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, 1998
                                 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.)

 300 First Stamford Place, P. O. Box 120014, Stamford, CT  06912-0014
        (Address of principal executive offices)    (Zip Code)

Registrant's telephone number, including area code   203-969-8600

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

                   Yes   X             No       

Indicate by check mark whether the registrant has filed all documents 
and reports required to be filed by Sections 12, 13 or 15(d) of the 
Securities Exchange Act of 1934 subsequent to the distribution of 
securities under a plan confirmed by a court.

                   Yes   X             No       

The number of shares outstanding of each of the registrant's classes 
of common stock as of October 29, 1998:

       Common Stock, par value $1 per share - 9,581,407 shares
 

 
 



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, 1998 and 
   1997 (Unaudited)......................................3

Consolidated Statements of Retained Earnings -            
   For the Three and Nine Months Ended September 30, 1998 
   and 1997 (Unaudited)..................................4 

Consolidated Balance Sheets - September 30, 1998
   (Unaudited) and December 31, 1997.....................5

Consolidated Statements of Cash Flows - For the 
   Nine Months Ended September 30, 1998 and 1997
   (Unaudited)...........................................6

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

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

PART II. OTHER INFORMATION..............................19

SIGNATURES..............................................20


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)


                             For the Three Months     For the Nine Months
                              Ended September 30,     Ended September 30,
                               1998        1997          1998          1997     
 <S>                            <C>         <C>           <C>           <C>
Revenues:                                                           
                                                                    
 Net sales                  $ 104,010    $111,775      $259,506      $277,229
 Joint venture income           2,889       3,059         5,943         6,136
 Other income, net              3,494       4,553         9,199         5,618
                             --------    --------      --------      --------
                             110,393      119,387       274,648       288,983
                             --------    --------      --------      -------- 
Deductions from revenues:                                           
 Cost of sales                 55,040      63,895       150,038       172,613
 Selling, general and                                                
  administrative expenses       5,890       6,752        18,950        21,929
 Depreciation and depletion     5,489       6,121        16,046        18,326
 Interest expense                 578         617         1,730         3,135
                             --------    --------      --------      --------
                               66,997      77,385       186,764       216,003
                             --------    --------      --------      -------- 
Income before income                                                
 taxes                         43,396      42,002        87,884        72,980
 Provision for income taxes   (14,646)    (14,280)      (29,661)      (24,813)
                             --------    --------      --------      -------- 
Net income applicable                                        
 to common stock             $ 28,750    $ 27,722      $ 58,223      $ 48,167 
                             ========    ========      ========      ======== 
Weighted average common 
 shares outstanding:
    Basic                      10,374      10,997        10,600        10,948
                             ========    ========      ========      ========
    Diluted                    13,283      13,621        13,548        13,342
                             ========    ========      ========      ======== 
Earnings per common share:                          
    Basic                    $   2.77   $    2.52      $   5.49      $   4.40 
                             ========    ========      ========      ========
    Diluted                  $   2.16   $    2.04      $   4.30      $   3.61
                             ========    ========      ========      ========
</TABLE>

The accompanying Notes to Unaudited Consolidated Financial Statements are an 
integral part of the Financial Statements.















LONE STAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (Unaudited)
(In Thousands)


<TABLE>
<CAPTION>
							
                                     
                              For the Three Months       For the Nine Months 
                               Ended September 30,        Ended September 30,
                               1998          1997         1998          1997 
<S>                            <C>          <C>          <C>           <C>
                                                                     
Retained earnings, beginning                                         
 of period                  $ 206,854    $ 134,576    $ 178,444     $ 115,228
                                                                     
Net income                     28,750       27,722       58,223        48,167

Dividends                        (507)        (550)      (1,570)       (1,647)
			
                             ---------    ---------    ---------     --------- 
Retained earnings, end of 
 period                     $ 235,097     $ 161,748  $  235,097     $ 161,748
                             =========    =========    =========     =========
</TABLE>

The accompanying Notes to Unaudited Consolidated Financial Statements are an 
integral part of the Financial Statements.






























