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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, 2003



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



For the transition period from
 to



Commission File Number 1-4887



---



TEXAS INDUSTRIES, INC.

(Exact name of registrant as specified in the charter)



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



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



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



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



As of April 7, 2003, 21,061,412 shares of Registrants Common Stock, $1.00 par value, were outstanding.



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INDEX



TEXAS INDUSTRIES, INC.
AND SUBSIDIARIES



|                             
|-----------------------------
|PART I. FINANCIAL INFORMATION
|                             
|Item 1.                      
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|Item 2.                      
|                             
|Item 3.                      
|                             
|Item 4.                      
|                             
|PART II. OTHER INFORMATION   
|                             
|Item 1.                      
|                             
|Item 6.                      
|                             
|SIGNATURES                   
|                             
|CERTIFICATIONS               





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CONSOLIDATED BALANCE SHEETS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES

|                                                                                                                          |  | (Unaudited) February 28, |           |   | May 31, |  
|------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | --------- | - | ------- | -
|                                                                                                                         
|In thousands                                                                                                              |  | 2003                     |           |   | 2002    |  
|                                                                                                                         
|ASSETS                                                                                                                    |  |                          |           |   |         |  
|CURRENT ASSETS                                                                                                            |  |                          |           |   |         |  
|Cash                                                                                                                      |  | $                        | 5,494     |   |         | $
|Receivables                                                                                                               |  |                          | 36,947    |   |         |  
|Inventories                                                                                                               |  |                          | 283,988   |   |         |  
|Deferred taxes and prepaid expenses                                                                                       |  |                          | 38,877    |   |         |  
|                                                                                                                          |  |                          |           |   |         |  
|TOTAL CURRENT ASSETS                                                                                                      |  |                          | 365,306   |   |         |  
|                                                                                                                         
|OTHER ASSETS                                                                                                              |  |                          |           |   |         |  
|Goodwill                                                                                                                  |  |                          | 146,474   |   |         |  
|Real estate and investments                                                                                               |  |                          | 43,322    |   |         |  
|Deferred charges and intangibles                                                                                          |  |                          | 24,282    |   |         |  
|                                                                                                                          |  |                          |           |   |         |  
|                                                                                                                          |  |                          | 214,078   |   |         |  
|                                                                                                                         
|PROPERTY, PLANT AND EQUIPMENT                                                                                             |  |                          |           |   |         |  
|Land and land improvements                                                                                                |  |                          | 216,666   |   |         |  
|Buildings                                                                                                                 |  |                          | 103,595   |   |         |  
|Machinery and equipment                                                                                                   |  |                          | 1,725,094 |   |         |  
|Construction in progress                                                                                                  |  |                          | 50,429    |   |         |  
|                                                                                                                          |  |                          |           |   |         |  
|                                                                                                                          |  |                          | 2,095,784 |   |         |  
|Less allowances for depreciation                                                                                          |  |                          | 944,414   |   |         |  
|                                                                                                                          |  |                          |           |   |         |  
|                                                                                                                          |  |                          | 1,151,370 |   |         |  
|                                                                                                                          |  |                          |           |   |         |  
|                                                                                                                          |  | $                        | 1,730,754 |   |         | $
|                                                                                                                          |  |                          |           |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                      |  |                          |           |   |         |  
|CURRENT LIABILITIES                                                                                                       |  |                          |           |   |         |  
|Trade accounts payable                                                                                                    |  | $                        | 120,049   |   |         | $
|Accrued interest, wages and other items                                                                                   |  |                          | 46,393    |   |         |  
|Current portion of long-term debt                                                                                         |  |                          | 85,232    |   |         |  
|                                                                                                                          |  |                          |           |   |         |  
|TOTAL CURRENT LIABILITIES                                                                                                 |  |                          | 251,674   |   |         |  
|                                                                                                                         
|LONG-TERM DEBT                                                                                                            |  |                          | 382,490   |   |         |  
|                                                                                                                         
|DEFERRED INCOME TAXES AND OTHER CREDITS                                                                                   |  |                          | 155,334   |   |         |  
|                                                                                                                         
|COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY HOLDING
SOLELY COMPANY CONVERTIBLE DEBENTURES |  |                          | 199,937   |   |         |  
|                                                                                                                         
|SHAREHOLDERS EQUITY                                                                                                      |  |                          |           |   |         |  
|Common stock, $1 par value                                                                                                |  |                          | 25,067    |   |         |  
|Additional paid-in capital                                                                                                |  |                          | 260,371   |   |         |  
|Retained earnings                                                                                                         |  |                          | 547,718   |   |         |  
|Accumulated other comprehensive loss                                                                                      |  |                          | (648      | ) |         |  
|Cost of common stock in treasury                                                                                          |  |                          | (91,189   | ) |         |  
|                                                                                                                          |  |                          |           |   |         |  
|                                                                                                                          |  |                          | 741,319   |   |         |  
|                                                                                                                          |  |                          |           |   |         |  
|                                                                                                                          |  | $                        | 1,730,754 |   |         | $
|                                                                                                                          |  |                          |           |   |         |  



See notes to
consolidated financial statements.





