FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[x]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 For the Fiscal Year ended November 30, 1998

                                       OR

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

                          Commission File Number 0-6953

                             LILLY INDUSTRIES, INC.
             (Exact name of Registrant as specified in its charter)

                               INDIANA 35-0471010
                (State or other jurisdiction of (I.R.S. Employer
                incorporation or organization Identification No.)

                              733 South West Street
                           Indianapolis, Indiana 46225
               (Address of principal executive offices) (Zip Code)

               Registrant's telephone number, including area code:
                                  317-687-6700

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                        Class A Stock, without par value
                           Common Share Purchase Right
                                (Title of class)

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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

  


<PAGE>



The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant as of February 16, 1999 was $336,355,000.

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of February 16, 1999.

22,772,474  shares of Class A Common Stock, without par value; 437,037 shares of
Class B Common Stock, without par value

                       DOCUMENTS INCORPORATED BY REFERENCE

Part II: Items 5              Annual Report to Shareholders for Fiscal
through 8                     Year Ended November 30, 1998

Part III: Items 10            Proxy Statement for Annual Meeting of
through 13                    Shareholders to be held April 22, 1999






<PAGE>



                                     PART I
Lilly Industries, Inc.

Item 1.  BUSINESS

Business Description

Lilly  Industries,  Inc.  (referred to herein as "Lilly" or the  "Company")  was
founded  in 1865,  and  incorporated  under the laws of the State of  Indiana on
December 5, 1888. The Company believes it is a leader in the industrial coatings
industry,  one of the five largest  industrial  coatings  manufacturers in North
America,  and one of the 15  largest  in the world  based on net sales of $619.0
million in fiscal 1998.  Lilly  formulates,  manufactures  and markets  coatings
primarily to original equipment  manufacturers,  enhancing the appearance of and
providing  durability to products such as home and office  furniture,  cabinets,
appliances,  building  products,  transportation,  agricultural and construction
equipment,  mirrors and a variety of metal and fiberglass reinforced surfaces. A
significant  amount of the  Company's  sales  represent  coatings  developed  in
cooperation  with its  customers to meet their  specific  product  requirements,
resulting in a number of primary  supplier  relationships  with those customers.
Lilly also produces and sells  household  products,  such as fabric  protectors,
furniture care products and cleaning aids.

No one class of similar products (other than protective and decorative coatings)
accounted for 10% or more of consolidated  revenues of the Company in any of the
last three  fiscal  years (1).  The  Company  has only one  reportable  industry
segment,  and employs  approximately  2,300  people.  The Company has plants and
sales offices in the U.S., Australia, Canada, China, Germany, Ireland, Malaysia,
Mexico, Singapore, Taiwan and the United Kingdom.

On April 8, 1996, the Company  acquired all the outstanding  shares of Guardsman
Products,  Inc.  ("GPI") for $235 million in cash. Like the Company,  GPI was in
the business of formulating,  manufacturing and marketing  industrial  coatings.
GPI also marketed various household  furniture care and automotive  after-market
products. With the acquisition of GPI, Lilly increased its fiscal 1996 net sales
by   approximately   55%  over  fiscal  1995  net  sales.  The  GPI  acquisition
strengthened  Lilly's  market  position by broadening  customer base and product
lines. The acquisition  increased  Lilly's presence in industrial wood and metal
coatings,  and provided it with important  environmentally  friendly water-borne
technologies.  Lilly also gained a household products business focused on fabric
and  stain  protection  products  for  household  furniture.  This  business  is
characterized  by  relatively  high  margins and the  potential  for new product
development, and adds a degree of diversification to the Company.

(1)  References in this Form 10-K are  references to the Company's  fiscal years
     ended November 30, 1996, 1997 and 1998.

<PAGE>

Industrial Coatings Industry

Coatings protect a wide range of manufactured goods from the effects of external
elements over the life of the product. In addition,  coatings make products more
aesthetically  pleasing to end-use customers.  Lilly competes in three principal
industrial coatings markets:  (i) wood coatings,  such as lacquer and protective
color  for  furniture,  building  products  and  kitchen  cabinets;  (ii)  metal
coatings,  such as liquid and powder coatings used to finish building  products,
furniture,  appliances and  transportation  equipment;  and (iii) composites and
glass  coatings,  such as gelcoats and specialty  chemicals  for  transportation
equipment, recreational vehicles and mirrors.

Sales for the global paints and coatings market equal  approximately $55 billion
annually,  with annual sales for the domestic market equaling  approximately $17
billion.  Annual  sales  for the  industrial  coatings  segment  in which  Lilly
participates   are   approximately   $25  billion   globally  and  $8.5  billion
domestically.  The balance of the market  consists  primarily  of  architectural
coatings (primarily house paints), a market in which Lilly does not compete, and
specialty coatings, including maintenance coatings and traffic paints.

Industrial  coatings  is a mature and highly  fragmented  industry  in the U.S.,
growing in-line with industrial production, and includes many small competitors.
Long  term  annual  unit  growth in the U.S.  industrial  coatings  business  is
projected  between 1% and 2%, largely tied to fluctuations  in general  economic
cycles.  Annual unit growth  rate is  projected  between 1% and 2% in Europe and
between 4% and 6% in Asia. The North American  industrial  coatings  industry is
divided among over 700 participants.

