FORM 10-Q

                 SECURITIES AND EXCHANGE COMMISSION
                      Washington, D. C.  20549

(Mark One)

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

For the quarterly period ended September 30, 2000
                                 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 1-06124

                      LONE STAR INDUSTRIES, INC.
        (Exact name of registrant as specified in its charter)

                 DELAWARE                        No. 13-0982660
         (State or other jurisdiction of        (I.R.S. Employer
         incorporation or organization)       Identification No.)

 10401 N. Meridian Street, Suite 400, Indianapolis, IN  46290
        (Address of principal executive offices)    (Zip Code)

Registrant's telephone number, including area code   317-706-3300

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



The number of shares  outstanding of each of the registrant's  classes of common
stock as of September 30, 2000:

       Common Stock, par value $.01 per share - 18,334,427 shares
<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

PART I.  FINANCIAL INFORMATION

                  ITEM 1.  FINANCIAL STATEMENTS
                  Consolidated Statements of Operations - For the
                     Three and Nine Months Ended September 30, 2000 and
                     1999 (Unaudited)......................................3

                  Consolidated Statements of Retained Earnings -
                     For the Three and Nine Months Ended September 30, 2000
                     and 1999 (Unaudited)..................................4

                  Consolidated Balance Sheets - September 30, 2000
                     (Unaudited) and December 31, 1999.....................5

                  Consolidated Statements of Cash Flows - For the
                     Nine Months Ended September 30, 2000 and 1999
                     (Unaudited)...........................................6

                  Notes to Unaudited Consolidated Financial Statements.....7

                  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........13

                  ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
                  ABOUT MARKET RISK.......................................19

PART II. OTHER INFORMATION................................................20

SIGNATURES................................................................21

<PAGE>

PART I.       FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                           LONE STAR INDUSTRIES, INC.
                                                                 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

                                                                      (In Thousands Except Per Share Amounts)

                                                            Successor Company                         Predecessor Company

<S>                                             <C>                   <C>                   <C>                  <C>
                                                      For the              For the               For the              For the
                                                    Three Months         Nine Months           Three Months         Nine Months
                                                       Ended                Ended                 Ended                Ended
                                                   September 30,        September 30,         September 30,        September 30,
                                                        2000                 2000                  1999                 1999
                                                 -------------------  -------------------   -------------------  -------------------
                                                 -------------------  -------------------   -------------------  -------------------
Revenues:

    Net sales                                              $111,507             $286,465              $112,875             $281,604
    Joint venture income                                      1,559                3,566                 2,944                6,454
    Marketable securities received
       from insurance company                                 7,200                7,200                    -                    -
    Other income, net                                           777                2,876                 3,025                6,476
                                                 -------------------  -------------------   -------------------  -------------------
                                                 -------------------  -------------------   -------------------  -------------------
                                                            121,043              300,107               118,844              294,534
                                                 -------------------  -------------------   -------------------  -------------------
                                                 -------------------  -------------------   -------------------  -------------------
Deductions from revenues:

    Cost of sales                                            67,481              178,852                61,747              161,909
    Selling, general and administrative

       expenses                                               6,754               20,669                 5,589               18,720
    Depreciation and depletion                               10,510               30,034                 6,193               18,227
    Interest expense, net                                    18,966               51,149                   291                1,560
                                                 -------------------  -------------------   -------------------  -------------------
                                                 -------------------  -------------------   -------------------  -------------------
                                                            103,711              280,704                73,820              200,416
                                                 -------------------  -------------------   -------------------  -------------------
                                                 -------------------  -------------------   -------------------  -------------------


Income before income taxes                                   17,332               19,403                45,024               94,118
Provision for income taxes                                   (5,895)              (6,565)              (15,196)             (31,765)
                                                 -------------------  -------------------   -------------------  -------------------
                                                 -------------------  -------------------   -------------------  -------------------

Net income applicable to common stock                       $11,437              $12,838               $29,828              $62,353
                                                 ===================  ===================   ===================  ===================
                                                 ===================  ===================   ===================  ===================

Weighted average common shares outstanding:

    Basic                                                    18,340               18,340                19,331               19,687
                                                 ===================  ===================   ===================  ===================
                                                 ===================  ===================   ===================  ===================

    Diluted                                                  18,434               18,455                23,891               24,210
                                                 ===================  ===================   ===================  ===================
                                                 ===================  ===================   ===================  ===================


Earnings per common share:

    Basic                                                     $0.62                $0.70                 $1.54                $3.17
                                                 ===================  ===================   ===================  ===================
                                                 ===================  ===================   ===================  ===================

    Diluted                                                   $0.62                $0.70                 $1.25                $2.58
                                                 ===================  ===================   ===================  ===================
                                                 ===================  ===================   ===================  ===================

</TABLE>


The accompanying  Notes to Unaudited  Consolidated  Financial  Statements are an
integral part of the Financial Statements.
                                       3
<PAGE>

<TABLE>
<CAPTION>

                                                       LONE STAR INDUSTRIES, INC.

