FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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


                      For the quarter ended August 31, 1999

                          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.)




                              200 WEST 103RD STREET
                           INDIANAPOLIS, INDIANA 46290
               (Address of principal executive offices) (Zip Code)

               Registrant's telephone number, including area code:
                                 (317) 814-8700




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  periods 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 the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.


              Number of shares outstanding at September 30, 1999:

              Class A Common                              22,803,000
              Class B Common                                  430,000


<PAGE>






                          PART I. FINANCIAL INFORMATION


Item 1.  Financial Statements.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands, except per share data)
<TABLE>
<CAPTION>



                                                              Three Months Ended
                                                           August 31        August 31
                                                              1999            1998
                                                           ---------       ---------
<S>                                                        <C>             <C>
Net sales                                                  $ 169,452       $ 159,345

Costs and expenses
              Cost of products sold                          105,223          97,593
              Selling, general and administrative             40,179          37,371
              Research and development                         5,535           5,235
                                                           ---------       ---------

                                                             150,937         140,199
                                                           ---------       ---------

                           OPERATING INCOME                   18,515          19,146

Sundry income (expense)                                           75             (51)
Interest expense, net                                         (3,889)         (4,140)
                                                           ---------       ---------

                           INCOME BEFORE INCOME TAXES         14,701          14,955

Income taxes                                                   6,024           6,281
                                                           ---------       ---------

                           NET INCOME                      $   8,677       $   8,674
                                                           =========       =========

Cash dividends per share                                   $    0.08       $    0.08

Net income per share
              Basic                                        $    0.37       $    0.37
              Diluted                                      $    0.37       $    0.37
</TABLE>



See notes to consolidated condensed financial statements.


<PAGE>



CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                              Nine Months Ended
                                                                                    August 31               August 31
                                                                                      1999                     1998
                                                                                ------------------     ---------------------
<S>                                                                             <C>                    <C>
Net sales                                                                       $        486,966       $           461,877

Costs and expenses
              Cost of products sold                                                      299,563                   284,900
              Selling, general and administrative                                        118,550                   109,493
              Research and development                                                    16,052                    15,530
                                                                                ------------------     ---------------------

                                                                                         434,165                   409,923
                                                                                ------------------     ---------------------

                           OPERATING INCOME                                               52,801                    51,954

Sundry expense                                                                              (418)                     (179)
Interest expense, net                                                                    (11,901)                  (12,932)
                                                                                ------------------     ---------------------

                           INCOME BEFORE INCOME TAXES                                     40,482                    38,843

Income taxes                                                                              16,594                    16,314
                                                                                ------------------     ---------------------

                           NET INCOME                                           $         23,888       $            22,529
                                                                                ==================     =====================

Cash dividends per share                                                        $           0.24       $              0.24

Net income per share
              Basic                                                             $           1.03       $              0.97
              Diluted                                                           $           1.02       $              0.96
</TABLE>



See notes to consolidated condensed financial statements.


<PAGE>




CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
<TABLE>
<CAPTION>

                                                                         August 31               November 30
                                                                            1999                     1998
                                                                     -------------------      -------------------

ASSETS

<S>                                                                  <C>                      <C>
CURRENT ASSETS
  Cash and cash equivalents                                          $           6,732        $           13,326
  Accounts receivable, less allowances
       for doubtful accounts (8/31/99, $1,900;
       11/30/98, $1,981)                                                        93,049                    82,039
  Inventories                                                                   56,862                    50,796
  Other                                                                          6,000                     5,871
                                                                     -------------------      -------------------

                           TOTAL CURRENT ASSETS                                162,643                   152,032

OTHER ASSETS                                                                    25,888                    21,257

INTANGIBLE ASSETS                                                              235,514                   241,028

PROPERTY AND EQUIPMENT
  Land, buildings and equipment                                                187,906                   162,357
  Accumulated depreciation                                                     (66,965)                  (60,189)
                                                                     -------------------      -------------------
                                                                               120,941                   102,168

                                                                     $         544,986        $          516,485
                                                                     ===================      ===================
</TABLE>



See notes to consolidated condensed financial statements.


