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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2002

Commission File Number 0-11936

Lafarge North America Inc.

Incorporated in Maryland

12950 Worldgate Dr., Suite 500
Herndon, Virginia 20170
(703) 480-3600

I.R.S. Employer Identification No.
58-1290226

Indicate by check mark whether the company (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 company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ   No  o

There were 68,735,995 shares of our Common Stock and 4,210,211 Exchangeable Preference Shares of our subsidiary, Lafarge Canada Inc., outstanding as of July 31, 2002, the latest practicable date. The Exchangeable Preference Shares are exchangeable at any time into our Common Stock on a one-for-one basis, entitle their holders to dividend and other rights economically equivalent to those of the Common Stock, and through a voting trust, vote at meetings of our stockholders.

LAFARGE NORTH AMERICA INC.

FORM 10-Q FOR THE QUARTER
ENDED JUNE 30, 2002

TABLE OF CONTENTS

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PART I.   FINANCIAL INFORMATION

Item 1.       Financial Statements

LAFARGE NORTH AMERICA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited and in thousands, except per share amounts)

See the Notes to Condensed Consolidated Financial Statements.

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LAFARGE NORTH AMERICA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

See the Notes to Condensed Consolidated Financial Statements.

2

LAFARGE NORTH AMERICA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)

See the Notes to Condensed Consolidated Financial Statements.

3

LAFARGE NORTH AMERICA INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

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	assets with indefinite lives no longer be amortized but reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives. In accordance with SFAS No. 142’s transitional requirements, the amortization provisions were applied immediately to goodwill and intangible assets that were recognized in acquisitions initiated after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001, we adopted the provisions of SFAS No. 142 effective January 1, 2002.
	The following table provides a reconciliation from reported net income to net income adjusted to exclude goodwill amortization expense, including any tax-related benefits:

	Three Months						Six Months						Twelve Months
	Ended June 30						Ended June 30						Ended June 30
	2002			2001			2002			2001			2002			2001
Reported net income	$	107,033		$	86,654		$	53,690		$	20,682		$	267,098		$	206,879
Add back amortization of goodwill		—			5,063			—			10,230			10,411			18,973
Adjusted net income	$	107,033		$	91,717		$	53,690		$	30,912		$	277,509		$	225,852
Net income per share - basic:
Reported net income	$	1.47		$	1.20		$	0.74		$	0.29		$	3.69		$	2.85
Add back amortization of goodwill		—			0.07			—			0.14			0.15			0.26
Adjusted net income per share - basic	$	1.47		$	1.27		$	0.74		$	0.43		$	3.84		$	3.11
Net income per share - diluted:
Reported net income	$	1.44		$	1.19		$	0.72		$	0.28		$	3.63		$	2.84
Add back amortization of goodwill		—			0.07			—			0.15			0.14			0.26
Adjusted net income per share - diluted	$	1.44		$	1.26		$	0.72		$	0.43		$	3.77		$	3.10

	Upon adoption of SFAS No. 142, we evaluated our existing intangible assets that were acquired in purchase business combinations, and did not find it necessary to make any reclassifications in order to conform with the classification criteria in SFAS No. 141, “Business Combinations,” for recognition separate from goodwill. We also were required to reassess the useful lives and residual values of all intangible assets acquired. Based on our review, it was not necessary to make any amortization period adjustments. Further, SFAS No. 142 required us to perform, as of the adoption date, an impairment test for intangible assets that are identified as having an indefinite useful life; however, we had no intangible assets meeting this criteria as of January 1, 2002.
	The following tables present details of other intangible assets, which are included in “other assets” in the condensed consolidated balance sheets(in thousands):

		June 30, 2002
		Gross
		Carrying			Accumulated
		Amount			Amortization			Net
Customer lists		$	16,659		$	6,151		$	10,508
Pension transition asset			10,000			400			9,600
Business purchase option			5,055			1,011			4,044
Mineral rights			2,901			471			2,430
Debt financing costs			2,122			564			1,558
Other			8,749			3,809			4,940
Total		$	45,486		$	12,406		$	33,080