                                           CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (Unaudited)

                                                            (In Thousands)




                                      Successor Company                         Predecessor Company

<S>                           <C>              <C>                   <C>                   <C>
                                   For the          For the              For the              For the
                                Three Months     Nine Months          Three Months          Nine Months
                                  Ended             Ended                Ended                 Ended
                                September 30,     September 30,        September 30,        September 30,
                              ----------------  ------------------    -----------------    -----------------
                                    2000               2000                 1999                 1999
                              ----------------  ------------------    -----------------    -----------------


Retained earnings, beginning        $  13,466           $  12,065             $ 283,200        $ 252,671
  of period
Net income ...................         11,437              12,838                29,828           62,353

Dividends ....................           --                  --                    (964)          (2,960)

                                     ---------          ---------             ---------        ---------
                                     ---------          ---------             ---------        ---------
Retained earnings, end of period     $  24,903          $  24,903             $ 312,064        $ 312,064
                                     =========          =========             =========        =========
                                     =========          =========             =========        =========

</TABLE>


The accompanying  Notes to Unaudited  Consolidated  Financial  Statements are an
integral part of the Financial Statements.
                                       4
<PAGE>
<TABLE>
<CAPTION>

                                                          LONE STAR INDUSTRIES, INC.

                                                          CONSOLIDATED BALANCE SHEETS

                                                               (In Thousands)


                                                                                                           Successor Company

                                                                                              September 30,         December 31,
                                                                                                  2000                  1999
                                                                                            ------------------   -------------------
                                                                                               (Unaudited)

<S>                                                                                         <C>                  <C>
Assets:
  Current assets:

   Cash including cash equivalents of $10,794 and $594                                                $10,926                  $787
   Accounts and notes receivable, net                                                                  46,684                32,866
   Inventories:

      Finished goods                                                                                   21,018                17,768
      Work in process and raw materials                                                                12,088                10,021
      Supplies and fuel                                                                                28,707                26,374
                                                                                            ------------------   -------------------
                                                                                                       61,813                54,163

   Other current assets                                                                                 9,723                 2,491
                                                                                            ------------------   -------------------
      Total current assets                                                                            129,146                90,307


  Joint venture                                                                                        73,682                62,616

  Property, plant and equipment                                                                     1,818,501             1,761,734
  Less accumulated depreciation and depletion                                                          40,226                10,193
                                                                                            ------------------   -------------------
                                                                                                    1,778,275             1,751,541

  Receivable from parent company                                                                       30,015                59,340
  Other assets and deferred charges                                                                    53,111                47,264
                                                                                            ------------------   -------------------
      Total assets                                                                                 $2,064,229            $2,011,068
                                                                                            ==================   ===================


Liabilities and Shareholders' Equity:
  Current liabilities:

   Accounts payable                                                                                   $13,431               $23,796
   Accrued liabilities                                                                                 76,613                59,693
   Short-term bank loans                                                                                    -               419,450
   Income taxes payable                                                                                 8,386                 2,101
                                                                                            ------------------   -------------------
      Total current liabilities                                                                        98,430               505,040
  Long-term debt                                                                                      930,550               490,550
  Postretirement benefits other than pensions                                                          91,753                90,919
  Deferred taxes                                                                                      542,926               542,926
  Payable to affiliated companies                                                                      42,063                36,079
  Other liabilities                                                                                    33,604                33,489
  Contingencies (See Notes 8 and 9)

                                                                                            ------------------   -------------------
      Total liabilities                                                                             1,739,326             1,699,003
                                                                                            ------------------   -------------------


Shareholders' Equity:

  Common stock                                                                                            183                   183
  Additional paid-in capital                                                                          299,817               299,817
  Retained earnings                                                                                    24,903                12,065
                                                                                            ------------------   -------------------
      Total shareholders' equity                                                                      324,903               312,065
                                                                                            ------------------   -------------------
      Total liabilities and shareholders' equity                                                   $2,064,229            $2,011,068
                                                                                            ==================   ===================


</TABLE>

The accompanying  Notes to Unaudited  Consolidated  Financial  Statements are an
integral part of the Financial Statements.
                                       5
<PAGE>
<TABLE>

                                          LONE STAR INDUSTRIES, INC.

                               CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

                                                (In Thousands)

<S>                                               <C>                       <C>
                                                     Successor                  Predecessor
                                                       Company                   Company

                                                    For the Nine                For the Nine
                                                    Months Ended                Months Ended
                                                    September 30,               September 30,
                                                        2000                          1999
                                                   ---------------              ----------------

Cash Flows from Operating Activities:

Net income .........................................   $  12,838                  $  62,353
Adjustments to arrive at net cash (used) provided by
  operating activities:

    Depreciation and depletion .....................      30,034                     18,227
    Deferred income taxes ..........................        --                       12,941
    Changes in operating assets and liabilities:

      Accounts and notes receivable ................     (13,558)                   (13,214)
      Inventories and other current assets .........     (14,683)                    (1,050)
      Accounts payable and accrued liabilities .....      19,836                     (3,899)
    Joint venture income, net of dividends received       (2,566)                    (1,454)
    Other, net .....................................       1,044                     (4,078)
                                                       ---------                     ---------
Net cash provided by operating activities ..........      32,945                     69,826

Cash Flows from Investing Activities:

Capital expenditures ...............................     (61,323)                   (49,305)
Advances to joint venture ..........................      (8,500)                    (5,250)
Proceeds from sales of assets ......................         112                        370
                                                       ---------                    --------
Net cash used by investing activities ..............     (69,711)                   (54,185)

Cash Flows from Financing Activities:

