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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               ----------------

                                   FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

    For the fiscal year ended March 26, 1999

                                      OR

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

    For the transition period from ____________ to __________

                        Commission File Number: 0-28568

                               ----------------

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
            (Exact name of registrant as specified in its charter)

<TABLE>
     <S>                                    <C>
                California                        95-2920557
        (State or other jurisdiction           (I.R.S. Employer
     of incorporation or organization)      Identification Number)
</TABLE>

               700 East Bonita Avenue, Pomona, California 91767
              (Address of principal executive offices) (Zip Code)

      Registrant's telephone number, including area code: (909) 624-8041

          Securities registered pursuant to Section 12(b) of the Act:

                                     None

          Securities registered pursuant to Section 12(g) of the Act:

<TABLE>
<CAPTION>
   Title of each class                       Name of each exchange on which registered
   -------------------                       -----------------------------------------
   <S>                                       <C>
   Common Stock, no par value                         Nasdaq National Market
</TABLE>

                               ----------------

  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 the Form 10-K or any
amendment to this form 10-K. [X]

  The aggregate market value of the voting stock held by nonaffiliates of the
registrant based upon the closing sales price of its Common Stock on June 18,
1999 on the Nasdaq National Market was approximately $263,744,400. For
purposes of the foregoing calculation, shares of Common Stock held by each
officer and director and by each person who may be deemed to be an affiliate
have been excluded.

  The number of shares of Common Stock outstanding as of June 18,
1999: 16,519,583

                      DOCUMENTS INCORPORATED BY REFERENCE

  The information required by Part III is incorporated by reference to
portions of the registrant's definitive proxy statement for the 1999 Annual
Meeting of Stockholders which will be filed with the Securities and Exchange
Commission within 120 days after the close of the 1999 fiscal year.

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                          FORWARD LOOKING STATEMENTS

  This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), that involve risks and uncertainties, such as
statements of the Company's strategies, plans, objectives, expectations and
intentions. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain
factors, including those set forth under "Cautionary Statements" in Item 1
below and elsewhere in this Annual Report. The cautionary statements made in
this Annual Report should be read as being applicable to all related forward-
looking statements wherever they appear in this Annual Report.

                                    PART I

ITEM 1. BUSINESS

General

  Keystone Automotive Industries, Inc. ("Keystone" or the "Company") is the
nation's leading distributor of aftermarket collision replacement parts
produced by independent manufacturers for automobiles and light trucks.
Keystone distributes products primarily to collision repair shops throughout
most of the United States. In addition, the Company recycles and produces
chrome plated and plastic bumpers and remanufactures alloy wheels. The
Company's product lines consist of automotive body parts, bumpers, autoglass
and remanufactured alloy wheels, as well as paint and other materials used in
repairing a damaged vehicle. Keystone currently offers more than 21,000 stock
keeping units to over 25,000 collision repair shop customers, out of an
estimated 54,000 shops nationwide. Founded in Southern California in 1947, the
Company operates a "hub and spoke" distribution system consisting of 21
regional hubs, 112 service centers and 23 depots located in 35 states
throughout the United States, as well as in Tijuana, Mexico. From these
service centers, Keystone has approximately 1,135 service and salespersons who
call on or have contact with collision repair shops. In addition, the Company
operates nine wheel remanufacturing facilities and 33 plastic and steel bumper
recycling facilities.

  A principal component of the Company's growth strategy is to acquire
independent distributors of aftermarket collision replacement parts, located
either in new geographical markets or in existing markets, to enable the
Company to increase its market penetration. During the last three fiscal
years, the Company has completed 21 acquisitions of a total of 83 service
centers, located throughout the United States. Following is a description of
the most significant acquisitions since 1996, as well as all acquisitions
completed since the beginning of fiscal 1999.

  In March 1997, a wholly-owned subsidiary of the Company merged into North
Star Plating Company ("North Star") in a transaction (the "North Star merger")
accounted for as a pooling of interests. At the time of the North Star merger,
North Star operated four regional hubs and 23 service centers located in the
Midwest and Mid-Atlantic regions.

  In January 1998, wholly-owned subsidiaries of the Company merged into
Inteuro Parts Distributors, Inc. ("Inteuro") and Car Body Concepts, Inc. ("Car
Body"), in transactions which were accounted for as poolings of interests. At
the time of the mergers, Inteuro and Car body operated eight service centers
located in Florida, Georgia and Alabama.

  In June 1998, the Company acquired Republic Automotive Parts, Inc.
("Republic"). Republic, through its wholly owned subsidiary, Fenders & More,
distributes aftermarket collision replacement parts to repair damaged vehicles
at its 21 service centers located in nine states, primarily in the South.
Republic also distributed a complete line of replacement parts (other than
tires) primarily relating to the mechanical systems contained in substantially
all mass-produced makes and models of automobiles manufactured within the last
15 years and most mechanical replacement parts for mass-produced trucks and
vans. This mechanical replacement parts business was divested by Keystone in a
series of transactions during fiscal 1999.

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  Also during fiscal 1999, the Company acquired the assets of the following
businesses: Unico Corporation and Greenville Unico II Corporation,
distributors of aftermarket collision replacement parts with operations in
North and South Carolina, in August 1998; Clark Supply Corporation, a
distributor of paint and related supplies doing business in Iowa, in November
1998; California Chrome, a distributor of aftermarket collision replacement
parts with operations in central California, in January 1999; Inventory
Recovery Systems, Inc., a distributor of aftermarket collision replacement
parts with operations in the Midwest, in January 1999; 1-800 Used Rim, Inc.. a
distributor of wheels for automobiles and light trucks with operations in
southern California, in March 1999; and Midwest Bumper Company, International
Warehouse Distributing Co., Midwest Bumper Company of Lansing, Collision Parts
Distributors Co. and Carhart Products, Inc. ("Midwest Bumper"), distributors
of aftermarket collision replacement parts with operations in Michigan, in
March 1999. Midwest Bumper Company also operates a bumper plating facility.
All of these acquisitions were accounted for under the purchase method of
accounting.

  In May 1999, the Company acquired all of the assets of Quality Bumpers,
L.L.C., a distributor of plastic and steel bumpers for automobiles and trucks
located, in Alabama and Nordan Products Division, Inc., and Nordan
Distributors, Inc., distributors of aftermarket collision replacement parts
with operations in the state of Washington.

  In addition, in March 1999, the Company opened a new service center in
Cincinnati, Ohio and anticipates opening several new service centers during
fiscal 2000.

Industry Overview

  History. The Company estimates that the wholesale market for aftermarket
collision parts is currently $1.8 billion in annual expenditures, or
approximately 15% of the collision parts market. In addition, the Company
estimates that annual wholesale sales of paint and related supplies and
equipment for collision repair currently account for approximately $2.4
billion. Substantially all of the remainder of the collision parts market
consists of parts produced by original equipment manufacturers ("OEMs"), and a
substantial number of collision parts are available exclusively from OEMs and
are likely to remain so. The growth in sales of aftermarket collision parts
has been due primarily to the increased availability of quality parts and to
cost containment efforts by the insurance industry.

  Before 1980, automotive collision parts were manufactured almost exclusively
by OEMs. During the 1960s and 1970s, due to prohibitive tariffs in Taiwan on
imported automobiles and restrictions on foreign ownership of manufacturing
facilities in Taiwan, certain Taiwanese automobile manufacturers commenced
producing automobiles for sale in Taiwan, which created the need for
additional parts manufacturers to supply the assembly lines. Since the early
1980s, these Taiwanese manufacturers have sought to reduce the effect on their
business of the cyclical demand for new automobiles by producing aftermarket
collision parts.

  An industry trade publication estimates that approximately 87% of all
automobile collision repair work is paid for in part by insurance.
Accordingly, major insurance companies exert significant influence over the
selection of collision parts used by collision repair shops. The availability
of aftermarket collision parts has been a major factor in the insurance
industry's efforts to contain the escalating cost of collision repairs.

  Aftermarket collision parts generally sell for between 20% and 40% less than
comparable OEM parts, resulting in substantial savings for insurance companies
by providing consumers with less expensive aftermarket parts and creating
competition resulting in lower prices for comparable OEM parts. The Company
believes that it is somewhat insulated from downturns in the general economy
as a result of the fact that approximately 87% of all automobile collision
repair work is paid for in part by insurance.

  As a part of their ongoing efforts to improve customer service, most major
insurance companies have adopted programs designating selected collision
repair shops in particular geographic areas as Direct Repair Providers
("DRPs"). DRPs are generally directed additional collision repair business by
the insurers in return

                                       3
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for adhering to certain criteria, which may include the use of aftermarket
collision parts when available. To encourage consumers to use DRPs, the
insurers authorize the repair of collision damage without obtaining the prior
approval of the insurer's adjuster (thereby generally providing for a quicker
return of the vehicle to its owner) and offer additional warranties concerning
the repair services and parts used.

  Companies offering collision support services, including Automated Data
Processing ("ADP"), Mitchell International and CCC Information Services, Inc.,
have developed proprietary software and databases to provide insurance claims
adjustors and collision repair shops with computerized access to the
inventories and prices of selected distributors of both aftermarket and OEM
collision parts nationwide. The Company's inventory and prices are included in
these databases. Access to the providers' databases enables distributors with
computerized inventory control systems, such as the Company, to update prices
rapidly and notify collision repair shops of the availability of new products.

  Quality Assurance. In 1987, the Certified Automotive Parts Association
("CAPA") was founded to provide insurance companies, distributors, collision
repair shops and consumers with an objective method of evaluating the
functional equivalence of aftermarket collision parts and OEM collision parts.
CAPA, a non-profit association of insurance companies, manufacturers,
importers, distributors, collision repair shops and consumer groups,
establishes the specifications for, tests and certifies the quality of
aftermarket automotive collision parts. Through independent testing
laboratories, CAPA develops engineering specifications for aftermarket
collision parts based upon an examination of OEM parts; certifies the
factories, manufacturing processes and quality control procedures used by
independent manufacturers; and certifies the materials, fit and finish of
specific aftermarket collision parts. While, according to CAPA, the number of
collision part applications entitled to bear the CAPA certification had
increased from approximately 700 in August 1989 to approximately 2,400 by
November 1998, the number of CAPA-certified parts approximates only 5% of the
total number of aftermarket collision parts. CAPA randomly reviews both the
factories and individual parts previously certified by it and solicits
comments concerning the quality of certified parts from collision repair shops
and consumers on a regular basis.

  Most major insurance companies have adopted policies recommending or
requiring the use of parts certified by CAPA, when available. The Company
distributes parts certified by CAPA when available and actively participates
with CAPA, insurance companies and consumer groups in encouraging independent
manufacturers of collision parts to seek CAPA certification. Management
believes that the Company is the largest distributor of CAPA-certified parts
in the United States. See "Cautionary Statements--Pending Class Action" below
for information with respect to a class action lawsuit challenging the quality
of aftermarket collision replacement parts produced by independent
manufacturers.

  Consolidation. The collision repair shop industry is in the process of
consolidation due to, among other things, (i) an increase in the technical
complexity of collision repairs generally, (ii) an increase in governmental
regulations, including environmental regulations, applicable to collision
repair shops, (iii) the designation of certain collision repair shops as DRPs
and (iv) a reduction in the number of collision repairs generally. The
increasing number of aftermarket collision parts and makes and models of
automobiles has resulted in distributors being required to maintain larger
inventories. In addition, the trend towards fewer, larger and more efficient
collision repair shops has increased the pressure on distributors to provide
price concessions, just-in-time delivery and certain value-added services,
such as training, that collision repair shops require in their increasingly
complex and competitive industry. The above factors, in turn, are contributing
to a consolidation of distributors of aftermarket collision parts, providing
the Company with an opportunity through acquisitions to expand its operations
into new markets and to penetrate further existing markets. See "Cautionary
Statements" below.

Products

  The Company distributes more than 21,000 stock keeping units of aftermarket
collision parts and repair materials for most popular models of domestic and
foreign automobiles and light trucks, generally for the seven most recent
model years. The Company's principal product lines consist of automotive body
parts, bumpers, paint and other materials, remanufactured alloy wheels,
autoglass and light truck accessories. In addition, the

                                       4
<PAGE>

Company recycles, produces and distributes new and remanufactured plastic and
chrome bumpers to wholesale bumper distributors and to manufacturers of truck
accessories.

  Automotive Body Parts. The Company distributes automotive and light truck
parts manufactured by multiple foreign and domestic manufacturers, including
fenders, hoods, radiators and condensers and head and tail light assemblies.
These products accounted for approximately $146.6 million, or 44.2% of the
Company's net sales in the fiscal year ended March 26, 1999.

  Bumpers. The Company distributes new and remanufactured plastic bumper
covers and steel bumpers manufactured by multiple domestic and foreign
manufacturers. For the fiscal year ended March 26, 1999, sales of plastic and
steel bumpers accounted for approximately $104.6 million, or 31.5% of the
Company's net sales. The Company believes that it is one of the nation's
largest non-OEM providers of new and recycled chrome plated bumpers for the
collision repair and restoration markets.

  Beginning in the late 1970s and the early 1980s, manufacturers of new
automobiles began changing from an almost exclusive use of chrome plated steel
bumpers to painted plastic bumpers. By the 1996 model year, manufacturers were
using painted plastic bumpers almost exclusively for their automobiles. Chrome
plated steel bumpers are still used extensively on light trucks and sport
utility vehicles. On an annual basis, the Company electro-plates approximately
220,000 steel plated bumpers for automobiles and light trucks. Bumpers used in
the operations include new steel stampings, collision-damaged bumpers that
require straightening and replating and older model or antique bumpers that
require restoration and replating. The bumper repair and replating process
generally includes some or all of the following steps: straightening or
reforming to original dimensions; welding breaks or cracks; surface grinding
to remove rust and corrosion; chemical stripping to remove the original
electro-plated finishes; metal polishing and buffing; electro-plating layers
of copper, nickel and chromium; and inspecting and packaging.

  Paint and Other Materials. Beginning in fiscal 1993, the Company
significantly increased its emphasis on the sale of paint and other materials
used in repairing a damaged vehicle, including sandpaper, abrasives, masking
products and plastic filler. The paint and other materials distributed by the
Company are purchased from numerous domestic suppliers. For the fiscal year
ended March 26, 1999, sales of paint and other materials accounted for
approximately $50.4 million, or 15.2% of the Company's net sales. Certain of
these products are distributed under the name "Keystone."

  Remanufactured Alloy Wheels. In October 1995, the Company acquired a
remanufacturer of collision damaged alloy wheels located in Denver, Colorado,
and since that time, has opened or acquired eight additional remanufacturing
operations. According to industry sources, the percentage of new automobiles
equipped with alloy wheels, as opposed to steel wheels and hub caps, has
increased from approximately 11% in 1985 to 45% for the 1998 model year. The
average wholesale cost of a new replacement alloy wheel is approximately $225,
compared to an average wholesale cost of approximately $140 for a
remanufactured alloy wheel. The alloy wheel remanufacturing process generally
includes some or all of the following steps: straightening, welding minor
breaks or chips, machining, painting and applying clear coat. For the fiscal
year ended March 26, 1999, sales of remanufactured alloy wheels accounted for
approximately $17.4 million, or 5.3% of the Company's net sales.

  The remanufacturing of alloy wheels is generally conducted by many small
independent operators. The Company believes that there is a large and growing
demand for remanufactured alloy wheels and that, using its existing
distribution system and customer base, the Company is well-positioned to
service that demand.

  Autoglass. The Company distributes autoglass, including windshields, side
windows and rear windows, which are purchased from two domestic manufacturers.
For the fiscal year ended March 26, 1999, sales of autoglass, which was
introduced by Keystone in fiscal 1993, accounted for approximately $6.0
million, or 1.8% of the Company's net sales.

                                       5
<PAGE>

Distribution, Marketing and Sales

  The Company's distribution system is designed to provide responsive customer
service and to foster long-term customer relations.