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		June 30, 2001
		Gross
		Carrying			Accumulated
		Amount			Amortization			Net
Customer lists		$	16,659		$	5,378		$	11,281
Pension transition asset			—			—			—
Business purchase option			—			—			—
Mineral rights			2,901			288			2,613
Debt financing costs			1,111			372			739
Other			8,707			2,703			6,004
Total		$	29,378		$	8,741		$	20,637

		December 31, 2001
		Gross
		Carrying			Accumulated
		Amount			Amortization			Net
Customer lists		$	16,659		$	5,772		$	10,887
Pension transition asset			—			—			—
Business purchase option			—			—			—
Mineral rights			2,901			380			2,521
Debt financing costs			1,111			448			663
Other			8,696			3,570			5,126
Total		$	29,367		$	10,170		$	19,197

The amortization expense for intangible assets for the periods presented is as follows:

		Three Months				Six Months				Twelve Months
		Ended June 30				Ended June 30				Ended June 30
		2002		2001		2002		2001		2002		2001
Amortization expense of intangible assets		1,482		918		2,777		1,652		4,722		3,318

The following presents the estimated amortization expense for intangible assets for each of the next five years (in thousands).

2002	$	5,231
2003	$	4,828
2004	$	3,714
2005	$	2,331
2006	$	2,074

	In connection with SFAS No. 142’s transitional goodwill impairment evaluation, the statement required us to perform the first step of the goodwill impairment test, which compares the fair value of the company’s reporting units with their respective carrying values, to identify potential impairment. We completed this evaluation during the quarter ended June 30, 2002, and determined that no goodwill impairment existed as of January 1, 2002.
5.	Under our receivables securitization program, we agreed to sell, on a revolving basis, certain of our accounts receivable to a wholly-owned, special purpose subsidiary (the “SPS”). The SPS in turn entered into an agreement to transfer, on a revolving basis, an undivided percentage ownership interest in a designated pool of accounts receivable to unrelated third-party purchasers, through the

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	use of a qualified special purpose entity, up to a maximum of $200 million. Under the agreements, new receivables are added to the pool as collections reduce previously sold receivables. We service, administer and collect the receivables sold.
	According to SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement No. 125,” the receivables securitization transactions were accounted for as sales and, as a result, the related receivables and debt have been excluded from the accompanying Condensed Consolidated Balance Sheets. We have received proceeds from the sale of trade receivables totaling $527.7 million and $559.7 million for the three months ended June 30, 2002 and 2001, respectively, $774.1 million and $889.1 million for the six months ended June 30, 2002 and 2001, respectively, and $1,875.9 million and $1,602.9 million for the twelve months ended June 30, 2002 and 2001, respectively. At June 30, 2002 and 2001 and at December 31, 2001, we administered $200.0 million, $200.0 million and $116.5 million, respectively, of receivables outstanding that were sold under this arrangement. The related fees and discounting expense are recorded as “other (income) expense, net” in the accompanying Condensed Consolidated Statements of Income and amounted to $0.6 million and $1.6 million for the three months ended June 30, 2002 and 2001, respectively, $1.3 million and $3.7 million for the six months ended June 30, 2002 and 2001, respectively, and $4.7 million and $6.7 million for the twelve months ended June 30, 2002 and 2001, respectively. The SPS holds a subordinated retained interest in the receivables not sold to third parties amounting to $87.9 million, $102.1 million and $87.0 million at June 30, 2002 and 2001 and at December 31, 2001, respectively. The subordinated interest in receivables is recorded at fair value, which is determined based on the present value of future expected cash flows estimated using management’s best estimates of credit losses and discount rates commensurate with the risks involved. Due to the short-term nature of trade receivables, the carrying amount, les s allowances, approximates fair value. Variations in the credit and discount assumptions would not significantly impact fair value.
6.	We value our inventories at the lower of cost or market. Other than maintenance and operating supplies, we value the majority of our U.S. cement inventories using the last-in, first-out method. We value all other inventories at average cost. At June 30, 2002 and 2001 and at December 31, 2001, our inventories consisted of the following (in thousands):

	June 30
							December 31
	2002			2001			2001
Finished products	$	221,937		$	217,077		$	199,156
Work in process		39,624			37,002			23,187
Raw materials and fuel		69,874			66,504			60,214
Maintenance and operating supplies		72,007			69,411			68,303
Total inventories	$	403,442		$	389,994		$	350,860