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(Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                                             |  | Three months ended February 28, |         |   | Nine months ended February 28, |  
|-------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | -
|                                            
|In thousands except per share                |  | 2003                            |         |   | 2002                           |  
|                                            
|NET SALES                                    |  | $                               | 273,629 |   |                                | $
|                                            
|COSTS AND EXPENSES (INCOME)                  |  |                                 |         |   |                                |  
|Cost of products sold                        |  |                                 | 265,387 |   |                                |  
|Selling, general and administrative          |  |                                 | 23,394  |   |                                |  
|Interest                                     |  |                                 | 8,481   |   |                                |  
|Other income                                 |  |                                 | (447    | ) |                                |  
|                                             |  |                                 |         |   |                                |  
|                                             |  |                                 | 296,815 |   |                                |  
|                                             |  |                                 |         |   |                                |  
|INCOME (LOSS) BEFORE THE FOLLOWING ITEMS     |  |                                 | (23,186 | ) |                                |  
|                                            
|Income taxes (benefit)                       |  |                                 | (7,755  | ) |                                |  
|                                             |  |                                 |         |   |                                |  
|                                             |  |                                 | (15,431 | ) |                                |  
|                                            
|Dividends on preferred securitiesnet of tax |  |                                 | (1,787  | ) |                                |  
|                                             |  |                                 |         |   |                                |  
|NET INCOME (LOSS)                            |  | $                               | (17,218 | ) |                                | $
|                                             |  |                                 |         |   |                                |  
|                                            
|BASIC                                        |  |                                 |         |   |                                |  
|Average shares                               |  |                                 | 21,129  |   |                                |  
|                                            
|Earnings (loss) per share                    |  | $                               | (.81    | ) |                                | $
|                                             |  |                                 |         |   |                                |  
|                                            
|DILUTED                                      |  |                                 |         |   |                                |  
|Average shares                               |  |                                 | 21,129  |   |                                |  
|                                            
|Earnings (loss) per share                    |  | $                               | (.81    | ) |                                | $
|                                             |  |                                 |         |   |                                |  
|                                            
|Cash dividends per share                     |  | $                               | .075    |   |                                | $
|                                             |  |                                 |         |   |                                |  



See notes to
consolidated financial statements.



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(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

TEXAS INDUSTRIES, INC. AND SUBSIDIARIES



|                                            |  | Nine months ended February 28, |         
|------------------------------------------- |  | ------------------------------ | --------
|                                           
|In thousands                                |  | 2003                           |         
|                                           
|OPERATING ACTIVITIES                        |  |                                |         
|Net income (loss)                           |  | $                              | (16,643 
|Loss (gain) on disposal of assets           |  |                                | 1,053   
|Non-cash items                              |  |                                |         
|Depreciation, depletion and amortization    |  |                                | 72,977  
|Deferred taxes                              |  |                                | (13,426 
|Othernet                                   |  |                                | 4,861   
|Changes in operating assets and liabilities |  |                                |         
|Receivables sold                            |  |                                | (14,071 
|Receivables                                 |  |                                | 22,227  
|Inventories and prepaid expenses            |  |                                | (15,067 
|Accounts payable and accrued liabilities    |  |                                | 6,735   
|Real estate and investments                 |  |                                | 2,351   
|                                            |  |                                |         
|Net cash provided by operations             |  |                                | 50,997  
|                                           
|INVESTING ACTIVITIES                        |  |                                |         
|Capital expenditures                        |  |                                | (41,094 
|Proceeds from disposal of assets            |  |                                | 10,974  
|Othernet                                   |  |                                | (683    
|                                            |  |                                |         
|Net cash used by investing                  |  |                                | (30,803 
|                                           
|FINANCING ACTIVITIES                        |  |                                |         
|Proceeds of long-term borrowing             |  |                                | 221,940 
|Debt retirements                            |  |                                | (238,415
|Purchase of treasury shares                 |  |                                | (2      
|Common dividends paid                       |  |                                | (4,736  
|Othernet                                   |  |                                | (917    
|                                            |  |                                |         
|Net cash used by financing                  |  |                                | (22,130 
|                                            |  |                                |         
|Increase (decrease) in cash                 |  |                                | (1,936  
|                                           
|Cash at beginning of period                 |  |                                | 7,430   
|                                            |  |                                |         
|Cash at end of period                       |  | $                              | 5,494   
|                                            |  |                                |         



See notes to
consolidated financial statements.