<TABLE>
<CAPTION>

LONE STAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)


                                                  September 30,   December 31,
                                                       1998           1997
                                                   (Unaudited)           
    <S>                                                <C>             <C>

Assets:                                                           
  Current assets:                                                   
    Cash including cash equivalents of $112,935
     and $152,775                                   $ 113,107       $ 154,080
    Accounts and notes receivable, net                 41,601          28,217
    Inventories:                                                     
       Finished goods                                  14,314          14,850
       Work in process and raw materials                7,609           6,417
       Supplies and fuel                               22,987          21,836
                                                     --------        --------  
                                                       44,910          43,103

    Deferred tax asset                                  3,825           3,825
    Other current assets                                4,402           3,751
                                                     --------        -------- 
       Total current assets                           207,845         232,976
                                                                             
  Joint ventures                                       22,269          20,326

  Property, plant and equipment                       406,795         368,248
  Less accumulated depreciation and depletion          84,583          68,993
                                                     --------        -------- 
                                                      322,212         299,255

Deferred tax asset                                   25,577          37,661 
Other assets and deferred charges                     8,750           8,759
                                                     --------        --------
 
       Total assets                                  $586,653        $598,977
                                                     ========        ========
Liabilities and Shareholders' Equity:                              
  Current liabilities:                                               
    Accounts payable                                 $ 11,469       $  13,400
    Accrued liabilities                                44,062          46,417
    Other current liabilities                           5,916           3,565
                                                      --------        --------
  
       Total current liabilities                       61,447          63,382
                                                                 
Senior notes payable                                   50,000          50,000
Postretirement benefits other than pensions           122,268         123,728
Other liabilities                                      27,450          28,233
Contingencies (See Notes 7 and 8)
                                                     --------        --------
       
 
       Total liabilities                              261,165         265,343
                                                     --------        -------- 
Shareholders' Equity:                                                         
  Common stock                                         12,351          12,092
  Warrants to purchase common stock                    14,250          15,554
  Additional paid-in capital                          178,492         174,915
  Retained earnings                                   235,097         178,444 
  Treasury stock, at cost                            (114,702)        (47,371)
                                                     --------        --------
       Total shareholders' equity                     325,488         333,634
       
       Total liabilities and shareholders'           --------        -------- 
        equity                                       $586,653        $598,977
                                                     ========        ======== 
</TABLE>
                           
The accompanying Notes to Unaudited Consolidated Financial Statements are an 
integral part of the Financial Statements.

  






























<TABLE>
<CAPTION>

LONE STAR INDUSTRIES, INC. 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands)

                                               For the Nine Months
                                                 Ended September 30,
                                               1998          1997   
    <S>                                       <C>           <C>
                                                                    
Cash Flows from Operating Activities:                                
                                                                    
Net income                                 $  58,223     $  48,167
Adjustments to arrive at net cash
 provided by operating activities:                                          
    Depreciation and depletion                16,046        18,326
    Deferred income taxes                     12,084        20,617 
    Changes in operating assets and                                 
      liabilities:                                                  
        Accounts and notes receivable        (13,332)      (16,017)
        Inventories and other current                               
          assets                              (2,556)        1,042
        Accounts payable and                                    
          accrued liabilities                 (3,795)       (2,218)
    Equity income, net of dividends
      received                                (1,943)       (1,386)
    Gain of sale of surplus property          (3,300)       (3,110)
    Other, net                                  (459)           587
                                             --------      --------
Net cash provided by operating                               
  activities                                  60,968        66,008
                                                                     

Cash Flows from Investing Activities:                               
                                                                    
Capital expenditures                         (39,977)      (30,026)
Proceeds from sales of assets                  4,445        12,854
                                             --------      --------
Net cash used by investing                                
  activities                                 (35,532)      (17,172)
                                                                     
Cash Flows from Financing Activities:                               

Proceeds from issuance of long-term
  senior notes                                  -           50,000
Redemption of long-term senior notes            -          (78,000)   
Proceeds from exercise of warrants             4,853            58 
Purchase of warrants                          (2,242)           -			 
Purchase of treasury stock                   (67,597)         (436)
Dividends paid                                (1,570)       (1,647)
Proceeds from exercise of options                147         4,574
                                            --------       --------
Net cash used by financing activities        (66,409)      (25,451)
                                            --------       --------  
Net (decrease) increase in cash and cash                             
  equivalents                                (40,973)       23,385
                                                                    
Cash and cash equivalents, beginning of                             
  period                                     154,080        71,215
                                            --------      --------     
Cash and cash equivalents, end of period   $ 113,107     $  94,600
                                            ========      ======== 
                                                                               
</TABLE>
The accompanying Notes to Unaudited Consolidated Financial Statements are an 
integral part of the Financial Statements.