Proceeds from long-term debt .......................     500,000                         --
Repayment of long-term debt ........................     (60,000)                        --
Proceeds from short-term debt ......................      20,000                         --
Repayment of short-term debt .......................    (439,450)                        --
Debt issuance costs ................................      (4,228)                        --
Net repayment of intercompany advances .............      33,753                         --
Proceeds from exercise of warrants .................          91                      4,344
Purchase of warrants and common stock ..............      (3,261)                    (1,486)
Purchase of treasury stock .........................        --                      (38,178)
Dividends paid .....................................        --                       (2,960)
Proceeds from exercise of options ..................        --                           23
                                                       ---------                    ---------
Net cash provided (used) by financing activities ...      46,905                     (38,257)
                                                       ---------                    ---------

Net increase (decrease) in cash and cash equivalents      10,139                     (22,616)

Cash and cash equivalents, beginning of period .....         787                     120,161
                                                       ---------                    ---------
Cash and cash equivalents, end of period ...........   $  10,926                   $  97,545
                                                       =========                    =========

</TABLE>





The accompanying  Notes to Unaudited  Consolidated  Financial  Statements are an
integral part of the Financial Statements.
                                       6
<PAGE>


      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Note 1

In the opinion of management,  the accompanying unaudited consolidated financial
statements  contain all  adjustments,  which are of a normal  recurring  nature,
necessary  to  present  fairly  the  financial  position  of the  Company  as of
September 30, 2000,  and the results of operations for the three and nine months
ended  September  30, 2000 and 1999 and the cash flows for the nine months ended
September 30, 2000 and 1999.

In  September  1999,  the Company  entered  into a merger  agreement  with Level
Acquisition  Corp.,  an  indirect,  wholly-owned  subsidiary  of  Dyckerhoff  AG
("Dyckerhoff").  This agreement  provided for the  acquisition of the Company by
Dyckerhoff and was completed in October 1999.  Under the  agreement,  Dyckerhoff
completed an all-cash tender offer for the Company's outstanding common stock at
a price of $50 per  share and  outstanding  warrants  at a price of  $81.25  per
warrant.  The total purchase price was approximately  $1,200,000,000,  including
debt assumed.

The acquisition  was accounted for as a purchase  transaction in accordance with
Accounting   Principles  Board  Opinion  No.  16.  Accordingly,   the  Company's
consolidated  financial statements for periods prior to October 1, 1999, are not
comparable to consolidated  financial  statements  presented on or subsequent to
October 1, 1999.  A black line has been drawn on the  accompanying  consolidated
financial  statements  to  distinguish  between the  successor  and  predecessor
companies.

The year-end  consolidated  balance sheet was derived from the Company's audited
financial statements, but does not include all disclosures required by generally
accepted accounting principles.  The consolidated financial statements contained
herein should be read in conjunction with the consolidated  financial statements
and related notes in the Company's annual report on Form 10-K for the year ended
December 31, 1999.  The Company's  operations  are seasonal  and,  consequently,
interim  results are not  indicative  of the  results to be expected  for a full
year.

Note 2 - Common Stock and Warrants

During the first nine months of 2000, the Company  purchased 33,386 warrants for
$2,713,000 and 9,134 shares of common stock for $457,000.

Note 3 - Supplemental Disclosures of Cash Flow Information

Cash equivalents include the Company's marketable securities which are comprised
of  short-term,  highly liquid  investments  with  original  maturities of three
months or less.  Interest  paid during the nine months ended  September 30, 2000
and 1999 was $35,441,000 and $3,781,000,  respectively. Income taxes paid during
the nine months ended September 30, 2000 and 1999 were $241,000 and $15,598,000,
respectively.


                                       7
<PAGE>

Note 4 - Interest

Interest cost of  $20,507,000,  $55,339,000,  $945,000 and  $2,835,000  has been
accrued  during the three and nine  months  ended  September  30,  2000 and 1999
respectively.  Interest  capitalized  during  the  three and nine  months  ended
September  30,  2000  and 1999  was  $1,541,000  and  $4,190,000,  $654,000  and
$1,275,000, respectively.

Note 5 - Earnings Per Share

Basic  earnings per common  share for the three and nine months ended  September
30,  2000 and 1999 are  calculated  by dividing  net income by weighted  average
common shares outstanding  during the period.  Diluted earnings per common share
for the three and nine months ended  September 30, 2000 and 1999 are  calculated
by dividing net income by weighted average common shares  outstanding during the
period plus dilutive potential common shares which are determined as follows:

                           For the Three Months       For the Nine Months
                            Ended September 30,        Ended September 30,
                            2000          1999         2000          1999
                         ----------    ----------   ----------    -------

Weighted average common

 Shares                  18,339,604    19,331,790   18,340,182    19,687,260
Effect of dilutive
 Securities:
     Warrants                94,255     4,333,239      115,180     4,303,977
     Options to purchase
     Common stock              -           226,129        -          218,990
                          ---------    ----------    ----------   ----------
Adjusted weighted

  Average common shares  18,433,859    23,891,158   18,455,362    24,210,227
                         ==========    ==========   ==========    ==========



The effect of dilutive  securities is calculated in accordance with the treasury
stock method which  assumes that the proceeds  from the exercise of all warrants
and options are used to repurchase  common stock at market value.  The number of
shares  remaining  after the proceeds are exhausted  represents the  potentially
dilutive effect of the securities.

Note 6 - Debt

During the first  quarter of 2000,  the  Company  borrowed  $20,000,000  under a
variable-rate term loan credit facility with banks.

