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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 February 28, 2007

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 ofIncorporation or Organization) |  | (IRS Employer Identification No.)
|                                                              | 
|1341 West Mockingbird Lane, Suite 700W, Dallas, Texas         |  | 75247-6913                       
|(Address of Principal Executive Offices)                      |  | (Zip Code)                       

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

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

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

Large Accelerated
Filer  x            Accelerated Filer ̈Non-Accelerated Filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes ̈No  x

There were 27,308,059 shares of the Registrants Common Stock, $1.00 par value, outstanding as of March 26, 2007.



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INDEX

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                              |  |                                                                                                                          |  |     
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ----
|                              |  |                                                                                                                          |  | Page
|PART I. FINANCIAL INFORMATION |  |                                                                                                                         
|                              |  |                                                                                                                         
|Item 1.                       |  | Financial Statements                                                                                                     |  |     
|                              |  |                                                                                                                         
|                              |  | Consolidated Balance Sheets  February 28, 2007 and May 31, 2006                                                         |  | 3   
|                              |  |                                                                                                                         
|                              |  | Consolidated Statements of Operations  three months and nine months ended February 28, 2007 and February 28, 2006       |  | 4   
|                              |  |                                                                                                                         
|                              |  | Consolidated Statements of Cash Flows  nine months ended February 28, 2007 and February 28, 2006                        |  | 5   
|                              |  |                                                                                                                         
|                              |  | Notes to Consolidated Financial Statements                                                                               |  | 6   
|                              |  |                                                                                                                         
|                              |  | Report of Independent Registered Public Accounting Firm                                                                  |  | 27  
|                              |  |                                                                                                                         
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                    |  | 28  
|                              |  |                                                                                                                         
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk  the information required by this item is included in Item 2 |  |    
|                              |  |                                                                                                                         
|Item 4.                       |  | Controls and Procedures                                                                                                  |  | 33  
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                         
|                              |  |                                                                                                                         
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                              |  | 34  
|                              |  |                                                                                                                         
|Item 6.                       |  | Exhibits                                                                                                                 |  | 34  
|                              | 
|SIGNATURES                    |  |                                                                                                                         



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CONSOLIDATED BALANCE SHEETS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                                           |  |                            |           |   |             |   |           |  
|------------------------------------------ |  | -------------------------- | --------- | - | ----------- | - | --------- | -
|In thousands                               |  | Unaudited February 28,2007 |           |   | May 31,2006 |  
|ASSETS                                     |  |                            |           |   |             |   |           |  
|CURRENT ASSETS                             |  |                            |           |   |             |   |           |  
|Cash and cash equivalents                  |  | $                          | 20,365    |   |             | $ | 84,139    |  
|Short-term investments                     |  |                            |          |   |             |   | 50,606    |  
|Receivables  net                          |  |                            | 126,527   |   |             |   | 132,849   |  
|Inventories                                |  |                            | 114,751   |   |             |   | 102,052   |  
|Deferred income taxes and prepaid expenses |  |                            | 18,779    |   |             |   | 33,599    |  
|                                           |  |                            |           |   |             |   |           |  
|TOTAL CURRENT ASSETS                       |  |                            | 280,422   |   |             |   | 403,245   |  
|OTHER ASSETS                               |  |                            |           |   |             |   |           |  
|Goodwill                                   |  |                            | 58,395    |   |             |   | 58,395    |  
|Real estate and investments                |  |                            | 132,884   |   |             |   | 125,913   |  
|Deferred charges and intangibles           |  |                            | 16,097    |   |             |   | 22,706    |  
|                                           |  |                            |           |   |             |   |           |  
|                                           |  |                            | 207,376   |   |             |   | 207,014   |  
|PROPERTY, PLANT AND EQUIPMENT              |  |                            |           |   |             |   |           |  
|Land and land improvements                 |  |                            | 132,081   |   |             |   | 128,056   |  
|Buildings                                  |  |                            | 41,767    |   |             |   | 42,069    |  
|Machinery and equipment                    |  |                            | 712,048   |   |             |   | 688,255   |  
|Construction in progress                   |  |                            | 298,682   |   |             |   | 95,094    |  
|                                           |  |                            |           |   |             |   |           |  
|                                           |  |                            | 1,184,578 |   |             |   | 953,474   |  
|Less depreciation and depletion            |  |                            | 511,406   |   |             |   | 483,163   |  
|                                           |  |                            |           |   |             |   |           |  
|                                           |  |                            | 673,172   |   |             |   | 470,311   |  
|                                           |  |                            |           |   |             |   |           |  
|                                           |  | $                          | 1,160,970 |   |             | $ | 1,080,570 |  
|                                           |  |                            |           |   |             |   |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY       |  |                            |           |   |             |   |           |  
|CURRENT LIABILITIES                        |  |                            |           |   |             |   |           |  
|Accounts payable                           |  | $                          | 74,810    |   |             | $ | 63,581    |  
|Accrued interest, wages and other items    |  |                            | 45,354    |   |             |   | 55,059    |  
|Current portion of long-term debt          |  |                            | 1,475     |   |             |   | 681       |  
|                                           |  |                            |           |   |             |   |           |  
|TOTAL CURRENT LIABILITIES                  |  |                            | 121,639   |   |             |   | 119,321   |  
|LONG-TERM DEBT                             |  |                            | 250,358   |   |             |   | 251,505   |  
|CONVERTIBLE SUBORDINATED DEBENTURES        |  |                            | 92,370    |   |             |   | 159,725   |  
|DEFERRED INCOME TAXES AND OTHER CREDITS    |  |                            | 87,987    |   |             |   | 76,955    |  
|SHAREHOLDERS EQUITY                       |  |                            |           |   |             |   |           |  
|Common stock, $1 par value                 |  |                            | 27,157    |   |             |   | 25,863    |  
|Additional paid-in capital                 |  |                            | 401,139   |   |             |   | 334,054   |  
|Retained earnings                          |  |                            | 229,559   |   |             |   | 169,696   |  
|Cost of common stock in treasury           |  |                            | (44,783   | ) |             |   | (52,093   | )
|Pension liability adjustment               |  |                            | (4,456    | ) |             |   | (4,456    | )
|                                           |  |                            |           |   |             |   |           |  
|                                           |  |                            | 608,616   |   |             |   | 473,064   |  
|                                           |  |                            |           |   |             |   |           |  
|                                           |  | $                          | 1,160,970 |   |             | $ | 1,080,570 |  
|                                           |  |                            |           |   |             |   |           |  

See notes to consolidated financial statements.



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CONSOLIDATED STATEMENTS OF OPERATIONS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                             |  | Three months ended February 28, |         |   | Nine months ended February 28, |  
|In thousands except per share                                |  | 2007                            |         |   | 2006                           |   |         | 2007 |  |   | 2006    |  
|NET SALES                                                    |  | $                               | 216,771 |   |                                | $ | 216,763 |      |  | $ | 734,255 |   |  | $ | 679,411 |  
|Cost of products sold                                        |  |                                 | 169,702 |   |                                |   | 179,397 |      |  |   | 569,097 |   |  |   | 571,553 |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|GROSS PROFIT                                                 |  |                                 | 47,069  |   |                                |   | 37,366  |      |  |   | 165,158 |   |  |   | 107,858 |  
|                                                             |  |                                 |         |  
|Selling, general and administrative                          |  |                                 | 27,476  |   |                                |   | 20,487  |      |  |   | 78,681  |   |  |   | 58,547  |  
|Interest                                                     |  |                                 | 3,289   |   |                                |   | 7,340   |      |  |   | 13,474  |   |  |   | 24,455  |  
|Loss on debt retirements and spin-off charges                |  |                                 | 26      |   |                                |   |        |      |  |   | 26      |   |  |   | 112,391 |  
|Other income                                                 |  |                                 | (3,273  | ) |                                |   | (5,274  | )    |  |   | (31,624 | ) |  |   | (17,576 | )
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|                                                             |  |                                 | 27,518  |   |                                |   | 22,553  |      |  |   | 60,557  |   |  |   | 177,817 |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |  |                                 | 19,551  |   |                                |   | 14,813  |      |  |   | 104,601 |   |  |   | (69,959 | )
|Income taxes (benefit)                                       |  |                                 | 6,838   |   |                                |   | 3,502   |      |  |   | 33,805  |   |  |   | (27,440 | )
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|INCOME (LOSS) FROM CONTINUING OPERATIONS                     |  |                                 | 12,713  |   |                                |   | 11,311  |      |  |   | 70,796  |   |  |   | (42,519 | )
|Income from discontinued operations  net of income taxes    |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   | 8,691   |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|NET INCOME (LOSS)                                            |  | $                               | 12,713  |   |                                | $ | 11,311  |      |  | $ | 70,796  |   |  | $ | (33,828 | )
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Basic earnings (loss) per share                              |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations                     |  | $                               | .52     |   |                                | $ | .49     |      |  | $ | 2.93    |   |  | $ | (1.85   | )
|Income from discontinued operations                          |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   | .38     |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                                            |  | $                               | .52     |   |                                | $ | .49     |      |  | $ | 2.93    |   |  | $ | (1.47   | )
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Diluted earnings (loss) per share                            |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations                     |  | $                               | .50     |   |                                | $ | .47     |      |  | $ | 2.71    |   |  | $ | (1.85   | )
|Income from discontinued operations                          |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   | .38     |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                                            |  | $                               | .50     |   |                                | $ | .47     |      |  | $ | 2.71    |   |  | $ | (1.47   | )
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Average shares outstanding                                   |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Basic                                                        |  |                                 | 24,438  |   |                                |   | 23,117  |      |  |   | 24,133  |   |  |   | 22,986  |  
|Diluted                                                      |  |                                 | 27,771  |   |                                |   | 27,628  |      |  |   | 27,629  |   |  |   | 22,986  |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Cash dividends per share                                     |  | $                               | .075    |   |                                | $ | .075    |      |  | $ | .225    |   |  | $ | .225    |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  

See notes to consolidated financial statements.



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CONSOLIDATED STATEMENTS OF CASH FLOWS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                                                                                               |  |                                |          |   |      |   |          |  
|---------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | -------- | -
|                                                                                               |  | Nine months ended February 28, |         
|In thousands                                                                                   |  | 2007                           |          |   | 2006 |  
|OPERATING ACTIVITIES                                                                           |  |                                |          |   |      |   |          |  
|Net income (loss)                                                                              |  | $                              | 70,796   |   |      | $ | (33,828  | )
|Adjustments to reconcile net income (loss) to cash provided by continuing operating activities |  |                                |          |   |      |   |          |  
|Income from discontinued operations                                                            |  |                                |         |   |      |   | (8,691   | )
|Loss on debt retirements                                                                       |  |                                | 26       |   |      |   | 107,006  |  
|Gain on asset disposals                                                                        |  |                                | (570     | ) |      |   | (9,277   | )
|Depreciation, depletion and amortization                                                       |  |                                | 33,856   |   |      |   | 33,373   |  
|Deferred income taxes (benefit)                                                                |  |                                | 16,830   |   |      |   | (26,632  | )
|Stock-based compensation expense                                                               |  |                                | 10,268   |   |      |   | 6,484    |  
|Excess tax benefits from stock-based compensation                                              |  |                                | (1,647   | ) |      |   |         |  
|Other  net                                                                                    |  |                                | 1,533    |   |      |   | (1,277   | )
|Changes in operating assets and liabilities                                                    |  |                                |          |   |      |   |          |  
|Receivables  net                                                                              |  |                                | 4,540    |   |      |   | 7,239    |  
|Inventories                                                                                    |  |                                | (12,259  | ) |      |   | (20,262  | )
|Prepaid expenses                                                                               |  |                                | 3,910    |   |      |   | 377      |  
|Accounts payable and accrued liabilities                                                       |  |                                | (1,532   | ) |      |   | (512     | )
|                                                                                               |  |                                |          |   |      |   |          |  
|Cash provided by continuing operating activities                                               |  |                                | 125,751  |   |      |   | 54,000   |  
|Cash used by discontinued operating activities                                                 |  |                                |         |   |      |   | (7,704   | )
|                                                                                               |  |                                |          |   |      |   |          |  
|Net cash provided by operating activities                                                      |  |                                | 125,751  |   |      |   | 46,296   |  
|INVESTING ACTIVITIES                                                                           |  |                                |          |   |      |   |          |  
|Capital expenditures  expansions                                                              |  |                                | (170,217 | ) |      |   | (36,061  | )
|Capital expenditures  other                                                                   |  |                                | (66,222  | ) |      |   | (27,512  | )
|Proceeds from asset disposals                                                                  |  |                                | 961      |   |      |   | 14,509   |  
|Purchases of short-term investments                                                            |  |                                | (8,500   | ) |      |   | (48,500  | )
|Sales of short-term investments                                                                |  |                                | 59,000   |   |      |   |         |  
|Investments in life insurance contracts                                                        |  |                                | (5,288   | ) |      |   | (4,071   | )
|Other  net                                                                                    |  |                                | (125     | ) |      |   | (2,015   | )
|                                                                                               |  |                                |          |   |      |   |          |  
|Cash used by continuing investing activities                                                   |  |                                | (190,391 | ) |      |   | (103,650 | )
|Cash used by discontinued investing activities                                                 |  |                                |         |   |      |   | (2,757   | )
|                                                                                               |  |                                |          |   |      |   |          |  
|Net cash used by investing activities                                                          |  |                                | (190,391 | ) |      |   | (106,407 | )
|FINANCING ACTIVITIES                                                                           |  |                                |          |   |      |   |          |  
|Long-term borrowings                                                                           |  |                                |         |   |      |   | 250,000  |  
|Debt retirements                                                                               |  |                                | (1,285   | ) |      |   | (600,353 | )
|Debt issuance costs                                                                            |  |                                |         |   |      |   | (7,356   | )
|Debt retirement costs                                                                          |  |                                | (4       | ) |      |   | (96,029  | )
|Stock option exercises                                                                         |  |                                | 5,976    |   |      |   | 7,028    |  
|Excess tax benefits from stock-based compensation                                              |  |                                | 1,647    |   |      |   |         |  
|Common dividends paid                                                                          |  |                                | (5,468   | ) |      |   | (5,172   | )
|                                                                                               |  |                                |          |   |      |   |          |  
|Cash provided (used) by continuing financing activities                                        |  |                                | 866      |   |      |   | (451,882 | )
|Cash provided by discontinued financing activities                                             |  |                                |         |   |      |   | 340,587  |  
|                                                                                               |  |                                |          |   |      |   |          |  
|Net cash provided (used) by financing activities                                               |  |                                | 866      |   |      |   | (111,295 | )
|                                                                                               |  |                                |          |   |      |   |          |  
|Decrease in cash and cash equivalents                                                          |  |                                | (63,774  | ) |      |   | (171,406 | )
|Cash and cash equivalents at beginning of period                                               |  |                                | 84,139   |   |      |   | 251,600  |  
|                                                                                               |  |                                |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                                     |  | $                              | 20,365   |   |      | $ | 80,194   |  
|                                                                                               |  |                                |          |   |      |   |          |  

See notes to consolidated financial statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Texas Industries, Inc. and subsidiaries is a leading supplier of heavy
building materials in the United States through three business segments: cement, aggregates and consumer products, which produce and sell cement; stone, sand and gravel and expanded shale and clay aggregate; and ready-mix concrete and packaged
concrete and related products, respectively, from facilities concentrated primarily in Texas, Louisiana and California.

SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended February 28, 2007,
are not necessarily indicative of the results that may be expected for the year ended May 31, 2007. 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, 2006. When used in these notes the terms Company, we, us or our mean Texas Industries, Inc. and subsidiaries unless the context indicates otherwise.

Principles of Consolidation. The consolidated financial statements include the accounts of Texas Industries, Inc. and all
subsidiaries except a subsidiary trust in which we have a variable interest but are not the primary beneficiary. Discontinued operations relate to our former steel segment which we spun-off in the form of a pro-rata, tax-free dividend to our
shareholders on July 29, 2005. Unless otherwise indicated, all amounts in the accompanying notes relate to our continuing operations. 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 and investment grade commercial paper
issued by major corporations and financial institutions.

Short-Term Investments.Our short-term investments consisted of investment
grade auction rate securities with an active resale market to ensure liquidity and the ability to be readily converted into cash to fund current operations, or satisfy other cash requirements as needed. These securities had legal maturities ranging
from 19 to 38 years, but had their interest rates reset at predetermined intervals, typically less than 30 days, through an auction process. These securities were expected to be sold within one year, regardless of their legal maturity date.
Accordingly, these securities were classified as available-for-sale and as current assets in the consolidated balance sheet. The auction rate securities were stated at cost plus accrued interest which approximated fair value. Net unrealized gains
and losses, net of deferred taxes, were not significant due to the short duration between interest rate reset dates. Purchase and sale activity of short-term investments is presented as cash flows from investing activities in the consolidated
statements of cash flows.

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.



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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.

Property, plant and equipment is recorded at cost. Provisions for depreciation are computed generally using the straight-line method. Provisions for depletion of mineral deposits are computed on the basis of the
estimated quantity of recoverable raw materials. Useful lives for our primary operating facilities range from 10 to 25 years. Maintenance and repairs are charged to expense as incurred.

Goodwill. Management tests goodwill for impairment at least annually by reporting unit. If the carrying amount of the goodwill exceeds its fair
value, an impairment loss is recognized. In applying a fair-value-based test, estimates are made of the expected future cash flows to be derived from the reporting unit. Similar to the review for impairment of other long-lived assets, the resulting
fair value determination is significantly impacted by estimates of future prices for our products, capital needs, economic trends and other factors. Goodwill having a carrying value of $58.4 million at February 28, 2007 and May 31, 2006
resulted from the acquisition of Riverside Cement Company and is identified with our California cement operations. The fair value of the reporting unit exceeds its carrying value.

Real Estate and Investments.Surplus real estate and real estate acquired for development of high quality industrial, office or multi-use parks
totaled $6.5 million at February 28, 2007 and $7.3 million at May 31, 2006.

Investments are composed primarily of life insurance
contracts purchased in connection with certain of our benefit plans. The contracts, recorded at their net cash surrender value, totaled $104.2 million (net of distributions of $1.3 million) at February 28, 2007 and $96.3 million (net of
distributions of $1.3 million) at May 31, 2006.

Investments also include $22.0 million at February 28, 2007 and May 31,
2006, representing the long-term portion of a note received in connection with the sale of land associated with our expanded shale and clay operations in south Texas. On November 30, 2006, the maturity date of the note was extended to
May 31, 2008.

Deferred Charges and Intangibles.Deferred charges are composed primarily of debt issuance costs that totaled
$7.8 million at February 28, 2007 and $10.3 million at May 31, 2006. The costs are amortized over the term of the related debt.

Intangibles are composed of non-compete agreements and other intangibles with finite lives being amortized on a straight-line basis over periods of 7 to 15 years. Their carrying value, adjusted for write-offs, totaled $1.2 million (net of
accumulated amortization of $3.2 million) at February 28, 2007 and $1.4 million (net of accumulated amortization of $3.0 million) at May 31, 2006. Amortization expense incurred was $200,000 in the nine-month period ended February 28,
2007 and $300,000 in the nine-month period ended February 28, 2006. Estimated amortization expense for the five succeeding years is approximately $300,000 for 2008 through 2010, $200,000 for 2011 and $100,000 for 2012.

Other Credits.Other credits totaled $62.6 million at February 28, 2007 and $55.3 million at May 31, 2006, and are composed primarily of
liabilities related to our retirement plans, deferred compensation agreements and asset retirement obligations.

Asset Retirement
Obligations.Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations, which applies to legal obligations associated with the retirement of long-lived assets, requires
that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the
associated asset and this additional carrying amount is depreciated over the life of the asset. 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.



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Changes in asset retirement obligations are as follows:



|                               |  |                                |       |   |      |   |       |  
|------------------------------ |  | ------------------------------ | ----- | - | ---- | - | ----- | -
|                               |  | Nine months ended February 28, |      
|In thousands                   |  | 2007                           |       |   | 2006 |  
|Balance at beginning of period |  | $                              | 4,346 |   |      | $ | 4,655 |  
|Additions                      |  |                                | 811   |   |      |   | 5     |  
|Accretion expense              |  |                                | 282   |   |      |   | 246   |  
|Settlements                    |  |                                | (550  | ) |      |   | (585  | )
|                               |  |                                |       |   |      |   |       |  
|Balance at end of period       |  | $                              | 4,889 |   |      | $ | 4,321 |  
|                               |  |                                |       |   |      |   |       |  

Pension Liability Adjustment.The pension liability adjustment to shareholders equity
totaled $4.5 million (net of tax of $2.5 million) at February 28, 2007 and May 31, 2006. The adjustment relates to a defined benefit retirement plan covering approximately 600 employees and retirees of our California cement subsidiary.
Comprehensive income or loss consists of net income or loss and the pension liability adjustment to shareholders equity. Comprehensive income (loss) was the same as net income (loss) for the three-month and nine-month periods ended
February 28, 2007 and 2006.

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.The governments of the U.S. and Mexico entered into the U.S.-Mexico Agreement on Cement, which settled the 16-year dispute over the
U.S. antidumping duty order on imports from Mexico. Pursuant to that agreement and a related agreement among the importers of cement from Mexico and certain producers in the U.S., including us, 50% of the cash deposits of estimated antidumping
duties collected from importers of Mexican cement were distributed to the U.S. producers. Other income in the nine-month period ended February 28, 2007 includes $19.8 million, which represents substantially all of the distributions to
which we are entitled pursuant to these agreements.

Other income in the nine-month period ended February 2006 includes a gain of $3.8
million resulting from the sale of certain investment assets.

Routine sales of surplus operating assets and real estate resulted in gains
of $300,000 and $3.0 million in the three-month periods ended February 28, 2007 and 2006, respectively, and $2.9 million and $7.6 million in the nine-month periods ended February 28, 2007 and 2006, respectively. Interest income totaled
$1.2 million and $1.6 million in the three-month periods ended February 28, 2007 and 2006, respectively, and $5.2 million and $4.5 million in the nine-month periods ended February 28, 2007 and 2006, respectively.

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

Earnings Per Share(EPS). Basic EPS is computed by 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 the Companys former stock awards program. The deferred compensation is denominated in shares of the Companys common stock and issued in accordance with the terms of the agreement subsequent to retirement or separation from the
Company. 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 income from continuing operations and the outstanding shares for the dilutive effect of convertible subordinated debentures, stock
options, restricted shares and awards.



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Basic and Diluted EPS are calculated as follows:



|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------------------- | ------ | ------------------------------ | ---- | - | ------ |  | - | ------ | - |  | - | ------- | -
|                                                             |  | Three-months ended February 28, |        | Nine-months ended February 28, |     
|In thousands except per share                                |  | 2007                            |        |                                | 2006 |   | 2007   |  |   | 2006   |  
|Basic earnings (loss)                                        |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Income (loss) from continuing operations                     |  | $                               | 12,713 |                                |      | $ | 11,311 |  | $ | 70,796 |   |  | $ | (42,519 | )
|Income from discontinued operations                          |  |                                 |       |                                |      |   |       |  |   |       |   |  |   | 8,691   |  
|Unvested restricted share participation                      |  |                                 | (5     | )                              |      |   |       |  |   | (24    | ) |  |   |        |  
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Basic income (loss)                                          |  | $                               | 12,708 |                                |      | $ | 11,311 |  | $ | 70,772 |   |  | $ | (33,828 | )
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Diluted earnings (loss)                                      |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Income (loss) from continuing operations                     |  | $                               | 12,713 |                                |      | $ | 11,311 |  | $ | 70,796 |   |  | $ | (42,519 | )
|Interest on convertible subordinated debentures  net of tax |  |                                 | 1,284  |                                |      |   | 1,787  |  |   | 4,138  |   |  |   |        |  
|Unvested restricted share participation                      |  |                                 | (5     | )                              |      |   |       |  |   | (24    | ) |  |   |        |  
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Diluted income (loss) from continuing operations             |  |                                 | 13,992 |                                |      |   | 13,098 |  |   | 74,910 |   |  |   | (42,519 | )
|Income from discontinued operations                          |  |                                 |       |                                |      |   |       |  |   |       |   |  |   | 8,691   |  
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Diluted income (loss)                                        |  | $                               | 13,992 |                                |      | $ | 13,098 |  | $ | 74,910 |   |  | $ | (33,828 | )
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Shares                                                       |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Weighted-average shares outstanding                          |  |                                 | 24,441 |                                |      |   | 23,089 |  |   | 24,135 |   |  |   | 22,957  |  
|Contingently issuable shares                                 |  |                                 | 7      |                                |      |   | 28     |  |   | 7      |   |  |   | 29      |  
|Unvested restricted shares                                   |  |                                 | (10    | )                              |      |   |       |  |   | (9     | ) |  |   |        |  
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Basic weighted-average shares                                |  |                                 | 24,438 |                                |      |   | 23,117 |  |   | 24,133 |   |  |   | 22,986  |  
|                                                             |  |                                 |        |                               
|Convertible subordinated debentures                          |  |                                 | 2,785  |                                |      |   | 3,897  |  |   | 3,003  |   |  |   |        |  
|Stock option, restricted share and award dilution            |  |                                 | 548    |                                |      |   | 614    |  |   | 493    |   |  |   |        |  
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Diluted weighted-average shares*                             |  |                                 | 27,771 |                                |      |   | 27,628 |  |   | 27,629 |   |  |   | 22,986  |  
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Basic earnings (loss) per share                              |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Income (loss) from continuing operations                     |  | $                               | .52    |                                |      | $ | .49    |  | $ | 2.93   |   |  | $ | (1.85   | )
|Income from discontinued operations                          |  |                                 |       |                                |      |   |       |  |   |       |   |  |   | .38     |  
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Net income (loss)                                            |  | $                               | .52    |                                |      | $ | .49    |  | $ | 2.93   |   |  | $ | (1.47   | )
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Diluted earnings (loss) per share                            |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Income (loss) from continuing operations                     |  | $                               | .50    |                                |      | $ | .47    |  | $ | 2.71   |   |  | $ | (1.85   | )
|Income from discontinued operations                          |  |                                 |       |                                |      |   |       |  |   |       |   |  |   | .38     |  
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Net income (loss)                                            |  | $                               | .50    |                                |      | $ | .47    |  | $ | 2.71   |   |  | $ | (1.47   | )
|                                                             |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|* Shares excluded due to antidilutive effect                 |  |                                 |        |                                |      |   |        |  |   |        |   |  |   |         |  
|Convertible subordinated debentures                          |  |                                 |       |                                |      |   |       |  |   |       |   |  |   | 3,897   |  
|Stock options, restricted shares and awards                  |  |                                 |       |                                |      |   |       |  |   | 73     |   |  |   | 731     |  



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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. We use the average stock price on the date of grant to determine the fair value of restricted stock awards granted. The impact of recognizing compensation expense related to
stock options using the fair value recognition provisions of SFAS No. 123R for the three-month period ended February 28, 2007 was $700,000 (net of tax benefit of $200,000) or $.03 per basic share and $.03 per diluted share, and for the
nine-month period ended February 28, 2007 was $2.0 million (net of tax benefit of $400,000) or $.08 per basic share and $.07 per diluted share. The results for periods prior to June 1, 2006 have not been restated.

SFAS No. 123R also requires that the benefits associated with tax deductions in excess of recognized compensation cost be reported as a financing
cash flow, rather than as an operating cash flow as previously required. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after the effective date. These future amounts can not be estimated,
because they depend on, among other things, when employees exercise stock options. For the nine-month period ended February 28, 2007 excess tax benefits recognized in financing cash flows were $1.6 million.

Prior to June 1, 2006, we accounted for employee stock options using the intrinsic value method prescribed by APB Opinion No. 25,
Accounting for Stock Issued to Employees as allowed by SFAS No. 123. Generally, no expense was recognized related to our stock options under this method because the exercise price of each option was set at the fair market value of
the underlying common stock on the date the option was granted.

In accordance with SFAS No. 123, we disclosed the compensation cost
related to our stock options based on the estimated fair value at the date of grant. All options were granted with graded vesting 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 with forfeitures recognized as they occurred. The fair value of each option grant was estimated on the date of grant for purposes of the pro forma disclosures using the Black-Scholes option-pricing
model. During the nine-month period ended February 28, 2006, the weighted-average fair value of options granted was $20.46 based on weighted average assumptions for dividend yield of .58%, volatility factor of .338, risk-free interest rate of
4.31% and expected life in years of 6.4.

In addition to grants under our stock option plans, we have provided stock-based compensation to
employees and directors under stock appreciation rights contracts, deferred compensation agreements, restricted stock payments and a former stock awards program. Stock compensation expense related to these grants was included in the determination of
net income as reported in the financial statements over the vesting periods of the related grants.

If we had applied the fair value
recognition provision of SFAS No. 123, our net income (loss) and earnings (loss) per share would have been adjusted to the following pro forma amounts for the three-month and nine-month periods ended February 28, 2006.



|                                                                                                          |  |                                 |        |   |                                |   |         |  
|--------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ | - | ------------------------------ | - | ------- | -
|                                                                                                          |  | Three-months ended February 28, |        |   | Nine-months ended February 28, |  
|In thousands except per share                                                                             |  | 2006                            |        |   | 2006                           |  
|Net income (loss)                                                                                         |  |                                 |        |   |                                |   |         |  
|As reported                                                                                               |  | $                               | 11,311 |   |                                | $ | (33,828 | )
|Plus: stock-based compensation included in the determination of net income (loss) as reported, net of tax |  |                                 | 1,748  |   |                                |   | 4,215   |  
|Less: fair value of stock-based compensation, net of tax                                                  |  |                                 | (2,424 | ) |                                |   | (4,454  | )
|                                                                                                          |  |                                 |        |   |                                |   |         |  
|Pro forma                                                                                                 |  | $                               | 10,635 |   |                                | $ | (34,067 | )
|                                                                                                          |  |                                 |        |   |                                |   |         |  
|Basic earnings (loss) per share                                                                           |  |                                 |        |   |                                |   |         |  
|As reported                                                                                               |  | $                               | .49    |   |                                | $ | (1.47   | )
|Pro forma                                                                                                 |  |                                 | .46    |   |                                |   | (1.48   | )
|Diluted earnings (loss) per share                                                                         |  |                                 |        |   |                                |   |         |  
|As reported                                                                                               |  | $                               | .47    |   |                                | $ | (1.47   | )
|Pro forma                                                                                                 |  |                                 | .45    |   |                                |   | (1.48   | )



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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 date of
grant and expire ten years later. 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 fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model. During the nine-month period ended February 28, 2007, the weighted-average fair value of options granted
was $27.61 based on weighted average assumptions for dividend yield of .43%, volatility factor of .330, risk-free interest rate of 4.78% and expected life in years of 6.0. 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. Expected volatility is based on an analysis of historical volatility of our common stock. Risk-free interest rates are determined using the implied yield currently available for
U.S. treasury bonds and notes with a remaining term equal to the expected life of the options. Expected life of the options is determined based on the historical share option exercise experience of our optionees.