Due to its maturity and historically  fragmented  participant base, the coatings
industry  is  undergoing   consolidation   through  mergers  and   acquisitions.
Consolidation  of the  coatings  industry  is being  driven by several  factors,
including (i) the need for growth in maturing markets;  (ii) environmental costs
which,  together  with a more  demanding  global  customer  base,  will  make it
difficult for smaller  manufacturers with limited financial  resources to remain
independent;  and (iii) the increasing  technical and financial resources of the
larger  companies.  To date,  the  effects of industry  consolidation  include a
greater  concentration of market share with fewer companies,  a reduction in the
number of  competitors,  and the  creation  of new  synergies  within the larger
coatings  companies,  such as raw material  purchasing  power and  manufacturing
economies of scale.

Competition

The  industrial  coatings  industry  is  competitive,  with  more than 700 North
American  manufacturers  operating in numerous  market  segments.  Manufacturers
include large  international  companies as well as small regional firms,  and no
one manufacturer  dominates.  Competitive advantages include developing coatings
that meet specific  customer  requirements,  pricing coatings  competitively and
rapidly  delivering  quality  products.  Technological  developments that reduce
negative environmental effects are also an important competitive factor.

Lilly is one of the top five industrial coatings manufacturers in North America,
one of the top 15  worldwide,  and,  with the  acquisition  of GPI,  became  the
largest supplier to the U.S. residential furniture market, serving virtually all
of the top 25 U.S.  furniture  manufacturers.  While Lilly is among the top five
North American producers of industrial coatings,  some competitors are generally
more diversified and have greater  financial  resources than the Company.  Major
competitors include Akzo Nobel; Ferro Corporation;  Morton International,  Inc.;
The Sherwin-Williams Company; PPG Industries, Inc.; and The Valspar Corporation.

End Use Markets

The Company  focuses on four end use markets:  metal  coatings;  wood  coatings;
composites  and  glass;  and  specialty.   These  four  markets   accounted  for
approximately  39%,  38%,  12% and 11% of the  Company's  fiscal 1998 net sales,
respectively. The following provides a summary of these markets.




<PAGE>



Metal Coatings.  The Company's metal coatings provide  specialized  coatings for
numerous  applications such as appliances,  building products and fixtures (such
as residential siding,  aluminum gutters,  and metal roofing),  agricultural and
construction  equipment,   furniture,   bicycles,   digital  satellite  systems,
automotive  trim and wheels,  entry and garage  doors,  computers,  window trim,
shelving,  and playground  equipment.  These coatings include traditional liquid
coatings as well as coil coatings and a full range of decorative  and functional
powder  coatings.  The  coil  coatings  process  is  considered  one of the most
environmentally  safe,  energy-efficient  methods of applying  coatings to metal
substrates.  Lilly's  technical innovation has produced  conventional and water-
borne coil  coatings  formulated  with  proprietary  resins  that  provide  high
durability,  flexibility,  corrosion resistance and chemical resistance.  Powder
coatings are experiencing growth because of their environmental desirability, as
powder   coatings   have  no  solvent   content.   Lilly  powder   coatings  are
environmentally compliant and provide outstanding durability and performance for
both interior and exterior  applications.  Metal  coatings are  manufactured  at
fourteen facilities in the U.S. and facilities in Canada and Germany.

Wood Coatings.  Lilly's wood coatings provide a full range of  custom-formulated
coatings  designed  to  enhance  the  beauty  of wood  while  providing  maximum
durability  for products  such as  residential  and office  furniture,  building
products  and kitchen  cabinets.  Wood  coatings  are  manufactured  at six U.S.
locations, as well as five foreign facilities located in Canada, China, Ireland,
Malaysia and Taiwan.

Composites and Glass Coatings.  The Company's  composites  include  gelcoats and
fiberglass  reinforced  plastic  composites  for boats,  recreational  vehicles,
cultured  marble  vanity  tops,  custom van and truck  components  and  personal
watercraft.  Lilly's glass coatings are well recognized globally.  The Company's
glass coatings provide mirror  manufacturers  with everything  needed to convert
glass into mirrors of premier  quality.  Glass coatings  include patented silver
and copper  plating  solutions,  as well as low-lead and lead-free  coatings for
mirror-back  protection,  all  of  which  meet  the  environmental  and  quality
performance standards of mirror  manufacturers.  Glass coatings are manufactured
at two facilities  located in  Connecticut,  and foreign  facilities  located in
Canada and Germany.

Specialty.  The Company  also  manufactures  and  distributes  a wide variety of
household  products  consisting  of four  distinct  businesses:  Interior  Care,
Consumer  Products,  Specialty  Chemicals  and  WoodPro(R).  The  Interior  Care
business  provides  fabric  protection  and furniture care products to consumers
through furniture stores,  and is the world's largest supplier of retail-applied
fabric  protection,  Fabri-Coate(R).  The  Consumer  Products  business  markets
several  well-known brand name household  specialty items,  such as Guardsman(R)
Furniture Polish, Goof Off(R) remover, One-Wipe(R) dust clothes and Chip Clip(R)
snack closures.  These products are sold through hardware,  home center,  paint,
mass  merchant  and  grocery   retailers.   The  Specialty   Chemicals  business
manufactures private-label automotive chemicals such as brake part cleaner, fuel
injector cleaner, and engine oil supplements for national automotive  customers.
This  division  also  serves  as a  private-label  contractor  in  the  chemical
packaging  market.  The  WoodPro(R)  business is a  franchise  group that offers
on-site repair and maintenance of wood and upholstered  furnishings for the home
or office.  These businesses operate from two facilities located in Michigan and
facilities located in Australia, Canada and the United Kingdom.