  Distribution System. The Company has developed a national "hub and spoke"
distribution system consisting of 21 regional hubs, 112 service centers and 23
depots. Each regional hub receives container shipments directly from foreign
and domestic manufacturers. Using the Company's fleet of over 1,000 delivery
trucks, each regional hub makes regular shipments to the service centers in
its region, which in turn make regular deliveries to its repair shop
customers. By maintaining a fleet of delivery trucks, the Company ensures
rapid delivery within its distribution system and to its customers. In
addition, each service center can order products directly from any hub or
service center. The Company manages its inventory and the ordering, shipment,
storage and delivery of products through centralized information systems that
allow the regional hubs and service centers to obtain timely information
regarding the location and availability of products. The continuing increase
in the number of makes and models of automobiles and light trucks and the
number of aftermarket collision parts has increased the pressure on
distributors to maintain larger inventories. The Company believes that its
"hub and spoke" distribution system allows it to offer its customers one of
the broadest available selections of aftermarket collision parts and to fill
most orders within 24 hours, while minimizing inventory costs.

  Sales and Marketing Staff. The Company has a 16 person marketing staff,
which operates from its corporate headquarters, and has over 1,100 sales
representatives and route salespersons who operate from its service centers.
The marketing staff develops all marketing and promotional materials, assists
the service centers in recruiting and training sales representatives, route
salespersons and customer service representatives, supervises the Company's
in-house management training program and supports general managers of its
service centers, sales representatives and route salespersons with
computerized analyses of sales by product, route and customer. In addition,
the marketing staff conducts educational programs for regional insurance
executives and claims adjusters to explain the role of aftermarket collision
parts in containing the escalating costs of claims and in order to facilitate
the implementation of insurance companies' policies favoring aftermarket
collision parts.

  The general managers of the Company's service centers are actively involved
in customer calls. The Company believes that this local control and expertise
have contributed significantly to its growth. Through periodic training
programs and performance reviews, the Company seeks to enhance the
professionalism and technical expertise of its route salespersons. As a
result, the Company believes that its route salespersons are highly attendant
to the needs of the Company's customers.

  Marketing Programs. The Company offers various marketing programs to foster
closer customer relations, including a warranty program in which the Company
generally warrants its products against defects in material and workmanship
for as long as the repair shop's customer owns the vehicle.

Customers

  The Company's current customers consist of more than 25,000 collision repair
shops located in 35 states and Tijuana, Mexico, none of which accounted for
more than 1% of the Company's net sales during the fiscal year ended March 26,
1999. The Company also distributes its bumpers to wholesale distributors and
to manufacturers of truck accessories. The size of its customer base reduces
the Company's dependence on any single customer and its national scope
mitigates the effects of regional economic changes and regional weather
patterns. Collision Repair Industry Insight, an industry trade publication,
estimates that there are over 54,000 collision repair shops nationwide. The
number of collision repair shops to whom the Company sold products increased
from approximately 13,400 in fiscal 1993 to approximately 25,000 in fiscal
1999.

  The Company's regional hubs also sell collision parts to local distributors
who may compete with the Company. These sales accounted for less than 10% of
the Company's net sales during the fiscal year ended March 26, 1999 and no
distributor accounted for more than 1% of the Company's net sales for such
fiscal year.

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Suppliers

  The products distributed by the Company are manufactured by over 60
manufacturers, and no single supplier provided as much as 10% of the products
purchased by the Company during fiscal 1999. The Company believes that it is
one of the largest customers of each of its ten largest suppliers. In fiscal
1999, approximately 75% of the products distributed by the Company were
manufactured in the United States or Canada, and approximately 25% were
imported directly from manufacturers in Taiwan. The Company's orders from
domestic suppliers generally are received within 10 days and orders from
foreign manufacturers generally are received in between 60 and 90 days.
Although the Company has no manufacturing agreements with any of its suppliers
and competes with other distributors for production capacity, the Company
believes that its sources of supply and its relationships with its suppliers
are satisfactory. Although alternative suppliers exist for substantially all
products distributed by the Company, the loss of any one supplier could have a
material adverse effect on the Company until alternative suppliers are located
and have commenced providing products.

Competition

  Based upon industry estimates, the Company believes that approximately 79%
of collision parts are supplied by OEMs, compared with approximately 15% by
distributors of aftermarket collision parts and 6% by distributors of salvage
parts. The Company encounters intense competition from OEMs, all of which have
substantially greater financial, distribution, marketing and other resources,
including greater brand recognition and a broader selection of collision
parts, than the Company. Accordingly, OEMs are in a position to exert pricing
and other competitive pressure on the Company. The distribution industry for
aftermarket collision parts is highly fragmented. The Company's competitors
generally are independently owned distributors having from one to three
distribution centers. The Company expects to encounter significant competition
in the future, including competition from OEMs, automobile dealerships,
distributors of salvage parts, buying groups and other large distributors.

  The Company competes with OEMs primarily on the basis of price, and it
competes with distributors of aftermarket collision parts primarily on the
basis of the competitive advantages provided by its position as a market
leader, experienced executive management and service center managers,
entrepreneurial corporate culture, superior customer service, its relationship
with certain insurance companies, and, to a lesser extent, on the basis of
price.

  The Company's chrome bumper plating operations compete in the wholesale
bumper distribution segment of the market with four companies, whom the
Company believes have greater regional sales than the Company. It also
competes with small chrome bumper platers or distributors in virtually every
geographical market in which it operates. The Company competes with small
chrome bumper platers and distributors primarily on the basis of quality and
service. Over the last 10 years, there has been a significant decrease in the
number of small bumper platers as a result of the decreasing use of chrome
plated bumpers on new automobiles and the increasing environmental
requirements for electro-platers. The Company believes that this trend will
continue, creating more sales opportunities for larger regional chrome bumper
platers, who are capable of meeting the increased financial and environmental
requirements of the future.

  The Company also encounters competition from the OEM's who supply new
replacement bumpers to the collision repair market. The Company competes with
the OEM's primarily on the basis of price.

Government Regulation and Environmental Hazards

  The Company is subject to increasing restrictions imposed by various
federal, state and local laws and regulations. Various state and federal
regulatory agencies, such as the Occupational Safety and Health Administration
and the EPA, have jurisdiction over the Company's operations with respect to
matters including worker safety, community and employee "right-to-know" laws,
and laws regarding clean air and water. See "Cautionary Statements--Compliance
with Government Regulations; Environmental Hazards."

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Prior Ford Litigation

  In 1987, Ford Motor Company ("Ford") filed suit against the Company on the
grounds that between 1982 and 1987, the Company had misrepresented the quality
of the aftermarket collision parts sold by it for Ford automobiles. In May
1992, Ford and the Company settled this lawsuit. As part of the settlement,
the Company and its insurance companies paid Ford $1.8 million, of which the
Company contributed $450,000, as damages and agreed to finance a one-year
corrective advertising campaign conducted by Ford using the Company's name. As
a result of this settlement and the corrective advertising campaign, certain
insurance companies ceased listing the Company as an approved supplier of
aftermarket collision parts. Currently, most major insurance companies list
the Company as an approved supplier of aftermarket collision parts, and all
major insurance companies reimburse the cost of collision repairs using the
Company's products. The Company's business is highly dependent on the
continued acceptance of aftermarket collision parts in general, and the
Company's products in particular, by insurers, collision repair shops,
consumers and governmental agencies. See "Cautionary Statements" below.

Employees

  At May 31, 1999, the Company had approximately 2,800 full-time employees, of
whom 500 were engaged in corporate management and administration, 1,135 in
sales and customer service, 692 in warehousing and shipping and 495 in
manufacturing. Seven persons in the Newark, New Jersey chrome bumper recycling
facility and three persons in its Kenilworth, New Jersey service center are
covered by collective bargaining agreements. The Company considers its
relations with its employees to be satisfactory.

Cautionary Statements

  Management Information Systems and Year 2000 Issue. In January 1998, the
Company purchased a comprehensive enterprise software package for accounting,
distribution and inventory planning. During the initial phases of the
implementation of the package, the Company determined that the package would
not meet the needs of the Company. In October 1998, the Company entered into
an agreement with a new vendor for the purchase of a new software package to
be installed on an enterprise basis. To date, the Company has expended an
aggregate of approximately $2.7 million on hardware and software relating to
the installation of a new enterprise software package and estimates that it
will spend an additional $2.5 million over the next 22 months to complete the
installation and to make the system fully operational. As the Company is still
in the initial phases of the implementation and such an implementation
involves uncertainty, there can be no assurance that the actual costs will not
exceed the estimate. To date, the costs have been paid using funds generated
from operating cash flow or the sale of assets and it is anticipated that
future costs will be paid from existing working capital or from cash flow from
operations.

  At the present time, the Company estimates that the new enterprise software
system, which will consolidate the Company's various systems and address a
number of management concerns including Year 2000 issues, will be installed
and operating company-wide in 16 to 22 months. Because this installation will
not be operational in time to address the Year 2000 issues, the Company has
engaged consultants to modify its various operating systems and it expects to
have all systems Year 2000 compliant before the end of 1999, at a cost which
the Company estimates to be between $300,000 and $500,000. Because of the
uncertainties involved, there can be no assurance that the modifications will
be completed on time, that they will be effective in addressing all the Year
2000 issues or that the costs will not exceed estimates. A failure of the
modification program could have a material adverse impact on the Company and
its operations.

  Management is uncertain about the Year 2000 compliance status of its major
suppliers and is having discussions with these suppliers to ascertain whether
the Company needs to implement contingency purchasing of critical parts in
anticipation of Year 2000. Because of the nature of the Company's customers
(numerous collision repair shops located throughout most of the United States
that primarily place orders telephonically), it does not anticipate any
significant Year 2000 problems with customers.

                                       8
<PAGE>

  The costs of the projects described above, and the date on which the Company
believes it will complete the Year 2000 modifications, are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain resources
and other factors. However, there can be no guarantee that these estimates
will be achieved, and actual results could differ materially from those
anticipated. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel
trained in this area, the ability to locate and correct all relevant computer
codes and similar uncertainties.

  Pending Class Action. In July 1997, certain individuals (the "plaintiffs")
initiated a class action lawsuit against State Farm Mutual Automobile
Insurance Company ("State Farm") in the Illinois Circuit Court in Williamson
County (Marion, Illinois), which asserts claims for breach of contract,
consumer fraud and equitable relief relating to State Farm's practice of
sometimes specifying the use of parts manufactured by sources other than the
original equipment manufacturer ("non-OEM crash parts") when adjusting claims
for damage to insured vehicles. It is alleged that this practice breaches
State Farm's insurance agreements with its policyholders and is a violation of
the Illinois Consumer Fraud and Deceptive Business Practices Act because non-
OEM crash parts are inherently inferior to OEM crash parts and, consequently,
vehicles are not restored to their "pre-loss condition" as specified in the
policy. While the Company is not a party to this lawsuit, a substantial
portion of the Company's business consists of the distribution of non-OEM
crash parts to collision repair shops for use in repairing automobiles, the
vast majority of which are covered by insurance policies.

  The Williamson County Court certified a near-nationwide class on an ex parte
basis on the date the lawsuit was filed. Subsequently, after a hearing on
December 5, 1997, the Circuit Court again certified a national class,
consisting of all persons in the United States (except residents of Arkansas
and Tennessee) insured by a State Farm vehicle casualty insurance policy who
had non-OEM crash parts installed on their vehicles (or were compensated based
upon the cost of these non-OEM crash parts). In December 1997, State Farm
petitioned the Illinois Supreme Court, for an order that the certification
violated State Farm's due process rights and infringed the sovereignty of
other states. The petition was neither granted nor denied. Again in February
1998, State Farm filed a petition with the Illinois Supreme Court which was
denied without comment on March 24, 1998. In June 1998, State Farm filed a
petition for a writ of certiorari with the United States Supreme Court on
various constitutional grounds, unrelated to the breach of contract issue.
State Farm's petition was supported by nine amicus briefs, including briefs
filed by four public interest groups Public Citizen, the Center for Auto
Safety, the Consumer Federation of America and the Massachusetts Public
Interest Research Group. The petition was denied. A trial on the merits is
scheduled to commence in August 1999.

  The plaintiffs acknowledged in their filings with the United States Supreme
Court that to prevail on the merits in the class action, they must prove that
all non-OEM crash parts (estimated to be over 30,000 unique crash parts,
manufactured by many companies around the world) are categorically and
inherently inferior to OEM crash parts. Many of these non-OEM crash parts are
evaluated by the Certified Automotive Parts Association ("CAPA"), a non-profit
association of insurance companies, manufacturers, distributors, collision
repair shops and consumer groups. Using an independent testing laboratory,
which compares the functional equivalence of non-OEM crash and OEM crash
parts, CAPA certifies the quality of these non-OEM crash parts.

  While a recent media report has questioned the quality of some non-OEM crash
parts, the Company, which is the largest distributor of non-OEM crash parts in
the United States, believes that substantially all of the non-OEM crash parts
which it distributes are of similar quality to OEM crash parts and when
installed in a competent manner by collision repair shops, vehicles are
restored to their "pre-loss condition." Consequently, the Company does not
believe that the plaintiffs in this class action should prevail.

  However, the Company is not a party to the litigation, does not control the
defense in any manner and it is impossible to predict the outcome of a jury
trial on the merits. If a jury were to find against State Farm, it could
become financially unacceptable for State Farm and other automobile insurers
to specify non-OEM crash parts similar to those distributed by the Company.
Such an event would have a material adverse effect on the Company.

                                       9
<PAGE>

  State Legislation. From time to time, legislation is introduced in various
states seeking to limit the use of aftermarket parts in collision repair work
to older model years. While to date no such legislation has been passed, if a
number of states were to adopt such legislation, it could have a material
adverse effect on the Company.

  Continued Acceptance of Aftermarket Collision Replacement Parts. Based upon
industry sources, the Company estimates that approximately 87% of automobile
collision repair work is paid for in part by insurance; accordingly, the
Company's business is highly dependent upon the continued acceptance of
aftermarket collision replacement parts by the insurance industry and the
governmental agencies that regulate insurance companies and the ability of
insurers to recommend the use of such parts for collision repair jobs, as
opposed to OEM parts. The Company's business is also dependent upon the
continued acceptance of such parts by collision repair shops and their
customers.

  Acquisition Strategy. A principal component of the Company's growth strategy
is to acquire other independent distributors of aftermarket collision
replacement parts operating in new geographic markets, as well as to increase
its penetration in existing markets. Since April 1993, the Company has
completed 29 acquisitions of a total of 106 service centers, located primarily
in the Northeast, Midwest, Mid-Atlantic and South, of which 24 have been
consolidated with existing locations and four have been closed. The Company's
ability to maintain or exceed its historical growth rate will depend in large
part on its ability to successfully execute its acquisition strategy. While
the Company believes that the consolidation in its industry is continuing, the
Company anticipates that the aggregate revenues of businesses acquired during
the current fiscal year will be less than during the past two fiscal years.
The successful execution of its acquisition strategy will depend on the
Company's ability to identify and to compete for appropriate acquisition
candidates, to consummate such acquisitions on favorable terms, to maintain
and expand the sales and profitability of the acquired centers and to
integrate the acquired company's financial reporting and control systems, data
processing systems and management into the Company's systems, which are
currently being completely revised. There can be no assurance that the Company
will be successful in executing its strategy.

  Acquisition Risks. Although the Company investigates the operations and
assets that it acquires, there may be liabilities that the Company fails to,
or is unable to, discover, and for which the Company as a successor owner or
operator may be responsible. The Company seeks to mitigate the risk of these
potential liabilities by obtaining indemnities and warranties from the seller.
However, these indemnities and warranties may not fully cover the liabilities
due to their limited scope, amounts or duration, the limited financial
resources of the indemnitor or warrantor or other reasons. In addition,
acquisitions accounted for under the purchase method of accounting generally
involve the recording of goodwill and deferred charges on the Company's
balance sheet, which are amortized over varying periods of time of up to 30
years. This amortization has the effect of reducing the Company's reported
earnings. At March 26, 1999, the Company had recorded approximately $36.3
million in goodwill, net of accumulated amortization. In addition, at March
26, 1999, the Company had recorded approximately $1.9 million in deferred
charges, net of accumulated amortization, primarily related to noncompetition
agreements, which are amortized over the terms of those agreements.