A summary of option transactions for the nine-month period ended February 28, 2007, follows:



|                                 |  |                     |   |  |                               |      
|-------------------------------- |  | ------------------- | - |  | ----------------------------- | -----
|                                 |  | Shares Under Option |   |  | Weighted-Average Option Price
|Outstanding at May 31, 2006      |  | 1,583,093           |   |  | $                             | 29.48
|Granted                          |  | 203,350             |   |  |                               | 70.18
|Exercised                        |  | (280,549            | ) |  |                               | 22.94
|Canceled                         |  | (6,201              | ) |  |                               | 39.01
|                                 |  |                     |   |  |                               |      
|Outstanding at February 28, 2007 |  | 1,499,693           |   |  | $                             | 36.19
|                                 |  |                     |   |  |                               |      
|Exercisable at February 28, 2007 |  | 769,197             |   |  | $                             | 28.12
|                                 |  |                     |   |  |                               |      

The following table summarizes information about stock options outstanding as of February 28,
2007.



|                                         |  |                          |         |                 |   |                 |  |   |        
|---------------------------------------- |  | ------------------------ | ------- | --------------- | - | --------------- |  | - | -------
|                                         |  | Range of Exercise Prices
|                                         |  | $16.04 - $27.85          |         | $31.15 - $38.34 |   | $45.86 - $70.18
|Options outstanding                      |  |                          |         |                 |   |                 |  |   |        
|Shares outstanding                       |  |                          | 663,420 |                 |   | 255,097         |  |   | 581,176
|Weighted-average remaining life in years |  |                          | 5.26    |                 |   | 2.26            |  |   | 8.94   
|Weighted-average exercise price          |  | $                        | 19.24   |                 | $ | 33.98           |  | $ | 56.51  
|Options exercisable                      |  |                          |         |                 |   |                 |  |   |        
|Shares exercisable                       |  |                          | 433,198 |                 |   | 243,098         |  |   | 92,901 
|Weighted-average exercise price          |  | $                        | 20.63   |                 | $ | 33.80           |  | $ | 48.14  

Outstanding options expire on various dates to January 17, 2017. We have reserved 1,845,578
shares for future awards under the 2004 Plan.

As of February 28, 2007, the aggregate intrinsic value (the difference in the closing
market price of our common stock of $79.21 and the exercise price to be paid by the optionee) of stock options outstanding was $64.5 million. The aggregate intrinsic value of exercisable stock options at that date was $39.3 million. During the
three-month and nine-month periods ended February 28, 2007, the total intrinsic value of 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 $9.0 million and $11.8 million, respectively.

As of February 28, 2007, outstanding stock appreciation rights totaled 158,645
shares, deferred compensation agreements payable in cash totaled 98,337 shares, deferred compensation agreements payable in common stock totaled 5,707 shares and stock awards totaled 9,514 shares.



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As of February 28, 2007, $13.9 million of total unrecognized compensation cost related to stock
options, stock appreciation rights contracts, restricted stock grants and stock awards is expected to be recognized. We currently expect to recognize approximately $5.6 million of this stock-based compensation expense in 2008, $3.3 million in 2009,
$2.5 million in 2010, $1.6 million in 2011, $800,000 in 2012 and an aggregate of $100,000 thereafter.

Total charges for stock-based
compensation were $4.0 million and $2.7 million in the three-month periods ended February 28, 2007 and 2006, respectively, and $10.3 million and $6.5 million in the nine-month periods ended February 28, 2007 and 2006, respectively.

Inventory Costs.On June 1, 2006, we adopted SFAS No. 151, Inventory Costs, an amendment of ARB No. 43,
Chapter 4. This standard clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted material should be expensed as incurred and not included in overhead. In addition, this standard requires that the allocation
of fixed production overhead costs to inventory be based on the normal capacity of the production facilities. The adoption of this standard did not have an effect on our consolidated financial position or results of operations.

Accounting for Mining Stripping Costs.On June 1, 2006, we adopted, Emerging Issues Task Force Issue 04-6, Accounting for Stripping
Costs Incurred during Production in the Mining Industry, which requires that stripping costs incurred during the production phase of the mine be included in the costs of the inventory produced during the period that the stripping costs are
incurred. As of May 31, 2006, the balance of our capitalized post-production stripping costs was $7.9 million. In accordance with the transition provision of EITF 04-6, we wrote off these deferred costs, effective June 1, 2006, and
recorded a charge to retained earnings of $4.9 million, net of tax benefits of $3.0 million. We will now recognize the costs of all post-production stripping activity as a cost of the inventory produced during the period the stripping costs are
incurred. Although dependent in part on the future level of post-production stripping activity which varies from period to period, we do not expect that EITF 04-6 will have a material impact on our financial position or results of operations for
periods following adoption.

Accounting for Income Taxes.In July 2006, the Financial Accounting Standards Board issued FASB
Interpretation 48, Accounting for Uncertainty in Income Taxes, which will be effective for our Company beginning June 1, 2007. 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 are currently evaluating the impact this
interpretation will have on our consolidated financial statements.

Fair Value Measurements.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. SFAS is
effective for our Company beginning June 1, 2008. We believe that the adoption of SFAS No. 157 will not have a material impact on our consolidated financial statements.

Accounting for Defined Benefit Pension and Other Postretirement Plans.In September 2006, the Financial Accounting Standards Board issued SFAS
No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R). This standard requires that previously unrecognized actuarial
gains or losses, prior service costs or credits and transition obligations or assets be recognized generally through adjustments to accumulated other comprehensive income and credits to prepaid benefit cost or accrued benefit liability. As a result
of these adjustments, the current funded status of defined benefit pension plans and other postretirement benefit plans will be reflected in our consolidated balance sheet as of May 31, 2007.



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WORKING CAPITAL

Working capital totaled $158.8 million at February 28, 2007, compared to $283.9 million at May 31, 2006.

Receivables
consist of:



|                         |  |                  |         |             |   |        
|------------------------ |  | ---------------- | ------- | ----------- | - | -------
|In thousands             |  | February 28,2007 |         | May 31,2006
|Accounts receivable      |  | $                | 116,409 |             | $ | 122,131
|Notes receivable         |  |                  | 641     |             |   | 1,170  
|Interest receivables     |  |                  | 1,186   |             |   | 4      
|Income tax refund claims |  |                  | 8,291   |             |   | 9,544  
|                         |  |                  |         |             |   |        
|                         |  | $                | 126,527 |             | $ | 132,849
|                         |  |                  |         |             |   |        

Accounts receivable are presented net of allowances for doubtful receivables of $1.7 million at
February 28, 2007 and $1.6 million at May 31, 2006. Provisions for bad debts charged to expense were $400,000 and $500,000 in the nine-month periods ended February 28, 2007 and 2006, respectively. Uncollectible accounts written off
amounted to $300,000 and $400,000 in the nine-month periods ended February 28, 2007 and 2006, respectively. The notes receivable included in current receivables relate to routine sales of surplus operating assets and real estate.

Inventories consist of:



|                               |  |                  |         |             |   |        
|------------------------------ |  | ---------------- | ------- | ----------- | - | -------
|In thousands                   |  | February 28,2007 |         | May 31,2006
|Finished products              |  | $                | 9,931   |             | $ | 10,341 
|Work in process                |  |                  | 51,873  |             |   | 42,384 
|Raw materials                  |  |                  | 16,345  |             |   | 13,881 
|                               |  |                  |         |             |   |        
|Total inventories at LIFO cost |  |                  | 78,149  |             |   | 66,606 
|Parts and supplies             |  |                  | 36,602  |             |   | 35,446 
|                               |  |                  |         |             |   |        
|Total inventories              |  | $                | 114,751 |             | $ | 102,052
|                               |  |                  |         |             |   |        

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 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 $27.5 million at February 28, 2007 and $26.8 million at May 31, 2006.

Accrued interest, wages and other items consist of:



|                         |  |                  |        |             |   |       
|------------------------ |  | ---------------- | ------ | ----------- | - | ------
|In thousands             |  | February 28,2007 |        | May 31,2006
|Interest                 |  | $                | 3,359  |             | $ | 8,531 
|Employee compensation    |  |                  | 31,508 |             |   | 33,422
|Income taxes             |  |                  |       |             |   | 2,113 
|Property taxes and other |  |                  | 10,487 |             |   | 10,993
|                         |  |                  |        |             |   |       
|                         |  | $                | 45,354 |             | $ | 55,059
|                         |  |                  |        |             |   |       



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LONG-TERM DEBT

Long-term debt consists of:



|                                                                             |  |                  |         |             |   |        
|---------------------------------------------------------------------------- |  | ---------------- | ------- | ----------- | - | -------
|In thousands                                                                 |  | February 28,2007 |         | May 31,2006
|Senior secured revolving credit facility expiring in 2010                    |  | $                |        |             | $ |       
|Senior notes due 2013, interest rate 7.25%                                   |  |                  | 250,000 |             |   | 250,000
|Pollution control bonds due through 2007, interest rate 6.19% (75% of prime) |  |                  | 1,475   |             |   | 1,815  
|Other                                                                        |  |                  | 358     |             |   | 371    
|                                                                             |  |                  |         |             |   |        
|                                                                             |  |                  | 251,833 |             |   | 252,186
|Less current maturities                                                      |  |                  | 1,475   |             |   | 681    
|                                                                             |  |                  |         |             |   |        
|                                                                             |  | $                | 250,358 |             | $ | 251,505
|                                                                             |  |                  |         |             |   |        

7.25% Senior Notes.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. In addition, prior to July 15, 2008, we may redeem up to 35% of the aggregate principal amount of the notes at a redemption price equal to 107.25% of the principal amount thereof, plus accrued interest with the net cash proceeds
from certain equity offerings. 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.

Senior Secured Revolving Credit Facility.The senior secured revolving credit facility expires in July 2010 and provides up to $200 million of
available borrowings. 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. At February 28, 2007, $29.5 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 1% to 2%, or at a base rate (which is the higher of the federal funds rate plus 0.5% and the prime rate) plus a margin of up to
1%. The interest rate margins are subject to adjustments based on our leverage ratio. Commitment fees are payable currently at an annual rate of 0.25% 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 interest in present and future domestic subsidiaries and 66% of the equity interest in
any future foreign subsidiaries.

The credit facility contains covenants restricting, among other things, prepayment or redemption of our
senior notes, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. We are required to comply with certain financial tests and to maintain
certain financial ratios, such as leverage and interest coverage ratios. At February 28, 2007, we were in compliance with all of our loan covenants.



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Refinancing in Connection with the Spin-off of Chaparral.In connection with the spin-off of
Chaparral in July 2005, we entered into new financing agreements and purchased the outstanding $600 million aggregate principal amount of our 10.25% senior notes due 2011 (10.25% Senior Notes). On July 6, 2005, we issued $250
million aggregate principal amount of our new 7.25% senior notes due July 15, 2013 (7.25% Senior Notes) and entered into a new senior secured revolving credit facility. In addition, Chaparral issued $300 million aggregate principal
amount of its new senior notes due 2013 (Chaparral Senior Notes) and entered into a separate new senior secured revolving credit facility. Chaparral used the net proceeds from its note offering and borrowings under its credit facility to
pay us a dividend of $341.1 million. We used the net proceeds from our offering of notes, the dividend paid by Chaparral and existing cash to purchase for cash all of our outstanding $600 million aggregate principal amount of 10.25% Senior Notes. We
paid a total of $699.5 million to the holders of the 10.25% Senior Notes, which was comprised of $600 million of principal, $3.6 million of accrued interest and $95.9 million of premiums and consent fees. We recorded a charge of $107.0 million
related to the early retirement of the 10.25% Senior Notes and old credit facility, consisting of $96.0 million in premiums or consent payments and transaction costs and a write-off of $11.0 million of debt issuance costs and interest rate swap
gains and losses associated with the debt repaid. On July 29, 2005, Chaparral became an independent, public company and we have no obligations with respect to Chaparrals long-term debt. Chaparral is not a guarantor of any of our
indebtedness nor are we a guarantor of any Chaparral indebtedness.

Other.Maturities of long-term debt for each of the five
succeeding years are $1.5 million for 2008 and none for 2009 through 2012. The total amount of interest paid was $25.4 million and $52.7 million during the nine-month periods ended February 28, 2007 and 2006, respectively. Interest capitalized
was $8.1 million and $500,000 during the nine-month periods ended February 28, 2007 and 2006, respectively.

CONVERTIBLE SUBORDINATED DEBENTURES

On June 5, 1998, we issued $206.2 million aggregate principal amount of 5.5% convertible subordinated debentures due June 30,
2028 (the Debentures). TXI Capital Trust I (the Trust), a Delaware business trust 100% owned by us, issued 4,000,000 of its 5.5% Shared Preference Redeemable Securities (Preferred Securities) to the public for
gross proceeds of $200 million. The combined proceeds from the issuance of the Preferred Securities and the issuance to us of the common securities of the Trust were invested by the Trust in the Debentures which are the sole assets of the Trust.
Each Preferred Security is convertible at any time prior to its redemption date at the option of the holder into shares of our common stock at a conversion rate of .97468 shares of our common stock for each Preferred Security. Upon redemption or
conversion of the Preferred Securities a like aggregate principal amount of Debentures is redeemed or converted.

On January 23, 2007,
the Trust made a partial call for redemption of the Preferred Securities. During the three-month period ended February 28, 2007, Preferred Securities having a liquidation amount of $66.4 million were converted into 1,293,379 shares of our
common stock. The conversions increased common stock and paid-in capital by a total of $65.2 million. Preferred Securities were redeemed on February 22, 2007 for the liquidation amount of $900,000 plus accrued distributions. In conjunction with
the conversions and redemption, Debentures in an aggregate principal amount of $67.3 million were redeemed or converted, leaving an aggregate principal amount of $92.4 million outstanding at February 28, 2007.

On February 23, 2007, the Trust called all remaining Preferred Securities for redemption on March 26, 2007. In March 2007, prior to the
redemption date, Preferred Securities having a liquidation amount of $91.5 million were converted into 1,783,466 shares of our common stock. The conversions increased common stock and additional paid-in capital by a total of $45.6 million and
reduced the cost of common stock in treasury by a total of $44.8 million. The remaining Preferred Securities were redeemed on March 26, 2007 for the liquidation amount of $900,000 plus accrued distributions. In conjunction with the conversions
and redemption, all outstanding Debentures were redeemed or converted.