7.	In April 2002, we entered into commercial paper agreements, under which we may from time to time issue up to an aggregate principal amount of $300 million in unsecured, short-term promissory notes through private placements. At June 30, 2002, we had $275 million of commercial paper outstanding under the agreements with a weighted-average interest rate of 2.12 percent and maturity dates ranging from 1 to 90 days. The agreements, which expire on April 17, 2003, require the maintenance of certain financial ratios, among other restrictions.
8.	We recorded $3.0 million, $6.0 million and $11.6 million in fees for managing on behalf of Lafarge S.A. certain U.S. operations of Blue Circle Industries PLC during the three, six and twelve months ended June 30, 2002, respectively. These operations remain the property of Lafarge S.A. and their

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	results are not consolidated with ours. In addition, for the three, six and twelve months ended June 30, 2002 we recorded $48.6 million, $93.4 million and $97.5 million, respectively, in direct costs and expenses reimbursable from Lafarge S.A. under our agreement to manage the Blue Circle operations. Such costs and expenses are reflected as “income from managed assets – direct and allocated costs and expenses” within the accompanying Condensed Consolidated Statements of Income, and are also reflected in “income from managed assets – management fees and cost reimbursements,” as these amounts were reimbursed by Lafarge S.A. These costs and expenses include payroll and other related costs and expenses incurred by us in connection with our employment of those individuals who carry on Blue Circle’s U.S. operations. We have employed these individuals pursuant to the terms of the Supplemental Agreement Regarding E mployees and Employee Benefits dated as of December 21, 2001, which we entered into with Lafarge S.A. in connection with our agreement to manage the Blue Circle operations. Costs and expenses reimbursed under our agreement also include other direct costs that are attributable to the Blue Circle operations and an allocation of cement-related regional and central selling, general and administrative costs incurred by us (allocated pro rata based on cement sales revenues).
9.	Cash paid for interest and income taxes is as follows (in thousands):

	Six Months						Twelve Months
	Ended June 30						Ended June 30
	2002			2001			2002			2001
Interest (net of amounts capitalized)	$	24,772		$	27,673		$	52,950		$	53,253
Income taxes (net of refunds)	$	25,300		$	1,195		$	52,028		$	124,971

10.	Net income per share for the three, six and twelve months ended June 30, 2002 and 2001 are as follows (in thousands, except per share amounts):

	Three Months						Six Months						Twelve Months
	Ended June 30						Ended June 30						Ended June 30
	2002			2001			2002			2001			2002			2001
Basic Calculation
Net income	$	107,033		$	86,654		$	53,690		$	20,682		$	267,098		$	206,879
Weighted average number of shares outstanding		72,829			72,066			72,593			72,063			72,306			72,579
Basic net income per share	$	1.47		$	1.20		$	0.74		$	0.29		$	3.69		$	2.85
Diluted Calculation
Net income assuming dilution	$	107,033		$	86,654		$	53,690		$	20,682		$	267,098		$	206,879
Weighted average number of shares outstanding		72,829			72,066			72,593			72,063			72,306			72,579
Net effect of the dilutive stock options based on the treasury      stock method		677			517			714			445			629			266
Net effect of dilutive stock warrant based on the treasury      stock method		962			316			909			174			735			—
Weighted average number of shares outstanding assuming full      conversion of all potentially dilutive securities		74,468			72,899			74,216			72,682			73,670			72,845
Diluted net income per share	$	1.44		$	1.19		$	0.72		$	0.28		$	3.63		$	2.84

Basic net income per common equity share was computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per

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	common equity share assumed the exercise of stock options and stock warrant, to the extent such conversion is dilutive, for all periods presented.
11.	Comprehensive income consists of the following (in thousands):

	Three Months							Six Months								Twelve Months
	Ended June 30							Ended June 30								Ended June 30
	2002				2001			2002				2001				2002				2001
Net income	$	107,033			$	86,654		$	53,690			$	20,682			$	267,098			$	206,879
Foreign currency translation adjustments		57,708				36,098			55,477				(15,659	)			5,441				(28,167	)
Minimum pension liability adjustment, net      of income taxes		—				—			—				—				(13,213	)			—
Change in fair value of derivative instruments, net      of income taxes		(616	)			—			(616	)			—				(616	)			—
Comprehensive income	$	164,125			$	122,752		$	108,551			$	5,023			$	258,710			$	178,712