In  June  2000,  the  Company   completed  two  debt  offerings   consisting  of
$350,000,000  9.25% bonds due in 2010 and $150,000,000  8.85% bonds due in 2005.
The Company incurred  approximately  $4,200,000 in costs related to the issuance
of this  debt.  These  costs are  being  amortized  over the life of the  bonds.
Interest payments on these bonds are due semi-annually. The Company utilized the
proceeds of these debt offerings to repay $499,450,000 of its variable-rate term
loan facility, including $439,450,000, which was due in August 2000.

                                       8
<PAGE>

At September 30, 2000, total outstanding debt was $930,550,000 consisting of the
$500,000,000 in fixed-rate bonds and $110,000,000  under its variable-rate  term
loan  facility.  The term loan  facility  is payable in  installments  from 2001
through 2004. In addition,  the Company has EUR 300,000,000  5.875% bearer bonds
due in November  2004. In order to avoid foreign  currency risk, the Company has
entered into cross currency swap  agreements  fixing the Euro debt in the amount
of $320,550,000, with an average U.S. dollar interest rate of 7.84%.

In April 2000, the Company entered into a $30,000,000 unsecured revolving credit
agreement.  Advances under this agreement bear interest at a rate which,  at the
Company's option, is either fixed at a Eurodollar rate or other agreed upon rate
or a floating  prime rate.  A fee of 0.125% is charged on the unused  portion of
the credit  line.  The  agreement  expires in March of 2001.  The  Company  also
entered into a $20,000,000  uncommitted line of credit facility.  Advances under
this agreement bear interest at a rate, which, at the Company's option is either
fixed at a Euro dollar rate, or other agreed upon rate or a floating prime rate.
At September 30, 2000 the company had no  outstanding  balances on the revolving
credit  agreement  or the  line  of  credit  facility.  The  Company's  existing
$100,000,000 unsecured revolving credit facility was cancelled.

Note 7 - Marketable Securities Received from Insurance Company

As a  policyholder  in an insurance  company,  the Company was awarded shares of
stock resulting from the insurance company's conversion from a mutual company to
a stock company.

Note 8 - Environmental Regulation

The Company is subject to extensive,  stringent and complex  federal,  state and
local  laws,  regulations  and  ordinances  pertaining  to the  quality  and the
protection of the environment and human health and safety, requiring the Company
to devote  substantial  time and  resources  in an effort to maintain  continued
compliance.  Many of the laws and  regulations  apply  to the  Company's  former
activities,  properties and facilities as well as its current operations.  There
can be no  assurances  that  judicial  or  administrative  proceedings,  seeking
penalties  or  injunctive  relief,  will not be brought  against the Company for
alleged  non-compliance  with  applicable  environmental  laws  and  regulations
relating to matters as to which the Company is currently unaware.  For instance,
if  releases  of  hazardous  substances  are  discovered  to  have  occurred  at
facilities  currently  or  previously  owned or operated by the  Company,  or at
facilities  to which the  Company has sent waste  materials,  the Company may be
subject to liability for the  investigation  and  remediation of such sites.  In
addition, changes to such regulations or the enactment of new regulations in the
future could require the Company to undertake capital improvement projects or to
cease or curtail certain  operations or could otherwise  substantially  increase
the capital,  operating and other costs associated with compliance. For example,
recent worldwide  initiatives for limitations on carbon dioxide  emissions could
result in the  promulgation  of statutes  or  regulations  that would  adversely
affect  certain  aspects of United  States  manufacturing,  including the cement
industry.

                                       9
<PAGE>

The Clean Water Act provides a comprehensive federal regulatory scheme governing
the  discharge of  pollutants to waters of the United  States.  This  regulatory
scheme requires that permits be secured for discharges of wastewater,  including
stormwater runoff associated with industrial  activity,  to waters of the United
States.  The Company has  secured or has  applied  for all  required  permits in
connection with its wastewater and stormwater discharges.

The Clean Air Act provides for a uniform federal regulatory scheme governing the
control of air pollutant emissions and permit requirements. In addition, certain
states in which the Company operates have enacted laws and regulations governing
the  emission  of air  pollutants  and  requiring  permits  for  sources  of air
pollutants.  The Company is required to apply for federal  operating permits for
each of its cement manufacturing facilities. All of these applications have been
made. As part of the permitting process,  the Company may be required to install
equipment  to  monitor  emissions  of air  pollutants  from its  facilities.  In
addition, the United States Environmental  Protection Agency ("EPA") is required
to develop  regulations  directed at reducing  emissions of toxic air pollutants
from  a  variety  of  industrial   sources,   including   the  portland   cement
manufacturing  industry.  As part of this process, the EPA has announced maximum
available  control  technology  ("MACT")  standards  for  cement   manufacturing
facilities  (like Lone Star's  Greencastle and Cape Girardeau  plants) that burn
hazardous  waste fuels ("HWF") and other MACT standards for  facilities  burning
fossil fuels. These MACT standards will be implemented over a three-year period.
The Company  currently  anticipates  that it will be able to achieve  these MACT
standards.  The EPA has also  promulgated  under the Clean Air Act new standards
for small  particulate  matter and ozone emissions,  and related testing will be
carried  out  over the next  several  years.  Depending  on the  result  of this
testing,  additional  regulatory burdens could be imposed on the cement industry
by states not in compliance  with the  regulations.  The EPA has promulgated new
regulations to reduce nitrogen oxide emissions substantially over the next eight
years.  These rules, if implemented,  would affect 22 states  including three in
which the Company has cement plants: Indiana,  Illinois and Missouri.  Depending
on state  implementation,  this emissions  reduction could adversely  affect the
cement industry in these states.