Distribution and Customers

Lilly's  technical sales force of  approximately  700 people market and sell its
industrial coatings directly to over 6,000 industrial  customers  throughout the
world. Most of the Company's  customers are located throughout the United States
and Canada,  with the remaining  customers  concentrated in Asia and Europe. The
Company is not dependent upon any single customer or few customers.  The loss of
any single customer would not have a material adverse impact on the Company.  No
single  customer  of  the  Company  represented  more  than  5%  of  net  sales.
International sales,  including U.S. exports, were $149.3 million in fiscal year
1998, which represented 24% of consolidated  sales.  Information  concerning the
Company's net sales,  operating  income and assets in foreign  countries and the
United States for the three years ended November 30, 1998 is set forth in Note 9
in the Notes to Consolidated  Financial  Statements in the Company's 1998 Annual
Report to Shareholders. Note 9 is incorporated herein by reference.




<PAGE>



The Company has no significant  order backlog.  No material part of the business
is  subject  to   re-negotiation  of  profit  or  termination  of  contracts  or
subcontracts  at the election of any  governments.  Historically,  first quarter
operating results are below operating  results for the second,  third and fourth
quarters  due to the lower  demand for  industrial  production  which  typically
occurs in December.

Raw Materials

Raw materials are the largest single cost in the industrial  coatings  business,
representing  about half of the  selling  price of most  coatings.  The  typical
coating consists of pigments dispersed in a liquid known as the "vehicle," which
is usually  composed of one or more polymers,  and a solvent.  The solvent helps
the coating  spread over the  substrate;  the  polymers  form a film to hold the
coating in place  after the  solvent  has  evaporated  and  provides  the unique
performance   characteristics   of   the   coating.   Solvents   are   typically
petrochemical-based  products  that  evaporate  quickly.  However,  the  use  of
petrochemical-based   solvents  is   declining   as   environmentally   friendly
technologies, such as water-borne liquid and powder coatings, gain market share.
The pigment,  usually an inorganic substance,  provides the color. "Fillers" and
"extender  pigments" provide gloss and sheen control,  while specialty chemicals
known as additives, enhance the flow and application properties of the coating.

The Company  manufactures  its  industrial  coatings from a variety of polymers,
pigments,  solvents and other  chemicals,  the bulk of which are  obtained  from
petrochemical feed stocks. In addition to petrochemicals,  the Company uses both
silver and copper.  Under  normal  conditions,  all of these raw  materials  are
available on the open market,  although prices and  availability  are subject to
fluctuation from time to time.  Lilly, like most other companies in the coatings
industry,  uses a variety of organic and inorganic materials in its products. No
single raw material  cost  currently  accounts for over 4% of net sales and most
account for less than 1% of net sales.

The Company's  largest single raw material cost is for titanium  dioxide (TiO2),
which is a white pigment, and accounts for approximately 30% of pigment usage in
the  coatings  industry.  The  Company's  annual  expenditures  for  TiO2  total
approximately 4% of the Company's annual net sales.

Research and Development

Lilly's  Corporate  Technology  Center,  as well as  laboratories  at its  major
facilities,  emphasize  the  development  of product  finishes to meet  specific
requirements  of  customers  and  the  maintenance  of  quality  throughout  the
manufacturing  process.  They are  also  engaged  in  research  directed  toward
development of new products and new  manufacturing  and application  techniques.
Research and development  expenses were $20.6 million (3.3% of net sales), $18.7
million  (3.1% of net  sales),  and $17.3  million  (3.4% of net  sales) for the
fiscal years 1998, 1997 and 1996, respectively.  Future research and development
expenses as a percent of net sales are  anticipated  to remain at current levels
with emphasis on new product development.

The Company  holds several  patents and  trademarks,  and  considers  patent and
trademark  protection  to be important,  but no  individual  patent is currently
material  to the  Company's  business  as a whole.  The  Company has patents and
licenses for glass  coatings which are material to that specific  business;  and
new patents are continually being developed to sustain the Company's competitive
advantage.

Properties

Lilly  maintains 32 principal  facilities,  of which 20 were located in the U.S.
See Item 2 -  Properties.  The plants range in size from  approximately  260,000
square feet to  approximately  9,000 square feet. The facilities vary in age and
are well maintained and adequate for their present uses.  Utilization rates vary
from  site  to site  depending  on  capacity,  customers  served  and  range  of
production  capabilities.  The Company believes it can take advantage of special
situations (e.g., special orders, new customers,  new technology) that may arise
during the course of an operating cycle by adding capacity  through  incremental
shifts.  Each facility operates technical support centers to assist customers in
addressing both application and processing issues.




<PAGE>



Although  the Company has  traditionally  located its  domestic  plants near its
customer  base,  the  Company  has  begun  to rely on  larger,  more  efficient,
centralized  plants in the U.S.  With  respect to its  foreign  operations,  the
Company  continues  to adhere to its strategy of  following,  and being in close
proximity to, its customers as they open plants around the world.

Employees and Collective Bargaining Units

As of November 30, 1998, Lilly employed approximately 2,300 people. The coatings
industry is not heavily  unionized and to the extent that there is unionization,
it is highly  fragmented.  Unionized workers account for approximately 9% of the
Company's  total work force and operate  through three  separate  unions at four
Lilly facilities. The Company believes that its relations with its employees are
good.

Environmental Regulation

The Company's  operations are subject to numerous  foreign,  federal,  state and
local  environmental  laws  and  regulations   relating  to  protection  of  the
environment,  employee health and safety, and the discharge,  storage, treatment
and disposal of hazardous  materials.  In the United States,  these laws include
the  Comprehensive  Environmental  Response,   Compensation  and  Liability  Act
("CERCLA" or "Superfund"), the Resource Conservation and Recovery Act, the Clean
Water  Act,  and the  Clean  Air Act.  Certain  operations  of the  Company  use
pigments,  resins  and  solvents  that  contain  chemicals  that are  considered
hazardous under various  environmental  laws.  Accordingly,  management  closely
monitors the Company's environmental  performance at its facilities.  Management
believes  that the  Company  is in  compliance  in  material  respects  with all
environmental laws and regulations.

