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 February 29, 2000

                          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 March 31, 2000:

            Class A Common                             22,720,000
            Class B Common                                497,000

                                  Page 1 of 12


<PAGE>



                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

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

                                                     Three Months Ended
                                                February 29,       February 28,
                                                   2000               1999
                                                 --------           --------

Net sales                                        $161,051           $146,139

Costs and expenses:
         Cost of products sold                    101,939             90,083
         Selling, general and administrative       41,697             37,093
         Research and development                   5,272              5,159
                                                 --------           --------

                                                  148,908            132,335
                                                 --------           --------

                  Operating income                 12,143             13,804

Other expenses:
         Sundry expense                               137                239
         Interest expense, net                      4,297              4,101
                                                 --------           --------

                  Income before income taxes        7,709              9,464

Income taxes                                        3,161              3,880
                                                 --------           --------

                  Net income                     $  4,548           $  5,584
                                                 ========           ========


Net income per share:
         Basic                                   $   0.20           $   0.24
         Diluted                                 $   0.20           $   0.24


Cash dividends per share                         $    .08           $    .08



See notes to condensed consolidated financial statements.

                                  Page 2 of 12


<PAGE>



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

                                                  February 29,      November 30,
                                                     2000              1999
                                                  ---------         ---------

ASSETS

Current assets:
     Cash and cash equivalents                    $   4,733         $   5,714
     Accounts receivable, less allowances
         for doubtful accounts (2/29/00, $1,869;
         11/30/99, $1,775)                           92,395            91,369
     Inventories                                     61,611            58,500
     Other                                            7,877             6,274
                                                  ---------         ---------

                  Total current assets              166,616           161,857

Other assets                                         23,992            22,755

Intangible assets                                   232,685           233,878

Property and equipment:
     Land, buildings and equipment                  207,907           199,714
     Accumulated depreciation                       (70,442)          (67,778)
                                                  ---------         ---------

                                                    137,465           131,936
                                                  ---------         ---------

                                                  $ 560,758         $ 550,426
                                                  =========         =========

See notes to condensed consolidated financial statements.

                                  Page 3 of 12


<PAGE>



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

                                                   February 29,     November 30,
                                                      2000              1999
                                                   ---------         ---------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                              $  69,129         $  60,317
     Other                                            37,972            52,820
                                                   ---------         ---------

                  Total current liabilities          107,101           113,137

Long-term debt                                       221,387           206,803

Other liabilities                                     37,193            38,315

Shareholders' equity:
     Capital stock:
           Class A (limited voting)                   15,554            15,539
           Class B (voting)                              300               300
     Additional capital                               84,237            83,833
     Retained earnings                               136,498           133,807
     Accumulated other comprehensive loss             (3,388)           (3,509)
     Cost of capital stock in treasury               (38,124)          (37,799)
                                                   ---------         ---------

                                                     195,077           192,171
                                                   ---------         ---------

                                                   $ 560,758         $ 550,426
                                                   =========         =========

See notes to condensed consolidated financial statements.

                                  Page 4 of 12


<PAGE>



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

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                  February 29,      February 28,
                                                                     2000             1999
                                                                   --------         --------

<S>                                                                <C>              <C>
OPERATING ACTIVITIES
Net income                                                         $  4,548         $  5,584
Adjustments to reconcile net income to net
  cash provided by operating activities:
     Depreciation                                                     3,005            2,632
     Amortization                                                     3,017            2,686
     Changes in operating assets and liabilities
        net of effects from acquired business:
           Accounts receivable                                       (1,026)          (4,521)
           Inventories                                               (3,111)          (3,201)
           Accounts payable and accrued expenses                     (6,036)          (9,284)
           Sundry                                                    (4,148)          (8,354)
                                                                   --------         --------

                  Net cash used by operating activities              (3,751)         (14,458)

INVESTING ACTIVITIES
Purchases of property and equipment                                  (8,834)          (6,843)
Payments for acquired businesses                                     (1,250)          (2,721)
Sundry                                                                   33              468
                                                                   --------         --------

                  Net cash used by investing activities             (10,051)          (9,096)

FINANCING ACTIVITIES
Dividends paid                                                       (1,857)          (1,857)
Proceeds from borrowings                                             14,584           21,800
Sundry                                                                   94              339
                                                                   --------         --------

                  Net cash provided by financing activities          12,821           20,282
                                                                   --------         --------

Decrease in cash and cash equivalents                                  (981)          (3,272)

Cash and cash equivalents at beginning of period                      5,714           13,326
                                                                   --------         --------

Cash and cash equivalents at end of period                         $  4,733         $ 10,054
                                                                   ========         ========
</TABLE>



See notes to condensed consolidated financial statements.

                                  Page 5 of 12


<PAGE>



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
FEBRUARY 29, 2000

NOTE A--BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated 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 Article 10 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.  The  results of  operations  for the three month  period  ended
February  29, 2000 are not  necessarily  indicative  of the results for the full
year.

The  balance  sheet at  November  30,  1999 has been  derived  from the  audited
financial  statements  at that date but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statements.

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, 1999.

NOTE B--INVENTORIES

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

                                               February 29,      November 30,
                                                  2000              1999
                                                 -------           -------

Finished products                                $35,294           $33,628
Raw materials                                     31,993            30,048
                                                 -------           -------
                                                  67,287            63,676
Less adjustment of certain inventories
     to LIFO basis                                 5,676             5,176
                                                 -------           -------
                                                 $61,611           $58,500
                                                 =======           =======

The Company uses the LIFO method of inventory valuation for approximately 61% of
inventories.  For these inventories, 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 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 C--SEGMENT INFORMATION

The Company  operates  within three business  segments which serve three end-use
markets:  wood coatings;  metal  coatings;  and  composites and glass  coatings.
Products sold to these markets have similar economic characteristics, production
processes,  distribution  methods, and regulatory  environments.  Based on these
similarities, the Company's products are aggregated into one reportable segment,
Industrial Coatings and Specialty Chemicals.