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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



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



SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended February 28,
2003, are not necessarily indicative of the results that may be expected for the year ended May 31, 2003. For further information, refer to the consolidated financial statements and footnotes thereto included in the Companys Annual Report on
Form 10-K for the year ended May 31, 2002.



Principles of Consolidation. The consolidated financial statements include the accounts of the Company and all subsidiaries. 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 Equivalents. For cash
flow purposes, temporary investments which have maturities of less than 90 days when purchased are considered cash equivalents.



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



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



|                        
|------------------------
|In thousands            
|                        
|CAC                     
|Gross carrying value    
|Accumulated amortization
|                        
|                        
|Steel                   
|Gross carrying value    
|Accumulated amortization
|                        
|                        
|                        
|                        
|                        





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SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES-Continued



Real Estate and
Investments.Surplus real estate and real estate acquired for development of high quality industrial, office and multi-use parks totaled $9.9 million and $14.3 million at February 28, 2003 and May 31, 2002, respectively. Investments, composed
primarily of life insurance contracts which may be used to fund certain Company benefit agreements, totaled $33.4 million and $27.2 million at February 28, 2003 and May 31, 2002, respectively.



Debt Issuance Cost. Debt issuance costs totaling $8.7
million and $9.9 million at February 28, 2003 and May 31, 2002, respectively, are associated with various debt issues and amortized over the terms of the related debt.



Intangibles.Intangibles include non-compete agreements and other intangibles with finite lives being
amortized on a straight-line basis over periods of 5 to 15 years. Their carrying value, adjusted for write-offs, totaled $2.7 million and $3.5 million, net of accumulated amortization of $5.8 million and $5.1 million at February 28, 2003 and May 31,
2002, respectively. Amortization expense of $700,000 and $900,000 was incurred in the nine-month periods ended February 28, 2003 and 2002, respectively. Annual amortization expense for each of the five succeeding years is $500,000, $400,000,
$300,000, $300,000 and $300,000.



Other
Credits. Other credits totaling $33.9 million and $32.1 million at February 28, 2003 and May 31, 2002, respectively, are composed primarily of liabilities related to the Companys retirement plans and deferred compensation agreements.



Accumulated Other Comprehensive Loss.Accumulated other comprehensive loss represents a minimum pension liability adjustment related to a defined benefit retirement plan covering certain employees and retirees of an acquired subsidiary. The minimum pension liability adjustment was
$600,000 net of tax of $300,000 at February 28, 2003. Comprehensive loss which consists of net loss and the minimum pension liability adjustment to shareholders equity was $17.3 million for the nine-month period ended February 28, 2003.



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



|                                 |  | Three months ended February 28, |         |   | Nine months ended February 28, |  
|-------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | -
|                                
|In thousands                     |  | 2003                            |         |   | 2002                           |  
|                                
|Revenues including delivery fees |  | $                               | 296,411 |   |                                | $
|Freight and delivery costs       |  |                                 | (22,782 | ) |                                |  
|                                 |  |                                 |         |   |                                |  
|Net sales                        |  | $                               | 273,629 |   |                                | $
|                                 |  |                                 |         |   |                                |  



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



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





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SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES-Continued



Basic and Diluted
EPS are calculated as follows:



|                                              |  | Three months ended February 28, |         | Nine months ended February 28,
|--------------------------------------------- |  | ------------------------------- | ------- | ------------------------------
|                                             
|In thousands except per share                 |  | 2003                            |         |                               
|                                             
|Earnings:                                     |  |                                 |         |                               
|Net income (loss)                             |  | $                               | (17,218 | )                             
|                                              |  |                                 |         |                               
|Basic earnings (loss)                         |  |                                 | (17,218 | )                             
|Dividends on preferred securitiesnet of tax  |  |                                 |        |                               
|                                              |  |                                 |         |                               
|Diluted earnings (loss)                       |  | $                               | (17,218 | )                             
|                                              |  |                                 |         |                               
|Shares:                                       |  |                                 |         |                               
|Weighted-average shares outstanding           |  |                                 | 21,055  |                               
|Contingently issuable shares                  |  |                                 | 74      |                               
|                                              |  |                                 |         |                               
|Basic weighted-average shares                 |  |                                 | 21,129  |                               
|                                             
|Preferred securities                          |  |                                 |        |                               
|Stock option and award dilution               |  |                                 |        |                               
|                                              |  |                                 |         |                               
|Diluted weighted-average shares *             |  |                                 | 21,129  |                               
|                                              |  |                                 |         |                               
|Basic earnings (loss) per share               |  | $                               | (.81    | )                             
|                                              |  |                                 |         |                               
|Diluted earnings (loss) per share             |  | $                               | (.81    | )                             
|                                              |  |                                 |         |                               
|* Shares excluded due to antidilutive effect: |  |                                 |         |                               
|Preferred securities                          |  |                                 | 2,888   |                               
|Stock options and awards                      |  |                                 | 2,576   |                               



WORKING CAPITAL



Working capital totaled $113.6 million at
February 28, 2003 and $202.6 million at May 31, 2002.