CERCLA  imposes  joint and  several  liability,  without  regard to fault or the
legality  of the  original  conduct,  on certain  classes  of  persons  that are
considered to have  contributed to the release of hazardous  substances into the
environment.  These persons include the owner and operator of the site where the
release  occurred and  companies  that  disposed or arranged for disposal of the
hazardous  substances  found  at the  site.  The  Company  has  been  named as a
potentially  responsible  party  ("PRP")  by  the  United  States  Environmental
Protection  Agency  ("EPA") or similar  state  agencies  with respect to several
inactive waste  processing  and/or disposal sites where clean-up costs have been
incurred  or may be  incurred.  In  addition  to these  sites,  the  Company  is
currently investigating and remediating on-site disposal areas at certain of its
current and former facilities.

The Company  continually  assesses  its  environmental  matters and  establishes
reserves to provide for these matters as they arise. The Company's experience to
date  leads  it to  believe  that  it  will  have  continuing  expenditures  for
compliance  with  provisions   regulating  protection  of  the  environment  and
remediation  efforts  at waste  and  manufacturing  sites.  However,  management
believes  that such  expenditures  will not have a  material  adverse  effect on
operating results or the financial position of the Company as a whole.

Under the Clean Air Act  Amendments  of 1990  ("CAAA"),  the EPA is  required to
regulate  volatile organic compound ("VOC") emissions from a variety of consumer
and commercial  products,  including coatings.  Accordingly,  the EPA has issued
various  regulations  that limit VOCs from  industrial  coatings.  Although  the
Company cannot  accurately assess the impact of these regulations prior to their
promulgation  or  implementation  in final form,  based on  currently  available
information,  the  Company  believes  that  these  regulations  will  not have a
material  adverse effect on the operating  results or the financial  position of
the Company as a whole.

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K contains  statements  which  constitute  forward
looking  statements  within the  meaning of Section 27A of the  Securities  Act.
Discussions  containing such forward  looking  statements may be found under the
captions  "Management's  Discussion  and Analysis of Results of  Operations  and
Financial Condition  ("MD&A"),  and "Business," as well as elsewhere within this
Report.  Forward looking  statements  include  statements  regarding the intent,
belief or current  expectations  of the Company,  primarily  with respect to the
future operating  performance of the Company or related  industry  developments.
When used in this Report,  terms such as  "anticipate,"  "believe,"  "estimate,"
"expect,"  "intend,"  "indicate," "may be," "objective,"  "plan," "predict," and
"will be" are intended to identify such statements.  Forward looking  statements
are not guarantees of future  performance  and involve risks and  uncertainties.
Forward looking statements are based upon management's  expectations at the time
they are made.  Actual results could differ  materially  from those projected in
the forward  looking  statements as a result of the risk factors set forth below
and the matters set forth in this Report generally, many of which are beyond the
control of the  Company.  The Company  cautions  the reader,  however,  that the
following list of factors may not be exhaustive.


<PAGE>

Sensitivity to General Economic and Industry Conditions

The Company's  business,  and the industrial  coatings  industry as a whole,  is
cyclical  in nature  and  affected  by the  general  trends of the  economy.  In
particular,   consumer   behavior   and   confidence,   the  level  of  personal
discretionary spending,  housing activity,  interest rates, credit availability,
and demographics  influence the Company's end use markets,  such as the housing,
building products, construction and agricultural equipment, appliance, furniture
and automotive industries.  During economic downturns,  these industries tend to
experience declines, which in turn diminish demand for the Company's products.

Effects of Leverage

The Company's level of indebtedness  will have several  important effects on its
operations  including (i) a substantial  portion of the Company's cash flow from
operations  will be dedicated to debt service  obligations,  (ii) the  covenants
contained in the Company's  revolving credit facility and senior notes may limit
the  Company's  ability  to borrow  additional  funds,  and (iii) the  Company's
leveraged  financial  position may make the Company more  vulnerable to economic
downturns and may limit its ability to withstand competitive pressures, and plan
for, or react to, changes in market conditions.

Environmental Matters

The operations of the Company,  like those of other  companies in the industrial
coatings  industry,  are subject to numerous foreign,  federal,  state and local
environmental  laws and  regulations.  While  the  Company  believes  that it is
currently in material compliance with environmental requirements, any failure to
comply with such present and future  requirements  could  subject the Company to
future liabilities. The imposition of more stringent environmental requirements,
or a  determination  that  the  Company  is  potentially  responsible  for  site
remediation  where   contamination  is  not  presently  known  could  result  in
expenditures for which no accrual has been made.

Mature Industry

The industrial  coatings  industry is a mature business in the U.S.,  growing in
line with industrial production.  Long-term annual growth in the U.S. industrial
coatings  industry  is  projected  in the 1% to 2% range.  To expand  and remain
competitive,  the Company will be required to continue  (i) to develop  coatings
that  meet  specific  customer  requirements,   (ii)  to  price  those  coatings
competitively,  and (iii) to deliver quality products on time. In addition,  the
Company will also need to keep pace with  technological  developments  to remain
competitive,    particularly   technological   developments   that   relate   to
environmental  demands such as reductions of volatile organic compound emissions
imposed by government regulations.

Raw Materials

Over 50% of the Company's operating costs are typically attributable to the cost
of raw  materials.  The cost of these raw  materials,  most of which are derived
from petrochemical products,  depends on numerous factors,  including changes in
the  economy,  the level of foreign and domestic  production,  and the crude oil
supply and demand balance. A rise in the price of raw materials could materially
increase the Company's  operating costs and thereby  adversely affect its profit
margins.