  The efficient and effective integration of acquired companies' operations is
necessary for the Company's acquisition strategy to be successful. This
generally requires, among other things, an integration of purchasing,
distribution, marketing and sales efforts, pricing, employee benefits
policies, liquidity and capital expenditure requirements, management teams and
management information and other systems. In the case of larger acquisitions,
such as North Star, Inteuro and Republic, the Company has maintained existing
management information and other systems, including purchasing, pending
completion of the installation of a new company-wide management information
system. See "Management Information Systems and Year 2000 Issue" above.
Integration generally requires a commitment of management resources, which may
temporarily divert attention from the day-to-day operations of the Company.

  Dependence on Key and Foreign Suppliers. The Company is dependent on a
relatively small number of suppliers. Although alternative suppliers exist for
substantially all products distributed by the Company, the loss of any one
supplier could have a material adverse effect on the Company until alternative
suppliers are located

                                      10
<PAGE>

and have commenced providing products. In fiscal 1999, approximately 75% of
the products distributed by the Company were manufactured in the United States
or Canada and approximately 25% were imported directly from manufacturers in
Taiwan. As a result, the Company's operations are subject to the customary
risks of doing business abroad, including, among other things, transportation
delays, political instability, expropriation, currency fluctuations and the
imposition of tariffs, import and export controls and other non-tariff
barriers (including changes in the allocation of quotas), as well as the
uncertainty regarding future relations between China and Taiwan. To date, the
Company has not been adversely impacted by the "Asian Crisis," but there can
be no assurance that the Company's sources of supply will not be impacted in
the future. The percentage of imported products may decline in the future if
sales of autoglass, paint and related supplies and equipment and
remanufactured alloy wheels, which are manufactured in the United States,
continue to grow. Any significant disruption in the Company's Taiwanese
sources of supply or in its relationship with its suppliers located in Taiwan
could have a material adverse effect on the Company.

  Competition. Based upon industry estimates, the Company believes that
approximately 79% of collision parts replacement for automobiles and light
trucks are supplied by OEMs, compared with approximately 15% by independent
distributors of aftermarket collision replacement parts and an additional 6%
by distributors of salvaged parts. The Company competes directly with, and
encounters intense competition from, OEMs, all of which have substantially
greater financial, distribution, marketing and other resources, including
greater brand recognition and a broader selection of collision replacement
parts. Accordingly, OEMs are in a position to exert pricing and other
competitive pressures on the Company and other independent distributors, which
could have a material adverse effect on the results of operations of the
Company. The aftermarket collision replacement parts distribution industry is
highly fragmented. Typically, the Company's other competitors are
independently owned distributors having from one to three distribution
centers. The Company anticipates that it will encounter significant
competition in the future, including competition from automobile dealerships,
distributors of salvage parts, buying groups and other large distributors.

  Compliance with Government Regulations; Environmental Hazards. The Company
is subject to increasing restrictions imposed by various federal, state and
local laws and regulations. Various state and federal regulatory agencies,
such as the Occupational Safety and Health Administration and the United
States Environmental Protection Agency (the "EPA"), have jurisdiction over the
Company's operations with respect to matters including worker safety,
community and employee "right-to-know" laws, and laws regarding clean air and
water. Under various federal, state and local laws and regulations, an owner
or lessee of real estate or the operator of a business may be liable for the
costs of removal or remediation of certain hazardous or toxic substances
located on or in, or emanating from, property owned or used in the business,
as well as related costs of investigation and property damage. Such laws often
impose such liability without regard to whether the owner, lessee or operator
knew of, or was responsible for, the presence of such hazardous or toxic
substances. Other than as described below with respect to its bumper plating
operations, the Company does not currently generate substantial hazardous
waste in the ordinary course of its business. The Company believes that it
currently is in substantial compliance with all applicable laws and
regulations, and is not aware of any material environmental problem at any of
its current or former facilities. No assurance can be given, however, that the
Company's prior activities or the activities of a prior owner or operator of
an acquired service center or other facility did not create a material
environmental problem for which the Company could be responsible or that
future uses or conditions (including, without limitation, changes in
applicable laws and regulations) will not result in material environmental
liability to the Company. Furthermore, compliance with legislative or
regulatory changes may cause future increases in the Company's operating costs
or otherwise adversely affect operations. Certain of the Company's products,
such as paints and solvents, are highly flammable. Accordingly, the storage
and transportation of these materials expose the Company to the inherent risk
of fire.

  The Company acquired North Star's bumper plating operations in March 1997
and Midwest Bumper's plating operations in March 1999. In addition to those
operations, the Company currently conducts limited bumper plating operations
at two sites and previously conducted similar operations at 11 additional
sites which

                                      11
<PAGE>

were closed between 1983 and 1993. The Company's bumper plating operations,
which use a number of hazardous materials, are subject to a variety of federal
and state laws and regulations relating to environmental matters, including
the release of hazardous materials into the air, water and soil. The Company
endeavors to ensure that its bumper plating operations comply with applicable
environmental laws and regulations. Compliance with such laws and regulations
has not had a material effect on the Company's capital expenditures, earnings
or competitive position, and no material capital expenditures with respect to
the Company's bumper plating operations are anticipated during the next 12
months. Although the Company believes it is in substantial compliance with all
applicable environmental laws and regulations relating to its bumper plating
operations, there can be no assurance that the Company's current or former
operations have not, or will not in the future, violate such laws and
regulations or that compliance with such laws and regulations will not have a
material adverse effect on the Company's operations. Any inadvertent
mishandling of hazardous materials or similar incident could result in costly
remediation efforts and administrative and legal proceedings, which could
materially and adversely affect the Company's business and results of
operations. In addition, future environmental regulations could add to overall
costs of the Company's bumper plating business or otherwise materially and
adversely affect these operations.

  Decline in the Number of Collision Repairs. The number of collision repairs
has declined significantly in recent years, and may continue to do so, due to,
among other things, automotive safety improvements, more rigorous enforcement
of stricter drunk driving laws resulting in fewer accidents and the increase
in unit body construction and higher collision repair costs resulting in a
larger number of automobiles being declared a total loss in lieu of being
repaired. The continuation of such decline may have a material adverse effect
on the Company.

  Volatility of Stock Price. The trading price of the Company's Common Stock
may be subject to significant fluctuations as a result of variations in the
Company's actual or anticipated operating results, changes in general market
conditions and other factors. In recent years, the stock market generally has
experienced significant price and volume fluctuations which often have been
unrelated or disproportionate to the operating performance of a specific
company or industry. There can be no assurance that the market price of the
Company's Common Stock will not decline below the current market price. It is
possible that in some future quarter, the Company's operating results will be
below the expectations of public market analysts or investors. In such event,
the price of the Company Common Stock may be materially and adversely
affected.

ITEM 2. PROPERTIES

  The Company's principal executive offices are located in Pomona, California,
on premises which contain approximately 20,000 square feet. The Pomona,
California offices are owned by the Company. In addition, the Company owns
facilities used as service centers in Chicago, Illinois; Bethlehem,
Pennsylvania; Denver, Colorado; New Albany, Indiana and Palmyra, New Jersey,
of which two of the facilities also serve as regional hubs and three serve as
wheel remanufacturing facilities. The Company leases its remaining facilities.

  The Company's regional hubs range from approximately 25,000 square feet to
163,000 square feet. Its service centers range from approximately 2,500 square
feet to 30,000 square feet. All of its leased properties are leased for terms
expiring on dates ranging from on or about the date hereof to the year 2006,
many with options to extend the lease term. The Company believes that no
single lease is material to its operations, its facilities are adequate for
the foreseeable future and alternative sites presently are available at market
rates.

  Of the Company's service centers, 11 are leased from parties in whom current
or former officers or directors of the Company have an interest. See "Item 13"
below. The Company believes that the terms and conditions of leases with
affiliated parties are no less favorable to the Company than could have been
obtained from unaffiliated parties in arm's-length transactions at the time of
the execution of such leases.

                                      12
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

  The Company is from time to time involved in litigation incidental to the
conduct of its business. The Company currently is not a party to any material
pending litigation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  None.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

  The Company's Common Stock began trading publicly on the Nasdaq National
Market under the symbol "KEYS" on June 20, 1996. The following table sets
forth, for the periods indicated, the range of high and low sale prices for
Keystone's Common Stock as reported by the Nasdaq National Market.

<TABLE>
<CAPTION>
                                                                   High   Low
                                                                  ------ ------
   <S>                                                            <C>    <C>
   Fiscal 1998
     First Quarter............................................... $17.88 $14.38
     Second Quarter..............................................  22.13  17.75
     Third Quarter...............................................  24.25  21.50
     Fourth Quarter..............................................  24.50  20.25
   Fiscal 1999
     First Quarter............................................... $28.13 $23.68
     Second Quarter..............................................  23.75  14.00
     Third Quarter...............................................  20.19  15.63
     Fourth Quarter..............................................  21.50  14.38
   Fiscal 2000
     First Quarter (through June 18, 1999)....................... $19.25 $14.13
</TABLE>

  On June 18, 1999, the last reported sale price for the Common Stock of the
Company, as reported on the Nasdaq National Market, was $17.56 per share. As
of June 18, 1999, there were 439 shareholders of record of the Common Stock.

  The Company has never paid cash dividends on its Common Stock. The Company
currently intends to retain any future earnings to provide funds to operate
and expand its business and does not anticipate paying cash dividends on its
Common Stock in the foreseeable future. The payment of dividends is within the
discretion of the Company's Board of Directors, and will depend upon, among
other things, the Company's earnings, financial condition and capital
requirements, general business conditions and any restrictions in credit
agreements.

  In March 1999, the Company issued 150,000 shares of its Common Stock to
Collision Parts Distributors Co. in exchange for substantially all of its
assets. Collision Parts Distributors Co. is a distributor of aftermarket
collision replacement parts. The shares were valued at $12.19 per share for an
aggregate purchase price of approximately $1.8 million. The issuance of these
shares was exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act.

                                      13
<PAGE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

  The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and notes thereto and
Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" also included elsewhere herein.

<TABLE>
<CAPTION>
                                           Fiscal Year Ended
                          ------------------------------------------------------
                           March 31,  March 29,  March 28,  March 27,  March 26,
                            1995(1)     1996       1997       1998       1999
                          ----------- ---------  ---------  ---------  ---------
                          (In thousands, except share and per share amounts)
<S>                       <C>         <C>        <C>        <C>        <C>
Consolidated Statement
 of Income Data:
Net sales...............   $149,581   $178,076   $223,806   $263,802   $332,047
Cost of sales...........     87,634    106,169    130,590    149,855    186,150
                           --------   --------   --------   --------   --------
Gross profit............     61,947     71,907     93,216    113,947    145,897
Selling and distribution
 expenses...............     43,101     50,156     61,063     73,551     93,169
General and
 administrative
 expenses...............     11,806     12,388     15,699     18,101     24,873
Non-recurring expenses..        --         --         905      1,147      1,814
                           --------   --------   --------   --------   --------
Operating income........      7,040      9,363     15,549     21,148     26,041
Other income............        --         174        373      1,086      3,617
Interest expense........     (1,300)    (1,721)    (1,477)      (504)       (50)
                           --------   --------   --------   --------   --------
Income before income
 taxes..................      5,740      7,816     14,445     21,730     29,608
Income taxes............      1,543      2,836      4,435      7,497     11,843
                           --------   --------   --------   --------   --------
Net income..............   $  4,197   $  4,980   $ 10,010   $ 14,233   $ 17,765
                           ========   ========   ========   ========   ========
Net income per share:
  Basic.................   $   0.41   $   0.49   $   0.88   $   1.02   $   1.06
                           ========   ========   ========   ========   ========
  Diluted...............   $   0.41   $   0.49   $   0.87   $   1.01   $   1.05
                           ========   ========   ========   ========   ========
Weighted average common
 shares outstanding:
  Basic.................     10,255     10,250     11,408     13,915     16,784
                           ========   ========   ========   ========   ========
  Diluted...............     10,255     10,250     11,474     14,105     16,913
                           ========   ========   ========   ========   ========
Pro forma information
 (unaudited)(2):
  Net income, as
   previously reported..   $  4,197   $  4,980   $ 10,010   $ 14,233   $ 17,765
  Pro forma tax
   adjustment...........       (705)      (258)    (1,288)    (1,345)       --
                           --------   --------   --------   --------   --------
  Pro forma net income..   $  3,492   $  4,722   $  8,722   $ 12,888   $ 17,765
                           ========   ========   ========   ========   ========
Pro forma net income per
 share:
  Basic.................   $   0.34   $   0.46   $   0.76   $   0.93   $   1.06
                           ========   ========   ========   ========   ========
  Diluted...............   $   0.34   $   0.46   $   0.76   $   0.91   $   1.05
                           ========   ========   ========   ========   ========
<CAPTION>
                          (Unaudited)
<S>                       <C>         <C>        <C>        <C>        <C>
Consolidated Balance
 Sheet Data:
Working capital.........   $ 15,230   $ 18,134   $ 30,154   $ 72,454   $105,330
Total assets............     56,757     71,780     87,183    119,696    194,094
Total current
 liabilities............     30,252     38,335     38,240     21,539     26,551
Long-term debt..........      4,063      7,021      2,087        503        100
Shareholders' equity....     21,671     26,119     46,453     97,228    163,205
</TABLE>
--------
(1) Fiscal 1995 contained 53 weeks.

(2) Pro forma information gives effect to an income tax adjustment to reflect
    taxation of the income of two corporations acquired in January 1998
    (accounted for as poolings of interests), as "C" corporations, rather than
    "S" corporations, at an estimated statutory rate of approximately 39%.

                                      14
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

  The following discussion and analysis is qualified in its entirety by, and
should be read in conjunction with, the "Selected Consolidated Financial Data"
as set forth in Item 6 above and the financial statements and notes thereto
included in Item 8 below. Except for the historical information contained
herein, the matters addressed herein constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. Forward-looking statements, such as statements of the Company's
strategies, plans, objectives, expectations and intentions, are subject to a
variety of risks and uncertainties that could cause the Company's actual
results to differ materially from those anticipated in these forward-looking
statements. The Cautionary Statements set forth in Item 1 above should be read
as being applicable to all related forward-looking statements wherever they
appear herein.

Recent Acquisitions

  Following is a description of the most significant acquisitions since 1996,
as well as all acquisitions completed during fiscal 1999.

  In March 1997, the Company completed the North Star merger which was
accounted for as a pooling of interests, in which the Company issued 2,450,000
shares of its Common Stock. In January 1998, the Company completed the Inteuro
and Car Body mergers, which were accounted for as poolings of interests, in
which the Company issued an aggregate of 2,000,000 shares of its Common Stock.
The pooling of interests method of accounting requires that financial
information be presented on an historical combined basis for all periods
presented. Therefore, unless otherwise indicated, the following discussion of
results of operations and liquidity and capital resources reflects the
combined companies for all periods presented.

  In June 1998, the Company completed the acquisition of Republic and issued
2,907,000 shares of its Common Stock to the former Republic shareholders. The
total purchase price amounted to $63.1 million and the acquisition of Republic
was accounted for under the purchase method of accounting. Following the
Republic acquisition, the Company sold the net operating assets of Republic's
hard parts operations in a series of transactions for cash.