Receivables consist of:



|                             
|-----------------------------
|In thousands                 
|                             
|Notes and interest receivable
|Tax refund claims            
|Accounts receivable          
|                             
|                             
|                             



Accounts
receivable are presented net of allowances for doubtful receivables of $4.8 million at February and $4.7 million at May.



The Company has an agreement to sell, on a revolving basis, an interest in a defined pool of trade receivables of up to $125 million. The
agreement is subject to renewal on May 31, 2003. The maximum amount outstanding varies based upon the level of eligible receivables. Fees are variable and follow commercial paper rates. The interest sold totaled $110.9 million at February and $125
million at May. The sales are reflected as accounts receivable reductions and as operating cash flows. As collections reduce previously sold interests, new accounts receivable are customarily sold. Fees and expenses of $2.2 million and $3.4 million
are included in selling, general and administrative expenses in the nine-month periods ended February 28, 2003 and 2002, respectively. The Company, as agent for the purchaser, retains collection and administration responsibilities for the
participating interests of the defined pool.





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WORKING CAPITAL-Continued



Inventories consist of:



|                          
|--------------------------
|In thousands              
|                          
|Finished products         
|Work in process           
|Raw materials and supplies
|                          
|                          
|                          



Inventories are stated at cost (not in excess of market) with a majority of inventories using the last-in, first-out method (LIFO). If the average cost method (which approximates current replacement cost) had been used, inventory
values would have been higher by $8.9 million at February and $6.3 million at May.



Accrued interest, wages and other items consist of:



|                        
|------------------------
|In thousands            
|                        
|Interest                
|Employee compensation   
|Income taxes            
|Property taxes and other
|                        
|                        
|                        



LONG-TERM DEBT



Long-term debt is comprised of the following:



|                                                                             
|-----------------------------------------------------------------------------
|In thousands                                                                 
|                                                                             
|Revolving credit facility maturing in 2004, interest rates average 3.83%     
|Senior notes                                                                 
|Notes due through 2017, interest rates average 7.28%                         
|Notes due through 2008, interest rates average 7.28%                         
|Notes due through 2004, interest rates average 10.2%                         
|Variable-rate industrial development revenue bonds                           
|Bonds maturing in 2028, interest rate approximately 2.5%                     
|Bonds maturing in 2029, interest rate approximately 2.5%                     
|Bonds maturing in 2029, interest rate approximately 2.5%                     
|Pollution control bonds, due through 2007, interest rate 3.19% (75% of
prime)
|Other, maturing through 2009, interest rates average 10%                     
|                                                                             
|                                                                             
|Less current maturities                                                      
|                                                                             
|                                                                             
|                                                                             



Annual
maturities of long-term debt for each of the five succeeding years are $85.2, $53.7, $40.7, $45.7 and $41.5 million.







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LONG-TERM DEBT-Continued



The Company has available a bank-financed $350
million long-term revolving credit facility. An interest rate at the applicable margin above either prime or LIBOR is selected at the time of each borrowing. Commitment fees at a current annual rate of .375% are paid on the unused portion of this
facility. At February 28, 2003, $76.5 million was outstanding under this facility. In addition, $114.4 million has been utilized to support letters of credit issued primarily to secure the Companys variable-rate industrial development revenue
bonds, which allows the interest rates on these bonds to closely follow the tax-exempt commercial paper rates.



Loan agreements contain covenants that place limitations on incurring certain indebtedness, purchasing treasury stock, and making capital
expenditures and certain investments. The provisions of the revolving credit facility also require the Company to maintain certain ratios as of the end of each quarter. A fixed charge ratio defined as the ratio of earnings before interest, taxes
depreciation and amortization (EBITDA) to fixed charges limits the aggregate amount of annual fixed charges, which includes cash dividends on common stock. At February 28, 2003, $11.4 million of additional fixed charges could have been
incurred. A leverage ratio defined as the ratio of total debt to EBITDA limits the aggregate amount of total debt. As a result of its fiscal 2003 third quarter results, the Companys leverage ratio did not meet this requirement at February 28,
2003. The Company received a waiver from its lenders addressing the current deficiency through May 30, 2003, however, the Company can not be certain that it will be able to meet this requirement in the future, and therefore, has classified its
revolving credit facility debt as debt due within one year. The Company is in compliance with all other loan covenant restrictions.