<PAGE>



CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
<TABLE>
<CAPTION>



                                                                                   August 31             November 30
                                                                                      1999                   1998
                                                                                -----------------      --------------

LIABILITIES AND SHAREHOLDERS' EQUITY

<S>                                                                             <C>                    <C>
CURRENT LIABILITIES
   Accounts payable                                                             $        65,187        $      59,156
   Other                                                                                 45,174               42,805
                                                                                -----------------      --------------

                    TOTAL CURRENT LIABILITIES                                           110,361              101,961

LONG-TERM DEBT                                                                          211,100              203,700

OTHER LIABILITIES                                                                        38,487               45,249

SHAREHOLDERS' EQUITY Capital stock:
     Class A (limited voting)                                                            15,532               15,459
     Class B (voting)                                                                       300                  300
   Additional capital                                                                    83,693               81,890
   Retained earnings                                                                    126,230              107,914
   Accumulated other comprehensive income                                                (3,414)              (4,096)
   Cost of capital stock in treasury                                                    (37,303)             (35,892)
                                                                                -----------------      --------------

                                                                                        185,038              165,575
                                                                                -----------------      --------------

                                                                                $       544,986        $     516,485
                                                                                =================      ==============
</TABLE>



See notes to consolidated condensed financial statements.


<PAGE>



CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
(In thousands)
<TABLE>
<CAPTION>

                                                                                             Nine Months Ended
                                                                                     August 31             August 31
                                                                                       1999                     1998
                                                                                --------------------     -------------------

<S>                                                                             <C>                      <C>
    OPERATING ACTIVITIES
    Net income                                                                  $           23,888       $           22,529
    Adjustments to reconcile net income to net
          cash provided by operating activities:
      Depreciation                                                                           7,762                    7,292
      Amortization                                                                           8,675                    8,182
      Changes in operating  assets and  liabilities net of effects from acquired
          businesses:
             Accounts receivable                                                           (10,842)                    (243)
             Inventories                                                                    (6,042)                  (1,892)
             Accounts payable and accrued expenses                                           8,324                   (5,644)
             Sundry                                                                        (12,124)                   5,262
                                                                                --------------------     -------------------

    NET CASH PROVIDED BY OPERATING ACTIVITIES                                               19,641                   35,486

    INVESTING ACTIVITIES
      Purchases of property and equipment                                                  (26,875)                 (11,584)
      Payments for acquired businesses                                                      (2,721)                 (11,253)
      Sundry                                                                                 1,067                    2,786
                                                                                --------------------     -------------------

    NET CASH USED BY INVESTING ACTIVITIES                                                  (28,529)                 (20,051)

    FINANCING ACTIVITIES
      Dividends paid                                                                        (5,572)                  (5,553)
      Proceeds from borrowings                                                               7,400                   11,000
      Principal payments on borrowings                                                           -                  (15,600)
      Sundry                                                                                   466                    1,489
                                                                                --------------------     -------------------

    NET CASH PROVIDED(USED) BY FINANCING ACTIVITIES                                          2,294                   (8,664)

                                                                                --------------------     -------------------
    INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        (6,594)                   6,771

    Cash and cash equivalents at beginning of year                                          13,326                   10,079
                                                                                --------------------     -------------------

    CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  $            6,732       $          16,850
                                                                                ====================     ===================
</TABLE>



See notes to consolidated condensed financial statements.


<PAGE>



NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
AUGUST 31, 1999

NOTE A--BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Rule 10-01 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  For further  information,  refer to the  consolidated  financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended November 30, 1998.