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SHAREHOLDERS EQUITY

Common stock consists of:



|                                            |  |                  |  |            
|------------------------------------------- |  | ---------------- |  | -----------
|In thousands                                |  | February 28,2007 |  | May 31,2006
|Shares authorized                           |  | 40,000           |  | 40,000     
|Shares outstanding                          |  | 25,523           |  | 23,945     
|Shares held in treasury                     |  | 1,634            |  | 1,918      
|Shares reserved for stock options and other |  | 3,360            |  | 3,652      

There are authorized 100,000 shares of Cumulative Preferred Stock, no par value, of which 20,000
shares are designated $5 Cumulative Preferred Stock (Voting), redeemable at $105 per share and entitled to $100 per share upon dissolution. An additional 40,000 shares are designated Series B Junior Participating Preferred Stock. The Series B
Preferred Stock is not redeemable and ranks, with respect to the payment of dividends and the distribution of assets, junior to (i) all other series of the Preferred Stock unless the terms of any other series shall provide otherwise and
(ii) the $5 Cumulative Preferred Stock. No shares of Cumulative Preferred Stock or Series B Junior Participating Preferred Stock were outstanding as of February 28, 2007. 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.

LEGAL PROCEEDINGS AND CONTINGENT LIABILITIES

We are subject to federal, state and local environmental laws
and regulations concerning, among other matters, air emissions and wastewater discharge. We believe we are in substantial compliance with applicable environmental laws and regulations; 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 environmental laws and regulations. Based on our experience and the information currently available to us, we believe that such claims will
not have a material impact on our financial condition or results of operations. Despite our compliance and experience, 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.

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

In connection with our spin-off of Chaparral, we entered into a separation and distribution
agreement and a tax sharing and indemnification agreement with Chaparral. In these agreements, we have indemnified Chaparral against, among other things, any liabilities arising out of the businesses, assets or liabilities retained by us and any
taxes imposed on Chaparral in connection with the spin-off that result from our breach of our covenants in the tax sharing and indemnification agreement. Chaparral has indemnified us against, among other things, any liabilities arising out of the
businesses, assets or liabilities transferred to Chaparral and any taxes imposed on us in connection with the spin-off that result from Chaparrals breach of its covenants in the tax sharing and indemnification agreement.



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We and Chaparral have made certain covenants to each other in connection with the spin-off that prohibit
us and Chaparral from taking certain actions. Pursuant to these covenants: (1) neither we nor Chaparral will liquidate, merge, or consolidate with any other person, sell, exchange, distribute or otherwise dispose of our assets (or those of
certain of our subsidiaries) except in the ordinary course of business, or enter into any substantial negotiations, agreements, or arrangements with respect to any such transaction, during the six months following the distribution date of
July 29, 2005; (2) we and Chaparral will, for a minimum of two years after the distribution date, continue the active conduct of the cement or steel business, respectively; (3) neither we nor Chaparral will repurchase our stock for
two years following the distribution except in certain circumstances permitted by the IRS; (4) we and Chaparral will not take any actions inconsistent with the representations made in the separation and distribution agreement or in connection
with the issuance by our tax counsel of its tax opinion with respect to the spin-off; and (5) we and Chaparral will not take or fail to take any other action that would result in any tax being imposed on the spin-off. We or Chaparral may take
actions inconsistent with these covenants if we obtain an unqualified opinion of counsel or a private letter ruling from the IRS that such actions will not cause the spin-off to become taxable, except that Chaparral may not, under any circumstances,
take any action described in (1) above.

INCOME TAXES

Federal income taxes for the interim periods ended February 28, 2007 and 2006, have been included in the accompanying financial statements on the basis of an estimated annual rate for continuing operations. The
estimated annualized rate for continuing operations does not include the tax impact of the loss on debt retirements, Chaparral spin-off charges and other discrete items. The estimated annualized rate for continuing operations excluding these charges
is 32.1% for 2007 compared to 27.1% for 2006. The primary reason that the tax rate differs from the 35% statutory corporate rate is due to percentage depletion that is tax deductible and state income taxes. The estimated effective rate for
discontinued operations was 35% for 2006, and reflects Chaparrals allocable share of such tax as prescribed in the tax sharing agreement between us and Chaparral. We made income tax payments of $25.8 million and $4.3 million during the
nine-month periods ended February 28, 2007 and 2006, respectively, and received income tax refunds of $600,000 during the nine-month period ended February 28, 2007.

RETIREMENT PLANS

Riverside Defined Benefit Plans.Approximately 600 employees and retirees of our
California cement subsidiary, Riverside Cement Company, are covered by a defined benefit pension plan and a postretirement health benefit plan. Unrecognized prior service costs and actuarial gains or losses for these plans are recognized in a
systematic manner over the remaining service periods of active employees expected to receive benefits under these plans. The amount of the defined benefit pension plan and postretirement health benefit plan expense charged to costs and expenses for
the three-month and nine-month periods ended February 28, 2007 and 2006, was as follows:



|                                   |  |                 |        |   |                |   |        |      |  |   |      |   |  |   |      |  
|---------------------------------- |  | --------------- | ------ | - | -------------- | - | ------ | ---- |  | - | ---- | - |  | - | ---- | -
|                                   |  | Pension Benefit |        |   | Health Benefit |  
|In thousands                       |  | 2007            |        |   | 2006           |   |        | 2007 |  |   | 2006 |  
|Three-months ended February 28     |  |                 |        |   |                |   |        |      |  |   |      |   |  |   |      |  
|Service cost                       |  | $               | 124    |   |                | $ | 143    |      |  | $ | 25   |   |  | $ | 27   |  
|Interest cost                      |  |                 | 681    |   |                |   | 624    |      |  |   | 92   |   |  |   | 87   |  
|Expected return on plan assets     |  |                 | (760   | ) |                |   | (691   | )    |  |   |     |   |  |   |     |  
|Amortization of prior service cost |  |                 |       |   |                |   |       |      |  |   | (212 | ) |  |   | (212 | )
|Amortization of net actuarial loss |  |                 | 106    |   |                |   | 264    |      |  |   | 151  |   |  |   | 185  |  
|                                   |  |                 |        |   |                |   |        |      |  |   |      |   |  |   |      |  
|                                   |  | $               | 151    |   |                | $ | 340    |      |  | $ | 56   |   |  | $ | 87   |  
|                                   |  |                 |        |   |                |   |        |      |  |   |      |   |  |   |      |  
|Nine-months ended February 28      |  |                 |        |   |                |   |        |      |  |   |      |   |  |   |      |  
|Service cost                       |  | $               | 370    |   |                | $ | 429    |      |  | $ | 74   |   |  | $ | 80   |  
|Interest cost                      |  |                 | 2,043  |   |                |   | 1,872  |      |  |   | 276  |   |  |   | 260  |  
|Expected return on plan assets     |  |                 | (2,280 | ) |                |   | (2,073 | )    |  |   |     |   |  |   |     |  
|Amortization of prior service cost |  |                 |       |   |                |   |       |      |  |   | (634 | ) |  |   | (634 | )
|Amortization of net actuarial loss |  |                 | 319    |   |                |   | 791    |      |  |   | 450  |   |  |   | 554  |  
|                                   |  |                 |        |   |                |   |        |      |  |   |      |   |  |   |      |  
|                                   |  | $               | 452    |   |                | $ | 1,019  |      |  | $ | 166  |   |  | $ | 260  |  
|                                   |  |                 |        |   |                |   |        |      |  |   |      |   |  |   |      |  



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Financial Security Defined Benefit Plans.We have a series of financial security plans
(FSP) 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 FSP benefit expense charged to costs and expenses for the three-month and nine-month periods ended February 28, 2007 and 2006, was as
follows:



|                               |  |             |       |   |      |   |       |  
|------------------------------ |  | ----------- | ----- | - | ---- | - | ----- | -
|                               |  | FSP Benefit |      
|In thousands                   |  | 2007        |       |   | 2006 |  
|Three-months ended February 28 |  |             |       |   |      |   |       |  
|Service cost                   |  | $           | 571   |   |      | $ | 487   |  
|Interest cost                  |  |             | 440   |   |      |   | 418   |  
|Recognized actuarial loss      |  |             |      |   |      |   |      |  
|Participant contributions      |  |             | (84   | ) |      |   | (79   | )
|                               |  |             |       |   |      |   |       |  
|                               |  | $           | 927   |   |      | $ | 826   |  
|                               |  |             |       |   |      |   |       |  
|Nine-months ended February 28  |  |             |       |   |      |   |       |  
|Service cost                   |  | $           | 1,714 |   |      | $ | 1,462 |  
|Interest cost                  |  |             | 1,321 |   |      |   | 1,254 |  
|Recognized actuarial loss      |  |             | 254   |   |      |   |      |  
|Participant contributions      |  |             | (245  | ) |      |   | (231  | )
|                               |  |             |       |   |      |   |       |  
|                               |  | $           | 3,044 |   |      | $ | 2,485 |  
|                               |  |             |       |   |      |   |       |  

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 aggregates. Through the consumer products segment we produce and
sell ready-mix concrete as our principal product, as well as packaged concrete 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, environmental, 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, short-term investments, real estate and other
financial assets not identified with a business segment.

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



|                    |  |                  |           |             |   |          
|------------------- |  | ---------------- | --------- | ----------- | - | ---------
|In thousands        |  | February 28,2007 |           | May 31,2006
|Identifiable assets |  |                  |           |             |   |          
|Cement              |  | $                | 688,764   |             | $ | 511,944  
|Aggregates          |  |                  | 193,911   |             |   | 166,944  
|Consumer Products   |  |                  | 84,182    |             |   | 90,635   
|Corporate           |  |                  | 194,113   |             |   | 311,047  
|                    |  |                  |           |             |   |          
|Total assets        |  | $                | 1,160,970 |             | $ | 1,080,570
|                    |  |                  |           |             |   |          



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



|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|------------------------------------------------------------ |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | -------- | -
|                                                             |  | Three-months ended February 28, |         |   | Nine-months ended February 28, |  
|In thousands                                                 |  | 2007                            |         |   | 2006                           |   |         | 2007 |  |   | 2006    |  
|Net sales                                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Cement                                                       |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Sales to external customers                                  |  | $                               | 95,994  |   |                                | $ | 91,736  |      |  | $ | 314,501 |   |  | $ | 284,580  |  
|Intersegment sales                                           |  |                                 | 15,891  |   |                                |   | 17,408  |      |  |   | 57,844  |   |  |   | 52,294   |  
|Aggregates                                                   |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Sales to external customers                                  |  |                                 | 53,341  |   |                                |   | 53,746  |      |  |   | 177,656 |   |  |   | 160,387  |  
|Intersegment sales                                           |  |                                 | 7,232   |   |                                |   | 7,543   |      |  |   | 24,691  |   |  |   | 23,312   |  
|Consumer products                                            |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Sales to external customers                                  |  |                                 | 67,436  |   |                                |   | 71,281  |      |  |   | 242,098 |   |  |   | 234,444  |  
|Intersegment sales                                           |  |                                 | 767     |   |                                |   | 4,214   |      |  |   | 2,879   |   |  |   | 11,989   |  
|Eliminations                                                 |  |                                 | (23,890 | ) |                                |   | (29,165 | )    |  |   | (85,414 | ) |  |   | (87,595  | )
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Total net sales                                              |  | $                               | 216,771 |   |                                | $ | 216,763 |      |  | $ | 734,255 |   |  | $ | 679,411  |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Segment operating profit (loss)                              |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Cement                                                       |  | $                               | 36,470  |   |                                | $ | 25,802  |      |  | $ | 126,950 |   |  | $ | 64,842   |  
|Aggregates                                                   |  |                                 | 1,320   |   |                                |   | 6,023   |      |  |   | 20,734  |   |  |   | 17,182   |  
|Consumer products                                            |  |                                 | (1,742  | ) |                                |   | (238    | )    |  |   | 4,522   |   |  |   | 5,357    |  
|Unallocated overhead and other income - net                  |  |                                 | (3,257  | ) |                                |   | (2,582  | )    |  |   | (8,045  | ) |  |   | (7,172   | )
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Total segment operating profit                               |  |                                 | 32,791  |   |                                |   | 29,005  |      |  |   | 144,161 |   |  |   | 80,209   |  
|Corporate                                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Selling, general and administrative expense                  |  |                                 | (11,359 | ) |                                |   | (8,782  | )    |  |   | (33,628 | ) |  |   | (23,762  | )
|Interest                                                     |  |                                 | (3,289  | ) |                                |   | (7,340  | )    |  |   | (13,474 | ) |  |   | (24,455  | )
|Loss on debt retirements and spin-off charges                |  |                                 | (26     | ) |                                |   |        |      |  |   | (26     | ) |  |   | (112,391 | )
|Other income                                                 |  |                                 | 1,434   |   |                                |   | 1,930   |      |  |   | 7,568   |   |  |   | 10,440   |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Income (loss) from continuing operations before income taxes |  | $                               | 19,551  |   |                                | $ | 14,813  |      |  | $ | 104,601 |   |  | $ | (69,959  | )
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Depreciation, depletion and amortization                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Cement                                                       |  | $                               | 5,893   |   |                                | $ | 5,808   |      |  | $ | 17,279  |   |  | $ | 17,692   |  
|Aggregates                                                   |  |                                 | 3,942   |   |                                |   | 3,397   |      |  |   | 11,467  |   |  |   | 10,064   |  
|Consumer products                                            |  |                                 | 1,607   |   |                                |   | 1,530   |      |  |   | 4,749   |   |  |   | 4,609    |  
|Corporate                                                    |  |                                 | 130     |   |                                |   | 319     |      |  |   | 361     |   |  |   | 1,008    |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Total depreciation, depletion and amortization               |  | $                               | 11,572  |   |                                | $ | 11,054  |      |  | $ | 33,856  |   |  | $ | 33,373   |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Capital expenditures                                         |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Cement                                                       |  | $                               | 70,224  |   |                                | $ | 28,377  |      |  | $ | 186,613 |   |  | $ | 47,538   |  
|Aggregates                                                   |  |                                 | 16,601  |   |                                |   | 2,605   |      |  |   | 40,689  |   |  |   | 9,003    |  
|Consumer products                                            |  |                                 | 1,686   |   |                                |   | 2,517   |      |  |   | 7,431   |   |  |   | 6,563    |  
|Corporate                                                    |  |                                 | 472     |   |                                |   | 171     |      |  |   | 1,706   |   |  |   | 469      |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Total capital expenditures                                   |  | $                               | 88,983  |   |                                | $ | 33,670  |      |  | $ | 236,439 |   |  | $ | 63,573   |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Net sales by product                                         |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Cement                                                       |  | $                               | 91,252  |   |                                | $ | 86,880  |      |  | $ | 297,984 |   |  | $ | 267,512  |  
|Stone, sand and gravel                                       |  |                                 | 26,749  |   |                                |   | 25,132  |      |  |   | 92,506  |   |  |   | 82,577   |  
|Ready-mix concrete                                           |  |                                 | 56,946  |   |                                |   | 59,676  |      |  |   | 202,301 |   |  |   | 195,806  |  
|Other products                                               |  |                                 | 24,404  |   |                                |   | 27,116  |      |  |   | 82,763  |   |  |   | 75,790   |  
|Delivery fees                                                |  |                                 | 17,420  |   |                                |   | 17,959  |      |  |   | 58,701  |   |  |   | 57,726   |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  
|Total net sales                                              |  | $                               | 216,771 |   |                                | $ | 216,763 |      |  | $ | 734,255 |   |  | $ | 679,411  |  
|                                                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |          |  

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



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Cement segment operating profit for the nine-month period ended February 28, 2007 includes $19.8
million representing distributions which we received pursuant to agreements that settled a 16-year dispute over the U.S. antidumping duty order on cement imports from Mexico.