  Also during fiscal 1999, the Company acquired the assets of the following
businesses: Unico Corporation and Greenville Unico II Corporation, a
distributor of aftermarket collision replacement parts with operations in
North and South Carolina, in August 1998; Clark Supply Corporation, a
distributor of paint and related supplies doing business in Iowa, in November
1998; California Chrome, a distributor of aftermarket collision replacement
parts with operations in central California, in January 1999; Inventory
Recovery Systems, Inc., a distributor of aftermarket collision replacement
parts with operations in Michigan, in January 1999; 1-800 Used Rim, Inc., a
distributor of wheels for automobiles and light trucks with operations in
southern California, in March 1999; and Midwest Bumper Company, International
Warehouse Distributing Co., Midwest Bumper Company of Lansing, Collision Parts
Distributors Co. and Carhart Products, Inc., affiliated distributors of
aftermarket collision replacement parts with operations in Michigan, in March
1999. All of these acquisitions were accounted for under the purchase method
of accounting and the consolidated financial statements include the results of
operations for each business for all periods subsequent to the applicable
purchase date.

                                      15
<PAGE>

Results of Operations

  The following table sets forth, for the periods indicated, certain selected
income statement items as a percentage of net sales.

<TABLE>
<CAPTION>
                                                         Fiscal Year Ended
                                                   -----------------------------
                                                   March 28, March 27, March 26,
                                                     1997      1998      1999
                                                   --------- --------- ---------
   <S>                                             <C>       <C>       <C>
   Net sales......................................   100.0%    100.0%    100.0%
   Cost of sales..................................    58.3      56.8      56.1
                                                     -----     -----     -----
   Gross profit...................................    41.7      43.2      43.9
   Selling and distribution expenses..............    27.3      27.9      28.1
   General and administrative expenses............     7.0       6.9       7.5
   Non-recurring expenses.........................     0.4       0.5       0.5
                                                     -----     -----     -----
   Operating income...............................     6.9       8.0       7.8
   Other income...................................     0.2       0.4       1.1
   Interest expense...............................     0.7       0.2       0.0
                                                     -----     -----     -----
   Income before income taxes.....................     6.5       8.2       8.9
   Income taxes...................................     2.0       2.8       3.5
                                                     -----     -----     -----
   Net income.....................................     4.5%      5.4%      5.4%
                                                     =====     =====     =====
   Pro forma net income(1)........................     3.9%      4.9%      5.4%
                                                     =====     =====     =====
</TABLE>
--------
(1) Pro Forma net income gives effect to an income tax adjustment to reflect
    taxation of the income of Inteuro and Car Body, acquired in January 1998,
    as "C" corporations, rather than "S" corporations, at an estimated
    statutory rate of approximately 39%.

 Fiscal 1999 Compared to Fiscal 1998

  Net sales were $332.0 million in fiscal 1999 compared to $263.8 million in
fiscal 1998, an increase of $68.2 million, or 25.9%. This increase was due
primarily to an increase of $35.5 million in sales of automotive body parts,
an increase of $9.3 million in sales of paint and related materials and an
increase of $13.0 million in sales of new and recycled bumpers, which
represent increases of approximately 32.0%, 22.6% and 14.2%, respectively,
over fiscal 1998. In addition, the Company sold $17.4 million of
remanufactured alloy wheels in fiscal 1999 compared to $8.4 million in the
prior fiscal year, an increase of 108.7%.

  The increased net sales were attributable primarily to an increase in the
number of service centers in operation as a result of acquisitions and an
increase in unit volume. Price increases were not a material factor in
increased net sales.

  Gross profit increased to $145.9 million (43.9% of net sales) in fiscal 1999
from $113.9 million (43.2% of net sales) in fiscal 1998, an increase of 28.0%,
primarily as a result of the increase in net sales. The Company's gross profit
margin has improved, in part, due to increased purchasing leverage, a direct
result of acquisitions and internal growth. In addition, the United States
dollar has strengthened relative to the Taiwanese dollar, resulting in lower
costs for imported product. The Company imports approximately 25% of its
product from Taiwan, generally, fenders, hoods, door panels and grilles. The
Company's gross profit margin has fluctuated, and is expected to continue to
fluctuate, depending on a number of factors, including changes in product mix,
acquisitions and competition.

  Selling and distribution expenses increased to $93.2 million (28.1% of net
sales) in fiscal 1999 from $73.6 million (27.9% of net sales) in fiscal 1998,
an increase of 26.7%. The increase in these expenses as a percentage of net
sales was generally the result of costs associated with consolidating service
centers and assimilating acquisitions.

                                      16
<PAGE>

  General and administrative expenses increased to $24.9 million (7.5% of net
sales) in fiscal 1999 from $18.1 million (6.9% of net sales) in fiscal 1998,
an increase of 37.4%. The increase in these expenses in fiscal 1999 as a
percentage of net sales resulted from a number of factors, including an
increase in amortization of goodwill and other intangibles. Amortization of
goodwill and other intangibles, as a result of acquisitions, increased to $2.1
million in fiscal 1999 compared to approximately $1.0 million in fiscal 1998,
due to the application of purchase accounting.

  During fiscal 1999, the Company incurred approximately $1.8 million of non-
recurring expenses. These expenses relate to an approximately $700,000 write-
off of an abandoned computer project, approximately $650,000 related to costs
incurred to consolidate duplicate warehouse facilities and approximately
$450,000 related to severance payments.

  During fiscal 1998, the Company expensed $442,000 of costs related to the
Inteuro and Car Body mergers, consisting primarily of legal, accounting and
regulatory fees, the Company incurred approximately $705,000 of costs related
to severance payments to its former Chairman and Chief Executive Officer.

  During fiscal 1999, other income increased to $3.6 million compared to $1.1
million in fiscal 1998. This increase is primarily attributable to interest
income earned on invested cash and to discounts earned for early payments on
purchases.

  As a result of the above factors, net income increased to $17.8 million
(5.4% of net sales) in fiscal 1999 from $14.2 million (5.4% of net sales) in
fiscal 1998.

 Fiscal 1998 Compared to Fiscal 1997

  Net sales were $263.8 million in fiscal 1998 compared to $223.8 million in
fiscal 1997, an increase of $40.0 million, or 17.9%. This increase was due
primarily to an increase of $16.6 million in sales of automotive body parts,
an increase of $5.1 million in sales of paint and related materials and an
increase of $10.0 million in sales of new and recycled bumpers, which
represent increases of approximately 17.6%, 14.0% and 12.3%, respectively,
over fiscal 1997. In addition, the Company sold $8.4 million of remanufactured
alloy wheels in fiscal 1998 compared to $2.9 million in the prior fiscal year,
an increase of 189.7%.

  The increased net sales were attributable primarily to an increase in the
number of service centers in operation as a result of acquisitions and an
increase in unit volume. Price increases were not a material factor in
increased net sales.

  Gross profit increased to $113.9 million (43.2% of net sales) in fiscal 1998
from $93.2 million (41.7% of net sales) in fiscal 1997, an increase of 22.2%,
primarily as a result of the increase in net sales. The Company's gross profit
margin has improved, in part, due to increased purchasing leverage, a direct
result of acquisitions and internal growth. In addition, the United States
dollar has strengthened relative to the Taiwanese dollar, resulting in lower
costs for imported product. The Company imports approximately 31% of its
product from Taiwan, generally, fenders, hoods, door panels and grilles. The
Company's gross profit margin has fluctuated, and is expected to continue to
fluctuate, depending on a number of factors, including changes in product mix,
acquisitions and competition.

  Selling and distribution expenses increased to $73.6 million (27.9% of net
sales) in fiscal 1998 from $61.1 million (27.3% of net sales) in fiscal 1997,
an increase of 20.5%. The increase in these expenses as a percentage of net
sales was generally the result of certain administrative costs associated with
consolidating and assimilating acquisitions.

  General and administrative expenses increased to $18.1 million (6.9% of net
sales) in fiscal 1998 from $15.7 million (7.0% of net sales) in fiscal 1997,
an increase of 15.3%. The decrease in these expenses as a percentage of net
sales in fiscal 1998 was primarily the result of certain administrative costs
being absorbed over a larger revenue base.

                                      17
<PAGE>

  During fiscal 1998, the Company incurred approximately $705,000 of costs
related to severance payments to its former Chairman and Chief Executive
Officer. In addition, during fiscal 1997, the Company incurred $442,000 of
costs related to the Inteuro and Car Body mergers, consisting primarily of
legal, accounting and regulatory fees which were required to be expensed as
incurred. All costs associated with the Inteuro and Car Body mergers were
expensed in fiscal 1998. This compares to $905,000 of costs related to the
North Star merger, which were expensed in fiscal 1997.

  As a result of the above factors, net income increased to $14.2 million
(5.4% of net sales) in fiscal 1998 from $10.0 million (4.5% of net sales) in
fiscal 1997. The increase in net income as a percentage of net sales was
primarily the result of an increase in gross profit as a percentage of sales.
There can be no assurance that the Company can maintain its gross profit
margin at the level experienced in fiscal 1999, which was above historical
levels.

Variability of Quarterly Results and Seasonality

  The Company has experienced, and expects to continue to experience,
variations in its sales and profitability from quarter to quarter due, in
part, to the timing and integration of acquisitions and the seasonal nature of
Keystone's business. The number of collision repairs is directly impacted by
the weather. Accordingly, the Company's sales generally are highest during the
five-month period from December to April. The winter of 1998 was unusually
mild. The impact of seasonality may be reduced somewhat in the future as
Keystone becomes more geographically diversified. Other factors which
influence quarterly variations include the reduced number of business days
during the holiday seasons, the timing of the introduction of new products,
the level of consumer acceptance of new products, general economic conditions
that affect consumer spending, the timing of supplier price changes and the
timing of expenditures in anticipation of increased sales and customer
delivery requirements.

Liquidity and Capital Resources

  The Company's primary need for funds has been to finance the growth of
inventory and accounts receivable and acquisitions. At March 26, 1999, working
capital was $105.3 million compared to $72.5 million at March 27, 1998.
Historically, the Company has financed its working capital requirements from
its cash flow from operations, proceeds from public offerings of its Common
Stock and advances drawn under lines of credit.

  The Company has in place a revolving line of credit with its commercial
lender that provides for a $25 million unsecured credit facility that expires
in September 1999. Advances under the revolving line of credit bear interest
at LIBOR plus 0.75%. At June 18, 1999, $1.0 million had been drawn down under
the line of credit. The line of credit is subject to certain restrictive
covenants set forth in the loan agreement, which requires that the Company
maintain certain financial ratios. The Company was in compliance with all
covenants as of March 26, 1999 and as of the date of filing of this Annual
Report.

  In June 1998, the Company completed the acquisition of Republic by issuing
2,907,000 shares of its Common Stock to the former shareholders, and assuming
approximately $20.0 million outstanding under a bank credit facility. During
the period August 1998 through January 1999, in three separate transactions,
the Company sold Republic's mechanical hard parts operations for gross
proceeds of approximately $52.7 million. A portion of the gross proceeds were
used to extinguish the $20.0 million credit facility and to pay liabilities of
approximately $10.4 million relating to the operations that were sold.

  During fiscal 1999, the Company initiated a stock repurchase program, where
it repurchased approximately 1.0 million shares of its Common Stock for
approximately $18.8 million, or an average of $18.67 per share. In March 1999,
the Board of Directors authorized the repurchase of an additional 1,000,000
shares, and through June 18, 1999, approximately 341,800 additional shares
have been repurchased for $5.5 million or an average of $16.22 per share.


                                      18
<PAGE>

  During fiscal 1999, the Company's cash and cash equivalents increased by
$6.9 million. This increase is the result of an increase in cash provided by
operating activities of $18.6 million from a variety of sources, primarily net
income; an increase in cash used in investing activities of $25.0 million,
primarily related to the receipt of proceeds from the sale of Republic's
mechanical hard parts operations; offset by a decrease in cash provided by
financing activities of $36.7 million, primarily as a result of the
elimination of Republic's outstanding bank indebtedness and the repurchase of
shares of the Company's Common Stock.

  The Company believes that consolidation among independent distributors of
aftermarket collision parts is creating opportunities for the Company to
acquire service centers in new and existing markets. See "Cautionary
Statements" in Item 1 above. The Company intends to continue exploring
acquisition opportunities that may arise from time to time. To date, the
Company's acquisitions have been financed primarily by issuing shares of its
Common Stock or paying cash obtained from (i) operations, (ii) proceeds from
public offerings of its Common Stock or (iii) advances drawn under its credit
facilities. In the future, the Company may incur indebtedness or issue equity
or debt securities to third parties or the sellers of the acquired businesses
to complete additional acquisitions. There can be no assurance that additional
capital, if and when required, will be available on terms acceptable to the
Company, or at all. In addition, future issuances of equity securities, will
result in dilution to the shareholders of the Company.

  The Company believes that its existing working capital, estimated cash flow
from operations and funds available under its line of credit will enable it to
finance its anticipated growth in sales, to complete anticipated acquisitions
and to finance anticipated stock repurchases for at least the next 12 months.

  For information concerning the Year 2000 issue and the impact on the
Company, see "Item 1. Cautionary Statements."

Inflation

  The Company does not believe that the relatively moderate rates of inflation
over the past three years have had a significant effect on its net sales or
its profitability.

New Accounting Standards

  In March 1998, Statement of Position (SOP) 98-1, "Accounting for the Costs
of Computer Software Developed for or Obtained for Internal Use," was issued,
which is effective for fiscal years beginning after December 15, 1998. SOP 98-
1 requires capitalization and amortization of qualified computer software
costs over its estimated useful life. The Company plans to adopt SOP 98-1
effective March 27, 1999. There will be no impact on the current financial
statements due to the adoption of SOP 98-1.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

  The Company's results of operations are exposed to changes in interest rates
primarily with respect to borrowings under its credit facility, where interest
rates are tied to the prime rate or LIBOR. Under its current policies, the
Company does not use interest rate derivative instruments to manage exposure
to interest rate changes. Based on the current levels of debt, the exposure to
interest rate fluctuations is not considered to be material. The Company is
also exposed to currency fluctuations, primarily with respect to its product
purchases in Taiwan. While all transactions with Taiwan are conducted in U.S.
Dollars, changes in the relationship between the U.S. dollar and the New
Taiwan dollar might impact the price of products purchased in Taiwan. The
Company might not be able to pass on any price increases to customers. Under
its present policies, the Company does not attempt to hedge its currency
exchange rate exposure.


                                      19
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         INDEX TO FINANCIAL STATEMENTS

                      KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

<TABLE>
<S>                                                                        <C>
Report of Independent Auditors...........................................   21

Consolidated Balance Sheets at March 27, 1998 and March 26, 1999.........   22

Consolidated Statements of Income for the years ended March 28, 1997,
 March 27, 1998 and March 26, 1999.......................................   23

Consolidated Statements of Shareholders' Equity for the years ended March
 28, 1997, March 27, 1998 and March 26, 1999.............................   24

Consolidated Statements of Cash Flows for the years ended March 28, 1997,
 March 27, 1998 and March 26, 1999.......................................   25

Notes to Consolidated Financial Statements...............................   26
</TABLE>

                                       20
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Keystone Automotive Industries, Inc.

  We have audited the accompanying consolidated balance sheets of Keystone
Automotive Industries, Inc. and subsidiaries as of March 27, 1998 and March
26, 1999, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the three years in the period ended March
26, 1999. Our audits also included the financial statement schedule listed in
the index at 14(d). These financial statements and the financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of Inteuro Parts
Distributors, Inc. or Car Body Concepts, Inc., wholly owned subsidiaries (see
Note 2), as of and for the year ended December 31, 1996, which combined
statements reflect total assets of $8,382,913 as of December 31, 1996, and
total revenues of $29,485,099 for the year then ended. Those statements were
audited by Arthur Andersen LLP whose report has been furnished to us, and our
opinion, insofar as it relates to data included for Inteuro Parts
Distributors, Inc. and Car Body Concepts, Inc. for that period, is based
solely on their report.

  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of Arthur
Andersen LLP provide a reasonable basis for our opinion.

  In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Keystone
Automotive Industries, Inc. at March 27, 1998 and March 26, 1999, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended March 26, 1999, in conformity with generally
accepted accounting principles. Also, in our opinion the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects the
information set forth therein.