	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, 1998, the results of operations for the 
three and nine months ended September 30, 1998 and 1997 and the cash flows 
for the nine months ended September 30, 1998 and 1997. 

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 financial 
statements contained herein should be read in conjunction with the 
financial statements and related notes in the Company's annual report on 
Form 10-K for the year ended December 31, 1997. 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 

In February, May, and August 1998, the Board of Directors declared $0.05 
dividends per common share, which were paid on March 16, 1998, June 15, 1998, 
and September 15, 1998 to shareholders of record as of March 1, 1998, June 1, 
1998, and September 1, 1998.  In January 1998, pursuant to an order signed by 
the U.S. Bankruptcy Court, 14,572 shares of common stock and 31,033 warrants 
were returned to the Company.  The common stock shares have been recorded as 
treasury shares and the returned warrants have been cancelled.  There was no 
effect on total equity of the Company as a result.  During the third quarter 
of 1998, the Board of Directors increased the stock repurchase program 
authority by $50,000,000.  In October 1998, the repurchase authority was 
increased by another $25,000,000. During the nine months ended September 30, 
1998, the Company purchased 1,028,095 shares of common stock for $67,597,000 
and 44,405 warrants for $2,242,000 and 258,834 warrants were exercised for 
$4,853,000.  In October 1998, the company purchased an additional 383,600 
shares of common stock for $22,423,000, leaving remaining authority to 
repurchase up to $18,668,000 of the Company's common stock and warrants.
  

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, 1998 and 1997 was $3,734,000 and $7,261,000, respectively. 
Income taxes paid during the nine months ended September 30, 1998 and 1997, 
were $15,221,000 and $1,063,000, respectively.


Note 4 - Interest

Interest expense of $945,000, $2,835,000, $951,000 and $4,082,000 has been 
accrued for the three and nine months ended September 30, 1998 and 1997, 
respectively. Interest capitalized during the three and nine months ended 
September 30, 1998 and 1997, was $367,000, $1,105,000, $334,000 and $947,000, 
respectively.


Note 5 - Earnings Per Share

In 1997, the Company adopted Statement of Financial Accounting Standards No. 
128, "Earnings Per Share" ("SFAS No. 128").  Previously reported earnings per 
share amounts have been restated.  Basic earnings per common share for the 
three and nine months ended September 30, 1998 and 1997 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, 1998 and 1997 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,

                              1998        1997          1998        1997  

Weighted average common
  Shares                   10,374,149  10,996,650    10,600,201   10,947,939
Effect of dilutive
  Securities:
     Warrants               2,800,832   2,522,867      2,837,662   2,269,376
     Options to purchase 
       common stock           108,383     101,769        110,221     125,068
Adjusted weighted
  average common shares    13,283,364  13,621,286	    13,548,084  13,342,383



Dilutive potential common shares are 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 - Sale of Assets

In February and September 1998, the Company recorded gains of $1,500,000 and 
$1,800,000 from the sale of surplus real estate in Massachusetts and Texas, 
respectively. The gains are included in other income on the accompanying 
consolidated statement of operations.  Other income for the nine months ended 
September 30, 1997 included a gain of $3,110,000 from the sale of surplus 
real estate in Massachusetts.


Note 7 - Environmental Matters    

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 initiatives for limitations on 
carbon dioxide emissions as a result of the fear of global warming could 
result in statutes or regulations which, if promulgated, could adversely 
affect certain aspects of United States manufacturing, including the 
cement industry.