The amount of interest paid for the nine-month periods presented was $20.5 million in 2003 and $28.9 million in 2002.



PREFERRED SECURITIES OF SUBSIDIARY



On June 5, 1998, TXI Capital Trust I (the Trust),
a Delaware business trust wholly owned by the Company, issued 4,000,000 of its 5.5% Shared Preference Redeemable Securities (Preferred Securities) to the public for gross proceeds of $200 million. The combined proceeds from the issuance
of the Preferred Securities and the issuance to the Company of the common securities of the Trust were invested by the Trust in $206.2 million aggregate principal amount of 5.5% convertible subordinated debentures due June 30, 2028 (the
Debentures) issued by the Company. At February 28, 2003, 3,998,744 Preferred Securities and $206.1 million aggregate principal amount of Debentures were outstanding. The Debentures are the sole assets of the Trust.



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



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



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





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SHAREHOLDERS EQUITY



Common stock consists of:



|                                           
|-------------------------------------------
|In thousands                               
|                                           
|Shares authorized                          
|Shares outstanding at end of period        
|Shares held in treasury                    
|Shares reserved for stock options and other



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



STOCK OPTION PLAN



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



A summary of option transactions for the nine-month period
ended February 28, 2003, follows:



|                          
|--------------------------
|                          
|                          
|                          
|                          
|                          
|Outstanding at June 1     
|Granted                   
|Exercised                 
|Cancelled                 
|                          
|Outstanding at February 28
|                          



At
February 28, 2003, there were 1,809,393 shares exercisable and 581,060 shares available for future grants. Outstanding options expire on various dates to January 15, 2013.





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INCOME TAXES



Federal income taxes for the interim periods ended February
28, 2003 and 2002, have been included in the accompanying financial statements on the basis of an estimated annual rate. The primary reason that the tax rate differs from the 35% statutory corporate rate is due to percentage depletion that is tax
deductible and state income tax expense. Applying these differences to the estimated current year pre-tax income resulted in an estimated annualized effective tax rate for 2003 of 43.9% compared to 31.3% for 2002. The tax benefit attributed to
dividends on preferred securities is based on the incremental tax rate of 35%. The Company made income tax payments of $2.6 million and $1.7 million in the nine-month periods ended February 28, 2003 and 2002, respectively and received income tax
refunds of $18.3 million in the nine-month period ended February 28, 2002.



LEGAL PROCEEDINGS AND CONTINGENT LIABILITIES



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



A wholly owned subsidiary of the Company based in California received a complaint from the California air regulatory authorities in
connection with its manufacturing operations. The subsidiary makes lightweight clay aggregate by heating clay pellets in two natural gas-fired kilns. The complaint alleges violations of the subsidiarys air emissions permit, but does not
specify the amount of any monetary sanction which may be sought. The amount of any possible sanctions is not currently estimable. The Company believes that the subsidiary is in substantial compliance with its permit limitations.



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



BUSINESS SEGMENTS



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





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EXHIBIT
A



INDEPENDENT ACCOUNTANTS REVIEW REPORT



Board of Directors

Texas Industries, Inc.



We have reviewed the accompanying condensed consolidated balance sheet of Texas Industries, Inc. and subsidiaries (the
Company) as of February 28, 2003 and the related condensed consolidated statements of operations for the three and nine-month periods ended February 28, 2003 and 2002, and the condensed consolidated statements of cash flows for the nine-month
periods ended February 28, 2003 and 2002. These financial statements are the responsibility of the Companys management.



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



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



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



/s/ Ernst & Young LLP



Dallas, Texas

March 20, 2003





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MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Comparison of operations and financial condition
for the three-month and nine-month periods ended February 28, 2003 to the three-month and nine-month periods ended February 28, 2002.