The   Resource   Conservation   and  Recovery   Act   ("RCRA")   establishes   a
cradle-to-grave regulatory scheme governing the generation,  treatment, storage,
handling,  transportation  and disposal of solid wastes.  Solid wastes which are
classified as hazardous  wastes  pursuant to RCRA,  as well as  facilities  that
treat,  store or dispose of such  hazardous  wastes,  are  subject to  stringent
regulatory requirements.  Generally, wastes produced by the Company's operations
are not classified as hazardous wastes and are subject to less stringent federal
and state regulatory  requirements.  However,  the EPA has proposed  regulations
imposing  controls on the management,  handling and disposal of cement kiln dust
("CKD"),  a  by-product  of  cement  manufacturing  and is  currently  reviewing
comments on the proposal.  The EPA's decision to go forward or withdraw the rule
is expected in the next 18 months.  The types of controls  include fugitive dust
emission  controls,  restrictions  for  landfills  located in  sensitive  areas,
groundwater  monitoring,  standards  for  liners  and caps,  metals  limits  and
corrective action for currently active units.

The Cape Girardeau,  Missouri and  Greencastle,  Indiana  plants,  which are the
Company's  two  cement  manufacturing  facilities  using  HWF as a cost-

                                       10
<PAGE>

saving energysource, are subject to strict federal, state and local requirements
governing hazardous waste treatment, storage and disposal facilities,  including
those  contained  in the  federal  Boiler  and  Industrial  Furnace  Regulations
promulgated  under RCRA (the "BIF  Rules").  The  Company has secured the permit
required  under  RCRA  and the BIF  Rules  for the  Cape  Girardeau  plant.  The
Greencastle plant also will go through this permitting process and has completed
a  three-year   recertification   of  its   existing   interim   status,   which
recertification  is anticipated in December  2000. The  Greencastle  permit is a
requirement  to enable  Lone Star to continue  the use of HWF at the plant.  The
permitting process is lengthy and complex, involving the submission of extensive
technical data, and there can be no assurances that the plant will be successful
in securing its final RCRA permit.  In addition,  if received,  the permit could
contain  terms and  conditions  with which the  Company  cannot  comply or could
require the Company to install and operate costly control technology  equipment.
While Lone Star believes  that it is currently in compliance  with the extensive
and complex technical  requirements of the BIF Rules, there can be no assurances
that the Company will be able to maintain  compliance with the BIF Rules or that
changes to such rules or their interpretation by the relevant agencies or courts
might not make it more difficult or cost-prohibitive to continue to burn HWF.

The federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA" or "Superfund"),  as well as many comparable state statutes, creates a
joint and several  liability  scheme for the  investigation  and  remediation of
facilities  where  releases of hazardous  substances are found to have occurred.
Liability may be imposed upon current owners and operators of the facility, upon
owners  and  operators  of the  facility  at the  time of the  release  and upon
generators and  transporters of hazardous  substances  released at the facility.
While,  as  noted  above,  wastes  produced  by the  Company  generally  are not
classified  as hazardous  wastes,  many of the raw  materials,  by-products  and
wastes currently and previously produced,  used or disposed of by the Company or
its  predecessors  contain  chemical  elements  or  components  that  have  been
designated as hazardous  substances or which  otherwise may cause  environmental
contamination.  Hazardous  substances  are or have been used or  produced by the
Company in connection with its cement  manufacturing  operations (e.g.  grinding
compounds,  refractory bricks),  quarrying operations (e.g. blasting materials),
equipment operation and maintenance (e.g. lubricants,  solvents,  grinding aids,
cleaning aids,  used oils),  and hazardous waste fuel burning  operations.  Past
operations of the Company have  resulted in releases of hazardous  substances at
sites currently or formerly owned by the Company and certain of its subsidiaries
or where waste  materials  generated by the Company have been disposed.  CKD and
other  materials were placed in depleted  quarries and other  locations for many
years. The Company has been named by the EPA as a potentially  responsible party
for the investigation  and remediation of several  Superfund sites,  although it
does not currently  contemplate that future costs relating to such sites will be
material.

The Company's  operations are subject to federal and state laws and  regulations
designed to protect worker health and safety. Worker protection at the Company's
cement  manufacturing  facilities  is governed  by the  federal  Mine Safety and
Health Act ("MSHA") and at other  Company  operations is governed by the federal
Occupational Safety and Health Act ("OSHA").

                                       11
<PAGE>

Note 9 - Legal Proceedings

From time to time,  the Company is named as a defendant  in lawsuits  asserting,
among other things,  products  liability.  The Company  maintains such liability
insurance  coverage for its operations as it deems reasonable.  The Company does
not expect the effect of such matters to have a material  adverse  effect on the
financial condition of the Company.

                                       12
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


Financial Condition

In  September  1999,  the Company  entered  into a merger  agreement  with Level
Acquisition  Corp.,  an  indirect,  wholly-owned  subsidiary  of  Dyckerhoff  AG
("Dyckerhoff").  This agreement  provided for the  acquisition of the Company by
Dyckerhoff and was completed in October 1999.