                                          /s/ Ernst & Young LLP

Los Angeles, California
May 28, 1999

                                      21
<PAGE>

                      KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                          CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                           March 27,  March 26,
                                                             1998       1999
                                                           ---------  ---------
                          ASSETS
                          ------
<S>                                                        <C>        <C>
Current assets:
  Cash and cash equivalents..............................  $ 10,859   $ 17,784
  Accounts receivable, less allowance for doubtful
   accounts of $593 in 1998 and $962 in 1999.............    23,476     30,256
  Inventories, primarily finished goods..................    54,870     72,284
  Prepaid expenses and other current assets..............     2,094      7,956
  Deferred taxes.........................................     2,694      3,601
                                                           --------   --------
   Total current assets..................................    93,993    131,881
Property, plant and equipment, at cost:
  Land...................................................       519        519
  Buildings and leasehold improvements...................     7,828      9,465
  Machinery and equipment................................    10,386     17,288
  Furniture and fixtures.................................    11,880     10,568
                                                           --------   --------
                                                             30,613     37,840
  Accumulated depreciation and amortization..............   (15,740)   (18,473)
                                                           --------   --------
                                                             14,873     19,367
Goodwill, net of accumulated amortization of $437 in 1998
 and $1,583 in 1999......................................     6,295     36,262
Other intangibles, net of accumulated amortization of
 $1,302 in 1998 and $2,167 in 1999.......................     1,980      1,874
Other assets.............................................     2,287      2,664
Deferred taxes...........................................       268      2,046
                                                           --------   --------
   Total assets..........................................  $119,696   $194,094
                                                           ========   ========
<CAPTION>
           LIABILITIES AND SHAREHOLDERS' EQUITY
           ------------------------------------
<S>                                                        <C>        <C>
Current liabilities:
  Bankers acceptances....................................  $  1,852   $  2,961
  Accounts payable.......................................    13,428     14,859
  Accrued salaries, wages and related benefits...........     2,639      3,621
  Other accrued liabilities..............................     2,336      4,141
  Long-term debt, due within one year....................       629        200
  Notes payable to related parties.......................       150        --
  Deferred taxes.........................................       505        769
                                                           --------   --------
   Total current liabilities.............................    21,539     26,551
Long-term debt, less current maturities..................       503        100
Other long-term liabilities..............................       --       2,679
Deferred taxes...........................................       426      1,559
Commitments and contingencies
Shareholders' equity:
  Preferred stock, no par value:
   Authorized shares--3,000,000
   None issued and outstanding
  Common stock, no par value:
   Authorized shares--50,000,000
   Issued and outstanding shares--14,642,000 in 1998 and
    16,858,000 in 1999, at stated value..................    57,196    105,436
  Additional paid-in capital.............................       724      1,223
  Retained earnings......................................    39,308     57,073
  Accumulated other comprehensive loss...................       --        (527)
                                                           --------   --------
   Total shareholders' equity............................    97,228    163,205
                                                           --------   --------
   Total liabilities and shareholders' equity............  $119,696   $194,094
                                                           ========   ========
</TABLE>

                            See accompanying notes.

                                       22
<PAGE>

                      KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                       CONSOLIDATED STATEMENTS OF INCOME
               (in thousands, except per share and share amounts)

<TABLE>
<CAPTION>
                                                      Year ended
                                           ----------------------------------
                                           March 28,   March 27,   March 26,
                                              1997        1998        1999
                                           ----------  ----------  ----------
<S>                                        <C>         <C>         <C>
Net sales................................. $  223,806  $  263,802  $  332,047
Cost of sales.............................    130,590     149,855     186,150
                                           ----------  ----------  ----------
Gross profit..............................     93,216     113,947     145,897
Operating expenses:
  Selling and distribution................     61,063      73,551      93,169
  General and administrative..............     15,699      18,101      24,873
  Non-recurring...........................        905       1,147       1,814
                                           ----------  ----------  ----------
                                               77,667      92,799     119,856
                                           ----------  ----------  ----------
Operating income..........................     15,549      21,148      26,041
Other income..............................        373       1,086       3,617
Interest expense..........................     (1,477)       (504)        (50)
                                           ----------  ----------  ----------
Income before income taxes................     14,445      21,730      29,608
Income taxes..............................      4,435       7,497      11,843
                                           ----------  ----------  ----------
Net income................................ $   10,010  $   14,233  $   17,765
                                           ==========  ==========  ==========
Net income per share--basic............... $     0.88  $     1.02  $     1.06
                                           ==========  ==========  ==========
Weighted average common shares
 outstanding--basic....................... 11,408,000  13,915,000  16,784,000
                                           ==========  ==========  ==========
Net income per share--diluted............. $     0.87  $     1.01  $     1.05
                                           ==========  ==========  ==========
Weighted average common shares
 outstanding--diluted..................... 11,474,000  14,105,000  16,913,000
                                           ==========  ==========  ==========


                   (unaudited pro forma information) (Note 2)

Net income, as previously reported........ $   10,010  $   14,233  $   17,765
Pro forma tax adjustment..................     (1,288)     (1,345)        --
                                           ----------  ----------  ----------
Pro forma net income...................... $    8,722  $   12,888  $   17,765
                                           ==========  ==========  ==========
Pro forma net income per share--basic..... $     0.76  $     0.93  $     1.06
                                           ==========  ==========  ==========
Pro forma net income per share--diluted... $     0.76  $     0.91  $     1.05
                                           ==========  ==========  ==========
</TABLE>


                            See accompanying notes.

                                       23
<PAGE>

                      KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               (in thousands, except per share and share amounts)

<TABLE>
<CAPTION>
                                                                      Accumulated
                             Common Stock       Additional               Other
                          --------------------   Paid-in   Retained  Comprehensive
                            Shares     Amount    Capital   Earnings      Loss       Total
                          ----------  --------  ---------- --------  ------------- --------
<S>                       <C>         <C>       <C>        <C>       <C>           <C>
Balance at March 29,
 1996...................  10,250,000  $  4,301    $  582   $21,236       $  --     $ 26,119
Issuance of 1,500,000
 shares in connection
 with initial public
 offering at $9.00 a
 share net of offering
 costs and commissions
 of $1,878..............   1,500,000    11,622       --        --           --       11,622
S-Corp distributions by
 pooled companies.......         --        --        --     (1,298)         --       (1,298)
Net income..............         --        --        --     10,010          --       10,010
                          ----------  --------    ------   -------       -----     --------
Balance at March 28,
 1997...................  11,750,000    15,923       582    29,948          --       46,453
Net adjustment for
 pooled companies for
 the quarter ended March
 31, 1997...............         --        --        --     (2,072)         --       (2,072)
Issuance of stock, net
 of offering costs of
 $2,679.................   2,610,000    37,776       --        --           --       37,776
Issuance of stock in
 connection with
 acquisition of All
 Makes at $12.75 per
 share..................     235,000     2,991       --        --           --        2,991
Stock options
 exercised..............      47,000       506       --        --           --          506
Tax benefit of stock
 options exercised......         --        --        142       --           --          142
S-Corp distributions by
 pooled companies.......         --        --        --     (2,801)         --       (2,801)
Net income..............         --        --        --     14,233          --       14,233
                          ----------  --------    ------   -------       -----     --------
Balance at March 27,
 1998...................  14,642,000    57,196       724    39,308          --       97,228
Net income..............         --        --        --     17,765          --       17,765
Defined benefit plan
 funding adjustments net
 of taxes of $363.......         --        --        --        --         (527)        (527)
                                                                                   --------
Comprehensive income....         --        --        --        --          --        17,238
Issuance of stock in
 connection with
 acquisition of
 Collision Parts
 Distributor Co. at
 $12.19 per share.......     150,000     1,828       --        --           --        1,828
Issuance of stock in
 connection with
 acquisition of Republic
 Automotive at $21.69
 per share..............   2,907,000    63,063       --        --           --       63,063
Stock options
 exercised..............     168,000     2,188       --        --           --        2,188
Tax benefit of stock
 options exercised......         --        --        499       --           --          499
Repurchase of common
 stock..................  (1,009,000)  (18,839)      --        --           --      (18,839)
                          ----------  --------    ------   -------       -----     --------
Balance at March 26,
 1999...................  16,858,000  $105,436    $1,223   $57,073       $(527)    $163,205
                          ==========  ========    ======   =======       =====     ========
</TABLE>

                            See accompanying notes.

                                       24
<PAGE>

                      KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                           Year ended
                                                  -----------------------------
                                                  March 28, March 27, March 26,
                                                    1997      1998      1999
                                                  --------- --------- ---------
<S>                                               <C>       <C>       <C>
Operating activities
Net income.......................................  $10,010   $14,233   $17,765
Adjustments to reconcile net income to net cash provided by
 operating activities:
  Depreciation and amortization..................    2,470     3,188     4,318
  Amortization of goodwill and other
   intangibles...................................      616       967     2,050
  Deferred taxes.................................     (487)     (618)      679
  Provision for losses on uncollectible
   accounts......................................      747       372       601
  Provision for losses on inventory..............      322       495       251
  (Gain) loss on sales of assets.................     (150)       76        27
  Changes in operating assets and liabilities:
    Accounts receivable..........................   (3,334)   (2,886)   (2,305)
    Inventories..................................   (7,522)   (8,031)   (1,151)
    Prepaid expenses and other current assets....     (111)     (692)   (1,949)
    Accounts payable.............................    3,047    (7,613)      521
    Accrued salaries, wages and related
     benefits....................................      625      (332)   (2,286)
    Other accrued liabilities....................     (785)    1,910      (532)
    Other, net...................................     (436)     (620)      624
                                                   -------   -------   -------
Net cash provided by operating activities........    5,012       449    18,613
Investing activities
Proceeds from sales of assets....................      270       213    42,629
Acquisitions of certain service centers, net of
 cash received...................................   (4,926)   (7,048)  (12,517)
Purchases of property, plant and equipment.......   (4,378)   (3,790)   (5,126)
                                                   -------   -------   -------
Net cash (used in) provided by investing
 activities......................................   (9,034)  (10,625)   24,986
Financing activities
Borrowings under bank credit facility............   19,129       --        --
Payments under bank credit facility..............  (19,750)  (12,629)  (20,000)
Bankers acceptances..............................       18    (1,686)    1,109
Payments on notes payable to officers,
 shareholders and other related parties..........     (172)      (42)      --
Borrowings on long-term debt.....................    1,024       --        --
Principal payments on long-term debt.............   (9,027)   (1,892)   (1,133)
S-Corp distributions related to pooled
 companies.......................................   (1,055)   (2,801)      --
Proceeds from initial public and secondary
 offering........................................   11,622    37,776       --
Purchase of common stock.........................      --        --    (18,839)
Proceeds from stock option exercises.............      --        506     2,189
                                                   -------   -------   -------
Net cash provided by (used in) financing
 activities......................................    1,789    19,232   (36,674)
                                                   -------   -------   -------
Net (decrease) increase in cash and cash
 equivalents.....................................   (2,233)    9,056     6,925
Cash and cash equivalents at beginning of year...    4,517     2,284    10,859
Net change in cash and cash equivalents during
 the quarter ended March 31, 1997 for pooled
 companies.......................................      --       (481)      --
                                                   -------   -------   -------
Adjusted cash and cash equivalents at beginning
 of year.........................................    4,517     1,803    10,859
                                                   -------   -------   -------
Cash and cash equivalents at end of year.........  $ 2,284   $10,859   $17,784
                                                   =======   =======   =======
Supplemental disclosures:
Interest paid during the year....................  $ 1,516   $   585   $   242
Income taxes paid during the year................  $ 5,311   $ 6,346   $11,655
Acquisition of businesses using debt.............  $   500   $   --    $   150
Acquisition of businesses using stock............  $   --    $ 2,991   $64,891
The following item is not included in the
 Consolidated Statement of Cash Flows:
Minimum pension liability adjustment.............  $   --    $   --    $   527
</TABLE>

                            See accompanying notes.


                                       25
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                March 26, 1999

1. Summary of Significant Accounting Policies

Principles of Consolidation

  The accompanying consolidated financial statements include the accounts of
Keystone Automotive Industries, Inc. and its wholly owned subsidiaries, North
Star Plating Co. ("North Star"), and Inteuro Parts Distributors, Inc. and Car
Body Concepts, Inc. (collectively "Inteuro") and Republic Automotive Parts,
Inc. ("Republic") (the "Company"). All significant intercompany transactions
have been eliminated in consolidation.

Business Information

  The principal business of the Company is the distribution of replacement
parts for automobiles and light trucks to collision repair shops through a
network of service centers located within the United States, and one in
Mexico.

Fiscal Year

  The Company uses a 52/53 week fiscal year. The Company's fiscal year ends on
the last Friday of March. The fiscal years ended March 28, 1997, March 27,
1998 and March 26, 1999 each included 52 week periods.

Accounting Estimates

  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from these estimates.

Concentrations of Risk

  Accounts receivable subject the Company to a potential concentration of
credit risk. Substantially all of the Company's customers are in the auto body
repair business, none representing more than 1% of sales. The Company performs
periodic credit evaluations of its customers' financial condition and
generally does not require collateral. Receivables are generally due within 30
days. Credit losses have consistently been within management's expectations.

  During 1998 and 1999, the Company imported 31% and 25% of its products from
the Far East, respectively.

Fair Values of Financial Instruments

  Fair values of cash and cash equivalents, accounts receivable, accounts
payable, bankers' acceptances and other short-term obligations approximate
cost due to the short period of time to maturity. Fair values of long-term
debt, which have been determined based on borrowing rates currently available
to the Company for loans with similar terms or maturity, approximate the
carrying amounts in the consolidated financial statements.

Cash Equivalents

  The Company considers all highly liquid instruments with an original
maturity of three months or less when purchased to be cash equivalents. Cash
and cash equivalents are held by major financial institutions.

                                      26
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Inventories

  The Company's inventories consist primarily of automotive aftermarket
collision replacement parts, paint and related items and bumpers. Inventories
are stated at the lower of cost (first-in, first-out method) or market.

Long-Lived Assets

  In accordance with Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", the Company records impairment losses on long-lived
assets held and used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than their related carrying amounts. In addition, the Company accounts
for its long-lived assets to be disposed of at the lower of their carrying
amounts or fair value less selling and disposal costs. At March 27, 1998 and
March 26, 1999, management of the Company believes that none of its assets are
impaired.

Depreciation and Amortization

  The Company uses the straight-line method for calculating depreciation and
amortization of property, plant, and equipment over the following estimated
useful lives:

<TABLE>
   <S>                       <C>
   Buildings...............  20 years
   Machinery and
    equipment..............  5-12 years
   Furniture and fixtures..  5-7 years
   Auto and truck..........  3-5 years
   Leasehold improvements..  Term of lease or life of the asset, whichever is shorter
</TABLE>

Goodwill and Other Intangibles

  Goodwill, representing the excess of the purchase price over the fair values
of the net assets of acquired entities, is amortized over 15 to 30 years using
the straight-line method. Other intangibles are comprised of covenants not to
compete. Covenants not to compete are amortized using the straight-line method
over the terms of the agreements, generally 3-5 years.

Revenue Recognition

  The Company recognizes revenue from product sales at the time of delivery or
shipment. The Company provides its customers the right to return products that
are damaged or defective. The effect of these programs is estimated and
current period sales and costs of sales are reduced accordingly.

Stock-Based Compensation

  The Company elected to continue to account for stock-based compensation
plans using the intrinsic value-based method of accounting prescribed by
Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued
to Employees," and related interpretations. Under the provisions of APB No.
25, compensation expense is measured at the grant date for the difference
between the fair value of the stock and the exercise price. The Company has
not granted stock options at less than the fair value of the stock at the date
of grant.