BUSINESS SEGMENTS



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



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



|                            |  | Three months ended February 28, |         | Nine months ended February 28,
|--------------------------- |  | ------------------------------- | ------- | ------------------------------
|                           
|In thousands                |  | 2003                            |         | 2002                          
|                           
|TOTAL SALES                 |  |                                 |         |                               
|Cement                      |  | $                               | 69,953  |                               
|Ready-mix                   |  |                                 | 39,113  |                               
|Stone, sand & gravel        |  |                                 | 21,458  |                               
|Structural mills            |  |                                 | 105,953 |                               
|Bar mill                    |  |                                 | 26,928  |                               
|                           
|UNITS SHIPPED               |  |                                 |         |                               
|Cement (tons)               |  |                                 | 1,032   |                               
|Ready-mix (cubic yards)     |  |                                 | 677     |                               
|Stone, sand & gravel (tons) |  |                                 | 3,891   |                               
|Structural mills (tons)     |  |                                 | 348     |                               
|Bar mill (tons)             |  |                                 | 84      |                               
|                           
|NET SALES                   |  |                                 |         |                               
|Cement                      |  | $                               | 58,368  |                               
|Ready-mix                   |  |                                 | 39,072  |                               
|Stone, sand & gravel        |  |                                 | 14,827  |                               
|Other products              |  |                                 | 23,999  |                               
|                            |  |                                 |         |                               
|TOTAL CAC                   |  |                                 | 136,266 |                               
|                           
|Structural mills            |  |                                 | 105,953 |                               
|Bar mill                    |  |                                 | 26,928  |                               
|Other                       |  |                                 | 4,482   |                               
|                            |  |                                 |         |                               
|TOTAL STEEL                 |  |                                 | 137,363 |                               
|                            |  |                                 |         |                               
|TOTAL NET SALES             |  | $                               | 273,629 |                               
|                            |  |                                 |         |                               





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|                                             |  | Three months ended February 28, |         |   | Nine months ended February 28, |  
|-------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | -
|                                            
|In thousands                                 |  | 2003                            |         |   | 2002                           |  
|                                            
|CAC OPERATIONS                               |  |                                 |         |   |                                |  
|Gross profit                                 |  | $                               | 26,910  |   |                                | $
|Less: Depreciation, depletion & amortization |  |                                 | 11,793  |   |                                |  
|Selling, general & administrative            |  |                                 | 8,763   |   |                                |  
|Other income                                 |  |                                 | (357    | ) |                                |  
|                                             |  |                                 |         |   |                                |  
|OPERATING PROFIT                             |  |                                 | 6,711   |   |                                |  
|                                            
|STEEL OPERATIONS                             |  |                                 |         |   |                                |  
|Gross profit                                 |  |                                 | 4,749   |   |                                |  
|Less: Depreciation & amortization            |  |                                 | 11,969  |   |                                |  
|Selling, general & administrative            |  |                                 | 4,958   |   |                                |  
|Other income                                 |  |                                 | 315     |   |                                |  
|                                             |  |                                 |         |   |                                |  
|OPERATING PROFIT (LOSS)                      |  |                                 | (12,493 | ) |                                |  
|                                             |  |                                 |         |   |                                |  
|TOTAL OPERATING PROFIT (LOSS)                |  |                                 | (5,782  | ) |                                |  
|                                            
|CORPORATE RESOURCES                          |  |                                 |         |   |                                |  
|Other income                                 |  |                                 | 405     |   |                                |  
|Less: Depreciation & amortization            |  |                                 | 482     |   |                                |  
|Selling, general & administrative            |  |                                 | 8,846   |   |                                |  
|                                             |  |                                 |         |   |                                |  
|                                             |  |                                 | (8,923  | ) |                                |  
|                                            
|INTEREST EXPENSE                             |  |                                 | (8,481  | ) |                                |  
|                                             |  |                                 |         |   |                                |  
|                                            
|INCOME (LOSS) BEFORE TAXES & OTHER ITEMS     |  | $                               | (23,186 | ) |                                | $
|                                             |  |                                 |         |   |                                |  



RESULTS OF OPERATIONS



Operating Profit  February 2003 Periods Compared to
February 2002 Periods



Operating loss for
the current quarter was $5.8 million, compared to an operating profit of $30.7 million for the prior year quarter. Operating profit for the current nine-month period was $27.2 million, compared to $105.1 million for the prior year period.



CAC profit declined $14.2 million for the
quarter and $32.8 million for the nine-month period. Abnormally poor winter weather and softening demand in the Companys north Texas markets reduced ready-mix and aggregate shipments in the quarter. Higher costs due to a planned maintenance
shutdown at the Companys Midlothian cement plant which was extended due to an independent contractor accident and increased energy costs reduced margins in the quarter.



Steel operating profit declined $22.3 million for the quarter and $45.2 million for the nine-month period.
Prior year operating profit included pre-tax income from the Companys litigation against certain graphite electrode suppliers of $1.1 million in the quarter and $9.6 million in the nine-month period. The decline in nonresidential construction
has resulted in a very competitive structural steel market. Realized prices for structural steel have declined significantly as the Company has sought to maintain market share. Increased raw material and energy costs also contributed to reduced
margins.



Net Sales. Consolidated net
sales for the current quarter were $273.6 million, compared to $303.5 million for the prior year quarter. Consolidated net sales for the current nine-month period were $923.1 million, compared to $1,000.6 million for the prior year period.