NOTE B--NET INCOME PER SHARE

Basic and  diluted net income per share are  computed by dividing  net income as
reported by the average number of shares outstanding as follows (in thousands):
<TABLE>
<CAPTION>




                                                                    Three Months Ended               Nine Months Ended
                                                                       August 31                          August 31
                                                                 1999            1998              1999              1998
                                                              ----------------------------      ------------------------------
<S>                                                             <C>             <C>               <C>               <C>
Basic
    Weighted-average common shares
           outstanding                                          23,220          23,182            23,200            23,146
                                                                ======          ======            ======            ======

Diluted
    Weighted-average common shares
       outstanding                                              23,220          23,182            23,200            23,146
    Dilutive effect of stock options                               110             295               130               272
                                                                ------          ------            ------            ------
    Average common shares outstanding
       assuming dilution                                        23,330          23,477            23,330            23,418
                                                                ======          ======            ======            ======
</TABLE>




NOTE C--INVENTORIES
================================================================================

The  principal   inventory   classifications   are  summarized  as  follows  (in
thousands):


<TABLE>
<CAPTION>
                                                  August 31                 November 30
                                                     1999                       1998
                                              -------------------       ---------------------
<S>                                              <C>                       <C>
Finished products                                $         32,624          $          29,761
Raw materials                                              30,114                     27,411
                                              -------------------        --------------------

                                                           62,738                     57,172

Less adjustment of certain
     inventories to last in,
     first out (LIFO) basis                                 5,876                      6,376
                                              -------------------         -------------------

                                                 $         56,862          $          50,796
                                              ===================         ===================
</TABLE>


The Company uses the LIFO method of inventory valuation for approximately 64% of
inventories  where an actual  valuation can be made only at the end of each year
based on the inventory levels and costs at that time. Accordingly,  interim LIFO
calculations  must  necessarily be based on  management's  estimates of expected
year-end  inventory  levels and costs.  Since  these are  subject to many forces
beyond management's  control,  interim results are subject to the final year-end
LIFO inventory  valuation.  The Company estimates the annual adjustment for LIFO
and allocates it to quarters based on actual inflation  experienced in a quarter
as it relates to anticipated inflation for the year.


NOTE D---ACCOUNTING CHANGES

The Company adopted Statement of Financial  Accounting Standards (SFAS) No. 130,
"Reporting  Comprehensive  Income" during the first quarter of fiscal year 1999.
SFAS 130  establishes  new rules for the reporting and display of  comprehensive
income and its components.  SFAS 130 requires the Company to report, in addition
to net income,  other  components of  comprehensive  income,  including  foreign
currency translation adjustments.  Total comprehensive income was $8,599,000 and
$7,205,000  for the three months ended  August  31,1999 and 1998,  respectively.
Total  comprehensive  income was $24,570,000 and $20,057,000 for the nine months
ended  August  31,  1999 and 1998,  respectively.  Adoption  of this  disclosure
standard had no effect on the Company's operating results or financial position.

NOTE E---RECLASSIFICATION

Certain amounts in the November 30, 1998 balance sheet have been reclassified to
conform with 1999 presentation.




<PAGE>



Item 2.  Management's  Discussion  and  Analysis  of Results of  Operations  and
Financial Condition.

Results of Operations

Sales for the third  quarter  ended  August 31,  1999  increased  6.3% to $169.5
million  compared to $159.3 in the prior year.  Sales for the nine month  period
ended August 31, 1999 were up 5.4% at $487.0 million  compared to $461.9 million
for the same period of 1998.  Sales  growth for both the third  quarter and nine
month period was driven by strong  volume  increases in wood coatings and powder
coatings for metal substrates.

Sales of wood coatings increased due to continued expansion in Asia and domestic
growth in the furniture,  kitchen cabinets, and building product markets. Powder
coatings  continue to gain market share in most metal  coatings  markets.  Sales
growth in these markets was partially  offset by reduced demand for liquid metal
coatings in the agricultural and construction equipment markets.

Gross profit margin for the third quarter ended August 31, 1999 fell slightly to
37.9% of sales  compared to 38.8% in the prior year.  The decrease was primarily
driven by the effect of changes in product  sales mix and a slight  increase  in
manufacturing  labor and  overhead.  For the nine month  period ended August 31,
1999,  gross profit margin held  approximately  even with the same period of the
prior year at 38.5% and 38.3%, respectively.