The federal Water Pollution Control Act, commonly known as 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 was amended in 1990 to provide 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 1990 
amendments to the Clean Air Act required the Company 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 Clean Air Act amendments 
require the United States Environmental Protection Agency ("EPA") 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 identified 
maximum available control technology ("MACT") for the reduction of 
emissions of air toxics from cement manufacturing facilities. In 1997, the 
EPA announced proposed MACT standards for those cement manufacturing 
facilities (like Lone Star's Greencastle and Cape Girardeau plants) that 
burn hazardous waste fuels ("HWF").  The proposed standards are extremely 
lengthy and complex and have been commented on by concerned parties.  They 
are anticipated by the Company to be effective in early 1999 and 
thereafter will be implemented over a three-year period for companies that 
plan to comply.  Depending on their final terms when effective, they could 
have the effect of limiting or eliminating the use of HWF at one or both 
facilities. MACT standards for facilities burning fossil fuels were 
proposed in early 1998, and these standards are currently being studied by 
the Company.  These rules are expected to be finalized by the EPA in early 
1999.  In 1997, the EPA 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.  Also in 1997, 
the EPA proposed new regulations to reduce nitrogen oxide emissions 
substantially over the next eight years.  These rules were recently 
finalized by the EPA.  These rules 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. 
Cement kiln dust ("CKD"), a by-product of cement manufacturing, is 
currently exempted from regulation as a hazardous waste pursuant to the 
Bevill Amendment to RCRA. However, in 1995, the EPA issued a regulatory 
determination regarding the need for regulatory controls on the 
management, handling and disposal of CKD. Generally, the EPA regulatory 
determination provides that the EPA intends to draft and promulgate 
regulations imposing controls on the management, handling and disposal of 
CKD that will be based largely on selected components of the existing RCRA 
hazardous waste regulatory program, tailored to address the specific 
regulatory concerns posed by CKD. The EPA regulatory determination further 
provides that new CKD regulations will be designed both to be protective 
of the environment and to minimize the burden on cement manufacturers. 
While it is not possible to predict at this time precisely what new 
regulatory controls on the management, handling and disposal of CKD or 
what increased costs (or range of costs) would be incurred by the Company 
to comply with these requirements. These regulations will be promulgated 
through a rulemaking scheduled to be completed shortly. These rules will 
be implemented over a three-year period following promulgation. The types 
of controls being considered by the EPA 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.

In 1995, the State of Indiana made a determination that the CKD stored at 
the Company's Greencastle plant is a Type I waste and requested that the 
Company apply for a formal permit for an on-site landfill for the CKD. The 
Company understands that similar notices were sent to other cement 
manufacturers in the State of Indiana. The Company is protesting this 
determination through legal channels and has received a stay to allow it 
to demonstrate that current management practices pose no threat to the 
environment. The Company believes that the State's determination 
ultimately will be reversed or the Company will receive the needed permit 
or other adequate relief, such as an agreed order requiring certain 
additional waste management procedures that are less stringent than those 
generally required for Type I wastes. If the Company is not successful in 
this regard, however, like other Indiana cement producers, the Greencastle 
plant could incur substantially increased operating and capital costs.

The Cape Girardeau, Missouri and Greencastle, Indiana plants, which are 
the Company's two cement manufacturing facilities using HWF as a cost-
saving energy source, 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"). These 
facilities qualified for and operate under interim status pursuant to RCRA 
and the BIF Rules. 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 Company is currently engaged in the process of securing the permit 
required under RCRA and the BIF Rules for the Cape Girardeau plant, and 
the EPA and the Missouri Department of Natural Resources recently proposed 
approval of this permit.  The Company anticipates that the Greencastle 
plant also will go through this permitting process and recently completed 
a three-year recertification of its existing interim status. These permits 
are a requirement to enable Lone Star to continue the use of HWF at those 
facilities. The permitting process is lengthy and complex, involving the 
submission of extensive technical data. There can be no assurances that 
the Company will be successful in securing a final RCRA permit for either 
or both of its HWF facilities. In addition, if received, the permits could 
contain terms and conditions with which the Company cannot comply or could 
require the Company to install and operate costly control technology 
equipment.

