<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                   FORM 10-Q

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934.
               For the quarterly period ended: December 31, 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)


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

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

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

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    .
                                        ---     ---

The number of shares outstanding of the registrant's Common Stock, no par value,
at December 31, 1999 was 15,365,000 shares.

This Form 10-Q contains 14 pages.

                                       1
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                                     INDEX
                                     -----

<TABLE>
<CAPTION>
                                                                                      Page Number
<S>                                                                                   <C>
PART I.          FINANCIAL INFORMATION

Item  1.     Financial Statements

             Condensed Consolidated Balance Sheets                                          3

                 December 31, 1999 (unaudited) and March 26, 1999

             Condensed Consolidated Statements of Income (unaudited)                        4

                 Thirteen weeks and forty weeks ended  December 31, 1999
                 Thirteen weeks and thirty-nine weeks ended December 25, 1998

             Condensed Consolidated Statements of Cash Flows (unaudited)                    5

                 Forty weeks ended December 31, 1999 and
                 thirty-nine weeks ended December 25, 1998

             Notes to Condensed Consolidated Financial Statements (unaudited)               6

Item  2.     Management's Discussion and Analysis of Financial Condition and                8
             Results of Operations
Item  3.     Quantitative and Qualitative Disclosure About Market Risks                    11

PART II          OTHER INFORMATION

Item  1.     Legal Proceedings                                                             11

Item  2.     Changes in Securities and Use of Proceeds                                     11

Item  3.     Defaults upon Senior Securities                                               11

Item  4.     Submission of Matters to a Vote of Security Holders                           11

Item  5.     Other Information                                                             12

Item  6.     Exhibits and Reports on Form 8-K                                              13

Signatures                                                                                 14
</TABLE>

                                       2
<PAGE>

                     Keystone Automotive Industries, Inc.
                     Condensed Consolidated Balance Sheets
                     (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                  December                  March 26, 1999
                                                                                  31,1999                       (Note)
                                                                                 (Unaudited)
                                                                                 -----------                --------------
<S>                                                                              <C>                        <C>
                               ASSETS
Current Assets:
  Cash and cash equivalents                                                       $  4,724                     $  17,784
  Accounts receivable, net of allowance of $1,376 at December 1999
   and $962 at March 1999                                                           26,681                        30,256
  Inventories, primarily finished goods                                             87,214                        72,284
  Other current assets                                                              11,752                        11,557
                                                                                  --------                      --------
    Total current assets                                                           130,371                       131,881

Plant, property and equipment, net                                                  22,937                        19,367
Goodwill, net of accumulated amortization of $2,815 at December 1999
 and $1,583 at March 1999                                                           37,142                        36,262
Other intangibles, net of accumulated amortization of $3,005 at
 December 1999 and $2,167 at March 1999                                              2,426                         1,874
Other assets                                                                         4,973                         4,710
                                                                                  --------                      --------
    Total Assets                                                                  $197,849                      $194,094
                                                                                  ========                      ========
                 LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
  Credit Facility                                                                 $ 22,138                      $     --
  Bankers acceptances                                                                   --                         2,961
  Accounts payable                                                                  13,273                        14,859
  Accrued liabilities                                                                5,815                         8,531
  Current portion of long-term debt                                                    135                           200
                                                                                  --------                      --------
    Total current liabilities                                                       41,361                        26,551

  Long-term debt, less current portion                                                 152                           100
  Other long-term liabilities                                                        2,540                         2,679
  Deferred taxes                                                                     1,559                         1,559


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: 15,365,000 at December 1999 and
     16,858,000 at March 1999                                                       84,445                       105,436
  Additional paid-in capital                                                         1,223                         1,223
  Retained earnings                                                                 67,096                        57,073

  Accumulated other comprehensive loss                                                (527)                         (527)
                                                                                  --------                      --------
    Total shareholders' equity                                                     152,237                       163,205
                                                                                  --------                      --------
    Total liabilities and shareholders' equity                                    $197,849                      $194,094
                                                                                  ========                      ========
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

NOTE:  The balance sheet at March 26, 1999 has been derived from the audited
       consolidated financial statements at that date, but does not include all
       of the information and footnotes required by generally accepted
       accounting principles for complete financial statements.

