SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

       (X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999


                         Commission File Number 0-23222

                               FINISHMASTER, INC.
             (Exact Name of Registrant as Specified in its Charter)

                    Indiana                                     38-2252096
        (State or other Jurisdiction of                      (I.R.S.  Employer
        Incorporation or Organization)                    Identification Number)

54 Monument Circle, Suite 600, Indianapolis, IN                    46204
   (Address of principal executive offices)                     (Zip Code)

       Registrant's Telephone Number, including area code: (317) 237-3678

        Securities registered pursuant to Section 12(b) of the Act: None

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

                                                    Name of each exchange on
        Title of each class                             which registered
        -------------------                             ----------------
 Common Stock - without par value                      Nasdaq Stock Market

Indicate  by check  mark  whether  the  registrant  (1) has  filed  all  annual,
quarterly and other  reports  required to be filed by Section 13 or 15(d) of the
Securities  Exchange Act of 1934 during the preceding  twelve months and (2) has
been subject to the filing requirements for at least 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 this Form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant as of March 1, 2000 was $14,793,928.

At  March  1,  2000,   7,539,140  shares  of  Registrant's   common  stock  were
outstanding.

                       Documents Incorporated By Reference

Portions of the annual proxy  statement for the year ended December 31, 1999 are
incorporated by reference into Part III.


<PAGE>




                               FINISHMASTER, INC.

                           ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS

ITEM                                                                        PAGE

1      Business............................................................   3

2      Properties..........................................................   7

3      Legal Proceedings...................................................   8

4      Submission of Matters to a Vote of Security Holders.................   8

5      Market for Registrant's Common Equity and
            Related Shareholder Matters....................................   9

6      Selected Consolidated Financial Data................................  10

7      Management's Discussion and Analysis of
            Financial Condition and Results of Operations..................  11

8      Financial Statements and Supplemental Data..........................  17

9      Changes in, and Disagreements with Accountants on
            Accounting and Financial Disclosure............................  32

10     Directors and Executive Officers of the Registrant..................  32

11     Executive Compensation..............................................  32

12     Security Ownership of Certain Beneficial Owners and Management......  33

13     Certain Relationships and Related Transactions......................  33

14     Exhibits, Financial Statement Schedules, and
            Reports on Form 8-K............................................  33

       Signatures..........................................................  34






<PAGE>

                                     PART I

ITEM 1 - BUSINESS

General

We are the leading  independent  distributor of automotive paints,  coatings and
paint-related accessories primarily to the automotive collision repair industry.
As of March 1, 2000,  we serve our customers  through a 340-person  direct sales
force in 158 sales outlets and three major  distribution  centers  located in 22
states, making us the only national independent  distributor in the industry. We
have over 30,000 customers consisting  principally of collision repair shops and
automobile dealers, to which we provide a comprehensive  selection of brand name
products.  Our product  offering  consists of over 30,000  stock  keeping  units
("SKUs"),  including leading brands of automotive paints, coatings, thinners and
reducers  manufactured  by  BASF,  DuPont,  and PPG and the  leading  brands  of
paint-related  accessories  manufactured  principally  by 3M,  such  as  masking
materials,  body fillers and cleaners. For the year ended December 31, 1999, net
sales were $324.5 million and net income was $3.7 million.

Our vision is to expand our leadership position in the distribution of products,
services and technology that are recognized by customers as key factors in their
success.  We provide our  customers  with "local"  value-added  services such as
rapid  delivery,  technical  support,  product  training,  management  seminars,
computerized  color  matching,  inventory  management,  personnel  placement and
environmental  compliance  reporting.  These value-added  services are backed by
"national" expertise in the systems and technology of warehouse distribution and
supply chain  management,  and strategic  partnering with the  manufacturers  of
paint and  paint-related  accessories.  Our local  focus helps us respond to the
unique customer needs in various geographic markets. Our national network allows
us to provide better,  consistent  service at a lower cost than our competition.
In  addition,  we are able to  provide  certain  multi-site  customers,  such as
collision repair shop chains and mega-dealerships, with efficient and consistent
product   distribution   throughout  their  national  or  regional  networks  at
competitive prices.

We estimate the U.S. automotive paint and paint-related accessories distribution
after-market  ("distribution  after-market")  to be approximately  $2.5 billion,
with  automotive   collision  repair  shops  being  the  primary  customers  for
automotive  paint and  paint-related  accessories.  In addition  to  independent
collision   repair  shops  and  automobile   dealers,   we  supply  products  to
organizations that maintain their own automobile fleet, van conversion companies
and other  commercial/industrial  customers.  The  distribution  after-market is
supplied  by  a  small  number  of  manufacturers  of  paint  and  paint-related
accessories  and  serves  a  highly  fragmented  customer  base,  consisting  of
approximately  50,000  collision  repair shops alone. Our competitors tend to be
family-owned,  with one to three distribution sites and typically serve a highly
localized customer base.

