance. Our stock-based compensation includes awards expected to be settled in cash, the expense for which is based on the average stock price at the end of each period until the awards are paid. The impact of changes in our stock
price reduced stock-based compensation $9.7 million and $3.8 million during six-month periods ended November 30, 2008 and November 30, 2007, respectively.

Interest

Interest expense incurred for the three-month period ended
November 30, 2008 was $12.5 million, of which $3.2 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $9.3 million was expensed. Interest expense incurred for the three-month period ended
November 30, 2007 was $7.2 million, all of which was capitalized in connection with our Hunter, Texas and Oro Grande, California cement plant expansion projects.

Interest expense incurred for the six-month period ended November 30, 2008 was $21.5 million, of which $5.0 million was capitalized in connection with our Hunter, Texas cement plant
expansion project and $16.5 million was expensed. Interest expense incurred for the six-month period ended November 30, 2007 was $13.3 million, all of which was capitalized in connection with our Hunter, Texas and Oro Grande, California cement
plant expansion projects.

Interest expense incurred for the three-month and six-month periods ended November 30, 2008
increased from the prior year periods $5.3 million and $8.2 million, respectively. The increases were due to higher average outstanding debt and borrowings on life insurance contracts. An additional $9.1 million in interest expense is currently
estimated to be capitalized in connection with our Hunter expansion project during the remainder of our current fiscal year.

Loss on Debt Retirements

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

Income Taxes

Income taxes for the interim periods ended November 30, 2008 and November 30, 2007 have been included in the accompanying
financial statements on the basis of an estimated annual rate. The primary reason that the tax rate differs from the 35% federal statutory corporate rate is due to percentage depletion that is tax deductible, state income taxes and deductions for
income from qualified domestic production activities. Our estimated effective tax rate for fiscal year 2009 is 28.3% compared to 31.2% for fiscal year 2008.

LIQUIDITY AND CAPITAL RESOURCES

In addition to cash and cash equivalents of $62.3 million at November 30,
2008, our sources of liquidity include cash from operations and borrowings available under our $200 million senior secured revolving credit facility.

Senior Secured Revolving Credit Facility. On November 21, 2008, we amended our August 15, 2007 credit agreement to, among other things, increase the permitted leverage ratio, secure our obligations
under the credit facility and limit the amount that can be borrowed under the credit agreement to the lesser of a borrowing base equal to the sum of 80% of our accounts receivable and 50% of our inventory or the $200 million stated principal amount
of the credit agreement. The credit facility expires on August 15, 2012. The borrowing base at November 30, 2008 was $170.8 million. It includes a $50 million sub-limit for letters of credit. Any outstanding letters of credit are deducted
from the borrowing availability under the facility. No borrowings were outstanding at November 30, 2008; however, $21.5 million of the facility was utilized to support letters of credit. Amounts drawn under the facility bear interest either at
the LIBOR rate plus a margin of 2.5% to 3.5%, or at a base rate (which is the higher of the federal funds rate plus 0.5%, the prime rate or the one-month LIBOR rate plus 1.0%) plus a margin of 1.5% to 2.5%. The interest rate margins are subject to
adjustments based on our leverage ratio. Commitment fees are payable currently at an annual rate of 0.5% on the unused portion of the facility. We may terminate the facility at any time.



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

The credit
facility contains covenants restricting, among other things, prepayment or redemption of the senior notes, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and
affiliate transactions. Cash dividends paid on our common stock are limited to an annual amount of $10.0 million. We are required to comply with certain financial tests and to maintain certain financial ratios, such as leverage and interest coverage
ratios. We were in compliance with all of these loan covenants as of November 30, 2008.

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



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

In October 2007, we commenced construction on a project to expand our Hunter,
Texas cement plant. We are expanding the Hunter plant by approximately 1.4 million tons of advanced dry process annual cement production capacity. The 900,000 tons of existing annual cement production capacity will remain in operation. As of
November 30, 2008, we have expended $193.4 million, excluding capitalized interest of $6.9 million related to the project.

In light of current economic and market conditions we plan to delay construction on the project. We believe that if the project were completed when originally scheduled, cement demand levels in Texas would likely not permit the new kiln to
operate at a profitable level. We do expect the demand for cement to rebound in the future and to resume construction on the project when warranted by future economic and market conditions. We expect to be able to begin the startup and commissioning
of the project within 12 months after resumption of construction.