                                       3
<PAGE>

                     Keystone Automotive Industries, Inc.
                  Condensed Consolidated Statements of Income
                     (In thousands, except share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                         Thirteen Weeks           Thirteen                 Forty              Thirty-nine
                                              Ended             Weeks Ended             Weeks Ended           Weeks Ended
                                          December 31,          December 25,            December 31,          December 25,
                                              1999                  1998                    1999                  1998
                                         --------------         ------------            ------------          ------------
<S>                                      <C>                    <C>                     <C>                   <C>
Net sales                                 $    86,197           $    84,017             $   280,079           $   235,327
Cost of sales                                  48,970                47,059                 158,663               132,997
                                          -----------           -----------             -----------           -----------
Gross profit                                   37,227                36,958                 121,416               102,330

Operating expenses:
  Selling and distribution                     27,226                22,935                  82,648                64,747
  General and administrative                    7,971                 6,590                  23,194                17,717
  Service Center consolidation costs               --                   103                      --                   505
                                          -----------           -----------             -----------           -----------
Operating income                                2,030                 7,330                  15,574                19,361
Other income                                      564                   973                   1,883                 2,155
Interest expense, net                            (328)                   (3)                   (469)                  (26)
                                          -----------           -----------             -----------           -----------
Income before income taxes                      2,266                 8,300                  16,988                21,490
Income taxes                                      929                 3,348                   6,965                 8,596
                                          -----------           -----------             -----------           -----------
Net income                                $     1,337           $     4,952             $    10,023           $    12,894
                                          ===========           ===========             ===========           ===========

Earnings per share:
  Basic                                   $      0.09           $      0.28             $      0.62           $      0.78
                                          ===========           ===========             ===========           ===========
  Diluted                                 $      0.09           $      0.28             $      0.62           $      0.77
                                          ===========           ===========             ===========           ===========

Weighted average shares outstanding:
  Basic                                    15,425,000            17,603,000              16,104,000            16,605,000
                                          ===========           ===========             ===========           ===========
  Diluted                                  15,425,000            17,779,000              16,133,000            16,837,000
                                          ===========           ===========             ===========           ===========
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       4
<PAGE>

                     Keystone Automotive Industries, Inc.
                Condensed Consolidated Statements of Cash Flows
                                (In thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                            Forty                 Thirty-nine
                                                                                         Weeks Ended              Weeks Ended
                                                                                      December 31, 1999        December 25, 1998
                                                                                      -----------------        -----------------
<S>                                                                                   <C>                      <C>
Operating activities
Net income                                                                                $ 10,023                 $ 12,894
Adjustments to reconcile net income to net cash used in operating
 activities:
Depreciation and amortization                                                                5,430                    3,282
Deferred taxes                                                                                  --                      719
Provision for losses on uncollectible accounts                                                 392                      266
Provision for losses on inventory                                                              194                       --
Gain on sale of assets                                                                           7                      (16)
Changes in operating assets and liabilities:
     Accounts receivable                                                                     4,596                   (1,039)
     Inventories                                                                           (12,764)                     507
     Other assets                                                                             (448)                  (8,433)
     Accounts payable and accrued liabilities                                               (4,441)                  (7,597)
                                                                                          --------                 --------

Net cash provided by operating activities                                                    2,989                      583

Investing activities
Proceeds from sale of assets                                                                   175                   50,261
Purchases of property, plant and equipment                                                  (5,568)                  (3,603)
Cash paid for acquisitions                                                                  (8,829)                  (3,114)
                                                                                          --------                 --------
Net cash (used in) provided by investing activities                                        (14,222)                  43,544