New Accounting Standards

  In March 1998, Statement of Position (SOP) 98-1, "Accounting for the Costs
of Computer Software Developed for or Obtained for Internal Use," was issued,
which is effective for fiscal years beginning after

                                      27
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

December 15, 1998. SOP 98-1 requires capitalization and amortization of
qualified computer software costs over their estimated useful life. The
Company will adopt SOP 98-1 effective March 27, 1999. There will be no impact
on the current financial statements due to the adoption of SOP 98-1

2. Acquisitions

  In June 1998, the Company completed its acquisitions of Republic Automotive
Parts, Inc. ("Republic"). The Company issued approximately 2,907,000 shares of
its common stock in exchange for the outstanding common stock of Republic
(total purchase price of approximately $63.1 million using an average share
price of $21.69). The fair value of the assets acquired approximated $41.9
million, net of approximately $28.8 million of liabilities assumed. The excess
of the purchase price over assets acquired (goodwill) approximated $21.2
million and is being amortized over 30 years. The acquisition of Republic is
being accounted for under the purchase method of accounting. At the time of
the acquisition, Republic was engaged in the distribution of automotive
mechanical hard parts and aftermarket collision replacement parts.

  The net assets acquired as part of the Republic transaction, which related
to the Republic mechanical hard parts operations, were recorded as assets held
for sale in the allocation of the opening balance sheet at June 27, 1998. The
assets held for sale were recorded at fair value based upon the final sales
price. The results of operations from June 27, 1998 through the date of sale
of the mechanical hard parts operations were accounted for as an adjustment to
the carrying amount of the assets. The assets held for sale were sold in a
series of transactions during fiscal 1999, which resulted in a gain. The gain
on sales has been accounted for as an adjustment of the original purchase
price. The operating results of the Company from June 27, 1998, excluded any
effects from the mechanical hard parts business.

  The unaudited pro forma results of operations for the year ended March 27,
1998 and March 26, 1999, as though Republic had been combined with the Company
at the beginning of fiscal 1998, is as follows (in thousands, except share and
per share amounts):

<TABLE>
<CAPTION>
                                                          March 27,  March 26,
                                                             1998       1999
                                                          ---------- ----------
   <S>                                                    <C>        <C>
   Net sales............................................. $  319,727 $  347,346
   Net income............................................ $   15,080 $   17,325
   Net income per share.................................. $      .89 $      .98
   Weighted average shares outstanding diluted........... 17,012,000 17,649,000
</TABLE>

  In addition to the Republic acquisition, Keystone acquired six other
companies for approximately $17.8 million cash, $1.8 million in stock and a
note payable of $150,000. These acquisitions were accounted for as purchases,
and accordingly the assets and liabilities of the acquired entities have been
recorded at their estimated fair values at the dates of acquisition. The
excess of purchase price over the estimated fair values of the assets acquired
was approximately $9.9 million and has been recorded as goodwill and is being
amortized over 15 to 20 years. The unaudited proforma results for fiscal 1998
and 1999, assuming these other acquisitions had been made at the beginning of
fiscal 1998, would not be materially different from the pro forma results
presented above.

  Effective January 1, 1998, Inteuro merged with and into the Company. An
aggregate of 2,000,000 shares of the Company's common stock were issued in
exchange for all of the issued and outstanding common stock of Inteuro.
Additionally, on March 28, 1997, the Company completed a merger with North
Star. An aggregate of 2,450,000 shares of Keystone common stock were exchanged
for all of the outstanding common stock of North Star. These transactions were
accounted for as poolings of interests and therefore, all prior period
financial

                                      28
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

statements presented include Inteuro's and North Star's historical activities.
Inteuro and North Star used a September 30 and December 31 year end,
respectively. The Company's financial statements for fiscal 1997 and fiscal
1998 combine the Company's consolidated financial statements for the years
ended March 28, 1997 and March 27, 1998, with Inteuro's financial statements
for years ended December 31, 1996 and 1997, and North Star for the twelve
months ended December 31, 1996.

  For the quarter ended March 28, 1997, net income for Inteuro was $385,000,
offset by S-Corp. distributions of $2,457,000, resulting in a net adjustment
to retained earnings of $2,072,000. Revenue and expenses of $9,164,000 and
$8,779,000, respectively, were recorded for the quarter ended March 28, 1997
for Inteuro which have not been reflected in the statement of operations.

  The North Star balance sheets and statements of income and cash flow have
been conformed to the Company's fiscal year ended March 28, 1997. Net sales,
net income and other changes in shareholders' equity of the separate companies
for the periods preceding the North Star and Inteuro mergers were as follows
for the two years ended March 27, 1998:

<TABLE>
<CAPTION>
                                                                     Unaudited
                                                                    Nine months
                                                         Year ended    ended
                                                         March 28,  December 26,
                                                            1997        1997
                                                         ---------- ------------
   <S>                                                   <C>        <C>
   Net sales:
     Keystone, as previously reported...................  $138,380    $165,702
     North Star.........................................    58,227         --
     Inteuro............................................    29,485      26,757
     Intercompany eliminations..........................    (2,286)        --
                                                          --------    --------
   Combined.............................................  $223,806    $192,459
                                                          ========    ========
   Net income:
     Keystone, as previously reported...................  $  4,836    $  7,495
     North Star.........................................     1,953         --
     Inteuro............................................     3,221       2,964
                                                          --------    --------
   Combined.............................................  $ 10,010    $ 10,459
                                                          ========    ========
   Other changes in shareholders' equity:
     Keystone...........................................  $ 11,622    $ 37,776
     S-Corp. distributions--Inteuro.....................    (1,298)     (2,801)
</TABLE>

  The above net income reflects the historical results of operations of
Inteuro, which had elected to be taxed under subchapter "S" of the Internal
Revenue Code, and therefore, does not reflect the corporate tax liability that
is passed through to its shareholders. The pro forma net income and earnings
per share included herein reflect income tax expense of the combining
companies at an estimated statutory rate of 39%.

  In connection with the merger with North Star and Inteuro, $905,000 and
$442,000 of merger costs and expenses were incurred and have been charged to
operations for the year ended March 28, 1997 and March 27, 1998, respectively.
The merger costs and expenses consisted primarily of legal, accounting, and
investment banking fees.

                                      29
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3. Goodwill and Other Intangibles

  Goodwill increased approximately $31,100,000 as a result of acquisitions
during fiscal 1999. Amortization expense for goodwill and other intangibles
for the years ended March 28, 1997, March 27, 1998 and March 26, 1999 was
$616,000, $967,000 and $2,050,000, respectively, and is included with
depreciation and amortization expense.

4. Financing Arrangements

  The Company maintains a revolving line of credit with a commercial lender
that provides a $25,000,000 unsecured credit facility that expires, as
amended, on September 17, 1999. Initial advances under the revolving line of
credit are made with interest at the lender's prime rate; however, at the
Company's option, all advances may be converted to LIBOR plus 0.75%--0.875%.
The agreement also contains an unused line charge of 0.125%. At March 26,
1999, no amounts were outstanding under the line of credit. The loan agreement
is subject to certain restrictive covenants and requires that the Company
maintain certain financial ratios. The Company was in compliance with all
covenants as of March 26, 1999.

5. Long-Term Debt

  Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                          March 27, March 26,
                                                            1998      1999
                                                          --------- ---------
                                                            (in thousands)
   <S>                                                    <C>       <C>
   Various covenants not-to-compete, payable with
    interest up to 8%, payable through 2001..............  $  327     $300
   Other.................................................     805      --
                                                           ------     ----
                                                            1,132      300
   Less amount due within one year.......................     629      200
                                                           ------     ----
   Amounts due after one year............................  $  503     $100
                                                           ======     ====
</TABLE>

6. Shareholders' Equity

  In June 1996, the Company completed its initial public offering at 1,500,000
shares at an offering price of $9.00 per share, which generated net proceeds
of $11,622,000. In June 1997, the Company's Registration Statement on Form S-1
was declared effective by the Securities and Exchange Commission, permitting
the Company to sell additional shares of its common stock to the public. The
Company and selling shareholders sold 2,610,000 shares each, at an offering
price of $15.50 per share, which generated net proceeds to the Company of
$37,776,000 (net of underwriter commissions and offering costs). The Company's
proceeds from both offerings were used to pay down bank debt, to fund
acquisitions and for working capital. Additionally, in August 1997, the
Company amended its Articles of Incorporation to increase its authorized
shares of common stock to 50,000,000.

  In June 1998, as part of the Company's acquisition of Republic, the Company
issued approximately 2,907,000 shares using an average share price of $21.69.

  In September 1998, the Board of Directors authorized the Company to purchase
up to 1,000,000 shares of its common stock at such times and at such prices as
the President and Chief Financial Officer deemed appropriate. Repurchased
shares were redeemed and treated as authorized but unissued shares. At March
26, 1999, the Company had repurchased approximately 1,009,000 shares of its
common stock at an average cost of $18.67 per share.

                                      30
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  In March 1999, the Company issued 150,000 shares of unregistered stock using
an average share price of $12.19 to acquire Collision Parts Distributors Co.

7. Earnings Per Share

  In 1997, the FASB issued SFAS No. 128, "Earnings Per Share." SFAS No. 128
replaced the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented and, where appropriate, restated
to conform to the SFAS No. 128 requirements. The following table sets forth
the computation of basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                                          Year ended
                                                 -----------------------------
                                                 March 28, March 27, March 26,
                                                   1997      1998      1999
                                                 --------- --------- ---------
                                                   (in thousands, except per
                                                        share amounts)
   <S>                                           <C>       <C>       <C>
   Numerator:
     Net income.................................  $10,010   $14,233   $17,765
                                                  -------   -------   -------
   Denominator:
     Denominator for basic earnings per share--
      weighted average shares...................   11,408    13,915    16,784
                                                  -------   -------   -------
   Effect of dilutive securities:
     Employee stock options.....................       66       190       129
     Denominator for dilutive earnings per
      share--adjusted weighted average shares
      and assumed conversions...................   11,474    14,105    16,913
                                                  -------   -------   -------
   Basic earnings per share.....................  $  0.88   $  1.02   $  1.06
                                                  =======   =======   =======
   Diluted earnings per share...................  $  0.87   $  1.01   $  1.05
                                                  =======   =======   =======
</TABLE>

8. Related Party Transactions

  The Company has entered into various property lease agreements with related
parties, including certain of the Company's directors and officers and
agreements with a corporation which is owned by a family member of a Company
officer and director. The leases contain terms up to 10 years. The Company
believes that the terms and conditions of such leases with affiliated parties
are no less favorable than could have been obtained from unaffiliated parties
in arm's length transactions at the time such leases were entered into. Rent
expense for related party lease agreements, included in the total rent
expense, amounted to $931,000, $1,715,000 and $1,863,000 for 1997, 1998 and
1999, respectively, exclusive of the Company's obligation for property taxes
and insurance.

  Notes payable to officers, shareholders, and other related parties of
$150,000 were paid on October 1, 1998, bearing interest at 8.25%. Interest
expense incurred in connection with these obligations was $21,000 at March 28,
1997, $14,000 at March 27, 1998 and $7,000 at March 26, 1999.

  In December 1996, Inteuro sold its Atlanta facility and land to a related
entity. At the time of the sale, the facility and land had a book value of
$662,000 and related outstanding debt of $415,000. Inteuro distributed the net
assets related to the facility and land of $244,000 to the related entity. No
rent payments were made to the related entity in 1996.

                                      31
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9. Income Taxes

  The liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.

  Significant components of the Company's deferred tax liabilities and assets
are as follows:

<TABLE>
<CAPTION>
                                                            March 27, March 26,
                                                              1998      1999
                                                            --------- ---------
                                                              (in thousands)
   <S>                                                      <C>       <C>
   Deferred tax assets:
     Uniform cost capitalization...........................  $1,067    $1,331
     Goodwill..............................................     347     1,183
     Inventory reserve.....................................     506       594
     Accrued expenses not currently deductible for tax.....     913     2,234
     Other, net............................................     129       305
                                                             ------    ------
       Total deferred tax assets...........................   2,962     5,647
   Deferred tax liabilities:
     Prepaid expenses......................................    (505)     (769)
     Tax depreciation over book............................    (426)     (488)
     Book/tax difference on pension accrual................     --     (1,071)
                                                             ------    ------
       Total deferred tax liabilities......................    (931)   (2,328)
                                                             ------    ------
       Net deferred tax assets.............................  $2,031    $3,319
                                                             ======    ======
</TABLE>

  Significant components of the provision for income taxes attributable to
operations under the liability method are as follows:

<TABLE>
<CAPTION>
                                                            Year ended
                                                   -----------------------------
                                                   March 28, March 27, March 26,
                                                     1997      1998      1999
                                                   --------- --------- ---------
                                                          (in thousands)
   <S>                                             <C>       <C>       <C>
   Current:
     Federal.....................................   $ 3,958   $6,575    $ 7,136
     State.......................................       964    1,540      1,984
                                                    -------   ------    -------
                                                      4,922    8,115      9,120
   Deferred:
     Federal.....................................      (390)    (514)     1,792
     State.......................................       (97)    (104)       931
                                                    -------   ------    -------
                                                       (487)    (618)     2,723
                                                    -------   ------    -------
                                                    $ 4,435   $7,497    $11,843
                                                    =======   ======    =======
</TABLE>


                                      32
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

  Prior to the purchase of Inteuro by the Company on January 1, 1998, Inteuro
had elected to be treated as an S corporation under the provisions of the
Internal Revenue Code. Accordingly, taxable income of Inteuro has been
reported in the tax returns of the individual shareholders of Inteuro.
Subsequent to the acquisition of Inteuro on January 1, 1998, the operating
results of Inteuro are included in the consolidated federal and state tax
returns of the Company.

  The reconciliation of income taxes at the U.S. federal statutory tax rate to
reported income tax expense is as follows:

<TABLE>
<CAPTION>
                                                          Year ended
                                                 -----------------------------
                                                 March 28, March 27, March 26,
                                                   1997      1998      1999
                                                 --------- --------- ---------
                                                        (in thousands)
   <S>                                           <C>       <C>       <C>
   Income taxes at statutory tax rate...........  $ 4,911   $7,606    $10,363
   State income taxes, net of federal tax
    effect......................................      727      915      1,229
   S-Corp earnings of Inteuro...................   (1,288)  (1,221)       --
   Non-deductible expenses......................       47      197        251
   Other, net...................................       38      --         --
                                                  -------   ------    -------
                                                  $ 4,435   $7,497    $11,843
                                                  =======   ======    =======
</TABLE>

10. Employee Benefit Plans

  The Company terminated its employee stock ownership plan which covers
substantially all of its employees. Final payout is expected to occur during
fiscal 1999. Under the terms of the Internal Revenue Code, each year's tax
deductible contribution is limited to a maximum of 15% of the Company's
qualified payroll. A carryover of unused allowable contributions is allowed,
subject to certain limits. Under the terms of the plan, the Company makes the
contribution to the Trustee, who is required to follow the Administrative
Committee's investment decisions. There were no Company contributions to the
plan in fiscal 1997, 1998 nor 1999.

  In March 1979, the Company adopted a defined benefit pension plan (the
"Plan") to provide pension benefits to all non-union employees. Plan benefits
are based on an employee's years of service and the compensation during the
five years of employment which would yield the highest average compensation.
Effective in April 1997, the Company suspended the accrual of future benefits
resulting in a curtailment gain of $427,000. The curtailment gain was used to
offset unrecognized net losses of the Plan. The assets of the Plan consist
primarily of investments in mutual funds, time certificates of deposit, and
marketable debt securities. The Company's policy is to fund pension cost
accrued.

  In June 1998, the Company acquired Republic, including its pension and
postretirement life and health insurance plans ("Health and Life Plans").
Republic's defined benefit plan covers substantially all employees. Benefits
under this plan generally are based upon the employee's years of service and
compensation preceding retirement. The Company's general funding policy is to
contribute amounts deductible for federal income taxes. Under the Health and
Life Plans, the Company contributes toward the cost of health insurance
benefits for certain retired employees. In order to be eligible for
postretirement health insurance coverage, an employee must retire after
attainment of age 55 and completion of 10 years of service, or attainment of
age 50 and completion of 15 years of service. After attainment of age 65, the
employee will not be eligible for coverage under the health insurance plan. In
order to be eligible for life insurance benefits, an employee must retire
after attaining age 55 and completing 10 years of service, or attaining age 50
and completing 15 years of service. Eligible retirees will receive a life
insurance benefit of $2,500 for which the Company pays the full cost. The
Health and Life Plans are unfunded and therefore, premiums are paid from the
Company's current operations.