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CAC net sales
were down from the prior year periods, 12% for the quarter and 8% for the nine-month period, reflecting lower cement prices and decreased ready-mix and aggregate shipments. Total cement sales decreased from the prior year periods as average trade
prices declined 2% in the current quarter and nine-month periods on lower shipments. Ready-mix sales decreased from the prior year periods as volumes declined 22% in the current quarter and 12% in the nine-month period. Average trade prices declined
3% in the current quarter and 2% in the current nine-month period. Aggregate sales decreased from the prior year periods as shipments declined 20% in the current quarter and 16% in the current nine-month period. Aggregate trade prices were 3% higher
in the current quarter and slightly lower in the nine-month period due to the product mix.



Steel sales were down from the prior year periods, 7% for the quarter and nine-month periods, reflecting lower realized prices. Structural steel sales decreased from the prior year periods as realized
prices declined 13% in the current quarter and 6% in the current nine-month period. Bar mill sales in the current quarter increased as 7% higher prices offset 5% lower shipments.



Operating Costs. Consolidated cost of products sold including depreciation, depletion and amortization
for the current quarter was $265.4 million, an increase of $12.4 million from the prior year period. Consolidated cost of products sold for the current nine-month period was $850.3 million, an increase of $2.2 million from the prior year period. CAC
costs increased $100,000 in the quarter and decreased $4.8 million in the nine-month period due to lower ready-mix volume offset by the impact of higher maintenance and energy costs. Steel costs increased from the prior year $12.3 million in the
quarter and $7.0 million in the nine-month period as lower shipments were offset by higher scrap and energy costs and the effect of lower realized prices on structural steel inventory valuations.



CAC selling, general and administrative expenses including
depreciation and amortization decreased from the prior year, $4.6 million in the quarter and $7.4 million in the nine-month period primarily due to lower incentive compensation and bad debt expense. Steel expenses decreased from the prior year, $2.7
million in the quarter and $7.9 million in the nine-month period primarily due to lower bad debt expense and general expenses.



CAC other income includes routine sales of surplus operating assets. Sales decreased from the prior year $700,000 in the nine-month
period. Steel other income includes losses from disposal of assets of $600,000 in the current quarter and $900,000 in the current nine-month period. In the prior year, Steel other income included $1.1 million in the quarter and $9.6 million in the
nine-month period from the Companys litigation against certain graphite electrode suppliers.



Corporate Resources



Selling, general and administrative expenses including depreciation and amortization increased from the prior year $300,000 in the quarter and decreased $100,000 in the nine-month period as lower costs
associated with the Companys agreement to sell receivables were offset by higher bad debt expense. Other income increased from the prior year due to higher interest income.



Interest Expense



Interest expense for the current nine-month period at $25.9 million decreased $7.3 million from the prior year period due primarily to
lower average borrowings under the Companys revolving credit facility and to a lesser extent lower interest rates.





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Income Taxes



Federal income taxes for the interim
periods ended February 28, 2003 and 2002, are based on an estimated annual rate. The primary reason that the tax rate differs from the 35% statutory corporate rate is due to percentage depletion that is tax deductible and state income tax expense.
Applying these differences to the estimated current year pre-tax income resulted in an estimated annualized effective tax rate for 2003 of 43.9% compared to 31.3% for 2002. The tax benefit attributed to dividends on preferred securities is based on
the incremental tax rate of 35%.



Dividends on Preferred
Securities  Net of Tax



Dividends on
preferred securities of subsidiary net of tax benefit amounted to $5.4 million in each nine-month period.



LIQUIDITY AND CAPITAL RESOURCES



The Company historically has financed its major capital expansion projects with cash from operations and long-term borrowing. Working capital requirements and capital expenditures for normal
replacement and technological upgrades of existing equipment and expansions of its operations are funded with cash from operations. The fiscal year 2003 capital expenditure budget for these activities is estimated currently at approximately $50
million. In addition, the Company leases certain mobile and other equipment used in its operations under operating leases that in the normal course of business are renewed or replaced by other leases. The Companys contractual obligations for
long-term debt, operating leases and preferred securities of subsidiary are essentially unchanged from May 31, 2002 except for the $13.5 million reduction in the outstanding balance on the revolving credit facility.