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

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

We expect cash and cash
equivalents, cash from operations and available borrowings under our senior secured revolving credit facility to be sufficient to provide funds for capital expenditure commitments currently estimated at $275 million to $305 million for fiscal year
2009 (including the expansion of the Hunter, Texas plant), scheduled debt payments, working capital needs and other general corporate purposes for at least the next year.



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Cash Flows

Net cash provided by operating activities was $38.3 million and $60.5 million for the six-month period ended November 30, 2008 and November 30, 2007, respectively. The decrease was primarily the result of
lower income from operations offset in part by higher depreciation due to the completion of our Oro Grande, California cement plant in May 2008.

Net cash used by investing activities was $143.3 million and $107.1 million for the six-month period ended November 30, 2008 and November 30, 2007, respectively.

Capital expenditures, including capitalized interest, incurred in connection with the expansion of our Hunter, Texas cement plant were
$122.1 million and $21.2 million for the six-month periods ended November 30, 2008 and November 30, 2007, respectively. Capital expenditures, including capitalized interest, incurred in connection with the expansion and modernization of
our Oro Grande, California cement plant were $1.3 million and $117.2 million for the six-month periods ended November 30, 2008 and November 30, 2007, respectively.

Capital expenditures for normal replacement and technological upgrades of existing equipment and acquisitions to sustain our existing operations were $51.9 million and $36.7 million for the
six-month periods ended November 30, 2008 and November 30, 2007, respectively. Capital expenditures in the current period include $25.3 million incurred to acquire aggregate operations in central Texas through a deferred like-kind-exchange
transaction. Completion of our deferred like-kind-exchange transactions reduced the cash designated for property acquisitions that is being held by a qualified intermediary trust by $28.7 million.

Net cash provided by financing activities was $127.7 million and $57.7 million for the six-month period ended November 30, 2008 and
November 30, 2007, respectively.

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

OTHER ITEMS

Environmental Matters

We are subject to federal, state and local environmental laws, regulations and permits concerning, among other
matters, air emissions and wastewater discharge. We intend to comply with these laws, regulations and permits. However, from time to time we receive claims from federal and state environmental regulatory agencies and entities asserting that we are
or may be in violation of certain of these laws, regulations and permits, or from private parties alleging that our operations have injured them or their property. See Note 9 of Notes to Consolidated Financial Statements entitled Legal
Proceedings and Contingent Liabilities presented in Part I, Item 1 of this report for a description of certain claims. It is possible that we could be held liable for future charges which might be material but are not currently known
or estimable. In addition, changes in federal or state laws, regulations or requirements or discovery of currently unknown conditions could require additional expenditures by us.

Market Risk

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

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



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Critical Accounting Policies

The preparation of financial statements and accompanying notes in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
amounts reported. Changes in the facts and circumstances could have a significant impact on the resulting financial statements. We believe the following critical accounting policies affect managements more complex judgments and estimates.

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

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

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

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

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

In light of current market conditions, we assessed our California cement operations for impairment during our November 2008 quarter. Our
assessment indicated that there was no impairment of goodwill. The assessment was based in part on assumptions regarding the timing of economic recovery in our California market. The current market conditions and economic climate are very volatile
and it is possible that the current recession could last longer and have a bigger impact on our operations than was anticipated. Should the recession become more severe or last longer than anticipated, we could recognize an impairment charge in the
future with respect to goodwill. Management will continue to evaluate and monitor the economic environment and perform its annual impairment test in the fourth quarter of our current fiscal year.

Recent Accounting Developments

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

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



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##### Table of Contents

Cautionary Statement for Purposes of the Safe Harbor Provisions of the

Private Securities Litigation Reform Act of 1995

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



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

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



|Item 4. | Controls and Procedures
|------- | -----------------------

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



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

The information
required by this item is included in Note 9 of Notes to Consolidated Financial Statements entitled Legal Proceedings and Contingent Liabilities presented in Part I, Item 1 of this report and incorporated herein by reference.



|Item 1A. | Risk Factors
|-------- | ------------

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



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

Shares of our common stock, $1 par value, are traded on the New York Stock Exchange (ticker symbol TXI). The restriction on the payment of dividends is included in Note 3 of Notes to Consolidated Financial Statements
entitled Long-Term Debt presented in Part I, Item 1 of this report and incorporated herein by reference.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

The following provides information concerning matters submitted to a vote at the Annual Meeting of Shareholders on October 21, 2008.