                                      33
<PAGE>

                      KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  The net periodic pension cost for all the Company's benefit plans was as
follows:

<TABLE>
<CAPTION>
                                              Pension Benefits          Other
                                        ----------------------------- Benefits
                                        March 28, March 27, March 26, March 26,
                                          1997      1998      1999      1999
                                        --------- --------- --------- ---------
                                               (in thousands)
   <S>                                  <C>       <C>       <C>       <C>
   Service cost.......................    $ 154     $  18     $ 281      $11
   Interest cost......................      323       271       424       58
   Amortization or unrecognized
    transition obligation or asset....        8       120       --        --
   Recognized gains or (losses).......       39       489        29       --
   Prior service cost recognized......       (7)     (143)      --        --
   Expected return on assets..........     (199)     (224)     (500)      --
   Gain or loss due to settlement or
    curtailment.......................      --       (427)      --        --
                                          -----     -----     -----      ---
                                          $ 227     $ 104     $ 234      $69
                                          =====     =====     =====      ===
</TABLE>

                                       34
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  The following is a summary of the status of the funding of the plans:

<TABLE>
<CAPTION>
                                                   Pension Benefits     Other
                                                  ------------------- Benefits
                                                  March 27, March 26, March 26,
                                                    1998      1999      1999
                                                  --------- --------- ---------
                                                    (in thousands)
<S>                                               <C>       <C>       <C>
Change in benefit obligation:
  Benefit obligation at beginning of year.......   $3,380    $ 2,752   $   --
  Benefit obligation from acquired company......      --       4,311     1,235
  Service cost..................................       18        281        11
  Interest cost.................................      270        424        58
  Plan participants' contributions..............      --         --         13
  Actuarial losses (gains)......................      (56)       690       (94)
  Benefits paid.................................     (458)    (1,048)     (116)
  Plan amendments...............................     (403)       --        --
  Assumption change.............................      --         730       --
                                                   ------    -------   -------
    Benefit obligation at end of year...........   $2,752    $ 8,140   $ 1,107
                                                   ======    =======   =======
Change in plan assets:
  Fair value of plan assets at beginning of
   year.........................................   $2,990    $ 3,015   $   --
  Actual return on plan assets..................      419         26       --
  Acquisition...................................      --       4,266       --
  Company contributions.........................       64        205       --
  Benefits paid.................................     (458)    (1,048)      --
                                                   ------    -------   -------
    Fair value of plan assets at end of year....   $3,015    $ 6,464   $   --
                                                   ======    =======   =======
Funded status:
  Funded status of the plan (Underfunded).......   $  263    $(1,676)  $(1,107)
  Unrecognized net actuarial (gain) losses......    1,047      2,485       (94)
  Adjustment required to recognize minimum
   liability....................................      --        (890)      --
                                                   ------    -------   -------
    Net amount recognized.......................   $1,310    $   (81)  $(1,201)
                                                   ======    =======   =======
Amounts recognized in the statement of financial
 position:
  Prepaid pension cost..........................   $1,310    $ 1,001   $   --
  Accrued benefit liability.....................      --      (1,548)   (1,201)
  Intangible asset..............................      --         466       --
                                                   ------    -------   -------
  Net amount recognized.........................   $1,310    $   (81)  $(1,201)
                                                   ======    =======   =======
</TABLE>

  In accordance with the provisions of SFAS No. 87, "Employers Accounting for
Pensions," the Company recorded a minimum pension liability representing the
excess of the accumulated benefit obligation of $7,816,000 over the fair value
of the plan assets of $6,464,000. The liability has been offset by intangible
assets to the extent possible. The balance of the liability of $890,000 is
reported in accumulated comprehensive income (loss), net of applicable
deferred income taxes of $363,000. No minimum pension liability existed at
March 27, 1998.

  In determining the actuarial present value of projected benefit obligations
for the Company's Plan, at March 27, 1998 and March 26, 1999, a discount rate
of 8% and 5% was used, respectively. Due to the amendment, there are no future
compensation increases for the Plan for the year ended March 27, 1998 and
March 26, 1999. The expected long-term annual rate of return on assets was 8%
and 5% for the years ended March 27, 1998 and March 26, 1999, respectively.
Reductions in the discount rate and rate of return on assets are due to the
amendment of the Plan.

                                      35
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  The actuarial present value of projected benefit obligations at March 26,
1999, for the Republic pension plan, used a discount rate of 7%. The assumed
future compensation increases for the Republic pension plan for the year ended
March 26, 1999 was 5% and the expected long-term annual rate of return on
assets was 9.5%.

  For the Health and Life Plans, the actuarial present value of benefit
obligations at March 26, 1999, assumed a discount rate of 7%. The assumed
healthcare cost trend rate for 1999 and later was 7%. The assumed health care
cost trend rate has a significant effect on the amounts reported. A one-
percentage-point change in the assumed health care cost trend rate would have
the following effects:

<TABLE>
<CAPTION>
                                                    1-Percentage- 1-Percentage
                                                        Point        Point
                                                      Increase      Decrease
                                                    ------------- ------------
                                                          (in thousands)
   <S>                                              <C>           <C>
   Effect on the total of service cost and
    interest cost components in fiscal 1999.......       $11          $ (3)
   Effect on the postretirement benefit obligation
    as of March 26, 1999..........................       $37          $(24)
</TABLE>

  The Company maintains a 401(k) plan, as amended, that covers substantially
all of its employees. Employees who have completed more than one year of
service are eligible and may contribute from 1% to 15% of their base pay. The
Company matches 50% of the first 6% of employee contributions. Employee
contributions vest immediately, while employer contributions vest based on
years of service. Employer contributions to the plan were $173,000, $982,000
and $1,058,000 as of March 28, 1997, March 27, 1998 and March 26, 1999,
respectively.

11. Stock Compensation Plans

  In 1996, the Board of Directors of the Company adopted a Stock Incentive
Plan (the "1996 Plan"). There were 1,100,000 shares of Common Stock reserved
for issuance under the 1996 Plan. The 1996 Plan provides for granting of stock
options that may be either "incentive stock options" within the meaning of
Section 422A of the Internal Revenue Code of 1986 (the "Code") or "non-
qualified stock options," which do not satisfy the provisions of Section 422A
of the Code. Options are required to be granted at an option price per share
equal to the fair market value of Common Stock on the date of grant. Stock
options may not be granted longer than 10 years from the date of the 1996
Plan. All options granted have ten-year terms and vest at the rate of 25% per
year, commencing one year from the date of grant. No options were exercised
during the year ended March 28, 1997.

<TABLE>
<CAPTION>
                                                                     Weighted
                                                                     Average
   Stock Option Plan                                      Shares  Exercise Price
   -----------------                                      ------- --------------
   <S>                                                    <C>     <C>
   Outstanding at March 29, 1996.........................     --      $  --
     Granted............................................. 432,000      11.90
                                                          -------     ------
   Outstanding at March 28, 1997......................... 432,000      11.90
     Granted............................................. 232,000      17.13
     Exercised...........................................  47,250      10.72
     Expired.............................................  28,500      13.22
                                                          -------     ------
   Outstanding at March 27, 1998......................... 588,250      13.99
     Granted............................................. 390,000      19.30
     Exercised........................................... 168,525      14.76
     Expired.............................................  10,250       9.16
                                                          -------     ------
   Outstanding at March 26, 1999......................... 799,475     $16.36
                                                          =======     ======
</TABLE>

                                      36
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  The following tabulation summarizes certain information concerning
outstanding and exercisable options at March 28, 1997, March 27, 1998 and
March 26, 1999:

<TABLE>
<CAPTION>
                                                          Price Range
                                                -------------------------------
                                                        $ 12.00-
                                                 $9.00  $ 20.00 $20.375 $24.13
                                                ------- ------- ------- -------
<S>                                             <C>     <C>     <C>     <C>
Outstanding options as of March 28, 1997:
  Number outstanding........................... 220,000 212,000     --      --
  Weighted average exercise price.............. $  9.00 $ 14.90     --      --
  Weighted average remaining contractual life
   in years....................................     9.2     9.3

Exercisable options:
  Number exercisable...........................  20,000  45,000     --      --
  Weighted average exercise price.............. $  9.00 $ 12.69     --      --

Outstanding options as of March 27, 1998:
  Number outstanding........................... 187,750 333,500  67,000     --
  Weighted average exercise price.............. $  9.00 $ 15.23 $20.375     --
  Weighted average remaining contractual life
   in years....................................     8.2     8.3     9.4     --

Exercisable options:
  Number exercisable...........................  67,500  57,125     --      --
  Weighted average exercise price.............. $  9.00 $ 14.71 $20.375     --

Outstanding options as of March 26, 1999:
  Number outstanding........................... 150,600 436,875  67,000 145,000
  Weighted average exercise price.............. $  9.00 $ 15.75 $20.375 $ 24.13
  Weighted average remaining contractual life
   in years....................................     7.2     7.6     8.4     9.1

Exercisable options:
  Number exercisable...........................  75,300 125,744  16,750     --
  Weighted average exercise price.............. $  9.00 $ 15.61 $20.375     --
</TABLE>

  If the Company had elected to recognize compensation cost based on the fair
value of the options granted at the grant date as prescribed by SFAS No. 123,
"Accounting for Stock-Based Compensation," net income and earnings per share
would have been reduced to the pro forma amounts shown below:

<TABLE>
<CAPTION>
                                                   March 28, March 27, March 26,
                                                     1997      1998      1999
                                                   --------- --------- ---------
                                                       (In thousands, except
                                                        per share amounts)
   <S>                                             <C>       <C>       <C>
   Pro forma:
     Net income...................................  $9,888    $13,855   $17,009
     Net income per share:
       Basic......................................  $  .87    $  1.00   $  1.01
       Diluted....................................  $  .86    $   .98   $  1.01
</TABLE>

                                      37
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  The effects of applying SFAS No. 123 for purposes of determining pro forma
net income and net income per share are not likely to be representative of the
effects on reported net income for future years. The fair value of each option
grant was estimated on the date of grant using the Black-Scholes option
pricing model using the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                   March 28, March 27, March 26,
                                                     1997      1998      1999
                                                   --------- --------- ---------
   <S>                                             <C>       <C>       <C>
   Risk free interest rate........................   6.52%     5.58%     5.89%
   Expected life in years.........................      4         4         4
   Expected volatility............................   26.8%     25.5%     31.6%
   Expected dividend yield........................   0.00%     0.00%     0.00%
</TABLE>

12. Commitments and Contingencies

  The Company leases substantially all of its property and a portion of its
plant and equipment. Certain of the leases contained renewal options from two
to five years.

  Future minimum lease payments, under noncancelable operating leases with
initial terms of one year or more, are approximately as follows at March 26,
1999:

<TABLE>
<CAPTION>
                                                       Related           Total
                                                        Party          Operating
                                                       Leases   Other   Leases
                                                       ------- ------- ---------
                                                            (in thousands)
   <S>                                                 <C>     <C>     <C>
   2000............................................... $1,729  $ 9,794  $11,523
   2001...............................................  1,660    7,660    9,320
   2002...............................................  1,649    5,461    7,110
   2003...............................................  1,652    3,659    5,311
   2004...............................................  1,329    2,483    3,812
   Thereafter.........................................  1,231    1,130    2,361
                                                       ------  -------  -------
   Total minimum rental payments...................... $9,250  $30,187  $39,437
                                                       ======  =======  =======
</TABLE>

  Total rent expense amounted to $6,217,000, $7,054,000 and $10,695,000 for
fiscal 1997, 1998 and 1999, respectively, exclusive of the Company's
obligation for property taxes and insurance. Certain leases contain provisions
for rent escalation that is being amortized on a straight-line basis over the
lives of the leases.

  The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. Although occasional adverse decisions or
settlements may occur, the Company believes that the final disposition of such
matters will not have a material adverse effect on the financial position,
results of operations or cash flow of the Company.

13. Non-Recurring Expenses

  During fiscal 1999, the Company expensed approximately $1.8 million of non-
recurring expenses. These expenses relate to an approximately $700,000 write-
off of an abandoned computer project, approximately $650,000 related to costs
incurred to consolidate duplicate warehouse facilities and approximately
$450,000 related to severance payments.

  During fiscal 1998, the Company expensed $442,000 of costs related to the
Inteuro and Car Body mergers, consisting primarily of legal, accounting and
regulatory fees. Additionally, the Company incurred approximately $705,000 of
costs related to severage payments to its former Chairman and Chief Executive
Officer.

                                      38
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


14. Quarterly Results of Operations (Unaudited)

  The following is a summary of the quarterly results of operations for the
years ended March 27, 1998 and March 26, 1999.

<TABLE>
<CAPTION>
                                                    Quarter Ended
                                      -----------------------------------------
                                      June 27 September 26 December 26 March 27
                                      ------- ------------ ----------- --------
                                      (In thousands, except per share amounts)
   <S>                                <C>     <C>          <C>         <C>
   1998:
   Net Sales......................... $62,745   $63,396      $66,247   $71,414
   Gross Profit......................  26,504    27,423       29,244    30,776
   Non-recurring expenses............     705       --           323       119
   Net Income........................   3,253     3,924        3,691     3,365
   Net Income Per Share--Basic.......    0.28      0.27         0.25      0.23
   Net Income Per Share--Diluted.....    0.27      0.27         0.25      0.23
</TABLE>

<TABLE>
<CAPTION>
                                                    Quarter Ended
                                      -----------------------------------------
                                      June 26 September 25 December 25 March 26
                                      ------- ------------ ----------- --------
                                      (In thousands, except per share amounts)
   <S>                                <C>     <C>          <C>         <C>
   1999:
   Net Sales......................... $69,872   $81,438      $84,017   $96,720
   Gross Profit......................  30,338    35,034       36,958    43,567
   Non-recurring expenses............     --        402          103     1,309
   Net Income........................   3,860     4,082        4,952     4,871
   Net Income Per Share--Basic.......    0.26      0.23         0.28      0.28
   Net Income Per Share--Diluted.....    0.26      0.23         0.28      0.28
</TABLE>

  Quarterly and year-to-date computations of per share amounts are made
independently. Therefore, the sum of per share amounts for the quarters may
not agree with per share amounts for the year shown elsewhere.

                                      39
<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

  None.

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

  The following table sets forth information regarding the directors and
executive officers of the Company.

<TABLE>
<CAPTION>
                                                                       Years
                                                                      Employed
              Name            Age             Position               by Company
              ----            ---             --------               ----------
   <C>                        <C> <S>                                <C>
   Ronald G. Brown........... 62  Chairman of the Board                  31(1)

   Charles J. Hogarty........ 58  President, Chief Executive
                                   Officer and Director                  38

   Kim D. Wood............... 43  Vice President and President and
                                   Chief Operating Officer of
                                   North Star                            17(1)

   John M. Palumbo........... 43  Vice President, Treasurer, and
                                   Chief Financial Officer                3

   Christopher Northup....... 39  Vice President--Sales and
                                   Marketing                             16

   James C. Lockwood......... 61  Vice President--General Counsel
                                   and Secretary                          2

   Timothy C. McQuay (2)(3).. 47  Director                               --

   Al A. Ronco (2)........... 63  Director                               --

   George E. Seebart (2)(3).. 70  Director                               --

   Keith M. Thompson (3)..... 59  Director                               --
</TABLE>
--------
(1) Includes years of service at North Star.

(2) Member of the Audit Committee.

(3) Member of the Compensation Committee.

  RONALD G. BROWN was elected a director of the Company upon completion of the
North Star Merger pursuant to the terms of the Merger Agreement and was
elected as Chairman of the Board of Directors in May 1997. Mr. Brown served as
President of North Star from its founding in 1968 until the North Star Merger
and he is currently the Vice-President--Manufacturing of North Star. From 1982
to the present, he has been a member of the Board of Directors of First Bank
N.A. of Brainerd, Minnesota, an affiliate of North Star's primary bank lender.
Mr. Brown has served as a member of the Board of Directors and Vice President
of the Bumper Recycling Association of North America.