The Companys sources of liquidity, in addition to cash
from operations, include a $350 million revolving credit facility that expires in March 2004, and an accounts receivable facility pursuant to which the Company has an agreement to sell, on a revolving basis, an interest in a defined pool of eligible
trade accounts receivables of up to $125 million. At February 28, 2003, $110.9 million of eligible receivables had been sold. The accounts receivable facility is subject to renewal on May 31, 2003. At February 28, 2003, $76.5 million was outstanding
under the revolving credit facility and an additional $114.4 million had been utilized to support letters of credit. Provisions of the revolving credit facility and accounts receivable facility require the Company to maintain certain ratios at the
end of each fiscal quarter including a fixed charge ratio defined as the ratio of earnings before interest, taxes, depreciation and amortization (EBITDA) to fixed charges, which limits the aggregate amount of annual fixed charges, and a
leverage ratio, defined as the ratio of total debt to EBITDA, which limits the amount to total debt. As a result of its fiscal 2003 third quarter results, the Company did not meet the required leverage ratio. However, the Companys banks agreed
to increase the permissible leverage ratio through May 30, 2003 and the Company is in compliance with this and its other financial covenants. The Company has reclassified its revolving credit facility debt as debt due within one year. Management is
pursuing refinancing alternatives that, when combined with the net cash provided by operating activities, should be sufficient to meet the Companys short and long-term financing needs. Based on discussions with lenders, management believes it
can obtain waivers and extensions of its revolving credit facility and its agreement to sell trade accounts receivable until the refinancing is completed. However, there can be no assurance that the Company will negotiate acceptable terms for such
refinancing, that other sources of financing will be available on acceptable terms, or that the Company will be able to obtain such waivers and extensions.





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Cash Flows



Net cash provided by operating activities
for the current nine-month period was $51.0 million, a decrease of $61.5 million from the prior year period. The decrease in operating cash flow was primarily the result of lower operating profit and the related increase in deferred taxes. In the
current period, a scheduled shutdown to refurbish the Steel production facilities increased prepaid expenses $6.9 million. CAC inventories grew $6.7 million and receivables declined $23.7 million on lower sales. Accounts payable and accrued expenses
increased $6.7 million primarily due to higher trade accounts payable. In the prior year period, increased Steel shipments reduced inventories $7.2 million and increased trade receivables $11.8 million. Collection of tax refund claims also reduced
receivables $18.3 million. Accounts payable and accrued expenses decreased $19.7 million primarily due to lower trade accounts payable as a result of the completion of the Midlothian cement plant expansion.



Net cash used by investing activities for the current
nine-month period was $30.8 million, compared to $20.7 million during the prior year period, consisting principally of capital expenditures for normal replacement and technological upgrades of existing equipment and expansion of the Companys
operations. Capital expenditures for these activities were $41.1 million, an increase of $22.1 million from the prior year. Proceeds from disposal of assets increased $5.7 million. Lower current sales of surplus assets were offset by the
collection of notes receivable related to disposals that occurred in prior years.



Net cash used by financing activities for the current nine-month period was $22.1 million, compared to $91.4 million during the prior year period. The outstanding balance on the Companys
revolving credit facility was reduced $13.5 million. The Companys quarterly cash dividend of $.075 per common share remained unchanged from the prior year.



OTHER ITEMS



Environmental Matters



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



Market Risk



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



Critical Accounting Policies



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





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New Accounting
Pronouncements



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



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

Private Securities Litigation Reform Act of 1995



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





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Item 4. Controls and Procedures



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



PART II. OTHER INFORMATION



Item 1. Legal Proceedings



The information required by this item is included in the section of the Notes to Consolidated Financial Statements entitled Legal Proceedings and Contingent Liabilities presented in Part I on page 12 and incorporated
herein by reference.



Item 6. Exhibits and Reports on Form 8-K



The following exhibits are included herein:



(15) Letter re: Unaudited Interim Financial Information



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



The
Registrant filed the following report on Form 8-K during the three-month period ended February 28, 2003:



December 30, 2002, reporting the certifications made by the Chief Executive Officer and the Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) to accompany the Registrants Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2002.





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SIGNATURES



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



|               |  |  |  | TEXAS INDUSTRIES, INC.
|-------------- |  |  |  | ----------------------
|              
|April 10, 2003 |  |  |  | /s/ Richard M. Fowler 
|               |  |  |  |                       



|April 10, 2003 |  |  |  | /s/ James R. McCraw
|-------------- |  |  |  | -------------------
|               |  |  |  |                    





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CERTIFICATIONS



I, Robert D. Rogers,
certify that:



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



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



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



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



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



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



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



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



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



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



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



Date: April 10, 2003



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






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I, Richard M. Fowler, certify
that:



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



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



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



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



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



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



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



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



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



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



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



Date: April 10, 2003



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




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##### Table of Contents



INDEX TO
EXHIBITS



|Exhibits |  | Page                                              
|-------- |  | --------------------------------------------------
|        
|15.      |  | Letter re: Unaudited Interim Financial Information





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