FORM 10-Q/A

                       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, 1998

                          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




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, 1998:

                 Class A Common                     22,789,000
                 Class B Common                        419,000





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Item 2,  Management's  Discussion  and  Analysis  of Results of  Operations  and
Financial  Condition of the  Registrant's  Form 10-Q for the period ended August
31, 1998,  is amended by this filing to include Year 2000  Readiness  discussion
which was omitted from the original filing made on October 14, 1998.






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


               The Company reports  all-time  record  quarterly sales and record
               third quarter net income and net income per share.  Sales for the
               quarter ended August 31, 1998 of $159.3  million rose 6% compared
               with 1997 third  quarter  sales of $150.9  million.  Record  1998
               third quarter net income was up 13% at $8.7 million,  or 37 cents
               per share on a diluted  basis,  compared to $7.7  million,  or 33
               cents per share, for the third quarter of 1997.

               For the nine months  ended August 31,  1998,  sales  increased to
               $461.9 million  compared to $447.3 million a year ago. Net income
               for the 1998  nine-month  period was $22.5  million,  up 14% over
               last year's $19.8 million. Diluted net income per share increased
               13% to 96 cents from 85 cents last year.

               Sales trends  during the third  quarter were  positive with gains
               registered by each of our major businesses. Sales from our German
               acquisition  earlier this year were offset by unfavorable foreign
               currency  translation and divested business.  Higher sales, lower
               interest expense,  and a lower effective tax rate are the primary
               reasons for our improved performance.

               We have  recently  combined  our  liquid  and  powder  industrial
               coatings  units  to  bring  improved  focus  to the  marketplace.
               Additionally,  our glass coatings unit has assumed responsibility
               for our composites business, which was formerly combined with our
               liquid industrial  business.  We are excited about these changes,
               and expect fiscal 1998 to be another successful,  record year for
               the Company.

               The Board of Directors  declared a regular quarterly  dividend of
               eight  cents per  common  share,  payable  January  4,  1999,  to
               shareholders  of  record  on  December  10,  1998.  This  is  the
               Company's 239th consecutive quarterly cash dividend.

               Year 2000 Readiness

               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  is  actively  engaged in 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 is  expected to begin
               during the fourth quarter of 1998.  Deployment of all critical IT
               systems is expected to be completed  during the third  quarter of
               1999.

               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  has  been
               completed and  deployment of these Non-IT  systems is expected to
               be completed during the third quarter of 1999.

               The  Company is in the  process  of  contacting  significant  raw
               material and service suppliers regarding their Y2K readiness. The
               Company's  supplier  readiness program focuses on those suppliers
               considered  essential for the prevention of a material disruption
               to the  Company's  business  operation.  The  Company  will  make
               efforts to address  third-party Y2K compliance  issues noted from
               the  inquiries.   However,   there  is  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.  Deployment
               of the  program  is  expected  to be  completed  during the third
               quarter of 1999.
 
               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 $2 million will be
               spent subsequent to August 31, 1998.  Approximately  70% of total
               Y2K cost is comprised of equipment and software replacement costs
               with the balance being  comprised of assessment  and  remediation
               costs.  The Company expects all costs to be funded with operating
               cash flow.  Y2K costs are  expensed  as  incurred  except for new
               systems  and  equipment,  which are  capitalized  and  charged to
               expense over the estimated useful life of the related asset.

               While the Company believes that its efforts to address Y2K issues
               will be  successfully  completed in a timely manner,  the Company
               recognizes  that  failing  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.


               Statements contained herein are not strictly  historical  and 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, 1997.

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                                   SIGNATURES
                                   ----------

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

                                            LILLY INDUSTRIES, INC.  (Registrant)

February 9, 1999


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