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The operating segments reported below are those for which separate financial information is available and for which executive management regularly evaluates operating income or loss amounts (before other poststretirement benefit expense for retirees, goodwill amortization through December 31, 2001 related to the 1998 acquisition of certain Redland PLC businesses in North America from Lafarge S.A., minority interests, interest, income taxes and foreign exchange gains and losses) in deciding how to allocate resources and in assessing performance. Each of our three reportable operating segments, Construction Materials, Cement and Cement-Related Products, and Gypsum, represents a separately managed strategic business unit with its own capital requirements and marketing strategies. The basis of segmentation is consistent with our year-end consolidated financial statements. We account for intersegment sales and transfers at market prices. We attri bute revenue to geographic areas based on the location of the assets producing the revenue.

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Operating segment information consists of the following (in millions):

	Three Months								Six Months								Twelve Months
	Ended June 30								Ended June 30								Ended June 30
	2002				2001				2002				2001				2002				2001
Net sales:
Construction materials
Revenues from external customers	$	521.0			$	585.7			$	755.1			$	832.4			$	1,996.6			$	1,755.6
Intersegment revenues		1.3				—				2.1				—				2.1				0.3
Cement and cement related products
Revenues from external customers		308.2				310.2				465.5				472.6				1,089.7				1,067.1
Intersegment revenues		37.1				40.2				56.2				60.9				136.9				137.5
Gypsum
Revenues from external customers		62.5				33.9				120.8				69.2				204.0				126.7
Eliminations		(38.4	)			(40.2	)			(58.3	)			(60.9	)			(139.0	)			(137.8	)
Total net sales	$	891.7			$	929.8			$	1,341.4			$	1,374.2			$	3,290.3			$	2,949.4
Income (loss) from operations:
Construction materials (a)	$	70.9			$	75.7			$	18.6			$	26.0			$	228.2			$	172.5
Cement and cement-related products (a)		100.9				96.9				97.7				97.2				314.4				305.4
Gypsum (a)		(2.4	)			(22.9	)			(4.8	)			(42.1	)			(32.1	)			(70.4	)
Corporate and other		10.5				(20.9	)			—				(42.2	)			(36.8	)			(66.7	)
Total income from operations		179.9				128.8				111.5				38.9				473.7				340.8
Minority interests		(2.5	)			(1.6	)			(4.7	)			(3.3	)			(8.4	)			(3.3	)
Interest expense, net		(12.7	)			(12.9	)			(22.3	)			(24.7	)			(45.5	)			(35.1	)
Earnings before income taxes	$	164.7			$	114.3			$	84.5			$	10.9			$	419.8			$	302.4

	(a)	Excludes other postretirement benefit expense for retirees, goodwill amortization related to the Redland acquisition, minority interests, interest, income taxes and foreign exchange gains and losses.
	Condensed consolidated geographic information consists of the following (in millions):

	Three Months								Six Months								Twelve Months
	Ended June 30								Ended June 30								Ended June 30
	2002				2001				2002				2001				2002				2001
Net sales:
United States	$	586.4			$	572.4			$	899.5			$	865.4			$	2,057.9			$	1,916.0
Canada		305.3				357.3				441.9				508.8				1,232.4				1,033.4
Total net sales	$	891.7			$	929.8			$	1,341.4			$	1,374.2			$	3,290.3			$	2,949.4
Income from operations:
United States	$	117.2			$	76.2			$	81.5			$	22.7			$	261.9			$	205.9
Canada		62.7				52.6				30.0				16.2				211.8				134.9
Total income from operations		179.9				128.8				111.5				38.9				473.7				340.8
Minority interests		(2.5	)			(1.6	)			(4.7	)			(3.3	)			(8.4	)			(3.3	)
Interest expense, net		(12.7	)			(12.9	)			(22.3	)			(24.7	)			(45.5	)			(35.1	)
Earnings before income taxes	$	164.7			$	114.3			$	84.5			$	10.9			$	419.8			$	302.4