We are an Indiana  corporation.  Our principal  executive offices are located in
space that we lease from LDI,  Ltd.  ("LDI"),  an Indiana  limited  partnership,
which indirectly owns 74.1% of our outstanding shares. We believe that the terms
of the lease are at least as  favorable to us as those that could be obtained by
arms-length  negotiations  with  an  unaffiliated  third  party.  Our  principal
executive  offices are located at 54 Monument Circle,  Suite 600,  Indianapolis,
Indiana 46204, and our telephone number is (317) 237-3678.

Industry Overview

We estimate the distribution  after-market to be approximately $2.5 billion. The
end  users  of  the  products  distributed  by us  are  principally  independent
collision repair shops and automobile dealers. Additionally,  organizations that
maintain  their  own  automobile  fleet,  van  conversion  companies  and  other
commercial/industrial  customers  make up a smaller  percentage  of our customer
base.  Automotive  paint and related  supplies,  in contrast to labor and parts,
represent  only a small  portion  (approximately  7-10%) of the total  cost of a
typical  collision  repair  job.  However,  while  paint is a  relatively  minor
component of the total repair cost,  we play a critical  role in the  customer's
level of satisfaction.

The  distribution  after-market  for  automotive  paint and related  supplies is
characterized  by a small  number of  manufacturers  of paint and  paint-related
accessories.  The five predominant manufacturers of automotive paint distributed
in the United States are Akzo Nobel, BASF, DuPont, PPG and The  Sherwin-Williams
Company.  In addition,  several other large foreign  manufacturers have recently
taken steps to expand the  distribution  of their  paint  products in the United
States.  3M is the predominant  manufacturer of paint-related  accessories which
include  refinishing  materials,  supplies,  accessories  and tools such as sand
paper, masking tape and paint masks.

The paint manufacturers  market is continuing to consolidate.  Specifically,  in
July 1999, PPG acquired Imperial Chemical Industries' global automotive refinish
and  industrial  coatings  business  and its  automotive  solvents  and thinners
business in North America.  In March 1999,  DuPont  acquired  Herberts Gmbh, the
coatings company of Hoechst.  The Herberts acquisition created the world's third
largest coatings company and the leading automotive coatings supplier.

While automotive paint  manufacturing is highly  concentrated,  automotive paint
distribution  and the end users of automotive  paint are highly  fragmented.  We
believe that a large number of  independent  distributors  of  automotive  paint
serve an aggregate of approximately  50,000  collision repair shops  nationwide.
Distributors,  which  tend to be  family-owned  with one to  three  distribution
sites,  typically serve a highly localized  customer base with each distribution
site  serving  customers  located  within  20 miles of the site  depending  upon
demographics, road access and geography.

Due  to  the  large  number  of end  users  and  their  increasing  demands  for
personalized  services,  such as  multiple  daily  deliveries,  assistance  with
color-mixing and matching,  and assistance with paint application techniques and
environmental  compliance reporting,  manufacturers  typically service end users
through distributors like us. Nevertheless, some of our paint manufacturers have
elected to operate  company-owned  distribution  facilities in selected markets,
including  markets in which we operate.  We believe,  however,  that the largest
automotive  paint  manufacturers  have  generally  avoided the cost of operating
their own distribution network due to their inability to offer multiple lines of
paint  which  prevents  them from  spreading  distribution  expenses  across the
market's  entire  potential  customer  base.   Consequently,   we  believe  that
independent  distributors  like us, which can sell the products of several paint
manufacturers,  are better  situated  to service  the end users'  needs than the
distribution facilities of automotive paint manufacturers.

The market for paints and supplies for automotive  collision repairs has changed
significantly in recent years. Key factors affecting this market have been:

     o    a decline  in the  number of  vehicles  repaired  annually,  with this
          number stabilizing in recent years;

     o    environmental  regulations  which have required the  reformulation  of
          paints and the use of more advanced equipment and facilities;

     o    automobile manufacturers' use of more complex and expensive automotive
          finishes; and

     o    an increase in the number of vehicles repaired by insurance companies'
          designated "direct repair providers".

Collision  repair  shops  have  been  forced  to  invest  in new  equipment  and
additional  training  of their  workers,  while  there has been a decline in the
number  of  repair  jobs.  Accordingly,  there  has  been  consolidation  in the
highly-fragmented collision repair industry among end-users of automotive paints
and  accessories.  In addition,  collision  repair shops and car dealerships are
seeking to improve  their  financial  performance  and  competitive  position by
developing  relationships  with  distributors  that can support their businesses
with  value-added  services.  This  demand  for higher  levels of  service  from
distributors,  combined  with lower  unit  volumes  of paint and  supplies,  has
resulted in a consolidation  among  after-market  distributors.  We have led the
consolidation   among   distributors  in  recent  years,   having  completed  33
acquisitions over the past eight years.