Net sales of  Industrial  Coatings and  Specialty  Chemical  products by end-use
markets are as follows (in thousands):

                                              Three Months Ended
                                       February 29,         February 28,
                                          2000                  1999
                                        --------              --------

Wood Coatings                           $ 74,296              $ 65,113
Metal Coatings                            67,584                63,662
Composites and Glass Coatings             19,171                17,364
                                        --------              --------
                                        $161,051              $146,139
                                        ========              ========


                                  Page 6 of 12


<PAGE>




NOTE D--COMPREHENSIVE INCOME

Total  comprehensive  income is comprised of net income and net foreign currency
translation  adjustments.  Total comprehensive income for the three month period
ended February 29, 2000 and February 28, 1999 was  approximately  $4,669,000 and
$5,799,000, respectively.

NOTE E--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):

                                                        Three Months Ended
                                                    February 29,   February 28,
                                                       2000            1999
                                                      ------          ------

Basic

    Weighted-average common shares outstanding        23,205          23,180
                                                      ======          ======

Diluted

    Weighted-average common shares outstanding        23,205          23,180
    Dilutive effect of stock options                      35             150
                                                      ------          ------

Average common shares outstanding assuming dilution   23,240          23,330
                                                      ======          ======


NOTE F--NEW ACCOUNTING STANDARD

Effective  December 1, 1999,  the  Company  adopted the  American  Institute  of
Certified  Public  Accountants'   (AICPA)  Statement  of  Position  (SOP)  98-5,
"Reporting  for the Costs of Start-Up  Activities."  The SOP  requires  start-up
costs  capitalized  prior to  December  1, 1999 to be written off and any future
start-up costs to be expensed as incurred.  The unamortized  balance of start-up
costs was  written  off as of  December  1, 1999.  The effect of this  change in
accounting principle on consolidated earnings was immaterial.

                                  Page 7 of 12


<PAGE>



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

Results of Operations - Three Months Ended February 29, 2000

The Company's net sales for the first quarter of 2000 increased by $14.9 million
or 10.2% to  $161.1  million  from  the  first  quarter  of 1999.  Sales  volume
continues  to increase  in most  markets,  with  strong  growth in sales of wood
coatings and powder coatings.

Gross profit for the first quarter of 2000  decreased by 1.7  percentage  points
over the same  period a year ago,  representing  36.7% of net sales  compared to
38.4% for last year's first  quarter.  This  decline is directly  related to the
rapid  cost  escalation  in  petroleum-based  raw  materials,   weather  related
manufacturing   disruptions  and  transition   start-up  costs  associated  with
increased capacity.

Selling,  general and  administrative  expenses during the first quarter of 2000
increased  12.4%  over the same  period in 1999 due to higher  selling  expenses
related to business building initiatives.

Operating  income for the first quarter of 2000 decreased by 12.0% over the same
period a year ago, as raw material and selling,  general and administrative cost
increases offset the increase in net sales.

Net interest expense during the first quarter of 2000 increased by 4.8% compared
to the first quarter of 1999, due to slightly higher average  interest rates and
debt levels.

Net  income and net  income  per share for the first  quarter of 2000  decreased
18.6% and 16.7%,  respectively,  over the same period of 1999, due to higher raw
material and selling,  general and administrative  costs. The effective tax rate
remained at 41%.

Liquidity and Capital Resources

Cash used by operating  activities for the first quarter of 2000 decreased $10.7
million  over the first  quarter  of 1999,  primarily  due to changes in working
capital and non-current liabilities.

Cash used by investing  activities  for the first  quarter of 2000  increased by
$1.0 million  compared to the same period a year ago, which was primarily due to
increased capital expenditures of $2.0 million, offset by a decrease in payments
for acquired businesses of $1.5 million.

Cash provided by financing activities during the first quarter of 2000 decreased
by $7.5  million  over  the  same  period  a year  ago  primarily  due to  lower
borrowings outstanding as compared to the same period in 1999.

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

Environmental

The  Company's  operations,  like  those  of most  companies  in the  industrial
coatings and specialty chemicals industry, are subject to regulations related to
maintaining or improving the quality of the environment. Such regulations, along
with the Company's own internal  compliance  efforts,  have  required,  and will
continue to require, ongoing expenditures. Spending for environmental compliance
is not  anticipated  to be material to the  Company's  financial  position.  The
Company  has  been  notified  that it is a  potentially  responsible  party  for
clean-up   costs  with   respect  to  several   government   investigations   at
independently-operated  waste  disposal  sites  previously  used by the Company.
Management has accrued,  as appropriate,  for these  environmental  liabilities.
Management believes the liabilities  associated with these sites will not have a
material adverse effect on its operating results or financial position.

                                  Page 8 of 12


<PAGE>




Forward-Looking Statements

Statements   in  this  report   that  are  not   strictly   historical   may  be
"forward-looking"  statements,  which  involve  risks  and  uncertainties.  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, 1999.

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 9 of 12


<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 February 29, 2000.

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

                                  Page 10 of 12


<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)

April 14, 2000
                                            /s/ Douglas W. Huemme
                                            -----------------------------------
                                            Douglas W. Huemme
                                            Chairman and Chief Executive Officer

                                            PRINCIPAL FINANCIAL OFFICER

April 14, 2000

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

                                  Page 11 of 12