International Operations

During fiscal 1998, the Company's  international  sales,  including U.S. exports
accounted for approximately 24% of total sales, and this percentage may increase
in the coming years. The Company's  international  operations  subject it to the
risks of doing business abroad,  including currency fluctuations,  various trade
barriers,  restrictions on the transfer of funds, greater difficulty in accounts
receivable collection, burdens of complying with a wide variety of foreign laws,
and, in certain parts of the world, economic, social, and political instability,
any of which could have an adverse  effect on the Company's  financial  position
and results of operations.

Year 2000 Issues

There can be no  assurance  that the  Company  and its  vendors,  suppliers  and
customers will achieve Year 2000 readiness.


<PAGE>

                        Executive Officers of the Company

The  executive  officers of the  Company,  the age of each,  the  positions  and
offices  held by each during the last five years,  and the period  during  which
each has served in such positions and offices are as follows:

Name of
Executive Officer     Age        Positions and Offices Held
-----------------     ---        --------------------------

Douglas W. Huemme     57         Director since 1990; Chairman,
                                 President and Chief Executive
                                 Officer of the Company since
                                 prior to 1994.

Robert A. Taylor      44         Director since April, 1997;
                                 Executive Vice President and
                                 Chief Operating Officer since
                                 February, 1997; Vice President
                                 and General Manager, Wood
                                 Coatings from April 1994 to
                                 February, 1997; Vice President,
                                 Specialty and Container Coatings,
                                 AKZ0 Coatings, Inc. from prior to 1994 to
                                 April, 1994.


Larry H. Dalton       51         Vice President - Manufacturing
                                 and Engineering since July,
                                 1994; General Manager of the
                                 Company's Indianapolis Division
                                 from   prior to 1994 to
                                 July, 1994.

William C. Dorris     55         Director since 1989; Vice
                                 President - Corporate
                                 Development since July, 1994;
                                 General Manager of the
                                 Company's  High Point  Division,  
                                 Templeton  Division and Dallas  Division
                                 from prior to 1994 to July, 1994

John C. Elbin         45         Vice   President, Chief Financial
                                 Officer and Secretary since
                                 April,  1997 when he joined the Company;
                                 Senior Vice President of Express
                                 Scripts in 1996; Senior Vice
                                 President   and  Chief
                                 Financial  Officer  of
                                 Pet Incorporated  from
                                 prior to 1994 to 1995.


A. Barry Melnkovic    41         Vice President - Human
                                 Resources since April, 1996;
                                 Director, Corporate Employee &
                                 Labor Relations and Director
                                 Corporate Compensation and
                                 Benefits, Cummins Engine
                                 Company, Inc., from 1993
                                 to 1996.

Kenneth L. Mills      50         Corporate  Accounting Director 
                                 and Assistant Secretary since
                                 prior to 1994.










Each  executive  officer  will serve as such until his  successor  is chosen and
qualified. No family relationships exist among the Company's executive officers.






<PAGE>



Item 2.  Properties.

The Company has 32 principal  facilities.  The locations and approximate  square
footage at those facilities are as follows:

Location                                   Square Feet

High Point, North Carolina (2 locations)     320,000
Indianapolis, Indiana                        260,000
Grand Rapids, Michigan                       165,000
Eschweiler, Germany                          121,000
Fremont, Michigan                            120,000
North Kansas City, Missouri                  138,000
London, Ontario, Canada                      103,000
Bowling Green, Kentucky                       94,000
Moline, Illinois                              76,000
Cornwall, Ontario, Canada                     97,000
Kaohsiung Hsien, Taiwan, R.O.C.               64,000
Montebello, California                        58,000
Charlotte, North Carolina                     57,000
Rocky Hill, Connecticut                       57,000
Gardena, California                           52,000
Paulsboro, New Jersey                         47,000
Dothan, Alabama                               42,000
Dallas, Texas                                 36,000
Little Rock, Arkansas                         35,000
Guadalupe, Mexico                             35,000
Seattle, Washington                           30,000
Elkhart, Indiana                              25,000
Dongguan, China                               25,000
Selangor, Malaysia                            20,000
Davie, Florida                                14,000
Woodbridge, Connecticut                       13,000
Ballinamore, Ireland                          12,000
Abingdon, England                             12,000
Wallenfels, West Germany                       9,000
North Sydney, Australia                        1,000
Singapore                                      1,000


All of these principal  facilities  noted above are owned directly or indirectly
by the Company, except for leased facilities in Grand Rapids, Michigan; Gardena,
California;  Dongguan, China; Selangor,  Malaysia; Abingdon, England; Singapore;
and North Sydney Australia.

Item 3.  Legal Proceedings.

The Company is involved in various  litigation and other asserted and unasserted
claims arising in the ordinary course of business, primarily relating to product
warranty and clean-up costs at independently  operated waste  treatment/disposal
sites previously used by the Company or the predecessors of businesses purchased
by the Company.  While the results of lawsuits or other proceedings  against the
Company cannot be predicted with certainty,  management  believes that uninsured
and unreserved  losses,  if any, arising from these  proceedings will not have a
material  adverse effect on the business or consolidated  financial  position of
the Company.






<PAGE>



Item 4.  Submission of Matters to a Vote of Security Holders.

No matter was  submitted  during the fourth  quarter of fiscal 1998 to a vote of
security holders through the solicitation of proxies or otherwise.

                                     PART II

Item 5.           Market for Company's Common Equity and Related
                  Stockholder Matters.