Financing activities
Borrowings on credit facility                                                               22,138                  (19,477)
Bankers acceptances and other short-term debt, net                                          (2,961)                     666
Principal payments on long-term debt                                                           (13)                    (262)
Repurchases of common stock                                                                (21,092)                  (1,594)
Net proceeds on option exercise                                                                101                    1,694
                                                                                          --------                 --------
Net cash used in financing activities                                                       (1,827)                 (18,973)
                                                                                          --------                 --------

Net (decrease) increase in cash and cash equivalents                                       (13,060)                  25,154

Cash and cash equivalents at beginning of period                                            17,784                   10,859
Cash from Republic stock acquisition                                                            --                    5,365
                                                                                          --------                 --------
Cash and cash equivalents at end of period                                                $  4,724                 $ 41,378
                                                                                          ========                 ========

Supplemental disclosures
     Interest paid during the period                                                      $    236                 $    213
                                                                                          ========                 ========
     Income taxes paid during the period                                                  $  6,838                 $  8,719
                                                                                          ========                 ========
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       5
<PAGE>

                     Keystone Automotive Industries, Inc.

             Notes to Condensed Consolidated Financial Statements
             ----------------------------------------------------
                                  (Unaudited)
                               December 31, 1999


1.   Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions of Form 10-Q and Article
10 of Regulation S-X.  Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments, consisting
only of normal recurring accruals, considered necessary for fair presentation,
with respect to the interim financial statements have been included.  The
results of operations for the 40-week period ended December 31, 1999 are not
necessarily indicative of the results that may be expected for the full year
ending March 31, 2000.  For further information, refer to the financial
statements and footnotes thereto for the year ended March 26, 1999, included in
the Company's Form 10-K filed with the Securities and Exchange Commission on
June 24, 1999.


2.   Fiscal Year

     The Company uses a 52/53 week fiscal year.  The Company's fiscal year ends
on the last Friday of March.  The nine-month periods ended December 31, 1999 and
December 25, 1998, included 40-week and 39-week periods, respectively


3.   Income Taxes

     The income tax provision for interim periods is based on an estimated
effective annual income tax rate.


4.   Financing Arrangements

     The Company maintains a revolving line of credit with a commercial lender
that provides a $30,000,000 unsecured credit facility that expires, as amended,
in September 2000. 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 of credit charge of 0.125%. At December 31, 1999, $22.1
million was 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
December 31, 1999.


5.   Acquisitions

     On June 27, 1998, the Company completed its acquisition 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 has
been accounted for under the purchase method of accounting.

     In addition, during fiscal 1999, subsequent 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 results of operations
of the Company include the results of the acquired companies from the date of
acquisition.

                                       6
<PAGE>

     During the 40-week period ended December 31, 1999, the Company completed
four acquisitions for approximately $8.8 million in cash.  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 $2.1 million and has been
recorded as goodwill and is being amortized over 15 years.  The unaudited pro
forma results for fiscal 2000, assuming these four acquisitions had been made at
the beginning of fiscal 2000, would not have been materially different from the
results presented above.


6.   Shareholders Equity

     In actions taken in September 1998, March 1999 and July 1999, the Board of
Directors authorized management of the Company to purchase up to an aggregate of
2,500,000 shares of its common stock at such times and at such prices as the
President and Chief Financial Officer deemed appropriate.  In October 1999, the
Board of Directors authorized management of the Company to purchase up to an
additional $10 million of its Common Stock.  Through December 31, 1999, the
Company had repurchased an aggregate of 2,514,138 shares of its common stock at
an average cost of $15.88 per share.


7.   Subsequent Event

     In July 1997, certain individuals 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 the damage to insured vehicles.  The Williamson County Court
certified a near-nationwide class.  It was alleged that this practice breaches
State Farm's insurance agreements with its policyholders and is a violation of
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 their
policy.  While the Company was 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 the use in repairing automobiles, the vast
majority of which are covered by insurance policies.  In October 1999, the jury
awarded the class damages in the amount of approximately $460 million and the
judge assessed punitive damages against State Farm of over $700 million.  State
Farm has appealed the verdict.