Selling,  general and administrative expenses for the third quarter ended August
31, 1999 increased 7.5% to $40.2 million  compared to $37.4 million in the prior
year.  Selling,  general and  administrative  expenses for the nine month period
ended  August 31,  1999  increased  8.3% to $118.6  million  compared  to $109.5
million  for the same  period of 1998.  Investment  in  selling,  marketing  and
infrastructure  enhancements contributed to the increase for both periods as the
Company  continues to focus on global expansion and capturing  additional market
share in certain markets.

Interest  expense for the third  quarter and nine month  period ended August 31,
1999 decreased 6.1% and 8.0%, respectively, over the same periods of 1998 due to
lower average interest rates and lower average debt  outstanding.  The Company's
effective  tax rate for the third quarter and nine month period ended August 31,
1999 was  41.0%  compared  to 42.0%  for the same  periods  of 1998.  The  lower
effective rate for 1999 is a result of the favorable impact of international tax
planning strategies.

Net income and net income per diluted share for the third quarter were even with
prior year results at $8.7 million and $.37 per diluted share, respectively. Net
income and net income per diluted  share for the nine month period ending August
31, 1999  increased  6.0% and 6.3%,  respectively,  over the same period of 1998
primarily due to higher  operating  income,  reduced interest expense and a more
favorable effective tax rate.

Liquidity and Capital Resources

Cash  provided by operating  activities  during the nine months ended August 31,
1999 decreased to $19.6 million compared to $35.5 million for the same period of
1998 as higher net  income  was offset by the cash  effect of changes in certain
operating assets and liabilities.


<PAGE>




Cash used by investing  activities  during the nine months ended August 31, 1999
increased  to $28.5  million  compared  to $20.1  million for the same period of
1998. The increase was primarily due to increased capital expenditures offset by
decreased payments for acquired businesses.  Capital  expenditures  increased by
$15.3  million to $26.9  million for the nine months ended August 31, 1999.  The
increase was driven by investments in international and domestic infrastructure.

Cash  provided by financing  activities  during the nine months ended August 31,
1999  increased  $11.0  million  over the  same  period  of 1998 as the  Company
utilized  credit  facilities to fund a portion of operating  and investing  cash
flows.

The Company  believes that funds  available  from internal and external  sources
will be sufficient to meet the liquidity needs of the Company.

The Board of Directors  declared a regular quarterly dividend of eight cents per
common share, payable January 3, 2000, to shareholders of record on December 10,
1999.

Year 2000

The Year 2000 issue  ("Y2K" or "Y2K  issue") is the result of computer  programs
being written using two digits rather than four to define the  applicable  year.
Any  computer  programs or any  hardware  that have date  sensitive  software or
embedded  chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a temporary inability to process transactions or
engage in normal manufacturing or other business activities.

The Company has  substantially  completed a  company-wide  effort to achieve Y2K
readiness for both information technology ("IT") and non-information  technology
("Non-IT") systems, and to determine the Y2K readiness of significant suppliers.
The Company is focusing its efforts on IT systems,  Non-IT systems and suppliers
that,  without  Y2K  readiness,  could  have a  material  adverse  effect on the
Company's operations.

The Company's approach to addressing Y2K preparedness consists of the following:

Inventory - identification of items to be assessed for Y2K readiness.

Assessment - prioritizing the inventoried  items,  assessing their Y2K readiness
and defining corrective actions and developing contingency plans.

Deployment -  implementing  corrective  actions,  verifying  implementation  and
finalizing contingency plans.

The  Company's  IT systems  are  comprised  of  business  computer  systems  and
technical  infrastructure.  In 1996, the Company  determined that the IT systems
supporting its business units could be inadequate to meet business  requirements
after 1999 and thus  implemented  a project to replace all  critical IT systems.
All critical IT systems have been  inventoried and assessed,  and replacement of
non-conforming IT systems began during the fourth quarter of 1998. Deployment of
all critical IT systems was completed during the third quarter of 1999.  Initial
testing has been  completed but on-going  evaluation  and testing of critical IT
systems will be performed throughout the remainder of the year.