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. 
Available factual information indicates that the Company's disposal of 
waste at these Superfund sites (other than sites that have been remediated 
or as to which the Company has entered into settlement agreements with the 
EPA) was small or non-existent, and the Company may have certain defenses 
arising out of its reorganization. The Company is also reviewing certain 
of its inactive properties to determine if any remedial action may be 
required at these sites.

The Company's operations are also 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").


Note 8 -  Litigation

From time to time the Company is named as a defendant in lawsuits 
asserting product liability for which the Company maintains insurance 
coverage. In late 1995, an office building in Boston, Massachusetts, 
constructed in 1983 using concrete pilings produced by San-Vel Concrete 
Corporation, an inactive Lone Star subsidiary ("San-Vel"), was demolished 
by order of the City of Boston based upon an engineering report that the 
pilings were unreliable. At the request of the City of Boston, San-Vel has 
provided a list of the approximate twenty-five other buildings built in 
that City between 1980 and 1990 using San-Vel pilings. The City has 
reportedly inspected these buildings visually, without noting any apparent 
piling failure. Certain engineering studies also have been conducted, and 
those limited results that have been made available to the Company do not 
indicate any additional failures.  The Company believes that San-Vel used 
cement produced by Lone Star at one of its formerly owned cement plants to 
mix the concrete from which pilings in certain of these buildings were 
produced. There has been no indication that Lone Star's production of this 
cement was defective. 


















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


Financial Condition

	The Company believes that cash and marketable securities on hand of 
$113.1 million and funds generated by operations will be adequate to 
cover current working capital and capital expenditure needs. 
	
	The Company's financing agreement and the revolving credit facility 
contain certain restrictive covenants which, among other things, could 
have the effect of limiting the payment of dividends and the repurchase 
of common stock and warrants.  Approximately $65.1 million is available 
at September 30, 1998 for such payments under the most restrictive of 
such covenants.  

	Cash flows from operating activities of $61.0 million for the nine 
months ended September 30, 1998 primarily reflect income from operations 
and changes in working capital.  The utilization of net operating loss 
carryforwards and other deferred tax assets during the first nine months 
reduced cash taxes otherwise payable by $12.1 million.
 
	During the nine months ended September 30, 1998, investing 
activities used $35.5 million, representing $40.0 million for capital 
expenditures, offset by $3.3 million received for the sale of surplus 
parcels of real estate and $1.1 million related to sales of 
miscellaneous property, plant and equipment.   

	Net cash outflows from financing activities of $66.4 million for 
the nine months ended September 30, 1998 primarily reflect the 
repurchase of 1,028,095 shares of common stock during the second and 
third quarters for $67.6 million, the purchase of 44,405 warrants for 
$2.2 million and the payment of dividends of $1.6 million during the 
first nine months of 1998. These payments were partially offset by 
proceeds of $4.9 million received from the conversion of warrants.

     Working capital on September 30, 1998 was $146.4 million as 
compared to $169.6 million on December 31, 1997.  Current assets 
decreased $25.1 million primarily due to lower short-term investments, 
partly offset by higher accounts and notes receivable and inventory 
balances. Current liabilities decreased $1.9 million primarily due to a 
decrease in accounts payable and accrued expenses. 

	The $12.1 million decrease in the Company's long-term deferred tax 
asset is due to the utilization of a portion of the tax assets during 
the first nine months of 1998.  Investments in joint ventures increased 
$1.9 million as the Company's share of equity earnings exceeded cash 
distributions paid from Kosmos Cement Company.  Net property, plant and 
equipment increased $23.0 million reflecting capital expenditures, 
partly offset by depreciation expense. 

	In February, May, and August 1998, the Company's Board of Directors 
declared $0.05 per share dividends which were paid on March 16, 1998, 
June 15, 1998, and September 15, 1998 to shareholders of record as of 
March 1, 1998, June 1, 1998, and September 1, 1998.  Total dividends 
paid during the nine months ended September 30, 1998 were approximately 
$1.6 million.


Other Information

	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 7).

	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 first 
nine months of 1998 did not have a material effect on the financial 
condition or cash flows of the Company.