     As a result of the verdict in the State Farm Mutual Automobile Insurance
Company class action, State Farm, Nationwide Insurance and Farmers Insurance
have temporarily suspended specifying the use of many aftermarket collision
replacement parts in connection with the repair of  vehicles which they insure.
These suspensions have had a material adverse effect on the Company's revenues
and earnings.  Because these suspensions occurred very recently, it is difficult
for the Company to quantify the extent of the future impact on the Company.  If
other insurance companies follow suit and institute suspensions, the suspensions
would likely have a further material adverse effect on to the Company's
operations.  There can be no assurance as to when, if ever, State Farm,
Nationwide Insurance or Farmers Insurance will resume specifying parts of the
type the Company distributes.

                                       7
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

     Except for the historical information contained herein, certain matters
addressed in this Item 2 constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended.  Such forward-looking
statements are subject to a variety of risks and uncertainties that could cause
actual results to differ materially from those anticipated by the Company's
management.  The Private Securities Litigation Reform Act of 1995 (the "Act")
provides certain "safe harbor" provisions for forward-looking statements.  All
forward-looking statements made in this Quarterly Report on Form 10-Q are made
pursuant to the Act and are subject to the cautionary statements set forth
herein.

General
-------

     The year-to-date results of operations for the period ended December 31,
1999 reflect a 40-week period whereas the comparable period in the prior fiscal
year reflects a 39-week period.  Consequently, comparisons of these results may
not be meaningful.

     The results of operations for the 40-week period ended December 31, 1999
include the results with respect to nine acquisitions completed subsequent to
December 25, 1998, accounted for as "purchases," whereas the 39-week period
ended December 25, 1998 does not include any results of operations for those
acquired entities.  Such acquisitions include the acquisition of the Midwest
Bumper group of companies effective January 4, 1999 and the acquisition of the
Nordan Products group of companies effective May 10, 1999.  In addition, the
results of operations for the 39-week period ended December 25, 1998, include
the results for Republic only for the period subsequent to the acquisition
(June 27, 1998), whereas the results of operations for the 40-week period ended
December 31, 1999, include the results for Republic for the entire period.

     As a result of the verdict in the State Farm class action in October 1999,
State Farm, Nationwide Insurance and Farmers Insurance have temporarily
suspended specifying the use of many aftermarket collision replacement parts in
connection with the repair of vehicles which they insure. See "Part II-Other
Information-Item 5b" below. These suspensions have had a material adverse effect
on the Company's revenues and earnings for the 13-week and 40-week periods ended
December 31, 1999.

                                       8
<PAGE>

                     KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

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>
                                               Thirteen             Thirteen               Forty        Thirty-Nine
                                             Weeks Ended          Weeks Ended           Weeks Ended     Weeks Ended
                                             December 31,         December 25,          December 31,    December 25,
                                                 1999                 1998                  1999            1998
                                             ------------         ------------          ------------    ------------
<S>                                          <C>                  <C>                   <C>             <C>
Net sales                                       100.0%               100.0%                100.0%          100.0%
Cost of sales                                    56.8                 56.0                  56.6            56.5
                                                -----                -----                 -----           -----
Gross profit                                     43.2                 44.0                  43.4            43.5
Selling and distribution expenses                31.6                 27.3                  29.5            27.5
General and administrative expenses               9.2                  7.8                   8.3             7.5
Service Center consolidation costs                0.0                  0.1                   0.0             0.2
Other income                                      0.7                  1.1                   0.7             0.9
Interest expense, net                            (0.4)                 0.0                  (0.2)            0.0
                                                -----                -----                 -----           -----
Income before income taxes                        2.7                  9.9                   6.1             9.2
Income taxes                                      1.1                  4.0                   2.5             3.7
                                                -----                -----                                 -----
Net income                                        1.6%                 5.9%                  3.6%            5.5%
                                                =====                =====                 =====           =====
</TABLE>