As of October 1, 1999, in accordance  with Accounting  Principles  Board Opinion
No. 16,  "Business  Combinations",  the  Company  recorded  the  acquisition  by
Dyckerhoff as a purchase and the Company  recorded its assets and liabilities at
fair  value as of  October  1, 1999.  Accordingly,  the  Company's  consolidated
financial statements for the periods prior to October 1, 1999 are not comparable
to consolidated  financial  statements  presented on or subsequent to October 1,
1999.  A black line has been drawn on the  accompanying  consolidated  financial
statements to distinguish between the successor and predecessor companies.

During the first  quarter of 2000,  the Company  borrowed  $20.0 million under a
variable-rate  term loan credit  facility with banks.  In June 2000, the Company
completed two debt  offerings  consisting  of $350.0  million 9.25% bonds due in
2010 and $150.0  million  8.85%  bonds due in 2005.  The  Company  utilized  the
proceeds of these  offerings to repay $499.5 million of its  variable-rate  term
loan credit facility,  including $439.5 million which was due in August 2000. At
September  30,  2000,  total debt was $930.6  million  consisting  of the $500.0
million in fixed-rate bonds and $110.0 million under its variable-rate term loan
facility agreement.  The term loan facility is payable in installments from 2001
through 2004. In addition, the Company has EUR 300.0 million 5.875% bearer bonds
due in November  2004. In order to avoid foreign  currency risk, the Company has
entered into cross currency swap  agreements  fixing the Euro debt in the amount
of $320.6  million,  with an average U.S. dollar interest rate of 7.84% for five
years.  The Company believes that funds generated by operations and repayment of
funds advanced by the Company to Dyckerhoff AG will be adequate to cover current
working capital and capital expenditure needs.

Cash provided by operating activities of $32.9 million for the nine months ended
September  30,  2000  primarily  reflects  net  income,  adjusted  to  add  back
depreciation and depletion, partly offset by changes in working capital.

During the nine months ended September 30, 2000, investing activities used $69.7
million,  primarily representing $61.3 million for capital expenditures and $8.5
million in advances to
                                       13
<PAGE>

Kosmos Cement Company, a partnership in which the Company
owns a 25% interest.

Net cash inflows from financing  activities of $46.9 million for the nine months
ended September 30, 2000 primarily  reflect  proceeds of $500.0 million from the
issuance  of  bonds,   $20.0  million  from  additional   borrowings  under  the
variable-rate  term loan credit  facility and $33.8 million of net receipts from
the parent and  affiliates.  These cash receipts were  partially  offset by cash
outlays of $499.5  million for the  repayment of a portion of the  variable-rate
term loan credit  facility,  $4.2 million for debt issuance costs related to the
$500.0 million bond offerings and $3.2 million paid for the purchase of warrants
and common stock.

At September 30, 2000, net working  capital was $30.7  million.  At December 31,
1999,  current  liabilities  exceeded current assets by $414.7 million.  Current
assets increased $38.8 million primarily due to higher  short-term  investments,
accounts  receivable,  marketable  securities  and inventory  balances.  Current
liabilities  decreased  $406.6  million  primarily  due  to the  refinancing  of
short-term bank loans and a decrease in accounts payable.

Investments  in joint  ventures  increased  $11.1 million due to $8.5 million in
additional  advances to Kosmos Cement Company and the Company's share of Kosmos'
equity  earnings net of dividends  received.  Net property,  plant and equipment
increased  $26.7  million  reflecting  capital  expenditures,  partly  offset by
depreciation and depletion expense.

The Company is subject to extensive,  stringent and complex  federal,  state and
local  laws,  regulations  and  ordinances  pertaining  to the  quality  and the
protection of the environment and human health and safety, requiring the Company
to devote  substantial  time and  resources  in an effort to maintain  continued
compliance.  Many of the laws and  regulations  apply  to the  Company's  former
activities,  properties and facilities as well as its current operations.  There
can be no  assurances  that  judicial  or  administrative  proceedings,  seeking
penalties  or  injunctive  relief,  will not be brought  against the Company for
alleged  non-compliance  with  applicable  environmental  laws  and  regulations
relating to matters as to which the Company is currently unaware.  For instance,
if  releases  of  hazardous  substances  are  discovered  to  have  occurred  at
facilities  currently  or  previously  owned or operated by the  Company,  or at
facilities  to which the  Company has sent waste  materials,  the Company may be
subject to liability for the  investigation  and  remediation of such sites.  In
addition, changes to such regulations or the enactment of new regulations in the
future could require the Company to undertake capital improvement projects or to
cease or curtail certain  operations or could otherwise  substantially  increase
the capital, operating and other costs associated with compliance (See Note 8).
                                       14
<PAGE>
The Company  believes that it has  adequately  provided for costs related to its
ongoing   obligations   with   respect  to  known   environmental   liabilities.
Expenditures for  environmental  liabilities  during the third quarter and first
nine months of 2000 did not have a material  effect on the financial  condition,
results of operations or cash flows of the Company.

Year 2000

In 1999, the Company conducted a company-wide assessment of its computer systems
and  operations  to identify  computer  hardware,  software and process  control
systems that were not year 2000 compliant.  Expenses have not been material, and
the Year 2000 issue has had no known effect on the Company to date.  The Company
will  continue  to  monitor  its  systems,   suppliers  and  customers  for  any
unanticipated issues that have not yet manifested. Future costs are not expected
to be material.