Proposal No. 1.Shareholders elected Sam Coats as a director of the Company for a term of office expiring at the Annual Meeting of Shareholders in 2011 with 11,322,256 shares for and
10,743,163 shares withheld. Shareholders elected Thomas R. Ransdell as a director of the Company for a term of office expiring at the Annual Meeting of Shareholders in 2011 with 11,329,410 shares for and 10,736,009 shares withheld.

Terms of office expire for the continuing directors Gordon E. Forward, Keith W. Hughes and Henry H. Mauz, Jr. in 2009 and for the
continuing directors Mel G. Brekhus, Robert D. Rogers and Ronald G. Steinhart in 2010.

Proposal No. 2.Shareholders approved the selection of Ernst & Young LLP as independent auditors of the Company to audit its consolidated financial statements for fiscal year 2009 with 21,702,969 shares for, 357,857 shares against and 4,593 shares
abstained.

Proposal No. 3.Shareholders did not approve the shareholder proposal regarding the preparation of
a sustainability report with 2,039,501 shares for, 18,152,839 shares against, 929,564 shares abstained and 943,515 broker non-votes.



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------

The following exhibits are
included herein:



|     |  |                                                                                                                                                                                                                                                                                                                                                                 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K dated August 28, 1996, File No. 001-04887)                                                                                                                                                                                                                    
|     | 
|3.2  |  | By-laws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K dated April 13, 2005, File No. 001-04887)                                                                                                                                                                                                                                       
|     | 
|3.3  |  | Amended and Restated Certificate of Designations of Series B Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K
filed on November 1, 2006)                                                                                                                                                            
|     | 
|4.1  |  | Form of Rights Agreement dated as of November 1, 2006, between Texas Industries, Inc. and Mellon Investor Services, LLC (incorporated by reference to Exhibit 4.1 to Current
Report on Form 8-K filed on October 20, 2006, File No. 001-04887)                                                                                                                  
|     | 
|4.2  |  | Form of the Companys 71/4% Senior Note due 2013
(CUSIP 882491 AK9) (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)                                                                                                                                                                            
|     | 
|4.3  |  | Form of the Companys Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated June 29, 2005, File No.
001-04887)                                                                                                                                                                                                    
|     | 
|4.4  |  | Registration Rights Agreement, dated July 6, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K dated
June 29, 2005, File No. 001-04887)                                                                                                                                                
|     | 
|4.5  |  | Indenture, dated July 6, 2005, among the Company, the Guarantors and Wells Fargo, National Association, as Trustee (incorporated by reference to Exhibit 4.4 to Current Report
on Form 8-K dated June 29, 2005, File No. 001-04887)                                                                                                                             
|     | 
|4.6  |  | Form of the Companys 71/4% Senior Note due 2013
(CUSIP 882491 AM5) and Notation of Guarantee (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)                                                                                                                                                
|     | 
|4.7  |  | Form of the Companys 71/4% Senior Note due 2013
(CUSIP U88244 AC9) and Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)                                                                                                                                                
|     | 
|4.8  |  | Registration Rights Agreement, dated August 18, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report
on Form 8-K dated August 19, 2008, File No. 001-04887)                                                                                                                           
|     | 
|4.9  |  | First Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K
dated August 19, 2008, File No. 001-04887)                                                                                                                                         
|     | 
|4.10 |  | Second Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.5 to Current Report on Form 8-K
dated August 19, 2008, File No. 001-04887)                                                                                                                                        
|     | 
|10.1 |  | Purchase Agreement, dated June 29, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated June 29,
2005, File No. 001-04887)                                                                                                                                                         
|     | 
|10.2 |  | First Amended and Restated Credit Agreement, dated August 15, 2007, among the Company, Bank of America, N.A., as Administrative Agent and lender, L/C Issuer and Swing Line
Lender, UBS Securities LLC, as Syndication Agent, and certain lenders (incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed on August 17, 2007, File No. 001-04887)
|     | 
|10.3 |  | Separation and Distribution Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.3 to Current Report on
Form 8-K dated June 29, 2005, File No. 001-04887)                                                                                                                                    