Thirteen Weeks Ended December 31, 1999 Compared to Thirteen Weeks Ended December
--------------------------------------------------------------------------------
25, 1998.
---------

     Net sales were $86.2 million for the quarter ended December 31, 1999 (the
"1999 Quarter") compared to $84.0 million for the quarter ended December 25,
1998 (the "1998 Quarter"), an increase of $2.2 million or 2.6%.  This increase
reflects a decrease of $0.3 million in sales of automotive body parts (including
fenders, hoods, headlights, radiators, grilles and other crash parts), an
increase of $1.1 million in sales of new and recycled bumpers and an increase of
$1.0 million in sales of paint and related materials, which changes represent
increases (decreases) of approximately (0.9%), 4.4% and 7.9%, respectively,
compared to the 1998 Quarter. The increases were attributable primarily to an
increase in the number of service centers in operation due primarily to
acquisitions and startup operations and an increase in unit volume.  The
decrease in sales of automotive body parts is primarily the result of the
actions by State Farm, Nationwide Insurance and Farmers Insurance in suspending
the use of certain aftermarket collision replacement parts.  As a result of the
State Farm verdict, the Company believes that it has encountered pricing
pressure and expects the pressure to continue over at least the next few
quarters.  In addition, the Company sold approximately $5.6 million of
remanufactured alloy wheels in the 1999 Quarter compared to $4.4 in the prior
year period, an increase of 26.3%.

     Gross profit increased in the 1999 Quarter to $37.2 million (43.2% of net
sales) from $37.0 million (44.0% of net sales) in the 1998 Quarter, an increase
of 0.7%, primarily as a result of the increase in net sales.  The Company's
decrease in gross profits as a percentage of net sales in the 1999 Quarter
primarily reflects the pricing pressure described above, an increase in freight
costs with respect to products shipped from overseas and a decrease in sales of
automotive body parts which have a higher margin compared to other products like
paint which has a lower margin.

     Selling and distribution expenses increased to $27.2 million (31.6% of net
sales) in the 1999 Quarter from $22.9 million  (27.3% of net sales) in the 1998
Quarter, an increase of 18.7%.  The increase in these expenses as a percentage
of net sales was generally the result of acquisitions and several new start up
operations and deleveraging effect caused by reduced revenues without a
corresponding reduction in expenses.  Throughout the 1999 Quarter, the Company
reviewed and reduced expenses where appropriate, mainly related to headcount.

                                       9
<PAGE>

     General and administrative expenses increased to $8.0 million (9.2% of net
sales) in the 1999 Quarter from $6.6 million (7.8% of net sales) in the 1998
Quarter, an increase of 21.0%.  The increase in these expenses as a percentage
of net sales was generally the result of acquisitions, including, but not
limited to, an increase in the amounts of amortization of goodwill and covenants
not to compete, and costs associated with several new start-up operations.

Forty Weeks Ended December 31, 1999 Compared to Thirty-nine Weeks Ended December
25, 1998.

     Net sales were $280.1 million for the forty weeks ended December 31, 1999
(the "99 Nine Months") compared to $235.3 million for the thirty-nine weeks
ended December 25, 1998 (the "98 Nine Months") an increase of $44.8 million or
19.0%. This increase was made up of increases of $19.8 million in sales of
automotive body parts (including fenders, hood, headlights, radiators, grilles,
and other crash parts), $16.4 million in sales of new and recycled bumpers and
$5.5 million in sales of paint and related materials, which increases represent
increases of approximately 19.3%, 22.7% and 14.6%, respectively, over the
comparable period in the prior fiscal year. In addition, the Company sold
approximately $16.6 million of manufactured alloy wheels in the 99 Nine Months
compared to $12.1 million in the 98 Nine Months, an increase of 37.5%. Increased
net sales were attributable primarily to the increase in the number of service
centers in operations as a result of acquisitions and an increase in unit
volume, and price increases in certain parts of the country. As a result of the
State Farm verdict, the Company has encountered reduced sales of automotive body
parts and pricing pressure and expects the pricing pressure to continue over at
least the next few quarters.