Market Risk

The Company is exposed to various market risks, including foreign currency risk,
interest rate risk and credit risk.  Market risk is the  potential  loss arising
from adverse changes in market rates and prices,  such as foreign exchange rates
and interest rates, and changes in economic  conditions.  In order to manage and
reduce the impact of adverse  market  changes,  the  Company  has  entered  into
certain  derivative  agreements.  The Company does not enter into derivatives or
other  financial  instruments for trading or speculative  purposes.  The Company
regularly  monitors  its  foreign  currency,   credit  risk  and  interest  rate
exposures.

Foreign exchange risk

The  Company  is  exposed  to foreign  exchange  rate risk  associated  with its
outstanding Eurobonds.  At September 30, 2000, the value of the Euro against the
U.S.  dollar was favorable to the Company.  However,  a 10%  appreciation or 10%
depreciation  of the U.S.  dollar  against  the Euro could  represent a material
impact on fair value, earnings or cash flows. In order to eliminate this foreign
exchange risk, the Company  entered into cross currency swap  agreements  during
1999. At September 30, 2000,  the Company held cross  currency swap contracts of
EUR 300.0  million  effectively  fixing  the Euro  debt in the  amount of $320.6
million with an average fixed interest rate of 7.84%.

Credit risk

The Company  attempts to reduce its  exposure  to credit  risk  associated  with
counter-parties by entering into derivative  contracts with only major financial
institutions.  At  September

                                       15
<PAGE>

30, 2000 the Company had no credit risk related to
these  contracts  as the value of the  dollar  against  the Euro  resulted  in a
favorable  position.  However,  the  depreciation of the U.S. dollar against the
Euro in the future may have an unfavorable  impact on earnings and cash flows in
the event of non-performance by the counter-party.

Interest rate risk

Interest  rate changes would result in gains or losses in the fair value of debt
and other financing instruments held by the Company.  Generally, the fair market
value of fixed  interest rate debt will increase as the interest  rates fall and
decrease as the interest  rates rise.  The estimated fair value of the Company's
$350.0 million and $150.0 million bonds at September 30, 2000  approximates  the
carrying  value due to their  recent  issue.  The  estimated  fair  value of the
Company's total Euro debt at September 30, 2000 would decrease approximately EUR
12.3 million or $10.8 million with a one percent  increase in interest  rates at
September 30, 2000. A one percent  decrease in prevailing  interest  rates would
result in an increase in fair value of EUR 13.0 million,  or $11.4 million.  The
changes are based on currency rates at September 30, 2000. Fair values are based
on quoted market prices of similar issues of publicly traded debt.

During the first quarter of 2000, the Company entered into certain interest rate
hedging transactions. Due to the issuance of fixed-rate bonds in June 2000 these
derivative  contracts were closed at fair market value. The net gain realized on
these instruments will be amortized over the life of the fixed-rate bonds.

Recently Issued Accounting Pronouncements

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and  Hedging  Activities"  ("SFAS  No.  133").  SFAS  No.  133  establishes  new
accounting and reporting standards for derivative financial  instruments and for
hedging  activities.  The statement is effective for all fiscal  quarters of all
fiscal years beginning after June 15, 2000. The Company does not expect adoption
of  this  statement  to  have  a  material  effect  on the  Company's  financial
statements.


Forward-Looking Statements

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  and  other  sections  of  this  Form  10-Q  contain  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section  21E of the  Securities  Exchange  Act of  1934.  These  forward-looking
statements  are  based  on  current  expectations,   estimates  and  projections

                                       16
<PAGE>

concerning  the  general  state  of the  economy  and the  industry  and  market
conditions in certain geographic locations in which the Company operates.  Words
such as "expects",  "anticipates",  "intends", "plans", "believes",  "estimates"
and  variations of such words and similar  expressions  are intended to identify
such forward-looking  statements.  These statements are not guarantees of future
performance and involve certain risks,  uncertainties  and assumptions which are
difficult  to  predict.  Therefore,  actual  results  and  outcomes  may  differ
materially  from  what  is  expressed  or  forecasted  in  such  forward-looking
statements.  The  Company  undertakes  no  obligation  to  update  publicly  any
forward-looking  statements  as a result of new  information,  future  events or
other factors.

The Company's business is cyclical and seasonal,  the effects of which cannot be
accurately  predicted.  Risks  and  uncertainties  include  changes  in  general
economic  conditions  (such as changes in interest  rates),  changes in economic
conditions  specific to any one or more of the  Company's  markets  (such as the
strength of local real estate markets and the  availability  of public funds for
construction),  adverse weather, unexpected operational difficulties, changes in
governmental and public policy including increased environmental regulation, the
outcome of pending and future  litigation,  the successful  negotiation of labor
contracts,  unforeseen operational  difficulties including difficulties relating
to the  construction  and  installation of  improvements to property,  plant and
equipment,  and the continued  availability of financing in the amounts,  at the
times, and on the terms required to support the Company's future business. Other
risks and  uncertainties  could also affect the  outcome of the  forward-looking
statements.

Results of Operations

As of  October  1,  1999,  the  Company  was  acquired  by  Dyckerhoff  and  the
transaction  was  accounted for as a purchase.  Operating  results for the third
quarter  and the first  nine  months of 2000 are  comparable  to the  prior-year
period with the  exception of certain  purchase  accounting  adjustments.  These
purchase  accounting  adjustments,  which primarily  relate to depreciation  and
depletion  expense and pension and  postretirement  benefits  other than pension
expense, are addressed in the following discussion.