Year 2000

The Company is in the process of conducting a company-wide 
assessment of its computer systems and operations, to identify computer 
hardware and software, and process control systems that are not Year 
2000 compliant.  The Company expects that the identification and repair 
of any problems will be successfully completed during 1999.  The 
Company's goal is to have its remediated and replaced systems 
operational by the end of the second quarter of 1999 to allow time for 
testing and verification.  In particular, the Company will perform tests 
of its cement plants' operations during their normal maintenance 
shutdowns in the first half of 1999. Expenses incurred to date have not 
been material, and the Year 2000 issue has had no known effect on the 
Company to date.  Future costs are not expected to be material.  Since 
1990, the Company has been replacing and upgrading its corporate and 
plant computer systems, including its maintenance tracking system, sales 
order entry system, treasury system and other financial programs. The 
Company has replaced all employee desktop computer systems within the 
past several years.  Such improvements have been made in the normal 
course of business. Vendors have assured the Company that all of these 
recently purchased machines and software programs are Year 2000 
compliant.	

The Company has initiated communications with third parties such as 
critical vendors and major service suppliers, communications providers 
and banks whose system failures potentially could have an impact on the 
Company. No single customer accounts for more than 10% of the Company's 
total sales and the Company has no executory contracts to sell cement 
that extend past December 31, 1999.  Accordingly the Company is not 
canvassing its customers as to their Year 2000 compliance.  There can be 
no guarantee that third-party systems will be Year 2000 compliant.  
Moreover, the potential effect of such noncompliance cannot be 
quantified because of the impossibility of estimating the magnitude, 
duration, or ultimate impact of noncompliance by others.

	If the Company is unsuccessful in identifying or fixing all Year 
2000 problems in its critical operations, or if it is affected by the 
inability of suppliers or customers to continue operations due to such a 
problem, the results of operations or financial condition could be 
materially impacted.  In the event of the failure to correct all 
compliance issues related to manufacturing control systems, the plants 
have the ability, in many instances, to continue operations 
mechanically, rather than electronically.  However, operations at a 
plant would shut down if that plant's power suppliers failed to deliver 
electricity due to a Year 2000 problem.  Failure of other major third 
parties, such as coal and gas suppliers and railroads, to correct Year 
2000 problems would result in slowdown of business.   

	The Company anticipates developing a contingency plan that would be 
designed to mitigate in part the impact on its business of certain Year 
2000 problems.  This plan, however, could not cover all eventualities, 
such as a power outage.  The Company expects this plan to be in place by 
mid-1999. 


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 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 and financial losses due 
to Year 2000 computer problems, 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

	Consolidated net sales of $104.0 million during the third quarter 
of 1998 and $259.5 million for the first nine months of 1998 were $7.8 
million and $17.7 million, respectively, lower than the comparable 
prior-year results.  The decrease in net sales primarily reflects the 
sales of the Company's New York construction aggregates and central 
Illinois ready-mixed concrete operations during 1997, partly offset by 
increased cement shipments and higher cement prices.

	Sales of $104.0 million and $259.5 million from the Company's on-
going cement and ready-mixed concrete operations for the three and nine 
months ended September 30, 1998 were $9.3 million and $20.4 million, 
respectively, higher than the comparable prior-year periods. Cement 
shipments for the current quarter and nine-month period were 
approximately 6% and 5%, respectively, above the prior-year levels, 
reflecting continued strong demand in most markets.  Average net 
realized selling prices for the third quarter and first nine months of 
1998 were 4% higher than comparable prior-year periods.  

	Gross profit from the Company's on-going cement and ready-mixed 
concrete operations of $43.5 million and $93.6 million for the three and 
nine months ended September 30, 1998 was $5.3 million and $10.1 million, 
respectively, higher than the comparable 1997 periods.  This increase in 
gross profit reflects higher average net realized cement selling prices, 
greater cement production and higher overall cement and ready-mixed 
concrete shipments for the quarter and nine months ended September 30, 
1998.
    