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|      |  |                                                                                                                                                                                                                                                                                                          
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4  |  | Amendment No. 1 to Separation and Distribution Agreement dated as of July 27, 2005 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated
July 27, 2005, File No. 001-04887)                                                                                                     
|      | 
|10.5  |  | Tax Sharing and Indemnification Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.4 to Current Report on
Form 8-K dated June 29, 2005, File No. 001-04887)                                                                         
|      | 
|10.6  |  | Employment Agreement of Mel G. Brekhus (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 22, 2007)                                                                                                                                                               
|      | 
|10.7  |  | Texas Industries, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 as filed May 19, 1994, File No.
033-53715)                                                                                                                                 
|      | 
|10.8  |  | Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan, as amended (incorporated by reference to Exhibit 10.9 to Quarterly Report on Form 10-Q filed on January 5, 2007)                                                                                                                           
|      | 
|10.9  |  | Form of Stock Option Agreement under Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan (incorporated by reference to Exhibit 10.10 to Annual Report on Form 10-K
filed on July 25, 2006)                                                                                                      
|      | 
|10.10 |  | Form of Non-Employee Directors Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated April 19, 2006)                                                                                                                                                 
|      | 
|10.11 |  | TXI Annual Incentive Plans-Fiscal Year 2009 (incorporated by reference to Exhibit 10.11 to Annual Report on Form 10-K filed July 11, 2008)                                                                                                                                                               
|      | 
|10.12 |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2009 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K
filed on July 25, 2006)                                                                                                        
|      | 
|10.13 |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2010 (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K
filed on July 13, 2007)                                                                                                        
|      | 
|10.14 |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2011 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K
filed on July 11, 2008)                                                                                                        
|      | 
|10.15 |  | Master Performance-Based Incentive Plan (incorporated by reference to Appendix A to definitive proxy statement filed on August 25, 2006)                                                                                                                                                                 
|      | 
|10.16 |  | Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on August 12, 2005, File No.
001-04887)                                                                                                                       
|      | 
|10.17 |  | Form of SAR Agreement for Non-Employee Directors under Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.16 to Annual Report
on Form 10-K filed on August 12, 2005, File No. 001-04887)                                                                
|      | 
|10.18 |  | Form of Amendment No. 1 to SAR Agreement for Non-Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan (incorporated by reference to Exhibit
10.6 to Current Report on Form 8-K dated April 19, 2006)                                                                      
|      | 
|10.19 |  | SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan between Texas Industries, Inc. and Mel G. Brekhus, dated June 1, 2004
(incorporated by reference to Exhibit 10.22 to Annual Report on Form 10-K filed on July 25, 2006)                            
|      | 
|10.20 |  | Amendment No. 1 to SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan, by and between Texas Industries, Inc. and Mel G.
Brekhus dated April 24, 2006 (incorporated by reference to Exhibit 10.23 to Annual Report on Form 10-K filed on July 25, 2006)
|      | 
|10.21 |  | Contract, dated September 27, 2005, between Riverside Cement Company and Oro Grande Contractors (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated
September 27, 2005, noting that portions of the exhibit were omitted pursuant to a request for confidential treatment)    