Consolidated  net sales of $111.5  million  and  $286.5  million,  respectively,
during the three and nine months  ended  September  30,  2000 were $1.4  million
lower and $4.9 million  higher,  respectively,  than the  comparable  prior-year
results.  Cement sales for the first nine months of 2000 were higher due to a 1%
increase in cement shipments and a 1% increase in net realized selling prices as
compared to the prior  year.  The  increase  in  shipments  is  attributable  to
continued strong demand for cement in the

                                       17
<PAGE>

Company's major markets.  For the third quarter, net realized selling prices and
shipments approximated 1999 levels.

Gross profit from the Company's  cement and ready-mixed  concrete  operations of
$33.5  million and $77.6  million for the three and nine months ended  September
30, 2000 were $11.5  million  and $24.1  million,  respectively,  lower than the
comparable  1999  periods.  The purchase  accounting  adjustments  reduced gross
profit by $3.3  million and $9.1  million  for the three and nine  months  ended
September  30,  2000,  respectively.   These  adjustments  primarily  relate  to
increased  depreciation  and depletion  expense  associated with the write-up of
fixed  assets on October  1, 1999.  Gross  profit  was also  affected  by higher
production  costs due to the extended  shutdown in the second and third quarters
of 2000 in connection with the plant expansion project at the Greencastle plant.

Included  in the  calculation  of gross  profit  are  sales  less  cost of sales
including  depreciation  and depletion  related to cost of sales (which excludes
depreciation on office  equipment,  furniture and fixtures which are not related
to the cost of sales).

The Company's operations are seasonal and, consequently, the interim results are
not indicative of the results to be expected for the full year.

Pre-tax  income from joint  ventures of $1.6 million and $3.6 million during the
three and nine  months  ended  September  30, 2000  reflects  the results of the
Kosmos Cement  Company,  a partnership  in which the Company has a 25% interest.
The results for the three months and nine months ended  September  30, 2000 were
$1.4 million and $2.9 million, respectively,  lower than the prior-year periods.
The decrease in joint venture income reflects lower operating margins during the
second  and  third  quarters  of  2000.  This  decrease  was  primarily  due  to
expansion-related  outages at the Kosmos Cement Company's  Louisville,  Kentucky
plant.

Income from marketable  securities received from insurance company for the three
and nine months  ended  September  30, 2000  includes  the fair market  value of
shares  received as a  policyholder  in  connection  with the  conversion  of an
insurance company from a mutual company to a stock company.

Other income of $0.8  million and $2.9 million  during the three and nine months
ended September 30, 2000 decreased $2.2 million and $3.6 million,  respectively,
from the comparable 1999 periods.  The decrease is due in part to lower interest
income  earned on lower  average  short-term  investment  balances  during  both
periods.  In  addition,  last year's  results  included  $1.4 million for a bond
assessment rebate on a parcel of real estate.

                                       18
<PAGE>

Selling,  general and administrative  expenses of $6.8 million and $20.7 million
during the three and nine months ended  September  30, 2000 was $1.2 million and
$1.9 million higher than the comparable  periods in 1999,  primarily from higher
pension  and other  postretirement  benefit  expenses  resulting  from  purchase
accounting adjustments.

Interest  expense of $19.0 million and $51.2  million  during the three and nine
months  ended   September  30,  2000  was  $18.7  million  and  $49.6   million,
respectively higher than the prior-year periods.  Capitalized  interest was $1.5
million and $4.2  million,  respectively,  for the three and nine  months  ended
September  30,  2000  and  $0.7  million  and $1.3  million  for the  comparable
prior-year periods.  The increase in interest expense is primarily due to higher
debt levels  during the three and nine months ended  September 30, 2000 compared
to 1999.

Income tax expense of $5.9  million and $6.6  million  during the three and nine
months  ended   September  30,  2000,   was  $9.3  million  and  $25.2  million,
respectively, lower than the prior year due to lower pretax earnings.

Net income of $11.4  million  during the third quarter of 2000 was $18.4 million
lower than the  prior-year  results.  This  decrease  is due to higher  interest
expense reflecting higher debt levels, purchase accounting adjustments primarily
consisting of higher  depreciation  and  depletion  expense,  higher  production
costs,  lower other  income,  and lower joint venture  income.  These items were
partly offset by marketable securities received from insurance company and lower
income tax expense.

Net income of $12.8  million for the nine months  ended  September  30, 2000 was
$49.5 million lower than the prior-year results.  This decrease is primarily due
to higher interest expense  reflecting higher debt levels,  purchase  accounting
adjustments  primarily  consisting of higher depreciation and depletion expense,
higher production and repair and maintenance costs, lower other income and lower
joint venture income.  These items were partially offset by higher cement sales,
marketable  securities  received  from  insurance  company and lower  income tax
expense.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Item 2.  Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations on page 15 for disclosures about market risk.

                                       19
<PAGE>

PART II.  OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

   (a)  Index of Exhibits:


                  27    Financial Data Schedule.


                                        20
<PAGE>




                                   SIGNATURES

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

                                 LONE STAR INDUSTRIES, INC.


Date: November 13, 2000              By:  JOHN L. QUINLAN
                                     --------------------
                                    John L. Quinlan
                                    Senior Vice President Finance
                                    and Chief Financial Officer



                                       21