     Gross profit increased in the 99 Nine Months to $121.4 million (43.4% of
net sales) from $102.3 million (43.5% of net sales) in the 98 Nine Months, an
increase of 18.7%, primarily as a result of the increase in net sales.  The
Company's gross profit margin decreased slightly during the 99 Nine Months.  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
(such as occurred in the third quarter as a result of the State Farm verdict),
acquisitions, competition and currency exchange rates.  See the comparison of
the third quarter periods above for a discussion of the recent erosion in the
gross profit margin.

     Selling and distribution expenses increased to $82.6 million (29.5% of net
sales) in the 99 Nine Months from $64.7 million (27.5% of sales) in the 98 Nine
Months, an increase of 2.7%.  The increase in these expenses as a percentage of
net sales was due in part to certain costs associated with consolidating and
assimilating acquisitions and several new start-up operations.

     General and administrative expenses increased to $23.2 million (8.3% of
net sales) in the 99 Nine Months from $17.7 million (7.5% of net sales) in the
98 Nine Months, an increase of 31.0%.  The increase in these expenses as a
percentage of net sales was primarily the result of acquisitions, costs
associated with several new start-up operations and Y2K compliance costs.

     As a result of the above factors, net income decreased to $10.0 million
(3.6% of net sales) in the 99 Nine Months from $12.9 million (5.5% of net sales)
in the 98 Nine Months.  The decrease in net income as a percentage of net sales
was primarily the result of increased operating expenses and a decrease in gross
profit as a percentage of sales.

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 the
Company'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 impact of seasonality has been reduced
somewhat as the Company has become 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, acquisitions and the stock buyback program. At December 31, 1999,
working capital was $89.0 million compared to $105.3 million at March 26, 1999.
The decrease in working capital was primarily the result of a decrease in cash
and an increase in the outstanding indebtedness under the Company's credit
facility.  The cash and borrowings were used to finance the repurchase of the
Company's Common Stock, to complete acquisitions and to finance the increase in
inventory, which increased to $87.2 million at December 31, 1999 from $72.3
million at March 26,

                                       10
<PAGE>

1999. 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 decrease in shareholders'
equity from $163.2 million at March 26, 1999 to $152.2 million at December 31,
1999 was the result of the Company's repurchasing and retiring shares of its
Common Stock.

     During fiscal 1999, the Company initiated a stock repurchase program, which
was increased by the Board of Directors during Fiscal 2000.  From the beginning
of the stock repurchase program through December 31, 1999, the Company
repurchased an aggregate of 2,514,138 shares for $39.9 million, or an average of
$15.88 per share.

     The Company has in place a revolving line of credit with its commercial
lender that provides for a $30 million unsecured credit facility that expires in
September 2000. Advances under the revolving line of credit bear interest at
LIBOR plus 0.75%. At December 31, 1999, $22.1 million had been drawn down
under the line of credit. The line of credit is subject to certain restrictive
covenants set forth in a loan agreement, which requires that the Company
maintain certain financial ratios. The Company was in compliance with all
covenants as of December 31, 1999 and as of the date of the filing of this
Quarterly Report.

     During the 40 weeks ended December 31, 1999, the Company's cash and cash
equivalents decreased by $13.1 million.  This decrease was the result of an
increase in cash provided by operating activities of $2.9 million from a variety
of sources, primarily net income, which was more than offset by decreases in (i)
cash used in investing activities of $14.2 million, primarily relating to the
consummation of acquisitions for cash and the purchase of property, plant and
equipment and (ii) cash used in financing activities of $1.8 million, primarily
as a result of the repurchase of shares of the Company's Common Stock and the
paydown of bankers acceptances, offset by borrowings under the credit facility.

     While the Company believes that consolidation among independent
distributors of aftermarket collision parts continues to create opportunities
for the Company to acquire service centers in new and existing markets, it is
unlikely that the Company will acquire additional companies over the next 12
months, primarily as a result of the impact of the State Farm verdict. However,
if extraordinary opportunities arise, the Company will consider them.