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|      |  |                                                                                                                                                                                                                                                                                                                              
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.22 |  | Deferred Compensation Plan for Directors of Texas Industries, Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 18,
2006)                                                                                                                                                          
|      | 
|10.23 |  | Form of 2005 Executive Financial Security Plan (Annuity Formula) (incorporated by reference to Exhibit 10.25 to Quarterly Report on Form 10-Q filed on January 5,
2007)                                                                                                                                                      
|      | 
|10.24 |  | Form of 2005 Executive Financial Security Plan (Lump Sum Formula) (incorporated by reference to Exhibit 10.26 to Quarterly Report on Form 10-Q filed on January 5,
2007)                                                                                                                                                     
|      | 
|10.25 |  | Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated April 19, 2006)                                                                                                                                                                                 
|      | 
|10.26 |  | Amendment No. 2 to SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan, between Texas Industries, Inc. and Mel G. Brekhus
dated July 11, 2007 (incorporated by reference to Exhibit 10.27 to Annual Report on Form 10-K filed on July 13, 2007)                            
|      | 
|10.27 |  | Contract, signed September 21, 2007, between TXI Operations, LP and Amec-Zachry Contractors (incorporated by reference to Exhibit 10.28 to Quarterly Report on Form 10-Q filed
on September 27, 2007, noting that portions of the exhibit have been omitted pursuant to a request for confidential treatment)                
|      | 
|10.28 |  | First Amendment to First Amended and Restated Credit Agreement dated as of January 28, 2008 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line
Lender, L/C Issuer and lender and other lenders (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 28, 2008)   
|      | 
|10.29 |  | Second Amendment to First Amended and Restated Credit Agreement dated as of March 20, 2008 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line
Lender, L/C Issuer and lender and other lenders (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K dated March 20, 2008)      
|      | 
|10.30 |  | Purchase Agreement dated August 7, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K
dated August 13, 2008, File No. 001-04887)                                                                                                    
|      | 
|10.31 |  | Third Amendment to First Amended and Restated Credit Agreement, dated November 21, 2008, among the Company, Bank of America, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated November 21, 2008)
|      | 
|10.32 |  | Security Agreement, dated November 21, 2008, among the Company, the Guarantors and Bank of America, N. A. (incorporated by reference to Exhibit 10.2 to Current Report on Form
8-K dated November 21, 2008)                                                                                                                  
|      | 
|12.1  |  | Computation of Ratios of Earnings to Fixed Charges                                                                                                                                                                                                                                                                           
|      | 
|15.1  |  | Letter re: Unaudited Interim Financial Information                                                                                                                                                                                                                                                                           
|      | 
|31.1  |  | Certification of Chief Executive Officer                                                                                                                                                                                                                                                                                     
|      | 
|31.2  |  | Certification of Chief Financial Officer                                                                                                                                                                                                                                                                                     
|      | 
|32.1  |  | Section 1350 Certification of Chief Executive Officer                                                                                                                                                                                                                                                                        
|      | 
|32.2  |  | Section 1350 Certification of Chief Financial Officer                                                                                                                                                                                                                                                                        

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



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##### Table of Contents

SIGNATURES

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



|                |  |                                                     
|--------------- |  | ----------------------------------------------------
|                |  | TEXAS INDUSTRIES, INC.                              
|                | 
|January 9, 2009 |  | /s/ Kenneth R. Allen                                
|                |  | Kenneth R. Allen                                    
|                |  | Vice President - Finance and Chief Financial Officer
|                |  | (Principal Financial Officer)                       
|                | 
|January 9, 2009 |  | /s/ T. Lesley Vines                                 
|                |  | T. Lesley Vines                                     
|                |  | Vice President - Corporate Controller               
|                |  | (Principal Accounting Officer)                      



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##### Table of Contents

INDEX TO EXHIBITS



|            |  |                                                                                                                                                                                                                                                                                                                                                                 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No.
|            | 
|3.1         |  | Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K dated August 28, 1996, File No. 001-04887)                                                                                                                                                                                                                    
|            | 
|3.2         |  | By-laws (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K dated April 13, 2005, File No. 001-04887)                                                                                                                                                                                                                                       
|            | 
|3.3         |  | Amended and Restated Certificate of Designations of Series B Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K
filed on November 1, 2006)                                                                                                                                                            
|            | 
|4.1         |  | Form of Rights Agreement dated as of November 1, 2006, between Texas Industries, Inc. and Mellon Investor Services, LLC (incorporated by reference to Exhibit 4.1 to Current
Report on Form 8-K filed on October 20, 2006, File No. 001-04887)                                                                                                                  
|            | 
|4.2         |  | Form of the Companys 71/4% Senior Note due 2013
(CUSIP 882491 AK9) (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)                                                                                                                                                                            
|            | 
|4.3         |  | Form of the Companys Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated June 29, 2005, File No.
001-04887)                                                                                                                                                                                                    
|            | 
|4.4         |  | Registration Rights Agreement, dated July 6, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report on Form 8-K dated
June 29, 2005, File No. 001-04887)                                                                                                                                                
|            | 
|4.5         |  | Indenture, dated July 6, 2005, among the Company, the Guarantors and Wells Fargo, National Association, as Trustee (incorporated by reference to Exhibit 4.4 to Current Report
on Form 8-K dated June 29, 2005, File No. 001-04887)                                                                                                                             
|            | 
|4.6         |  | Form of the Companys 71/4% Senior Note due 2013
(CUSIP 882491 AM5) and Notation of Guarantee (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)                                                                                                                                                
|            | 
|4.7         |  | Form of the Companys 71/4% Senior Note due 2013
(CUSIP U88244 AC9) and Notation of Guarantee (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K dated August 19, 2008, File No. 001-04887)                                                                                                                                                
|            | 
|4.8         |  | Registration Rights Agreement, dated August 18, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 4.3 to Current Report
on Form 8-K dated August 19, 2008, File No. 001-04887)                                                                                                                           
|            | 
|4.9         |  | First Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.4 to Current Report on Form 8-K
dated August 19, 2008, File No. 001-04887)                                                                                                                                         
|            | 
|4.10        |  | Second Supplemental Indenture dated August 18, 2008 among the Company, the Guarantors and the Trustee (incorporated by reference to Exhibit 4.5 to Current Report on Form 8-K
dated August 19, 2008, File No. 001-04887)                                                                                                                                        
|            | 
|10.1        |  | Purchase Agreement, dated June 29, 2005, among the Company and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated June 29,
2005, File No. 001-04887)                                                                                                                                                         
|            | 
|10.2        |  | First Amended and Restated Credit Agreement, dated August 15, 2007, among the Company, Bank of America, N.A., as Administrative Agent and lender, L/C Issuer and Swing Line
Lender, UBS Securities LLC, as Syndication Agent, and certain lenders (incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed on August 17, 2007, File No. 001-04887)
|            | 
|10.3        |  | Separation and Distribution Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.3 to Current Report on
Form 8-K dated June 29, 2005, File No. 001-04887)                                                                                                                                    