The information  required by this item is incorporated by reference  herein from
the information included under caption "Stock Trading and Dividend  Information"
in the Company's 1998 Annual Report to  Shareholders  and is included in Exhibit
13. There is no public trading market for the Company's Class B Common Stock.

Item 6.           Selected Financial Data.

The information  required by this item is incorporated by reference  herein from
the  information  included under the caption  "Selected  Financial  Data" in the
Company's 1998 Annual Report to Shareholders and is included in Exhibit 13.

Item 7.           Management's Discussion and Analysis of Results of
                  Operations and Financial Condition.

The information  required by this item is incorporated by reference  herein from
the information included under the caption "Management's Discussion and Analysis
of Results of Operations  and Financial  Condition" in the Company's 1998 Annual
Report to Shareholders and is included in Exhibit 13.

Item 7A.          Quantitative and Qualitative Disclosures About Market Risk.

The  Company  is subject to market  risk in the form of  interest  rate risk and
foreign  currency  risk.  Both interest rate risk and foreign  currency risk are
immaterial to the Company.


Item 8.           Financial Statements and Supplementary Data.

The  consolidated  financial  statements  of the  Company  are  incorporated  by
reference from the Company's 1998 Annual Report to Shareholders and are included
in Exhibit 13.

Item 9.           Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure.

No  information  is  required  to be  disclosed  under this item of this  report
pursuant to Instruction 1 to Item 304 of Regulation S-K.



<PAGE>

                                    PART III

Item 10.                   Directors and Executive Officers of the Company.

The  information  required by this item with respect to directors of the Company
is incorporated  herein by reference from the section entitled  "Proposal Number
One, Election of Directors" of the Company's definitive Proxy Statement relating
to its Annual Meeting of Shareholders to be held April 22, 1999. See Part I, for
a list of the  Company's  executive  officers,  and their  ages,  positions  and
offices.

Item 11.                   Executive Compensation.

The information  required by this item is incorporated  herein by reference from
the section  entitled  "Compensation  of Executive  Officers"  of the  Company's
definitive Proxy Statement  relating to its Annual Meeting of Shareholders to be
held April 22, 1999.

Item 12.                   Security Ownership of Certain Beneficial Owners and
                           Management.

The information  required by this item is incorporated  herein by reference from
the  sections  entitled  "Share  Ownership  of Certain  Beneficial  Owners"  and
"Proposal Number One,  Election of Directors" of the Company's  definitive Proxy
Statement  relating to its Annual Meeting of  Shareholders  to be held April 22,
1999.

Item 13.                   Certain Relationships and Related Transactions.

The  information  required  by this  item,  if any,  is  incorporated  herein by
reference from the section entitled "Proposal Number One, Election of Directors"
of the Company's  definitive  Proxy statement  relating to its Annual Meeting of
Shareholders to be held April 22, 1999.






<PAGE>



                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

               (a)-1 The following items,  included in the Company's 1998 Annual
               Report to Shareholders,  are incorporated herein by reference and
               are included herein in Exhibit 13.

               Report of Independent Auditors

               Consolidated Balance Sheets -- November 30, 1998 and 1997

               Consolidated  Statements of Income and Retained Earnings -- Years
               ended November 30, 1998, 1997 and 1996

               Consolidated Statements of Cash Flows -- Years ended November 30,
               1998, 1997 and 1996

               Notes to Consolidated Financial Statements -- November 30, 1998

               (a)-2 The following  financial  statement  schedule is filed as a
               part of this report.

               Schedule II

               Valuation and Qualifying Accounts

All other  schedules for which  provision is made in the  applicable  accounting
regulation of the Securities and Exchange  Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.






<PAGE>

(a)-3         Exhibits.

Exhibits Incorporated by Reference

                                  EXHIBIT INDEX

Exhibit No.                        Description                          

     2         Merger  Agreement,  dated  March 4, 1996,  by and among
               Lilly Industries,  Inc., LP Acquisition Corporation and
               Guardsman  Products,  Inc. This exhibit is incorporated
               by reference to Exhibit 2 to Lilly  Industries,  Inc.'s
               Form 8-K Current Report filed with the SEC on April 22,
               1996.

     3.1       Restated Articles of Incorporation of Lilly Industries,
               Inc.,  as  amended.  This  exhibit is  incorporated  by
               reference to Exhibit 3(a) to Lilly  Industries,  Inc.'s
               Form 10-K  Annual  Report  for the  fiscal  year  ended
               November 30, 1996.

     3.2       Restated By-Laws of Lilly Industries, Inc., as amended.
               This  exhibit is  incorporated  by reference to Exhibit
               3(b) to  Lilly  Industries,  Inc.'s  Form  10-K  Annual
               Report for the fiscal year ended November 30, 1993.

     4.1       Indenture,  dated  November  10,  1997,  between  Lilly
               Industries,  Inc.  and Harris  Trust and Savings  Bank.
               This  exhibit is  incorporated  by reference to Exhibit
               4.1 to Lilly Industries,  Inc.'s Registration Statement
               on Form S-4 filed with the  Commission  on  December 5,
               1997 (Commission No. 333-41587).

     4.2       Credit Agreement, dated October 24, 1997, between Lilly
               Industries,  Inc., the Lenders Signatory  thereto,  and
               NBD Bank,  N.A. as Agent.  This exhibit is incorporated
               by reference to Exhibit 4.2 to Lilly Industries, Inc.'s
               Registration  Statement  on Form  S-4  filed  with  the
               Commission   on  December  5,  1997   (Commission   No.
               333-41587).