  CHARLES J. HOGARTY has served as the President, Chief Operating Officer and
a director of the Company since 1987 and was appointed the Chief Executive
Officer of the Company in May 1997. From his joining the Company in 1960 until
1987, Mr. Hogarty held various positions, including salesman, sales manager,
general manager and regional manager. Mr. Hogarty served as a director of the
Aftermarket Body Parts Association from 1984 to 1993, President in 1989 and
Chairman in 1990.

  KIM D. WOOD was elected President and Chief Operating Officer of North Star
upon completion of the North Star Merger in March 1997 and was elected a Vice
President of the Company in May 1997. Mr. Wood served as Vice President of
North Star from 1982 until the completion of the North Star Merger. Mr. Wood
is a member of the Aftermarket Body Parts Association and the Certified
Automotive Parts Association. From 1993 through 1995, he was the Chairman of
the Board of the Aftermarket Body Parts Association.

                                      40
<PAGE>

  JOHN M. PALUMBO joined the Company as Vice President and Treasurer in March
1996 and was appointed Chief Financial Officer in May 1997. From 1988 until he
joined the Company in 1996, Mr. Palumbo served as Chief Financial Officer,
Treasurer and Corporate Secretary of American United Global, Inc., a public
company engaged in the manufacture of certain automotive parts.

  CHRISTOPHER NORTHUP has served as Vice President--Sales and Marketing since
October 1996. From 1987 until October 1996, Mr. Northup served as the National
Marketing Director. From his joining the Company in 1983 until 1987, Mr.
Northup held the position of Publications Manager.

  JAMES C. LOCKWOOD joined the Company in April 1997 and was appointed Vice
President--General Counsel and Secretary in May 1997. From July 1985 until he
joined the Company in April 1997, Mr. Lockwood was a member of the law firm of
Troy & Gould Professional Corporation. In November 1998, Mr. Lockwood became
of counsel to the law firm of Weissmann, Wolff, Bergman, Coleman & Silverman,
LLP, located in Beverly Hills, California.

  TIMOTHY C. MCQUAY was appointed a director of the Company upon the
completion of its initial public offering in June 1996. Mr. McQuay joined A.G.
Edwards & Sons, Inc. as a Senior member of its Investment Banking Department
in July 1997, where he is currently a Managing Director. From October 1994 to
July 1997, he was Managing Director--Corporate Finance with Crowell, Weedon &
Co. From May 1993 to October 1994, Mr. McQuay was Vice President, Corporate
Development with Kerr Group, Inc., a NYSE-listed plastics manufacturing
company. From May 1990 to May 1993, Mr. McQuay was Managing Director--Merchant
Banking with Union Bank. Mr. McQuay is a director of Meade Instruments Corp.,
a publicly-held company.

  AL A. RONCO served as the Executive Vice President and Secretary of the
Company from 1987 until he retired in August 1998. From his joining the
Company in 1959 until 1987, Mr. Ronco held various positions, including
salesman, production manager, general manager and regional manager. Mr. Ronco
has been a director of the Company since 1987.

  GEORGE E. SEEBART was appointed a director of the Company upon the
completion of its initial public offering in June 1996. From 1964 until his
retirement in 1993, Mr. Seebart was employed in various executive positions
with Farmers Group, Inc., including as Senior Vice President, Field Operations
and Vice President, Sales and Marketing. Additionally, from 1987 to 1993, Mr.
Seebart was President of Mid-Century Insurance Company, a subsidiary of
Farmers Group, Inc.

  KEITH M. THOMPSON was the President and Chief Executive Officer of Republic
Automotive Parts, Inc. ("Republic") from 1986 until he resigned on November
30, 1998. Republic was acquired by the Company in June 1998. Mr. Thompson was
elected a director of the Company in March 1999. Mr. Thompson is also a
director of Acklands Limited, a Canadian automotive parts and industrial
supplies distributor, and Sirrom Capital Corporation, an investment company.

  Pursuant to the North Star Merger, certain shareholders of the Company,
including Charles J. Hogarty, Al A. Ronco and John M. Palumbo, agreed to vote
all shares held by them to maintain Ronald G. Brown as a director of the
Company.

  All directors are elected annually and serve until the next annual meeting
of shareholders or until their successors have been elected and qualified. All
officers are appointed by and serve at the discretion of the Board of
Directors, subject to employment agreements, where applicable. There are no
family relationships between any directors or officers of the Company.

  The Board of Directors has established an Audit Committee, whose members are
Messrs. McQuay, Ronco and Seebart and a Compensation Committee whose members
are Messrs. McQuay, Seebart and Thompson.

                                      41
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

  The information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Stockholders under
the captions "Election of Directors" and "Executive Compensation," and is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  The information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Stockholders under
the caption "Security Ownership," and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  The information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Stockholders under
the caption "Certain Transactions," and is incorporated herein by reference.

                                      42
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

  (a)(1) Financial Statements:

  See the Index to Item 8 above.

  (a)(2) Financial Statement Schedule:

  See (d) below.

  (a)(3) Exhibits:

  The following exhibits are filed herewith or incorporated by reference
herein:

<TABLE>
<CAPTION>
 Exhibit No.                            Description
 -----------                            -----------
 <C>         <S>
 3.1(2)      Amended and Restated Bylaws of the Registrant. [3.4]*

 3.1.1(4)    Amendment to Amended and Restated Bylaws of the Registrant.
             [3.1.1]*

 3.1.2       Amendment to Amended and Restated Bylaws of the Registrant.

 3.2(2)      Restated Articles of Incorporation of the Registrant. [3.5]*

 3.2.1(8)    Amendment to Restated Articles of Incorporation of Registrant.
             [3.2.1]*

 3.2.2       Amendment to Restated Articles of Incorporation of Registrant.

 4.1(2)      Form of stock certificate. [4.1]*

 10.1(1)     Employment Agreement dated June 20, 1996, between the Registrant
              and Charles J. Hogarty.[10.2]*

 10.2(1)     Employment Agreement dated June 20, 1996, between the Registrant
              and Al A. Ronco. [10.3]*

 10.3(3)     Employment Agreement between North Star and Ronald G. Brown.
              [10.5]*

 10.4(3)     Employment Agreement between North Star and Kim D. Wood. [10.6]*

 10.5(1)     Indemnification Agreement dated June 20, 1996 between the
              Registrant and Charles J. Hogarty. [10.6]*

 10.6(1)     Indemnification Agreement dated June 20, 1996 between the
              Registrant and Al A. Ronco. [10.7]*

 10.7(1)     Indemnification Agreement dated June 20, 1996, between the
              Registrant and John M. Palumbo. [10.9]*

 10.8(3)     Indemnification Agreement between the Registrant and Ronald G.
              Brown. [10.12]*

 10.9(3)     Indemnification Agreement between the Registrant and Kim D. Wood.
              [10.13]*s

 10.10(1)    Keystone Automotive Industries, Inc. 1996 Stock Incentive Plan,
              together with forms of incentive stock option, non-qualified
              stock option and restricted stock agreements. [10.10]*

 10.11(7)    Amendment to Registrant's 1996 Stock Incentive Plan

 10.12(1)    The Registrant's Employee Defined Benefit Pension Plan, as
              amended. [10.11]*

 10.13(1)    The Registrant's Employee Stock Ownership Plan, as amended.
              [10.12]*

 10.14(1)    Lease Agreement, dated January 5, 1995, between V-JAC Properties,
              Ltd. and the Registrant. [10.14]*

 10.15(1)    Lease Agreement, dated January 5, 1995, between B-J Properties,
              Ltd. and the Registrant. [10.15]*

 10.16(1)    Lease and Option Agreement, dated April 1, 1995, between Benton
              Real Properties, Inc. and the Registrant. [10.16]*
</TABLE>

                                       43
<PAGE>



<TABLE>
<CAPTION>
 Exhibit No.                             Description
 -----------                             -----------
 <C>         <S>
 10.17(1)    Lease and Option Agreement, dated January 1, 1991, between Benton
              Real Properties, Inc. and the Registrant. [10.17]*

 10.18(1)    Lease Agreement, dated January 5, 1995, between V-JAC Properties,
              Ltd. and the Registrant. [10.18]*

 10.19(3)    Letter Agreement dated January 15, 1996, between Registrant and
              Crowell, Weedon & Co. [10.34]*

 10.20(3)    Affiliate Agreement dated December 6, 1996, among the Registrant,
              North Star Plating Company, Ronald G. Brown and Kim D. Wood.
              [10.35]*

 10.21(3)    Form of Registration Rights Agreement among the Registrant, North
              Star Plating Company, Ronald G. Brown and Kim D. Wood [10.36]*

 10.22(3)    Voting Agreement dated December 6, 1996, among the Registrant,
              North Star Plating Company, Virgil K. Benton, II, Charles J.
              Hogarty, Al A. Ronco, Robert L. Blanton and John M. Palumbo.
              [10.37]*

 10.23(3)    Credit Agreement dated March 25, 1997 between the Registrant and
              Mellon Bank, N.A. [10.38]*

 10.24(7)    Amendment No. 1 to Credit Agreement between the Registrant and
              Mellon Bank, N.A.

 10.25(7)    Amendment No. 2 to Credit Agreement between the Registrant and
              Mellon Bank, N.A.

 10.25       Amendment No. 3 to Credit Agreement between the Registrant and
              Mellon Bank, N.A.

 10.26       Amendment No. 4 to Credit Agreement between the Registrant and
              Mellon Bank, N.A.

 10.27(3)    Agreement and Plan of Merger among the Registrant, North Star
              Merger, Inc., North Star Plating Company, Ronald G. Brown and Kim
              D. Wood dated December 6, 1996. [2.1]*

 10.28(4)    Resignation Agreement and General Release effective as of May 23,
              1997 between the Registrant and Virgil K. Benton II. [10.40]*

 10.29(4)    Lease Agreement, dated January 1, 1995, between North Star and the
              spouses of Ronald G. Brown and Kim D. Wood. [10.41]*

 10.30(4)    Lease Agreement, dated January 1, 1995, between North Star and the
              spouse of Ronald G. Brown and a third party. [10.42]*

 10.31(4)    Lease Agreement, dated January 1, 1995, between North Star and a
              partnership owned by Kim D. Wood and an employee of North Star.
              [10.43]*

 10.32(4)    Lease Agreement, dated May 20, 1996, between North Star and a
              partnership owned by the spouses of Ronald G. Brown and Kim Wood
              and the Brown Family Limited Partnership. [10.44]*

 10.33(6)    Agreement and Plan of Merger dated as of November 14, 1997 by and
              among Registrant, Inteuro Merger, Inc., Inteuro Parts
              Distributors, Inc., Leon Schigiel and Joseph Bick [10.45]

 10.34(5)    Agreement and Plan of Merger dated February 17, 1998 among
              Registrant, KAI Merger, Inc. and Republic Automotive Parts, Inc.

 10.35(9)    Stock Acquisition Agreement dated August 3, 1998 by and among the
              Registrant, Republic Automotive Parts, Inc., Republic Automotive
              Parts Distribution, Inc. and General Parts, Inc. [2.1]*

 21.1        Subsidiaries.

 23.1        Consent of Ernst & Young LLP, independent auditors of Registrant

 27.1        Financial Data Schedule.
</TABLE>
--------
 * Indicates the exhibit number of the document in the original filing.

(1) Filed as an exhibit to the Registration Statement on Form S-1 filed with
    the Securities and Exchange Commission on April 18, 1996 (File No. 333-
    3994).

(2) Filed as an exhibit to Amendment No. 2 to the Registration Statement on
    Form S-1 filed with the Securities and Exchange Commission on June 17,
    1996.

                                      44
<PAGE>

(3) Filed as an exhibit to the Registration Statement on Form S-4 filed with
    the Securities and Exchange Commission on December 23, 1996 (File No. 333-
    18663).

(4) Filed as an exhibit to the Registration Statement on Form S-1 filed with
    the Securities and Exchange Commission on June 6, 1997 (File No. 333-
    28709).

(5) Filed as an exhibit to Registrant's Form 8-K filed with the Securitities
    and Exchange Commission on February 19, 1998.

(6) Filed as an exhibit to Registrant's Form 8-K filed with the Securities and
    Exchange Commission on January 9, 1998.

(7) Filed as an exhibit to Registrant's Registration Statement on Form S-4
    filed with the Securities and Exchange Commission on May 18, 1998 (File
    No. 333-52969)

(8) Filed as an exhibit to Registrant's Form 10-K filed with the Securities
    and Exchange Commission on June 24, 1998.

(9) Filed as an exhibit to Registrant's Form 8-K filed with the Securities and
    Exchange Commission on September 14, 1998.

  (b) Reports on Form 8-K:

  There were no reports on Form 8-K filed during the last quarter of the
fiscal year ended March 26, 1999.

  (c) Exhibits:

  See (a)(3) above.

  (d) Financial Statement Schedules:

  Schedule II--Valuation and Qualifying Accounts

  All other schedules are omitted because they are not applicable or the
required information is shown in the Registrant's financial statements or the
related notes thereto.

                                      45
<PAGE>

                         KEYSTONE AUTOMOTIVE INDUSTRIES

                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>
                                         Additions
                                   ---------------------
                        Balance at Charged to Charged to
                        Beginning  Costs and    Other               Balance at
      Description        of Year    Expenses   Accounts  Deductions End of Year
      -----------       ---------- ---------- ---------- ---------- -----------
<S>                     <C>        <C>        <C>        <C>        <C>
Year ended March 28,
 1997
  Allowance for
   uncollectible
   accounts............    $440       $747       $--        $455       $732
Year ended March 27,
 1998
  Allowance for
   uncollectible
   accounts............    $732       $372       $--        $511       $593
Year ended March 26,
 1999
  Allowance for
   uncollectible
   accounts............    $593       $601       $249       $481       $962
</TABLE>
--------
(1)Uncollectible accounts written off, net of recoveries.

<TABLE>
<CAPTION>
                                          Additions
                                    ---------------------
                         Balance at Charged to Charged to
                         Beginning  Costs and    Other               Balance at
      Description         of Year    Expenses   Accounts  Deductions End of Year
      -----------        ---------- ---------- ---------- ---------- -----------
<S>                      <C>        <C>        <C>        <C>        <C>
Year ended March 28,
 1997
  Allowance for slow-
   moving inventory.....   $  495      $322       $--        $307      $  510
Year ended March 27,
 1998
  Allowance for slow-
   moving inventory.....   $  510      $495       $629       $444      $1,190
Year ended March 26,
 1999
  Allowance for slow-
   moving inventory.....   $1,190      $251       $156       $ 75      $1,522
</TABLE>

                                       46
<PAGE>

                                  SIGNATURES

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

                                          KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                                                /s/ Charles J. Hogarty
                                          By: _________________________________
                                                    Charles J. Hogarty,
                                                         President

Dated: June 22, 1999

  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this Annual Report has been signed by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
             Signature                           Title                  Date
             ---------                           -----                  ----

<S>                                  <C>                           <C>
     /s/ Charles J. Hogarty          President, Chief Executive     June 22, 1999
____________________________________  Officer and Director
         Charles J. Hogarty

      /s/ John M. Palumbo            Vice President and Treasurer   June 22, 1999
____________________________________  (Principal Financial and
          John M. Palumbo             Accounting Officer)

      /s/ Ronald G. Brown            Director                       June 22, 1999
____________________________________
          Ronald G. Brown

     /s/ Timothy C. McQuay           Director                       June 22, 1999
____________________________________
         Timothy C. McQuay

        /s/ Al A. Ronco              Director                       June 22, 1999
____________________________________
            Al A. Ronco

     /s/ George E. Seebart           Director                       June 22, 1999
____________________________________
         George E. Seebart

                                     Director
____________________________________
         Keith M. Thompson
</TABLE>

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