Cement capital expenditures includes $64.0 million and $24.1 million in the three-month periods ended February 28, 2007 and 2006, respectively, and
$170.2 million and $36.1 million in the nine-month periods ended February 28, 2007 and 2006, respectively, incurred in connection with the expansion and modernization of our Oro Grande, California cement plant. Other capital expenditures
incurred represent normal replacement and technological upgrades of existing equipment and acquisitions to sustain existing operations in each segment.

DISCONTINUED OPERATIONS

On July 29, 2005, we completed the spin-off of our steel segment in the form of a pro rata, tax-free
dividend to our shareholders of one share of Chaparral Steel Company (Chaparral) common stock for each share of our common stock that was owned on July 20, 2005. Following the spin-off, Chaparral became an independent, public
company. We have no further ownership interest in Chaparral or in any steel business, and Chaparral has no ownership interest in us. In addition, Chaparral is not a guarantor of any of our indebtedness nor are we a guarantor of any Chaparral
indebtedness. The Companys relationship with Chaparral is now governed by a separation and distribution agreement and the ancillary agreements described in that agreement. The terms of the agreements are more fully described in our note
entitled Legal Proceedings and Contingent Liabilities. In accordance with the terms of these agreements, we recorded a charge to retained earnings of approximately $600,000 during the nine-month period ended February 28, 2007.

We recorded a charge of approximately $107.0 million related to the early retirement of the 10.25% Senior Notes and old credit facility
and incurred $5.4 million in spin-off related charges during the nine-month period ended February 28, 2006.

Operations for the
nine-month period ended February 28, 2006 included discontinued operations through July 29, 2005, as summarized below:



|                                    |  |                               |        
|----------------------------------- |  | ----------------------------- | -------
|                                    |  | Nine-months endedFebruary 28,
|In thousands                        |  | 2006                         
|Net sales                           |  | $                             | 198,893
|Income before income/taxes          |  |                               | 13,384 
|Income taxes                        |  |                               | 4,693  
|Income from discontinued operations |  |                               | 8,691  



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CONDENSED CONSOLIDATING FINANCIAL INFORMATION

On July 6, 2005, Texas Industries, Inc. (the parent company) issued $250 million principal amount of its 7.25% Senior Notes. All existing
consolidated subsidiaries of the parent company are 100% owned and, excluding Chaparral and its subsidiaries, 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, all guarantor subsidiaries and all non-guarantor subsidiaries. The information has been presented as if the parent company accounted for its ownership of the guarantor and non-guarantor subsidiaries using
the equity method of accounting.



|                                                           |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|---------------------------------------------------------- |  | ---------------------- | --------- | ---------------------- | - | -------------------------- |  | ------------------- | - |  | ------------ | -------- | - |  | - | ---------
|In thousands                                               |  | Texas Industries, Inc. |           | Guarantor Subsidiaries |   | Non-Guarantor Subsidiaries |  | Eliminating Entries |   |  | Consolidated
|Condensed consolidating balance sheet at February 28, 2007 |  |                        |           |                        |   |                            |  |                     |   |  |              |          |  
|Cash and cash equivalents                                  |  | $                      | 15,818    |                        | $ | 4,547                      |  | $                   |  |  | $            |         |   |  | $ | 20,365   
|Short-term investments                                     |  |                        |          |                        |   |                           |  |                     |  |  |              |         |   |  |   |         
|Receivables  net                                          |  |                        | 8,291     |                        |   | 118,236                    |  |                     |  |  |              |         |   |  |   | 126,527  
|Intercompany receivables                                   |  |                        | 17,149    |                        |   | 18,794                     |  |                     |  |  |              | (35,943  | ) |  |   |         
|Inventories                                                |  |                        |          |                        |   | 114,751                    |  |                     |  |  |              |         |   |  |   | 114,751  
|Deferred income taxes and prepaid expenses                 |  |                        | 15,068    |                        |   | 3,711                      |  |                     |  |  |              |         |   |  |   | 18,779   
|                                                           |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Total current assets                                       |  |                        | 56,326    |                        |   | 260,039                    |  |                     |  |  |              | (35,943  | ) |  |   | 280,422  
|Goodwill                                                   |  |                        |          |                        |   | 58,395                     |  |                     |  |  |              |         |   |  |   | 58,395   
|Real estate and investments                                |  |                        | 104,184   |                        |   | 28,700                     |  |                     |  |  |              |         |   |  |   | 132,884  
|Deferred charges and intangibles                           |  |                        | 9,628     |                        |   | 6,469                      |  |                     |  |  |              |         |   |  |   | 16,097   
|Investment in subsidiaries                                 |  |                        | 782,796   |                        |   |                           |  |                     |  |  |              | (782,796 | ) |  |   |         
|Long-term intercompany receivables                         |  |                        | 50,000    |                        |   |                           |  |                     |  |  |              | (50,000  | ) |  |   |         
|Property, plant and equipment  net                        |  |                        |          |                        |   | 667,681                    |  |                     |  |  |              | 5,491    |   |  |   | 673,172  
|                                                           |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Total assets                                               |  | $                      | 1,002,934 |                        | $ | 1,021,284                  |  | $                   |  |  | $            | (863,248 | ) |  | $ | 1,160,970
|                                                           |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Accounts payable                                           |  | $                      | 84        |                        | $ | 74,726                     |  | $                   |  |  | $            |         |   |  | $ | 74,810   
|Intercompany payables                                      |  |                        | 18,794    |                        |   | 17,149                     |  |                     |  |  |              | (35,943  | ) |  |   |         
|Accrued interest, wages and other items                    |  |                        | 7,121     |                        |   | 38,233                     |  |                     |  |  |              |         |   |  |   | 45,354   
|Current portion of long-term debt                          |  |                        | 1,475     |                        |   |                           |  |                     |  |  |              |         |   |  |   | 1,475    
|                                                           |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Total current liabilities                                  |  |                        | 27,474    |                        |   | 130,108                    |  |                     |  |  |              | (35,943  | ) |  |   | 121,639  
|Long-term debt                                             |  |                        | 250,358   |                        |   |                           |  |                     |  |  |              |         |   |  |   | 250,358  
|Convertible subordinated debentures                        |  |                        | 92,370    |                        |   |                           |  |                     |  |  |              |         |   |  |   | 92,370   
|Long-term intercompany payables                            |  |                        |          |                        |   | 50,000                     |  |                     |  |  |              | (50,000  | ) |  |   |         
|Deferred income taxes and other credits                    |  |                        | 24,116    |                        |   | 63,871                     |  |                     |  |  |              |         |   |  |   | 87,987   
|Shareholders equity                                       |  |                        | 608,616   |                        |   | 777,305                    |  |                     |  |  |              | (777,305 | ) |  |   | 608,616  
|                                                           |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Total liabilities and shareholders equity                 |  | $                      | 1,002,934 |                        | $ | 1,021,284                  |  | $                   |  |  | $            | (863,248 | ) |  | $ | 1,160,970
|                                                           |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          



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|                                                      |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|----------------------------------------------------- |  | ---------------------- | --------- | ---------------------- | - | -------------------------- |  | ------------------- | - |  | ------------ | -------- | - |  | - | ---------
|In thousands                                          |  | Texas Industries, Inc. |           | Guarantor Subsidiaries |   | Non-Guarantor Subsidiaries |  | Eliminating Entries |   |  | Consolidated
|Condensed consolidating balance sheet at May 31, 2006 |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Cash and cash equivalents                             |  | $                      | 78,569    |                        | $ | 5,570                      |  | $                   |  |  | $            |         |   |  | $ | 84,139   
|Short-term investments                                |  |                        | 50,606    |                        |   |                           |  |                     |  |  |              |         |   |  |   | 50,606   
|Receivables  net                                     |  |                        | 9,543     |                        |   | 123,306                    |  |                     |  |  |              |         |   |  |   | 132,849  
|Intercompany receivables                              |  |                        | 585       |                        |   | 93,160                     |  |                     |  |  |              | (93,745  | ) |  |   |         
|Inventories                                           |  |                        |          |                        |   | 102,052                    |  |                     |  |  |              |         |   |  |   | 102,052  
|Deferred income taxes and prepaid expenses            |  |                        | 6,234     |                        |   | 27,365                     |  |                     |  |  |              |         |   |  |   | 33,599   
|                                                      |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Total current assets                                  |  |                        | 145,537   |                        |   | 351,453                    |  |                     |  |  |              | (93,745  | ) |  |   | 403,245  
|Goodwill                                              |  |                        |          |                        |   | 58,395                     |  |                     |  |  |              |         |   |  |   | 58,395   
|Real estate and investments                           |  |                        | 96,347    |                        |   | 29,566                     |  |                     |  |  |              |         |   |  |   | 125,913  
|Deferred charges and intangibles                      |  |                        | 16,790    |                        |   | 5,916                      |  |                     |  |  |              |         |   |  |   | 22,706   
|Investment in subsidiaries                            |  |                        | 699,775   |                        |   |                           |  |                     |  |  |              | (699,775 | ) |  |   |         
|Long-term intercompany receivables                    |  |                        | 50,000    |                        |   |                           |  |                     |  |  |              | (50,000  | ) |  |   |         
|Property, plant and equipment  net                   |  |                        |          |                        |   | 470,311                    |  |                     |  |  |              |         |   |  |   | 470,311  
|                                                      |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Total assets                                          |  | $                      | 1,008,449 |                        | $ | 915,641                    |  | $                   |  |  | $            | (843,520 | ) |  | $ | 1,080,570
|                                                      |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Accounts payable                                      |  | $                      | 184       |                        | $ | 63,397                     |  | $                   |  |  | $            |         |   |  | $ | 63,581   
|Intercompany payables                                 |  |                        | 93,160    |                        |   | 585                        |  |                     |  |  |              | (93,745  | ) |  |   |         
|Accrued interest, wages and other items               |  |                        | 14,102    |                        |   | 40,957                     |  |                     |  |  |              |         |   |  |   | 55,059   
|Current portion of long-term debt                     |  |                        | 681       |                        |   |                           |  |                     |  |  |              |         |   |  |   | 681      
|                                                      |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Total current liabilities                             |  |                        | 108,127   |                        |   | 104,939                    |  |                     |  |  |              | (93,745  | ) |  |   | 119,321  
|Long-term debt                                        |  |                        | 251,505   |                        |   |                           |  |                     |  |  |              |         |   |  |   | 251,505  
|Convertible subordinated debentures                   |  |                        | 159,725   |                        |   |                           |  |                     |  |  |              |         |   |  |   | 159,725  
|Long-term intercompany payables                       |  |                        |          |                        |   | 50,000                     |  |                     |  |  |              | (50,000  | ) |  |   |         
|Deferred income taxes and other credits               |  |                        | 16,028    |                        |   | 60,927                     |  |                     |  |  |              |         |   |  |   | 76,955   
|Shareholders equity                                  |  |                        | 473,064   |                        |   | 699,775                    |  |                     |  |  |              | (699,775 | ) |  |   | 473,064  
|                                                      |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          
|Total liabilities and shareholders equity            |  | $                      | 1,008,449 |                        | $ | 915,641                    |  | $                   |  |  | $            | (843,520 | ) |  | $ | 1,080,570
|                                                      |  |                        |           |                        |   |                            |  |                     |   |  |              |          |   |  |   |          



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|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | - | ---------------------- | - | ------- | -------------------------- |  | ------------------- | - |  | ------------ | ------- | - |  | - | ------- | -
|In thousands                                                                                 |  | Texas Industries, Inc. |        |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  | Eliminating Entries |   |  | Consolidated |        
|Condensed consolidating statement of operations for the three months ended February 28, 2007 |  |                        |        |   |                        |   |         |                           
|Net sales                                                                                    |  | $                      |       |   |                        | $ | 216,771 |                            |  | $                   |  |  | $            |        |   |  | $ | 216,771 |  
|Cost of products sold                                                                        |  |                        |       |   |                        |   | 169,702 |                            |  |                     |  |  |              |        |   |  |   | 169,702 |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|Gross profit                                                                                 |  |                        |       |   |                        |   | 47,069  |                            |  |                     |  |  |              |        |   |  |   | 47,069  |  
|Selling, general and administrative                                                          |  |                        | 3,258  |   |                        |   | 24,218  |                            |  |                     |  |  |              |        |   |  |   | 27,476  |  
|Interest                                                                                     |  |                        | 4,138  |   |                        |   | 14      |                            |  |                     |  |  |              | (863    | ) |  |   | 3,289   |  
|Loss on debt retirements and spin-off charges                                                |  |                        | 26     |   |                        |   |        |                            |  |                     |  |  |              |        |   |  |   | 26      |  
|Other income                                                                                 |  |                        | (818   | ) |                        |   | (2,455  | )                          |  |                     |  |  |              |        |   |  |   | (3,273  | )
|Intercompany other income                                                                    |  |                        | (863   | ) |                        |   |        |                            |  |                     |  |  |              | 863     |   |  |   |        |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|                                                                                             |  |                        | 5,741  |   |                        |   | 21,777  |                            |  |                     |  |  |              |        |   |  |   | 27,518  |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|Income (loss) before the following items                                                     |  |                        | (5,741 | ) |                        |   | 25,292  |                            |  |                     |  |  |              |        |   |  |   | 19,551  |  
|Income taxes (benefit)                                                                       |  |                        | (1,956 | ) |                        |   | 8,794   |                            |  |                     |  |  |              |        |   |  |   | 6,838   |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|                                                                                             |  |                        | (3,785 | ) |                        |   | 16,498  |                            |  |                     |  |  |              |        |   |  |   | 12,713  |  
|Income from discontinued operations  net of income taxes                                    |  |                        |       |   |                        |   |        |                            |  |                     |  |  |              |        |   |  |   |        |  
|Equity in earnings of subsidiaries                                                           |  |                        | 16,498 |   |                        |   |        |                            |  |                     |  |  |              | (16,498 | ) |  |   |        |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|Net income (loss)                                                                            |  | $                      | 12,713 |   |                        | $ | 16,498  |                            |  | $                   |  |  | $            | (16,498 | ) |  | $ | 12,713  |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|Condensed consolidating statement of operations for the three months ended February 28, 2006 | 
|Net sales                                                                                    |  | $                      |       |   |                        | $ | 216,763 |                            |  | $                   |  |  | $            |        |   |  | $ | 216,763 |  
|Cost of products sold                                                                        |  |                        |       |   |                        |   | 179,397 |                            |  |                     |  |  |              |        |   |  |   | 179,397 |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|Gross profit                                                                                 |  |                        |       |   |                        |   | 37,366  |                            |  |                     |  |  |              |        |   |  |   | 37,366  |  
|Selling, general and administrative                                                          |  |                        | 2,222  |   |                        |   | 18,265  |                            |  |                     |  |  |              |        |   |  |   | 20,487  |  
|Interest                                                                                     |  |                        | 7,837  |   |                        |   | 366     |                            |  |                     |  |  |              | (863    | ) |  |   | 7,340   |  
|Loss on debt retirements and spin-off charges                                                |  |                        |       |   |                        |   |        |                            |  |                     |  |  |              |        |   |  |   |        |  
|Other income                                                                                 |  |                        | (1,557 | ) |                        |   | (3,717  | )                          |  |                     |  |  |              |        |   |  |   | (5,274  | )
|Intercompany other income                                                                    |  |                        | (863   | ) |                        |   |        |                            |  |                     |  |  |              | 863     |   |  |   |        |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|                                                                                             |  |                        | 7,639  |   |                        |   | 14,914  |                            |  |                     |  |  |              |        |   |  |   | 22,553  |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|Income (loss) before the following items                                                     |  |                        | (7,639 | ) |                        |   | 22,452  |                            |  |                     |  |  |              |        |   |  |   | 14,813  |  
|Income taxes (benefit)                                                                       |  |                        | (2,812 | ) |                        |   | 6,314   |                            |  |                     |  |  |              |        |   |  |   | 3,502   |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|                                                                                             |  |                        | (4,827 | ) |                        |   | 16,138  |                            |  |                     |  |  |              |        |   |  |   | 11,311  |  
|Income from discontinued operations  net of income taxes                                    |  |                        |       |   |                        |   |        |                            |  |                     |  |  |              |        |   |  |   |        |  
|Equity in earnings of subsidiaries                                                           |  |                        | 16,138 |   |                        |   |        |                            |  |                     |  |  |              | (16,138 | ) |  |   |        |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  
|Net income (loss)                                                                            |  | $                      | 11,311 |   |                        | $ | 16,138  |                            |  | $                   |  |  | $            | (16,138 | ) |  | $ | 11,311  |  
|                                                                                             |  |                        |        |   |                        |   |         |                            |  |                     |   |  |              |         |   |  |   |         |  