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##### Table of Contents

Index to Exhibits-(Continued)



|            |  |                                                                                                                                                                                                                                                                                                          
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No.
|            | 
|10.4        |  | Amendment No. 1 to Separation and Distribution Agreement dated as of July 27, 2005 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated
July 27, 2005, File No. 001-04887)                                                                                                     
|            | 
|10.5        |  | Tax Sharing and Indemnification Agreement, dated July 6, 2005, between the Company and Chaparral Steel Company (incorporated by reference to Exhibit 10.4 to Current Report on
Form 8-K dated June 29, 2005, File No. 001-04887)                                                                         
|            | 
|10.6        |  | Employment Agreement of Mel G. Brekhus (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 22, 2007)                                                                                                                                                               
|            | 
|10.7        |  | Texas Industries, Inc. 1993 Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 as filed May 19, 1994, File No.
033-53715)                                                                                                                                 
|            | 
|10.8        |  | Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan, as amended (incorporated by reference to Exhibit 10.9 to Quarterly Report on Form 10-Q filed on January 5, 2007)                                                                                                                           
|            | 
|10.9        |  | Form of Stock Option Agreement under Texas Industries, Inc. 2004 Omnibus Equity Compensation Plan (incorporated by reference to Exhibit 10.10 to Annual Report on Form 10-K
filed on July 25, 2006)                                                                                                      
|            | 
|10.10       |  | Form of Non-Employee Directors Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated April 19, 2006)                                                                                                                                                 
|            | 
|10.11       |  | TXI Annual Incentive Plans-Fiscal Year 2009 (incorporated by reference to Exhibit 10.11 to Annual Report on Form 10-K filed July 11, 2008)                                                                                                                                                               
|            | 
|10.12       |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2009 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K
filed on July 25, 2006)                                                                                                        
|            | 
|10.13       |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2010 (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K
filed on July 13, 2007)                                                                                                        
|            | 
|10.14       |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2011 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K
filed on July 11, 2008)                                                                                                        
|            | 
|10.15       |  | Master Performance-Based Incentive Plan (incorporated by reference to Appendix A to definitive proxy statement filed on August 25, 2006)                                                                                                                                                                 
|            | 
|10.16       |  | Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on August 12, 2005, File No.
001-04887)                                                                                                                       
|            | 
|10.17       |  | Form of SAR Agreement for Non-Employee Directors under Texas Industries, Inc. 2003 Share Appreciation Rights Plan (incorporated by reference to Exhibit 10.16 to Annual Report
on Form 10-K filed on August 12, 2005, File No. 001-04887)                                                                
|            | 
|10.18       |  | Form of Amendment No. 1 to SAR Agreement for Non-Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan (incorporated by reference to Exhibit
10.6 to Current Report on Form 8-K dated April 19, 2006)                                                                      
|            | 
|10.19       |  | SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan between Texas Industries, Inc. and Mel G. Brekhus, dated June 1, 2004
(incorporated by reference to Exhibit 10.22 to Annual Report on Form 10-K filed on July 25, 2006)                            
|            | 
|10.20       |  | Amendment No. 1 to SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan, by and between Texas Industries, Inc. and Mel G.
Brekhus dated April 24, 2006 (incorporated by reference to Exhibit 10.23 to Annual Report on Form 10-K filed on July 25, 2006)