<PAGE>



The Company's  Non-IT  systems are comprised of  manufacturing  and  warehousing
systems and facility support systems. A preliminary  inventory and assessment of
these Non-IT  systems was completed in early 1999 and deployment of these Non-IT
systems was completed during the third quarter of 1999.

The Company has  substantially  completed the process of contacting  significant
raw material and service suppliers regarding their Y2K readiness.  The Company's
supplier readiness program focused on those suppliers  considered  essential for
the prevention of a material disruption to the Company's business operation. The
Company made efforts to address third-party Y2K compliance issues noted from the
inquiries.  However,  there can be no assurance that such  third-parties will be
Y2K  compliant.  Non-compliance  by third parties could have a material  adverse
impact on the Company's financial position and business operations.

The  Company  is  developing  contingency  plans to  minimize  the impact to the
Company of any potential  non-compliance by third parties or other unanticipated
Y2K  business  interruptions.   These  plans,  for  example,  will  address  the
availability  of  raw  materials,   alternative  service  providers,  and  other
resources critical to the Company's  operations.  However,  it is unlikely these
plans will address all potential business interruptions.  Accordingly, there can
be no assurance the implementation of these plans will be successful.

The Company  utilizes both internal and external  resources in all phases of its
Y2K readiness program. The Company estimates the total cost of resolving the Y2K
issue to be approximately $5 million. Of this amount, the Company estimates that
over $0.5 million was spent during the third quarter of 1999.  Approximately 70%
of total Y2K cost will be comprised of equipment and software  replacement costs
with the balance  being  comprised of  assessment  and  remediation  costs.  The
Company expects all costs related to the Y2K readiness program to be funded with
operating cash flow. Y2K costs were expensed as incurred  except for new systems
and equipment,  which were  capitalized  and will be charged to expense over the
estimated useful life of the related asset.

While the  Company  believes  that its  efforts to address  Y2K issues have been
successfully  completed,  the  Company  recognizes  that  failure to resolve Y2K
issues could,  in a reasonably  likely worst case  scenario,  increase costs and
limit the Company's ability to conduct business operations. The financial impact
of such scenario can not be reasonably estimated.

Forward-Looking Statements

Statements   in  this  report   that  are  not   strictly   historical   may  be
"forward-looking"  statements,  which  involve  risks  and  uncertainties.  Such
statements  are made  pursuant  to the safe  harbor  provisions  of the  Private
Securities  Litigation Reform Act of 1995. Risk factors include general economic
and   industry   conditions,   effects  of  leverage,   environmental   matters,
technological  developments,  product  pricing,  raw material cost changes,  and
international  operations,  among  others,  which are set forth in the Company's
annual report on Form 10-K for the year ended November 30, 1998.  Actual results
of the Company could differ  materially  from those  expressed or implied by any
such forward-looking  statements.  The Company makes no commitment to update any
forward-looking  statement or disclose any facts, events, or circumstances after
the date hereof that may affect the accuracy of any forward-looking statement.

Item 3.  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
considered immaterial to the Company.




<PAGE>




                           PART II: OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.


(a)  The following exhibit is included herein:

           EXHIBIT 27            Financial Data Schedule

(b)  The Company  did not file any  reports on Form 8-K during the three  months
     ended August 31, 1999.


Note:  All other item numbers under this section are not applicable.



<PAGE>



                                   SIGNATURES
                                   ----------


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

                                           LILLY INDUSTRIES, INC.  (Registrant)

October 15, 1999


                                           /s/ Douglas W. Huemme
                                           --------------------------------
                                           Douglas W. Huemme
                                           Chairman and
                                           Chief Executive Officer





                                           PRINCIPAL FINANCIAL OFFICER

October 15, 1999


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