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|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|------------------------------------------------------------------------------------------- |  | ---------------------- | -------- | - | ---------------------- | - | ------- | -------------------------- |  | ------------------- | ----- |  | ------------ | ------- | - |  | - | ------- | -
|In thousands                                                                                |  | Texas Industries, Inc. |          |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  | Eliminating Entries |       |  | Consolidated |        
|Condensed consolidating statement of operations for the nine months ended February 28, 2007 |  |                        |          |   |                        |   |         |                           
|Net sales                                                                                   |  | $                      |         |   |                        | $ | 734,255 |                            |  | $                   |      |  | $            |        |   |  | $ | 734,255 |  
|Cost of products sold                                                                       |  |                        |         |   |                        |   | 569,097 |                            |  |                     |      |  |              |        |   |  |   | 569,097 |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|Gross profit                                                                                |  |                        |         |   |                        |   | 165,158 |                            |  |                     |      |  |              |        |   |  |   | 165,158 |  
|Selling, general and administrative                                                         |  |                        | 8,800    |   |                        |   | 69,881  |                            |  |                     |      |  |              |        |   |  |   | 78,681  |  
|Interest                                                                                    |  |                        | 16,052   |   |                        |   | 40      |                            |  |                     |      |  |              | (2,618  | ) |  |   | 13,474  |  
|Loss on debt retirements and spin-off charges                                               |  |                        | 26       |   |                        |   |        |                            |  |                     |      |  |              |        |   |  |   | 26      |  
|Other income                                                                                |  |                        | (3,986   | ) |                        |   | (27,638 | )                          |  |                     |      |  |              |        |   |  |   | (31,624 | )
|Intercompany other income                                                                   |  |                        | (2,618   | ) |                        |   |        |                            |  |                     |      |  |              | 2,618   |   |  |   |        |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|                                                                                            |  |                        | 18,274   |   |                        |   | 42,283  |                            |  |                     |      |  |              |        |   |  |   | 60,557  |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|Income (loss) before the following items                                                    |  |                        | (18,274  | ) |                        |   | 122,875 |                            |  |                     |      |  |              |        |   |  |   | 104,601 |  
|Income taxes (benefit)                                                                      |  |                        | (6,652   | ) |                        |   | 40,457  |                            |  |                     |      |  |              |        |   |  |   | 33,805  |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|                                                                                            |  |                        | (11,622  | ) |                        |   | 82,418  |                            |  |                     |      |  |              |        |   |  |   | 70,796  |  
|Income from discontinued operations  net of income taxes                                   |  |                        |         |   |                        |   |        |                            |  |                     |      |  |              |        |   |  |   |        |  
|Equity in earnings of subsidiaries                                                          |  |                        | 82,418   |   |                        |   |        |                            |  |                     |      |  |              | (82,418 | ) |  |   |        |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|Net income (loss)                                                                           |  | $                      | 70,796   |   |                        | $ | 82,418  |                            |  | $                   |      |  | $            | (82,418 | ) |  | $ | 70,796  |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|Condensed consolidating statement of operations for the nine months ended February 28, 2006 | 
|Net sales                                                                                   |  | $                      |         |   |                        | $ | 679,411 |                            |  | $                   |      |  | $            |        |   |  | $ | 679,411 |  
|Cost of products sold                                                                       |  |                        |         |   |                        |   | 571,553 |                            |  |                     |      |  |              |        |   |  |   | 571,553 |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|Gross profit                                                                                |  |                        |         |   |                        |   | 107,858 |                            |  |                     |      |  |              |        |   |  |   | 107,858 |  
|Selling, general and administrative                                                         |  |                        | 5,272    |   |                        |   | 53,275  |                            |  |                     |      |  |              |        |   |  |   | 58,547  |  
|Interest                                                                                    |  |                        | 24,944   |   |                        |   | 2,129   |                            |  |                     |      |  |              | (2,618  | ) |  |   | 24,455  |  
|Loss on debt retirements and spin-off charges                                               |  |                        | 112,391  |   |                        |   |        |                            |  |                     |      |  |              |        |   |  |   | 112,391 |  
|Other income                                                                                |  |                        | (4,424   | ) |                        |   | (13,152 | )                          |  |                     |      |  |              |        |   |  |   | (17,576 | )
|Intercompany other income                                                                   |  |                        | (2,618   | ) |                        |   |        |                            |  |                     |      |  |              | 2,618   |   |  |   |        |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|                                                                                            |  |                        | 135,565  |   |                        |   | 42,252  |                            |  |                     |      |  |              |        |   |  |   | 177,817 |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|Income (loss) before the following items                                                    |  |                        | (135,565 | ) |                        |   | 65,606  |                            |  |                     |      |  |              |        |   |  |   | (69,959 | )
|Income taxes (benefit)                                                                      |  |                        | (47,704  | ) |                        |   | 20,264  |                            |  |                     |      |  |              |        |   |  |   | (27,440 | )
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|                                                                                            |  |                        | (87,861  | ) |                        |   | 45,342  |                            |  |                     |      |  |              |        |   |  |   | (42,519 | )
|Income from discontinued operations  net of income taxes                                   |  |                        |         |   |                        |   | (176    | )                          |  |                     | 8,867 |  |              |        |   |  |   | 8,691   |  
|Equity in earnings of subsidiaries                                                          |  |                        | 54,033   |   |                        |   |        |                            |  |                     |      |  |              | (54,033 | ) |  |   |        |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  
|Net income (loss)                                                                           |  | $                      | (33,828  | ) |                        | $ | 45,166  |                            |  | $                   | 8,867 |  | $            | (54,033 | ) |  | $ | (33,828 | )
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |                     |       |  |              |         |   |  |   |         |  



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|                                                                                            |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|------------------------------------------------------------------------------------------- |  | ---------------------- | -------- | - | ---------------------- | - | -------- | -------------------------- |  | ------------------- | - | ------------ | - | - |  | - | -------- | -
|In thousands                                                                                |  | Texas Industries, Inc. |          |   | Guarantor Subsidiaries |   |          | Non-Guarantor Subsidiaries |  | Eliminating Entries |   | Consolidated |  
|Condensed consolidating statement of cash flows for the nine months ended February 28, 2007 |  |                        |          |   |                        |   |         
|Operating activities                                                                        |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Cash provided by continuing operating activities                                            |  | $                      | (108,829 | ) |                        | $ | 234,580  |                            |  | $                   |  |              | $ |  |  | $ | 125,751  |  
|Cash used by discontinued operating activities                                              |  |                        |         |   |                        |   |         |                            |  |                     |  |              |   |  |  |   |         |  
|                                                                                            |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Net cash provided by operating activities                                                   |  |                        | (108,829 | ) |                        |   | 234,580  |                            |  |                     |  |              |   |  |  |   | 125,751  |  
|Investing activities                                                                        |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Capital expenditures  expansions                                                           |  |                        |         |   |                        |   | (170,217 | )                          |  |                     |  |              |   |  |  |   | (170,217 | )
|Capital expenditures  other                                                                |  |                        |         |   |                        |   | (66,222  | )                          |  |                     |  |              |   |  |  |   | (66,222  | )
|Proceeds from asset disposals                                                               |  |                        |         |   |                        |   | 961      |                            |  |                     |  |              |   |  |  |   | 961      |  
|Purchases of short-term investments                                                         |  |                        | (8,500   | ) |                        |   |         |                            |  |                     |  |              |   |  |  |   | (8,500   | )
|Sales of short-term investments                                                             |  |                        | 59,000   |   |                        |   |         |                            |  |                     |  |              |   |  |  |   | 59,000   |  
|Investments in life insurance contracts                                                     |  |                        | (5,288   | ) |                        |   |         |                            |  |                     |  |              |   |  |  |   | (5,288   | )
|Intercompany investing activities                                                           |  |                        |         |   |                        |   |         |                            |  |                     |  |              |   |  |  |   |         |  
|Other  net                                                                                 |  |                        |         |   |                        |   | (125     | )                          |  |                     |  |              |   |  |  |   | (125     | )
|                                                                                            |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Cash used by continuing investing activities                                                |  |                        | 45,212   |   |                        |   | (235,603 | )                          |  |                     |  |              |   |  |  |   | (190,391 | )
|Cash used by discontinued investing activities                                              |  |                        |         |   |                        |   |         |                            |  |                     |  |              |   |  |  |   |         |  
|                                                                                            |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Net cash used by investing activities                                                       |  |                        | 45,212   |   |                        |   | (235,603 | )                          |  |                     |  |              |   |  |  |   | (190,391 | )
|Financing activities                                                                        |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Long-term borrowings                                                                        |  |                        |         |   |                        |   |         |                            |  |                     |  |              |   |  |  |   |         |  
|Debt retirements                                                                            |  |                        | (1,285   | ) |                        |   |         |                            |  |                     |  |              |   |  |  |   | (1,285   | )
|Debt issuance costs                                                                         |  |                        |         |   |                        |   |         |                            |  |                     |  |              |   |  |  |   |         |  
|Debt retirement costs                                                                       |  |                        | (4       | ) |                        |   |         |                            |  |                     |  |              |   |  |  |   | (4       | )
|Stock option exercises                                                                      |  |                        | 5,976    |   |                        |   |         |                            |  |                     |  |              |   |  |  |   | 5,976    |  
|Excess tax benefits from stock-based compensation                                           |  |                        | 1,647    |   |                        |   |         |                            |  |                     |  |              |   |  |  |   | 1,647    |  
|Common dividends paid                                                                       |  |                        | (5,468   | ) |                        |   |         |                            |  |                     |  |              |   |  |  |   | (5,468   | )
|                                                                                            |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Cash provided (used) by continuing financing activities                                     |  |                        | 866      |   |                        |   |         |                            |  |                     |  |              |   |  |  |   | 866      |  
|Cash provided by discontinued financing activities                                          |  |                        |         |   |                        |   |         |                            |  |                     |  |              |   |  |  |   |         |  
|                                                                                            |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Net cash provided (used) by financing activities                                            |  |                        | 866      |   |                        |   |         |                            |  |                     |  |              |   |  |  |   | 866      |  
|                                                                                            |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Decrease in cash and cash equivalents                                                       |  |                        | (62,751  | ) |                        |   | (1,023   | )                          |  |                     |  |              |   |  |  |   | (63,774  | )
|Cash and cash equivalents at beginning of period                                            |  |                        | 78,569   |   |                        |   | 5,570    |                            |  |                     |  |              |   |  |  |   | 84,139   |  
|                                                                                            |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  
|Cash and cash equivalents at end of period                                                  |  | $                      | 15,818   |   |                        | $ | 4,547    |                            |  | $                   |  |              | $ |  |  | $ | 20,365   |  
|                                                                                            |  |                        |          |   |                        |   |          |                            |  |                     |   |              |   |   |  |   |          |  



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|                                                                                            |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|------------------------------------------------------------------------------------------- |  | ---------------------- | -------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------------- | - |  | ------------ | -------- | - |  | - | -------- | -
|In thousands                                                                                |  | Texas Industries, Inc. |          |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminating Entries |   |  | Consolidated |         
|Condensed consolidating statement of cash flows for the nine months ended February 28, 2006 |  |                        |          |   |                        |   |         |                            | 
|Operating activities                                                                        |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Cash provided by continuing operating activities                                            |  | $                      | 3,754    |   |                        | $ | 39,233  |                            |  | $ |                    |   |  | $            | 11,013   |   |  | $ | 54,000   |  
|Cash used by discontinued operating activities                                              |  |                        |         |   |                        |   |        |                            |  |   | 3,309               |   |  |              | (11,013  | ) |  |   | (7,704   | )
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Net cash provided by operating activities                                                   |  |                        | 3,754    |   |                        |   | 39,233  |                            |  |   | 3,309               |   |  |              |         |   |  |   | 46,296   |  
|Investing activities                                                                        |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Capital expenditures  expansions                                                           |  |                        |         |   |                        |   | (36,061 | )                          |  |   |                    |   |  |              |         |   |  |   | (36,061  | )
|Capital expenditures  other                                                                |  |                        |         |   |                        |   | (27,512 | )                          |  |   |                    |   |  |              |         |   |  |   | (27,512  | )
|Proceeds from asset disposals                                                               |  |                        |         |   |                        |   | 14,509  |                            |  |   |                    |   |  |              |         |   |  |   | 14,509   |  
|Purchases of short-term investments                                                         |  |                        | (48,500  | ) |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   | (48,500  | )
|Sales of short-term investments                                                             |  |                        |         |   |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   |         |  
|Investments in life insurance contracts                                                     |  |                        | (4,071   | ) |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   | (4,071   | )
|Intercompany investing activities                                                           |  |                        | 341,139  |   |                        |   |        |                            |  |   |                    |   |  |              | (341,139 | ) |  |   |         |  
|Other  net                                                                                 |  |                        | (2,367   | ) |                        |   | 352     |                            |  |   |                    |   |  |              |         |   |  |   | (2,015   | )
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Cash used by continuing investing activities                                                |  |                        | 286,201  |   |                        |   | (48,712 | )                          |  |   |                    |   |  |              | (341,139 | ) |  |   | (103,650 | )
|Cash used by discontinued investing activities                                              |  |                        |         |   |                        |   |        |                            |  |   | (343,896            | ) |  |              | 341,139  |   |  |   | (2,757   | )
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Net cash used by investing activities                                                       |  |                        | 286,201  |   |                        |   | (48,712 | )                          |  |   | (343,896            | ) |  |              |         |   |  |   | (106,407 | )
|Financing activities                                                                        |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Long-term borrowings                                                                        |  |                        | 250,000  |   |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   | 250,000  |  
|Debt retirements                                                                            |  |                        | (600,353 | ) |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   | (600,353 | )
|Debt issuance costs                                                                         |  |                        | (7,356   | ) |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   | (7,356   | )
|Debt retirement costs                                                                       |  |                        | (96,029  | ) |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   | (96,029  | )
|Stock option exercises                                                                      |  |                        | 7,028    |   |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   | 7,028    |  
|Excess tax benefits from stock-based compensation                                           |  |                        |         |   |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   |         |  
|Common dividends paid                                                                       |  |                        | (5,172   | ) |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   | (5,172   | )
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Cash provided (used) by continuing financing activities                                     |  |                        | (451,882 | ) |                        |   |        |                            |  |   |                    |   |  |              |         |   |  |   | (451,882 | )
|Cash provided by discontinued financing activities                                          |  |                        |         |   |                        |   |        |                            |  |   | 340,587             |   |  |              |         |   |  |   | 340,587  |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Net cash provided (used) by financing activities                                            |  |                        | (451,882 | ) |                        |   |        |                            |  |   | 340,587             |   |  |              |         |   |  |   | (111,295 | )
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Decrease in cash and cash equivalents                                                       |  |                        | (161,927 | ) |                        |   | (9,479  | )                          |  |   |                    |   |  |              |         |   |  |   | (171,406 | )
|Cash and cash equivalents at beginning of period                                            |  |                        | 241,287  |   |                        |   | 10,313  |                            |  |   |                    |   |  |              |         |   |  |   | 251,600  |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  
|Cash and cash equivalents at end of period                                                  |  | $                      | 79,360   |   |                        | $ | 834     |                            |  | $ |                    |   |  | $            |         |   |  | $ | 80,194   |  
|                                                                                            |  |                        |          |   |                        |   |         |                            |  |   |                     |   |  |              |          |   |  |   |          |  



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EXHIBIT A

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Texas Industries, Inc.