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##### Table of Contents

Index to Exhibits-(Continued)



|            |  |                                                                                                                                                                                                                                                                                                                              
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No.
|            | 
|10.21       |  | Contract, dated September 27, 2005, between Riverside Cement Company and Oro Grande Contractors (incorporated by reference to Exhibit 10.1 to Current Report on Form
8-K dated September 27, 2005, noting that portions of the exhibit were omitted pursuant to a request for confidential treatment)                        
|            | 
|10.22       |  | Deferred Compensation Plan for Directors of Texas Industries, Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 18,
2006)                                                                                                                                                          
|            | 
|10.23       |  | Form of 2005 Executive Financial Security Plan (Annuity Formula) (incorporated by reference to Exhibit 10.25 to Quarterly Report on Form 10-Q filed on January 5, 2007)                                                                                                                                                      
|            | 
|10.24       |  | Form of 2005 Executive Financial Security Plan (Lump Sum Formula) (incorporated by reference to Exhibit 10.26 to Quarterly Report on Form 10-Q filed on January 5, 2007)                                                                                                                                                     
|            | 
|10.25       |  | Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated April 19, 2006)                                                                                                                                                                                 
|            | 
|10.26       |  | Amendment No. 2 to SAR Agreement for Employee Directors Under Texas Industries, Inc. 2003 Stock Appreciation Rights Plan, between Texas Industries, Inc. and Mel G. Brekhus
dated July 11, 2007 (incorporated by reference to Exhibit 10.27 to Annual Report on Form 10-K filed on July 13, 2007)                            
|            | 
|10.27       |  | Contract, signed September 21, 2007, between TXI Operations, LP and Amec-Zachry Contractors (incorporated by reference to Exhibit 10.28 to Quarterly Report on Form 10-Q
filed on September 27, 2007, noting that portions of the exhibit have been omitted pursuant to a request for confidential treatment)                
|            | 
|10.28       |  | First Amendment to First Amended and Restated Credit Agreement dated as of January 28, 2008 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line
Lender, L/C Issuer and lender and other lenders (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated January 28, 2008)   
|            | 
|10.29       |  | Second Amendment to First Amended and Restated Credit Agreement dated as of March 20, 2008 among the Company, Bank of America, N.A., as Administrative Agent, Swing Line
Lender, L/C Issuer and lender and other lenders (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K dated March 20, 2008)      
|            | 
|10.30       |  | Purchase Agreement dated August 7, 2008, among the Company, the Guarantors and the Initial Purchasers (incorporated by reference to Exhibit 10.1 to Current Report on Form
8-K dated August 13, 2008, File No. 001-04887)                                                                                                    
|            | 
|10.31       |  | Third Amendment to First Amended and Restated Credit Agreement, dated November 21, 2008, among the Company, Bank of America, N.A., as Administrative Agent, L/C Issuer and
Swing Line Lender, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated November 21, 2008)
|            | 
|10.32       |  | Security Agreement, dated November 21, 2008, among the Company, the Guarantors and Bank of America, N. A. (incorporated by reference to Exhibit 10.2 to Current Report on
Form 8-K dated November 21, 2008)                                                                                                                  
|            | 
|12.1        |  | Computation of Ratios of Earnings to Fixed Charges                                                                                                                                                                                                                                                                           
|            | 
|15.1        |  | Letter re: Unaudited Interim Financial Information                                                                                                                                                                                                                                                                           
|            | 
|31.1        |  | Certification of Chief Executive Officer                                                                                                                                                                                                                                                                                     
|            | 
|31.2        |  | Certification of Chief Financial Officer                                                                                                                                                                                                                                                                                     
|            | 
|32.1        |  | Section 1350 Certification of Chief Executive Officer                                                                                                                                                                                                                                                                        
|            | 
|32.2        |  | Section 1350 Certification of Chief Financial Officer                                                                                                                                                                                                                                                                        



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