     The Company believes that its existing working capital, potential cash flow
from operations and funds available under its line of credit will enable it to
finance its operations for at least the next 12 months.

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 profitability.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE 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

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.  None
          -----------------

Item 2.   Changes in Securities and Use of Proceeds.   None
          ------------------------------------------

Item 3.   Defaults Upon Senior Securities.   None
          -------------------------------

Item 4.   Submission of Matters to a Vote of Security Holders. None
          ---------------------------------------------------

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<PAGE>

Item 5.   Other Information.
          -----------------

          a. Management Information Systems. In January 1998, the Company
purchased a comprehensive 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 software package to be installed on an enterprise
basis. To date, the Company has expended an aggregate of approximately $4.5
million on hardware and software relating to the installation of the software
package and estimates that it will spend an additional $2.5 million over the
next 18 months to complete the installation and to make the system fully
operational. As the Company is still in the implementation phase 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, from
cash flow from operations or borrowings under the credit facility.

          The costs of the projects described above 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 time or cost 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, and the inherent difficulty in integrating new computer systems
into the Company's existing operations.

          b.  Legal Actions Against Insurance Companies Relating to the Use of
Aftermarket Collision Replacement Parts.  In July 1997, certain individuals
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 the damage to
insured vehicles. The Williamson County Court certified a near-nationwide class.
It was alleged that this practice breaches State Farm's insurance agreements
with its policyholders and is a violation of 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 their policy. While the Company was
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 the use in repairing automobiles, the vast majority of which are covered by
insurance policies.

          In October 1999, after a lengthy trial, the jury awarded the class
damages in the amount of approximately $460 million and the judge assessed
punitive damages against State Farm of over $700 million.  State Farm has
appealed the verdict.

          In the meantime, the Company understands that numerous class actions
have been brought against many of the other automobile insurance companies. The
Company is unaware of the exact status of these cases. In addition, the Company
understands that attorneys have sued several insurance companies alleging fraud
in setting up the Certified Automobile Parts Association ("CAPA"). CAPA is a
non-profit association of insurance companies, manufacturers, distributors,
collision repair shops and consumer groups which, using an independent testing
laboratory, compares the functional equivalence of OEM and non-OEM crash parts.

          Shortly after the verdict in the Williamson County case, State Farm
suspended specifying most non-OEM crash parts used in connection with repairing
cars covered by their insurance.  Effective November 8, 1999, Nationwide
Insurance and Farmers Insurance also  temporarily suspended specifying many non-
OEM crash parts.  The action of these insurance companies has had a material
adverse impact on the Company's sales and net income and if other insurance
companies follow suit and the State Farm decision is not overruled, the
magnitude of the negative impact on the Company would likely increase.  See
"Management Discussion and Analysis of Financial Condition and Result of
Operations-General" above.

          The Company 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."  In addition, the Company guarantees the parts it
distributes for as long as the owner at the time repairs are made continues to
own the vehicle.

          In the event that the State Farm verdict is repeated in other cases,
and these cases are not overturned on appeal, with the result that non-OEM crash
parts can no longer be specified by insurance companies to repair insured
vehicles, the cost to consumers will be substantial. Once again, OEM's would
likely have monopoly pricing power with respect to many of the products required
to repair damaged vehicles.

                                       12
<PAGE>

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

          a.   Exhibits - Exhibit 10.36 - Amendment No. 5 to Credit Agreement
                 between the Registrant and Mellon Bank, N.A.

                 Exhibit 27 Financial Data Schedule

          b.   Reports on Form 8-K - None

                                       13
<PAGE>

                                  SIGNATURES

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



                              KEYSTONE AUTOMOTIVE INDUSTRIES, INC.

                         By:  /S/ John M. Palumbo
                              -------------------
                              John M. Palumbo
                              Chief Financial Officer
                              (Duly Authorized Officer and Principal Financial
                              and Accounting Officer)

Date:  February 14, 2000

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