We have reviewed the accompanying consolidated balance sheet of Texas Industries, Inc. and subsidiaries (the Company) as of February 28, 2007, and the related
consolidated statements of operations for the three and nine-month periods ended February 28, 2007 and 2006 and cash flows for the nine-month periods ended February 28, 2007 and 2006. 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, 2006, 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 19, 2006, 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, 2006, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Dallas, Texas

March 29, 2007



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MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

We are a leading supplier of heavy building
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 aggregates, produced and sold through our aggregates segment, and packaged
concrete and related products produced and sold through our consumer products segment. Our facilities are concentrated primarily in Texas, Louisiana and California.

RESULTS OF OPERATIONS

The following table highlights certain of our operating information.



|                                  |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                  |  | Three-months ended February 28, |         |   | Nine-months ended February 28, |  
|In thousands except per unit      |  | 2007                            |         |   | 2006                           |   |         | 2007 |  |   | 2006    |  
|Sales                             |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Cement                            |  | $                               | 107,143 |   |                                | $ | 104,290 |      |  | $ | 355,828 |   |  | $ | 319,807 |  
|Stone, sand and gravel            |  |                                 | 33,043  |   |                                |   | 34,645  |      |  |   | 113,832 |   |  |   | 111,368 |  
|Ready-mix concrete                |  |                                 | 57,007  |   |                                |   | 59,732  |      |  |   | 202,591 |   |  |   | 196,021 |  
|Other products                    |  |                                 | 26,048  |   |                                |   | 29,302  |      |  |   | 88,717  |   |  |   | 82,084  |  
|Interplant                        |  |                                 | (23,890 | ) |                                |   | (29,165 | )    |  |   | (85,414 | ) |  |   | (87,595 | )
|Delivery fees                     |  |                                 | 17,420  |   |                                |   | 17,959  |      |  |   | 58,701  |   |  |   | 57,726  |  
|                                  |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Net Sales                         |  | $                               | 216,771 |   |                                | $ | 216,763 |      |  | $ | 734,255 |   |  | $ | 679,411 |  
|                                  |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Shipments                         |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Cement (tons)                     |  |                                 | 1,122   |   |                                |   | 1,164   |      |  |   | 3,749   |   |  |   | 3,747   |  
|Stone, sand and gravel (tons)     |  |                                 | 4,527   |   |                                |   | 5,417   |      |  |   | 16,561  |   |  |   | 18,684  |  
|Ready-mix concrete (cubic yards)  |  |                                 | 736     |   |                                |   | 847     |      |  |   | 2,695   |   |  |   | 2,859   |  
|Prices                            |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Cement ($/ton)                    |  | $                               | 95.50   |   |                                | $ | 89.62   |      |  | $ | 94.91   |   |  | $ | 85.35   |  
|Stone, sand and gravel ($/ton)    |  |                                 | 7.30    |   |                                |   | 6.40    |      |  |   | 6.87    |   |  |   | 5.96    |  
|Ready-mix concrete ($/cubic yard) |  |                                 | 77.49   |   |                                |   | 70.49   |      |  |   | 75.19   |   |  |   | 68.54   |  
|Cost of sales                     |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Cement ($/ton)                    |  | $                               | 61.98   |   |                                | $ | 65.36   |      |  | $ | 64.10   |   |  | $ | 65.73   |  
|Stone, sand and gravel ($/ton)    |  |                                 | 6.56    |   |                                |   | 5.96    |      |  |   | 5.59    |   |  |   | 5.18    |  
|Ready-mix concrete ($/cubic yard) |  |                                 | 76.38   |   |                                |   | 71.18   |      |  |   | 71.80   |   |  |   | 67.16   |  

Gross profit for the three-month period ended February 28, 2007 was $47.1 million, an
increase of $9.7 million from the prior year period. Gross profit for the nine-month period ended February 28, 2007 was $165.2 million, an increase of $57.3 million. The increases were primarily the result of improved product pricing and lower
cement unit costs.

Sales.Net sales for the three-month period ended February 28, 2007 were $216.8 million, which was
comparable to the prior year period. Total cement sales increased $2.9 million on 7% higher average prices and 4% lower shipments. Total stone, sand and gravel sales decreased $1.6 million on 14% higher average prices and 16% lower shipments. Total
ready-mix concrete sales decreased $2.7 million on 10% higher average prices and 13% lower volumes.

Net sales for the nine-month period
ended February 28, 2007 were $734.3 million, an increase of $54.8 million from the prior year period. Total cement sales increased $36.0 million on 11% higher average prices and comparable shipments. Total stone, sand and gravel sales increased
$2.5 million on 15% higher average prices and 11% lower shipments. Total ready-mix concrete sales increased $6.6 million on 10% higher average prices and 6% lower volumes.



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Adverse weather (low temperatures, ice and above average rainfall) in our north Texas market area reduced
shipments of all of our major products in the current three-month period. In addition, stone, sand and gravel shipments were lower in the current periods due to the expiration of a low margin, large supply contract at the beginning of the current
fiscal year. Average prices for our major products have continued to improve. Market conditions have continued to support our current level of pricing.

Cost of Products Sold.Cost of products sold for the three-month period ended February 28, 2007 was $169.7 million, a decrease of $9.7 million from the prior year period. Cement unit costs decreased 5%.
Stone, sand and gravel unit costs increased 10%. Ready-mix concrete unit costs increased 7%.

Cost of products sold for the nine-month
period ended February 28, 2007 was $569.1 million, a decrease of $2.5 million from the prior year period. Cement unit costs decreased 2%. Stone, sand and gravel unit costs increased 8%. Ready-mix concrete unit costs increased 7%.

Overall energy costs declined from the prior year periods and contributed to lower cement unit costs. Stone, sand and gravel overall unit cost of sales
increased primarily due to lower productivity caused by the adverse weather conditions in north Texas and also reduced shipments. Ready-mix concrete unit costs increased primarily due to the higher cost of cement and aggregate raw materials.

Selling, General and Administrative.Selling, general and administrative expense for the three-month period ended February 28,
2007 was $27.5 million, an increase of $7.0 million from the prior year period. Operating selling, general and administrative expense increased $4.4 million primarily due to $1.7 million higher incentive compensation expense, $700,000 higher wages
and benefits and $400,000 higher stock-based compensation. Corporate selling, general and administrative expense increased $2.6 million primarily due to $1.6 million higher incentive compensation expense and $900,000 higher stock-based compensation
expense.

Selling, general and administrative expense for the nine-month period ended February 28, 2007 was $78.7 million, an increase
of $20.1 million from the prior year period. Operating selling, general and administrative expense increased $10.2 million primarily due to $5.2 million higher incentive compensation expense, $1.4 million higher wages and benefits and $1.1 million
higher stock-based compensation expense. Corporate selling, general and administrative expense increased $9.9 million primarily due to $6.6 million higher incentive compensation expense and $2.7 million higher stock-based compensation expense.

Other Income.Other income for the three-month period ended February 28, 2007 was $3.3 million, a decrease of $2.0 million
from the prior year period primarily due to lower gains from the routine sale of surplus operating assets and real estate. Other income for the nine-month period ended February 28, 2007 was $31.6 million, an increase of $14.0 million from the
prior year period. Other income in the current nine-month period includes operating other income of $19.8 million representing distributions which we received pursuant to agreements that settled a 16-year dispute over the U.S. antidumping duty order
on cement imports from Mexico. Other income in the prior year nine-month period includes corporate other income of $3.8 million resulting from the sale of certain investment assets.

Interest Expense. Interest expense for the three-month period ended February 28, 2007 was $3.3 million, a decrease of $4.1 million from the
prior year period. Interest expense for the nine-month period ended February 28, 2007 was $13.5 million, a decrease of $11.0 million from the prior year period. Interest expense capitalized in conjunction with our Oro Grande, California cement
plant expansion and modernization project reduced the amount of interest expense recognized by $3.7 million in the current three-month period and $8.1 million in the current nine-month period. Total interest expense to be capitalized related to this
project during the two year construction period is currently estimated at $25 million. Also contributing to lower interest expense in the current nine-month period was our prior year debt refinancing in connection with the spin-off of Chaparral
Steel Company.

Loss on Debt Retirements and Spin-off Charges.Loss on debt retirements and spin-off charges for the nine-month
period ended February 28, 2006 includes a loss of $107.0 million related to the early retirement of our 10.25% senior notes and former credit facility, consisting of $96.0 million in premiums and consent payments plus transaction costs, and a
write-off of $11.0 million of debt issuance costs and interest rate swap gains and losses associated with the debt purchased. In addition, we incurred $5.4 million in charges related to the spin-off of Chaparral in July 2005.



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Income Taxes.Federal income taxes for the interim periods ended February 28, 2007 and 2006
have been included in the accompanying financial statements on the basis of an estimated annual rate for continuing operations. The estimated annualized rate for continuing operations does not include the tax impact of the loss on debt retirements
and Chaparral spin-off charges and other discrete items. The estimated annualized rate for continuing operations excluding these charges is 32.1% for 2007 compared to 27.1% for 2006. The primary reason that the tax rate differs from the 35%
statutory corporate rate is due to percentage depletion that is tax deductible and state income taxes. The estimated effective rate for discontinued operations is 35% for 2006, and reflects Chaparrals allocable share of such tax as prescribed
in our tax sharing agreement with Chaparral.

Income from Discontinued Operations - Net of Income Taxes. As a result of the
spin-off of Chaparral, the operating results of our steel segment, including the allocation of certain corporate expenses, have been presented as discontinued operations. The nine-month period ended February 28, 2006 includes steel operations
through the July 29, 2005 spin-off date.

LIQUIDITY AND CAPITAL RESOURCES

In addition to cash and cash equivalents of $20.4 million at February 28, 2007, our sources of liquidity include cash from operations, borrowings
available under our $200 million senior secured revolving credit facility and distributions available from our investments in life insurance contracts.

Senior Secured Revolving Credit Facility.We have available a $200 million senior secured revolving credit facility expiring in July 2010. 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. At February 28, 2007, $29.5 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 1% to 2%, or at a base rate (which is the higher of the federal funds rate plus 0.5% and the prime rate) plus a margin of up to 1%. The interest rate margins are subject to adjustments based on our leverage ratio.

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 interest in present and future domestic subsidiaries and 66% of the
equity interest in any future foreign subsidiaries.

The credit facility contains covenants restricting, among other things, prepayment or
redemption of our 7.25% senior notes, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. We are required to comply with certain
financial tests and to maintain certain financial ratios, such as leverage and interest coverage ratios. We are in compliance with all of our loan covenants.

Investments in Life Insurance Contracts.In connection with certain of our benefit plans, we have purchased life insurance contracts having a total cash surrender value of $104.2 million as of February 28,
2007. During fiscal year 2005 we repaid previous distributions received from our investments in life insurance contracts in the amount of $51.2 million. Approximately $50 million of these funds are available for redistribution at our election.

Capital Expenditure Commitments.During fiscal year 2006, we commenced construction on a project to expand and modernize our
Oro Grande, California cement plant. We plan to expand the Oro Grande plant to approximately 2.3 million tons of advanced dry process cement production capacity annually, and retire the 1.3 million tons of existing, but less efficient,
production after the new plant is commissioned. We expect the Oro Grande project will cost approximately $358 million excluding capitalized interest related to the project, of which $240.4 million has been incurred as of February 28, 2007. The
new plant is expected to commence operation by the end of calendar year 2007. We expect our capital expenditures for the remainder of fiscal year 2007, including those related to the expansion and modernization of our Oro Grande cement plant, to be
approximately $65 million.



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Convertible Subordinated Debentures. In conjunction with the conversion or redemption of the
preferred securities of TXI Capital Trust I, during the three-month period ended February 28, 2007, a total of $66.4 million aggregate principal amount of our 5.5% convertible subordinated debentures were converted into 1,293,379 shares of our
common stock, and a total of $900,000 aggregate principal amount of debentures were redeemed. In March 2007, an additional $91.5 million aggregate principal amount of debentures were converted into 1,783,466 shares of our common stock, and the
remaining $900,000 aggregate principal amount of debentures outstanding were redeemed.

We expect cash and cash equivalents, cash from
operations, available borrowings under our senior secured revolving credit facility and available distributions from our investments in life insurance contracts to be sufficient to provide funds for capital expenditure commitments (including the
expansion and modernization of our Oro Grande, California cement plant), scheduled debt payments, working capital needs and other general corporate purposes for at least the next year.

Cash Flows

Net cash provided by continuing operating activities for the nine-month period ended
February 28, 2007 was $125.8 million compared to $54.0 million for the prior year period. The increase resulted primarily from higher net income and its related effects on deferred income taxes and changes in working capital items.

Net cash used by continuing investing activities for the nine-month period ended February 28, 2007 was $190.4 million compared to $103.7 million
for the prior year period. Capital expenditures incurred in connection with the expansion and modernization of our Oro Grande, California cement plant were $170.2 million, up $134.2 million from the prior year period. Capital expenditures for normal
replacement and technological upgrades of existing equipment and acquisitions to sustain our existing operations were $66.2 million, up $38.7 million from the prior year period. In the current period, we decreased our investments in auction rate
securities $50.5 million. In the prior year period we invested $48.5 million in auction rate securities.

Net cash provided by continuing
financing activities for the nine-month period ended February 28, 2007 was $900,000 compared to $451.9 million used in the prior year period. In the prior year period we purchased $600 million aggregate principal amount of our 10.25% senior
notes, paying $96.0 million in premiums and consent payments plus transaction costs. To fund the purchase we issued $250 million aggregate principal amount of our 7.25% senior notes and incurred $7.4 million in debt issuance costs, received a cash
dividend of $341.1 million from Chaparral and used $112.3 million of cash and cash equivalents on hand.

Net cash provided by discontinued
operations was $330.1 million for the nine-month period ended February 28, 2006. In connection with our refinancing and spin-off transactions, Chaparral issued $300 million aggregate principal amount of senior notes and borrowed $50 million
under its new $150 million credit facility. The net proceeds were used to pay us a dividend of $341.1 million.