	The construction aggregates and ready-mixed concrete operations 
sold in 1997 contributed sales of $17.1 million and gross profit of $3.7 
million to the third quarter of 1997 results. The nine-month 1997 
results included net sales of $38.1 million and a gross profit of $3.1 
million from these operations. The fourth quarter of 1997 included sales 
of $2.2 million and gross profit of $0.6 million.  For the full year 
1997, these operations contributed net sales of $40.3 million and gross 
profit of $3.7 million.

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

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

	Pre-tax income from joint ventures of $2.9 million and $5.9 
million, respectively, during the three and nine months ended September 
30, 1998 reflects the results of the Kosmos Cement Company, a 
partnership in which the Company has a 25% interest.  The results for 
the third quarter and nine-month period of 1998 were $0.2 million lower 
than both the comparable prior-year periods. 

	Other income of $3.5 million for the third quarter of 1998 was $1.1 
million lower than the comparable prior-year period.  This decrease is 
primarily due to a lower gain on the sale of a surplus parcel of real 
estate.  The current quarter includes a gain from the sale of real 
estate of $1.8 million.  Last year's third quarter included a $3.1 
million gain.  Higher interest income on higher short-term investment 
balances partly offset the lower income from the real estate sale.    
Other income of $9.2 million for the nine months ended September 30, 
1998 was $3.6 million higher than the comparable period in 1997, 
primarily due to the higher interest income earned on higher short-term 
investment balances. 

	Selling, general and administrative expenses of $5.9 million and 
$19.0 million during the three and nine months ended September 30, 1998 
were $0.9 million and $3.0 million, respectively, lower than the 
comparable periods in 1997. This primarily reflects the decrease in 
expense related to the Company's New York construction aggregates 
operations which were sold in 1997, in addition to lower pension and 
other postretirement benefit expenses.  

	Interest expense of $0.6 million for the third quarter of 1998 was 
comparable to the third quarter of the prior year. Interest expense of 
$1.7 million during the nine months ended September 30, 1998 represents 
a decrease of $1.4 million from the comparable prior-year period. 
Capitalized interest was $0.4 million and $1.1 million for the three and 
nine months ended September 30, 1998 and $0.3 million and $0.9 million 
for the comparable prior-year periods.  The reduction in interest 
expense for the nine-month period reflects lower debt and a lower 
interest rate.  The Company redeemed $78.0 million of its 10% senior 
notes in March and April 1997 and issued $50.0 million of 7.31% senior 
notes through a private placement agreement in April 1997.  

	The income tax expense of $14.6 million and $29.7 million during 
the three and nine months ended September 30, 1998, reflects an increase 
of $0.4 million and $4.8 million, respectively, from the prior-year 
expense, reflecting higher pre-tax earnings in both periods of 1998.  

	Net income of $28.8 million during the third quarter of 1998 was 
$1.0 million higher than the prior-year results. On a per share basis, 
basic and diluted earnings for the three-month period were $2.77 and 
$2.16, respectively, compared to $2.52 and $2.04, respectively, for 
1997. Net income of $58.2 million during the first nine months of 1998 
was $10.1 million higher than the prior-year results. On a per share 
basis, basic and diluted earnings for the first nine months of 1998 were 
$5.49 and $4.30, respectively, compared to $4.40 and $3.61, 
respectively, for 1997. The improvement in net income for the three and 
nine months ended September 30, 1998 is primarily due to higher cement 
and ready-mixed concrete shipments, higher interest income earned on 
higher short-term investment balances, lower interest expense on lower 
outstanding debt, and a gain on the sales of surplus real estate.  In 
addition, the Company sold its construction aggregates and ready-mixed 
concrete operations in 1997.  These operations had income during the 
third quarter and first nine months in 1997.  The 1998 favorable results 
were partly offset by the earnings of these sold operations and 
increased income tax expense due to higher pre-tax earnings.  












PART II.  OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

	(a)	Index of Exhibits:

		 27.	Financial Data Schedule.


                            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: October 30, 1998			By:  WILLIAM E. ROBERTS	
							     William E. Roberts
							    Vice President, Chief
							      Financial Officer,
							   Controller and Treasurer



Date: October 30, 1998			By:    JAMES W. LANGHAM	 
							       James W. Langham
							     Vice President, General
								 Counsel and Secretary