     4.3       Rights Agreement, dated January 12, 1996, between Lilly
               Industries, Inc. and KeyCorp Shareholder Services, Inc.
               as  Rights  Agent.  This  exhibit  is  incorporated  by
               reference to Exhibit 4 to Lilly Industries, Inc.'s Form
               8-A filed with the SEC on January 23, 1996.

     10.1      Registration Agreement, dated November 5, 1997, between
               Lilly  Industries,  Inc.  and Salomon  Brothers,  Inc.,
               Lehman  Brothers,  Inc. and Schroder & Co.,  Inc.  This
               exhibit is incorporated by reference to Exhibit 10.1 to
               Lilly Industries, Inc.'s Registration Statement on Form
               S-4  filed  with the  Commission  on  December  5, 1997
               (Commission No. 333-41587).

     10.2      Form of Exchange  Agent  Agreement,  dated December 22,
               1997,  between Lilly Industries,  Inc. and Harris Trust
               and  Savings  Bank.  This  exhibit is  incorporated  by
               reference to Exhibit 10.2 to Lilly  Industries,  Inc.'s
               Registration  Statement  on Form  S-4  filed  with  the
               Commission   on  December  5,  1997   (Commission   No.
               333-41587).

     *10.3     Lilly Industries, Inc. Unfunded Supplemental Retirement
               Plan (as in effect November 29, 1990).  This exhibit is
               incorporated  by  reference  to Exhibit  10(b) to Lilly
               Industries,  Inc.'s  Form 10-K  Annual  Report  for the
               fiscal year ended November 30, 1990.

     *10.4     Lilly  Industries,  Inc.  Unfunded Excess Benefit Plan.
               This  exhibit is  incorporated  by reference to Exhibit
               10(c) to Lilly  Industries,  Inc.'s  Form  10-K  Annual
               Report for the fiscal year ended November 30, 1989.

     *10.5     Lilly  Industries,  Inc. Second  Unfunded  Supplemental
               Retirement Plan (effective June 4, 1990).  This exhibit
               is  incorporated by reference to Exhibit 10(f) to Lilly
               Industries,  Inc.'s  Form 10-K  Annual  Report  for the
               fiscal year ended November 30, 1990.

     *10.7     Lilly Industries, Inc. 1991 Director Stock Option Plan.
               This  exhibit is  incorporated  by reference to Exhibit
               10(i) to Lilly  Industries,  Inc.'s  Form  10-K  Annual
               Report for the fiscal year ended November 30, 1991.
<PAGE>



     *10.8     Lilly  Industries,  Inc.  1992 Stock Option Plan.  This
               exhibit is  incorporated  by reference to Exhibit 10(j)
               to Lilly Industries, Inc.'s Form 10-K Annual Report for
               the  fiscal  year  ended   November  30,  1991.   First
               Amendment to Lilly  Industries,  Inc. 1992 Stock Option
               Plan.  This  exhibit is  incorporated  by  reference to
               Exhibit 10.8 to Lilly Industries,  Inc.'s  Registration
               Statement  on Form S-4  filed  with the  Commission  on
               December 5, 1997 (Commission No. 333-41587).

     *10.9     Lilly  Industries,   Inc.  Executive   Retirement  Plan
               (effective  as of January  1,  1996).  This  exhibit is
               incorporated  by  reference  to Exhibit  10(i) to Lilly
               Industries,  Inc.'s  Form 10-K  Annual  Report  for the
               fiscal year ended November 30, 1996.

     *10.10    Lilly Industries, Inc. Retirement Plan (effective as of
               January  1,  1996)  and  Trust   Agreement   for  Lilly
               Industries,   Inc.   Replacement   Plan  between  Lilly
               Industries,  Inc.  and  Bankers  Trust  Company  of Des
               Moines,  dated  September  27,  1996.  This  exhibit is
               incorporated  by  reference  to Exhibit  10(j) to Lilly
               Industries,  Inc.'s  Form 10-K  Annual  Report  for the
               fiscal year ended November 30, 1996.

     *10.11    Change in Control Agreement,  dated September 26, 1997,
               by and  between  Registrant  and  Hugh M.  Cates.  This
               exhibit is  incorporated  by reference to Exhibit 10(1)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

     *10.12    Change in Control Agreement,  dated September 26, 1997,
               by and between  Registrant  and Larry H.  Dalton.  This
               exhibit is  incorporated  by reference to Exhibit 10(2)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

     *10.13    Change in Control Agreement,  dated September 26, 1997,
               by and between  Registrant and William C. Dorris.  This
               exhibit is  incorporated  by reference to Exhibit 10(3)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

     *10.14    Change in Control Agreement,  dated September 26, 1997,
               by and  between  Registrant  and  John C.  Elbin.  This
               exhibit is  incorporated  by reference to Exhibit 10(4)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

     *10.15    Change in Control Agreement,  dated September 26, 1997,
               by and between  Registrant and Ned L. Fox. This exhibit
               is  incorporated by reference to Exhibit 10(5) to Lilly
               Industries,  Inc.'s Form 10-Q Quarterly  Report for the
               fiscal quarter ended August 31, 1997.