OTHER ITEMS

Environmental Matters

We are subject to federal,
state and local environmental laws and regulations concerning, among other matters, air emissions and wastewater discharge. We believe we are in substantial compliance with applicable environmental laws and regulations; 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 environmental laws and regulations. Based on our experience and the information currently available to us,
we believe that such claims will not have a material impact on our financial condition or results of operations. Despite our compliance and experience, it is possible that we could be held liable for future charges which might be material but are
not currently known or estimable. In addition, changes in federal or state laws, regulations or requirements or discovery of currently unknown conditions could require additional expenditures by us.



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Market Risk

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

Our operations require large amounts of energy and
are dependent upon energy sources, including electricity and fossil fuels. Prices for energy are subject to market forces largely beyond our control. In December 2005 we renegotiated three contracts for the purchase of coal for use in our cement and
expanded shale and clay plants in Texas. Each contract specifies a fixed price (escalated quarterly or annually) at which we must purchase a minimum amount of coal each calendar year through 2008, and we may purchase additional amounts up to a
specified maximum. We have generally not entered into any long-term contracts to satisfy our natural gas and electricity needs. 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 uninterrupted supply of these products could adversely affect our results of operations.

Critical Accounting Policies

The
preparation of financial statements and accompanying notes in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Changes in the facts and circumstances
could have a significant impact on the resulting financial statements. The critical accounting policies that affect the more complex judgments and estimates are described in our Annual Report on Form 10-K for the year ended May 31, 2006.

New Accounting Standards.

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. We use the average stock price on the date of grant to determine the
fair value of restricted stock awards granted. The impact of recognizing compensation expense related to stock options using the fair value recognition provisions of SFAS No. 123R for the three-month period ended February 28, 2007 was
$700,000 (net of tax benefit of $200,000) or $.03 per basic share and $.03 per diluted share, and for the nine-month period ended February 28, 2007 was $2.0 million (net of tax benefit of $400,000) or $.08 per basic share and $.07 per diluted
share. The results for periods prior to June 1, 2006 have not been restated.

SFAS No. 123R also requires that the benefits
associated with tax deductions in excess of recognized compensation cost be reported as a financing cash flow, rather than as an operating cash flow as previously required. This requirement will reduce net operating cash flows and increase net
financing cash flows in periods after the effective date. These future amounts can not be estimated, because they depend on, among other things, when employees exercise stock options. For the nine-month period ended February 28, 2007 excess tax
benefits recognized in financing cash flows were $1.6 million.

Inventory Costs.On June 1, 2006, we adopted SFAS No. 151,
Inventory Costs, an amendment of ARB No. 43, Chapter 4. This standard clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted material should be expensed as incurred and not included in overhead.
In addition, this standard requires that the allocation of fixed production overhead costs to inventory be based on the normal capacity of the production facilities. The adoption of this standard did not have an effect on our consolidated financial
position or results of operations.

Accounting for Mining Stripping Costs.On June 1, 2006, we adopted, Emerging Issues Task
Force Issue 04-6, Accounting for Stripping Costs Incurred during Production in the Mining Industry, which requires that stripping costs incurred during the production phase of the mine be included in the costs of the inventory produced
during the period that the stripping costs are incurred. As of May 31, 2006, the balance of our capitalized post-production stripping costs was $7.9 million. In accordance with the transition provision of EITF 04-6, we wrote off these deferred
costs, effective June 1, 2006, and recorded a charge to retained earnings of $4.9 million, net of tax benefits of $3.0 million. We will now recognize the costs of all post-production stripping activity as a cost of the inventory produced during
the period the stripping costs are incurred. Although dependent in part on the future level of post-production stripping activity which varies from period to period, we do not expect that EITF 04-6 will have a material impact on our financial
position or results of operations for periods following adoption.



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Accounting for Income Taxes.In July 2006, the Financial Accounting Standards Board issued FASB
Interpretation 48, Accounting for Uncertainty in Income Taxes, which will be effective for our Company beginning June 1, 2007. 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 are currently evaluating the impact this
interpretation will have on our consolidated financial statements.

Fair Value Measurements.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. SFAS is
effective for our Company beginning June 1, 2008. We believe that the adoption of SFAS No. 157 will not have a material impact on our consolidated financial statements.

Accounting for Defined Benefit Pension and other Postretirement Plans.In September 2006, the Financial Accounting Standards Board issued SFAS
No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements No. 87, 88, 106 and 132(R). This standard requires that previously unrecognized actuarial
gains or losses, prior service costs or credits and transition obligations or assets be recognized generally through adjustments to accumulated other comprehensive income and credits to prepaid benefit cost or accrued benefit liability. As a result
of these adjustments, the current funded status of defined benefit pension plans and other postretirement benefit plans will be reflected in our consolidated balance sheet as of May 31, 2007.

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 level of construction activity in our markets, abnormal periods of inclement weather, unexpected
periods of equipment downtime, changes in the cost of raw materials, fuel and energy, the impact of environmental laws and other regulations, and the risks and uncertainties described in Part I, Item 1A, Risk Factors, of our Annual
Report on Form 10-K for the year ended May 31, 2006.



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

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



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PART II. OTHER INFORMATION



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

Issuer Purchases of Equity Securities. We did not purchase any of our Common Stock on the open market during the three-month period ended February 28, 2007. However, we repurchased shares of our Common Stock in connection with
so-called stock swap exercises of employee stock options in which shares are surrendered or deemed surrendered to us to pay the exercise price or to satisfy tax withholding obligations. The following table presents information with
respect to such repurchases.



|                                     |  |                                     |  |                                  |       |                                                                                    |     |                                                                                 |    
|------------------------------------ |  | ----------------------------------- |  | -------------------------------- | ----- | ---------------------------------------------------------------------------------- | --- | ------------------------------------------------------------------------------- | ---
|Period                               |  | (a) TotalNumber of Shares Purchased |  | (b) Average Price Paid per Share |       | (c) Total Number of Shares Purchasedas Part of PubliclyAnnounced
Plans or Programs |     | (d) Maximum Numberof Shares that MayYet Be PurchasedUnder the Plans or Programs
|December 1, 2006  December 31, 2006 |  |                                    |  | $                                |      |                                                                                    | N/A |                                                                                 | N/A
|January 1, 2007  January 31, 2007   |  | 5,929                               |  |                                  | 72.02 |                                                                                    | N/A |                                                                                 | N/A
|February 1, 2007  February 28, 2007 |  |                                    |  |                                  |      |                                                                                    | N/A |                                                                                 | N/A
|                                     |  |                                     |  |                                  |       |                                                                                    |     |                                                                                 |    
|Total                                |  | 5,929                               |  | $                                | 72.02 |                                                                                    | N/A |                                                                                 | N/A
|                                     |  |                                     |  |                                  |       |                                                                                    |     |                                                                                 |    



|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 Amended and Restated Trust Agreement, dated as of June 5, 1998, among Texas Industries, Inc., The First National Bank of Chicago, First Chicago Delaware, Inc., Kenneth R. Allen, Larry L.
Clark and James R. McCraw (incorporated by reference to Exhibit 4.5 to Form S-3/A dated June 1, 1996, File No. 333-50517)
|    | 
|4.3 |  | Form of Convertible Subordinated Debenture Indenture, dated as of June 5, 1998, between Texas Industries, Inc. and First Chicago Delaware Inc. (incorporated by reference to Exhibit 4.6 to Form
S-3/A dated June 1, 1996, File No. 333-50517)                                                                              
|    | 
|4.4 |  | Form of Guarantee Agreement, dated as of June 5, 1998, by Texas Industries, Inc. and First Chicago Delaware Inc. (incorporated by reference to Exhibit 4.7 to Form S-3/A dated June 1, 1996, File
No. 333-50517)                                                                                                            
|    | 
|4.5 |  | Form of the Companys 71/4% Senior Note due 2013
(incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)                                                                                                                                                           
|    | 
|4.6 |  | 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)                                                                                                                                                                



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|      |  |                                                                                                                                                                                                                                                                                                                                      
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|4.7   |  | 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)                                                                                                                     
|      | 
|4.8   |  | 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)                                                                                                  
|      | 
|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  |  | Credit Agreement, dated July 6, 2005, 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 10.2 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)
|      | 
|10.3  |  | Separation and Distribution Agreement, dated July 6, 2005, between the Company and Chaparral (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated June 29, 2005, File
No. 001-04887)                                                                                                                       
|      | 
|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 (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K dated June 29, 2005,
File No. 001-04887)                                                                                                                   
|      | 
|10.6  |  | Security Agreement, dated as of July 6, 2005, among the Company, the Guarantors and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.5 to Current Report on
Form 8-K dated June 29, 2005, File No. 001-04887)                                                                                 
|      | 
|10.7  |  | 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)                                                                                                                                                                                           
|      | 
|10.8  |  | 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)                                                                                                                                                             
|      | 
|10.9  |  | 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)                                                                                                                                                       
|      | 
|10.10 |  | 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)                                                                                                                                  
|      | 
|10.11 |  | 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)                                                                                                                                                                             
|      | 
|10.12 |  | TXI Annual Incentive Plans-Fiscal Year 2007 (incorporated by reference to Exhibit 10.12 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, 2009 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 25,
2006)                                                                                                                                    
|      | 
|10.14 |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2008, as amended (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on
July 25, 2006)                                                                                                                        
|      | 
|10.15 |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2007, as amended (incorporated by reference to Exhibit 10.16 to Annual Report on Form 10-K filed on
July 25, 2006)                                                                                                                        



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                                                          
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.16 |  | Master Performance-Based Incentive Plan (incorporated by reference to Appendix A to definitive proxy statement filed on August 25, 2006)                                                                                                                                                                 
|      | 
|10.17 |  | 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)                                                                                                                       
|      | 
|10.18 |  | 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)                                                                
|      | 
|10.19 |  | 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)                                                                      
|      | 
|10.20 |  | 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)                            
|      | 
|10.21 |  | 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)
|      | 
|10.22 |  | 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)    
|      | 
|10.23 |  | 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)                                                                                                                                      
|      | 
|10.24 |  | 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)                                                                                                                                  
|      | 
|10.25 |  | 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)                                                                                                                               
|      | 
|10.26 |  | 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)                                                                                                                                                             
|      | 
|12.1  |  | Computation of Ratios of Earnings to Fixed Charges                                                                                                                                                                                                                                                       
|      | 
|15.1  |  | Letter re: Unaudited Interim Financial Information                                                                                                                                                                                                                                                       
|      | 
|31.1  |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                                                                                                                        
|      | 
|31.2  |  | Rule 13a-14(a)/15d-14(a) 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.                                                                     
|               |  | 
|March 29, 2007 |  |  |  | /s/ Richard M. Fowler                                                                      
|               |  |  |  | Richard M. Fowler                                                                          
|               |  |  |  | Executive Vice President - Finance andChief Financial Officer (Principal Financial Officer)
|               |  | 
|March 29, 2007 |  |  |  | /s/ James R. McCraw                                                                        
|               |  |  |  | James R. McCraw                                                                            
|               |  |  |  | Vice President  Accounting and Risk Management (Principal Accounting Officer)             



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##### Table of Contents

INDEX TO EXHIBITS



|              |  |                                                                                                                                                                                                                                                                                                                                      
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  |                                                                                                                                                                                                                                                                                                                                      
|              | 
|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 Amended and Restated Trust Agreement, dated as of June 5, 1998, among Texas Industries, Inc., The First National Bank of Chicago, First Chicago Delaware, Inc., Kenneth R. Allen, Larry L.
Clark and James R. McCraw (incorporated by reference to Exhibit 4.5 to Form S-3/A dated June 1, 1996, File No. 333-50517)         
|              | 
|4.3           |  | Form of Convertible Subordinated Debenture Indenture, dated as of June 5, 1998, between Texas Industries, Inc. and First Chicago Delaware Inc. (incorporated by reference to Exhibit 4.6 to Form
S-3/A dated June 1, 1996, File No. 333-50517)                                                                                       
|              | 
|4.4           |  | Form of Guarantee Agreement, dated as of June 5, 1998, by Texas Industries, Inc. and First Chicago Delaware Inc. (incorporated by reference to Exhibit 4.7 to Form S-3/A dated June 1, 1996, File
No. 333-50517)                                                                                                                     
|              | 
|4.5           |  | Form of the Companys 71/4% Senior Note due 2013
(incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K dated June 29, 2005, File No. 001-04887)                                                                                                                                                                    
|              | 
|4.6           |  | 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)                                                                                                                                                                         
|              | 
|4.7           |  | 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)                                                                                                                     
|              | 
|4.8           |  | 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)                                                                                                  
|              | 
|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          |  | Credit Agreement, dated July 6, 2005, 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 10.2 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)



|              |  |                                                                                                                                                                                                                                                     
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  |                                                                                                                                                                                                                                                     
|              | 
|10.3          |  | Separation and Distribution Agreement, dated July 6, 2005, between the Company and Chaparral (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K dated June 29, 2005, File
No. 001-04887)                                      
|              | 
|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 (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K dated June 29, 2005,
File No. 001-04887)                                  
|              | 
|10.6          |  | Security Agreement, dated as of July 6, 2005, among the Company, the Guarantors and Bank of America, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.5 to Current Report on
Form 8-K dated June 29, 2005, File No. 001-04887)
|              | 
|10.7          |  | 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)                                                                                                          
|              | 
|10.8          |  | 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)                                                                            
|              | 
|10.9          |  | 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)                                                                      
|              | 
|10.10         |  | 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)                                                 
|              | 
|10.11         |  | 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)                                                                                            
|              | 
|10.12         |  | TXI Annual Incentive Plans-Fiscal Year 2007 (incorporated by reference to Exhibit 10.12 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, 2009 (incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K filed on July 25,
2006)                                                   
|              | 
|10.14         |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2008, as amended (incorporated by reference to Exhibit 10.15 to Annual Report on Form 10-K filed on
July 25, 2006)                                       
|              | 
|10.15         |  | TXI Three Year Incentive Plan for the Three Consecutive Fiscal Year Periods Ending May 31, 2007, as amended (incorporated by reference to Exhibit 10.16 to Annual Report on Form 10-K filed on
July 25, 2006)                                       
|              | 
|10.16         |  | Master Performance-Based Incentive Plan (incorporated by reference to Appendix A to definitive proxy statement filed on August 25, 2006)                                                                                                            
|              | 
|10.17         |  | 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)                                                                  
|              | 
|10.18         |  | 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)           



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##### Table of Contents

Index to Exhibits-(Continued)



|              |  |                                                                                                                                                                                                                                                                                                          
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  |                                                                                                                                                                                                                                                                                                          
|              | 
|10.19         |  | 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)                                                                      
|              | 
|10.20         |  | 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)                            
|              | 
|10.21         |  | 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)
|              | 
|10.22         |  | 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)    
|              | 
|10.23         |  | 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)                                                                                                                                      
|              | 
|10.24         |  | 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)                                                                                                                                  
|              | 
|10.25         |  | 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)                                                                                                                                 
|              | 
|10.26         |  | 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)                                                                                                                                                             
|              | 
|12.1          |  | Computation of Ratios of Earnings to Fixed Charges                                                                                                                                                                                                                                                       
|              | 
|15.1          |  | Letter re: Unaudited Interim Financial Information                                                                                                                                                                                                                                                       
|              | 
|31.1          |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                                                                                                                        
|              | 
|31.2          |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer                                                                                                                                                                                                                                        
|              | 
|32.1          |  | Section 1350 Certification of Chief Executive Officer                                                                                                                                                                                                                                                    
|              | 
|32.2          |  | Section 1350 Certification of Chief Financial Officer                                                                                                                                                                                                                                                    



- 40 -