     *10.16    Change in Control Agreement,  dated September 26, 1997,
               by and between  Registrant and Douglas W. Huemme.  This
               exhibit is  incorporated  by reference to Exhibit 10(6)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

<PAGE>

     *10.17    Change in Control Agreement,  dated September 26, 1997,
               by and between Registrant and A. Barry Melnkovic.  This
               exhibit is  incorporated  by reference to Exhibit 10(7)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

     *10.18    Change in Control Agreement,  dated September 26, 1997,
               by and between  Registrant  and John D.  Million.  This
               exhibit is  incorporated  by reference to Exhibit 10(8)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

     *10.19    Change in Control Agreement,  dated September 26, 1997,
               by and between  Registrant  and Kenneth L. Mills.  This
               exhibit is  incorporated  by reference to Exhibit 10(9)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

     *10.20    Change in Control Agreement,  dated September 26, 1997,
               by and between Registrant and Gary D. Missildine.  This
               exhibit is  incorporated by reference to Exhibit 10(10)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

     *10.21    Change in Control  Agreement,  dated September 5, 1997,
               by and between  Registrant  and Robert A. Taylor.  This
               exhibit is  incorporated by reference to Exhibit 10(11)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for the fiscal quarter ended August 31, 1997.

     *10.22    Change in Control Agreement,  dated September 26, 1997,
               by and between  Registrant  and Keith C.  Vander  Hyde,
               Jr..  This  exhibit is  incorporated  by  reference  to
               Exhibit  10(12) to Lilly  Industries,  Inc.'s Form 10-Q
               Quarterly  Report for the fiscal  quarter  ended August
               31, 1997.

     *10.23    Change in Control Agreement,  dated September 26, 1997,
               by and  between  Registrant  and Jay M.  Wiegner.  This
               exhibit is  incorporated by reference to Exhibit 10(13)
               to Lilly Industries,  Inc.'s Form 10-Q Quarterly Report
               for  the  fiscal  quarter  ended  August  31,  1997.  

*    Management  contracts and compensatory plans required to be filed
     pursuant to Item 14(c) of Form 10-K.



<PAGE>



Exhibits Filed Herewith:

     4.4       First Amendment to Credit Agreement among Lilly Industries, Inc.,
               the Lenders  Signatory  thereto and NBD Bank,  N.A., as agent,
               dated as of April 4, 1998.

     13        Excerpts  from the Lilly  Industries,  Inc. 1998 Annual
               Report.

     21        List of Subsidiaries.

     23        Consent of Ernst & Young LLP.

     27        Financial Data Schedule.






<PAGE>



                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

Date:             February 23, 1999
                                                   LILLY INDUSTRIES, INC.

                                                   /s/ Douglas W. Huemme

                                                   Douglas W. Huemme,
                                                   Chairman, President and
                                                   Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the  following  persons on behalf of the Company and in
the capacities and on the dates indicated.

          Signature                  Title                          Date

(1)  Principal Executive
Officer and Director

/s/ Douglas W. Huemme         Chairman, President           February 23, 1999
-----------------------       and Chief Executive
Douglas W. Huemme             Officer

(2)  Principal
Financial Officer

/s/ John C. Elbin             Vice President,               February 23, 1999
------------------------      Chief Financial Officer
John C. Elbin                 and Secretary

(3)  Principal
Accounting Officer

/s/ Kenneth L. Mills          Corporate Controller          February 23, 1999
-----------------------       and
Kenneth L. Mills              Assistant Secretary




<PAGE>



(4)  A majority of the
Board of Directors

/s/ James M. Cornelius                Director             February 23, 1999
---------------------------          
James M. Cornelius                   
                                     
                                     
/s/ William C. Dorris                 Director             February 23, 1999
---------------------------          
William C. Dorris                    
                                     
                                     
/s/ Paul K. Gaston                    Director             February 23, 1999
---------------------------          
Paul K. Gaston                       
                                     
/s/ Harry Morrison, Ph.D.             Director             February 23, 1999
---------------------------          
Harry Morrison, Ph.D.                
                                     
/s/ Norma J. Oman                     Director             February 23, 1999
---------------------------          
Norma J. Oman                        
                                     
/s/ John D. Peterson                  Director             February 23, 1999
---------------------------          
John D. Peterson                     
                                     
/s/ Thomas E. Reilly, Jr.             Director             February 23, 1999
---------------------------          
Thomas E. Reilly, Jr.                
                                     
/s/ Van P. Smith                      Director             February 23, 1999
---------------------------          
Van P. Smith                         
                                     
/s/ Robert A. Taylor                  Director             February 23, 1999
---------------------------          
Robert A. Taylor                     
                                     
                                     
                             

<PAGE>



                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS
                     LILLY INDUSTRIES, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
COL. A                          COL. B                            COL. C                          COL. D             COL. E
                                ------                            ------                          ------             ------

                                                                 Additions
Description                     Balance at       (1)              (2)             (3)             Deductions-         Balance
                                Beginning      Charged to        Charged to     Acquired in        Describe          at End of
                                of Period      Costs and        Other Accounts   Business                             Period
                                               Expenditures      -Describe      Combination
                              -----------      ------------     --------------  -----------       -----------       -----------
<S>                           <C>                <C>              <C>                 <C>          <C>              <C>       
Year ended November 30, 1998:
Reserves and allowances
          deducted from asset
          accounts:
Allowance for doubtful
          accounts receivable $2,139,000         $752,000         $--                 $--          $910,000 (A)     $1,981,000
                              ==========         ========         ===                 ===          ============     ==========



Year ended November 30, 1997:
Reserves and allowances
          deducted from asset
          accounts:
Allowance for doubtful
          accounts receivable $2,705,759         $538,000         $--                 $--          $1,104,759 (A)   $2,139,000
                              ==========         ========         ===                 ===          ==============   ==========

Year ended November 30, 1996:
Reserves and allowances
          deducted from asset
          accounts:
Allowance for doubtful
          accounts receivable $2,050,922         $510,826         $--            $729,307            $585,296 (A)   $2,705,759
                              ==========         ========         ===            ========            ============   ==========
</TABLE>

Note A - Uncollectible accounts receivable charged off, net of recoveries.