Although the automotive collision repair industry is experiencing a trend toward
consolidation,  we believe that our size and current position as a market leader
will enable us to continue to grow and remain  profitable.  We have been able to
offset the decline in unit volume by material price  increases that we have been
able to pass on to our customers due to the technological advancements in paints
and coatings.  In addition, we believe we will continue to attract new customers
due to our  value-added  services,  such as our experience in helping  customers
comply with environmental regulations.  This service, which we currently provide
in California and Colorado,  will be applicable in other geographic areas as the
U.S.  Environmental  Protection  Agency enacts volatile organic compound ("VOC")
regulations nationwide.

Products and Suppliers

We offer our  customers  a  comprehensive  selection  of  prominent  brand  name
products and our own  PrivateBrand  products.  The product line consists of over
30,000  SKUs,  including  the three  leading  brands of  automotive  paints  and
coatings and a leading brand of related accessories.  Our PrivateBrand  products
include some of the most frequently used refinishing accessories such as masking
materials, body fillers, thinners, reducers and cleaners.

We rely on four leading suppliers for the majority of our product  requirements.
BASF, DuPont, and PPG supply virtually all of our paint products,  and 3M is our
largest  supplier  of  paint-related  accessories.  Products  supplied  by BASF,
DuPont,  3M and PPG  accounted  for  approximately  80% of  purchases  in  1999.
Although  each of these  suppliers  generally  competes  with the  others  along
product  lines,  we do not believe the products are  completely  interchangeable
because of high brand loyalty among  customers  and their  brand-specific  color
matching  computer  systems.  We continuously  seek  opportunities  with new and
existing suppliers to supply the highest quality products.

Whenever  practical,  we make  purchases  from  suppliers  in large  volumes  to
maximize volume discounts. In addition, our size generally permits us to benefit
from  periodic  special  incentive  programs  available  from  suppliers.  These
programs  provide  additional  purchase  discounts and extended payment terms in
exchange for large  volume  purchases.  We also  benefit from  supplier-provided
early payment discounts and from other supplier-supported programs.

Services

We offer  comprehensive  value-added  services  designed to assist  customers in
operating their businesses more effectively. These services include:

   Rapid Delivery

Products are delivered to customers  using our delivery  fleet of  approximately
800  trucks.   We  offer  multiple  daily  deliveries  to  meet  our  customers'
just-in-time   inventory  needs.  Customer  concerns  for  product  availability
typically  take priority over all other  competitive  considerations,  including
price.

   Technical Support

Our technical support personnel demonstrate and recommend products. In addition,
they  assist  customers  with  problems  related  to  their  particular  product
applications.  Equipment  specialists provide information to customers regarding
their heavy equipment requirements, such as spray booths and frame straightening
equipment.

   Product Training

As  a  result  of  increasing   regulations,   manufacturers   have   introduced
technologically  advanced,  lower VOC paints,  which require  significantly more
sophisticated  application techniques. We provide training to customers in order
to teach them the  techniques  required  to work with these  products.  Training
sessions are typically  conducted  jointly by us and by one or more of our major
suppliers at the customer's location or at an off-site location.

   Management Seminars

Management  seminars  are  conducted  at  convenient  locations  to  inform  our
customers about environmental regulations and compliance,  techniques to improve
productivity, and industry trends.

   Color Matching

The growing number of paint colors is a challenge for the refinishing  industry.
DuPont,  for example,  has more than 120,000 mix  formulas.  With  sophisticated
PC-based color  matching  equipment and  specialists,  we provide color matching
services to our customers.

   Inventory Management

We perform monthly physical  inventories for customers who request this service.
We also provide customers with management information reports on product usage.

   Assistance with Environmental Compliance Reporting

All states have air  quality  regulations  that  mandate  paint and  application
methods which result in reduced atmospheric emissions of paint and other related
materials.  In  California  in  particular,  we  arrange  demonstrations  of new
products  and  application  techniques  designed  to  comply  with  air  quality
regulations.  In addition,  in California and Colorado,  we assist our customers
with environmental  reporting requirements by providing special reports designed
to simplify their  compliance.  The EPA has proposed  regulations to control VOC
emissions  from  automobile  refinishing  nationwide  and,  accordingly,  we are
considering an expansion of these programs.

   Personnel Placement

Certain  of our  divisions  maintain  an  employment  data base  which  includes
employment  openings  and/or persons seeking  employment  with collision  repair
shops  located in the market  served.  Upon  request  from a customer to fill an
opening,  we may  provide  the names of one or more  persons  for the  position.
Similar services are available to persons seeking  employment.  We do not charge
for this service but benefit from enhanced  relationships with our customers and
their employees.

Competition

The distribution  after-market of the automotive  refinishing industry is highly
fragmented  and  competitive  with  many  independent   distributors   competing
primarily on the basis of technical  assistance and expertise,  price,  speed of
delivery  and  breadth  of  product  offering.  There  are no other  independent
national distributors of automotive refinish paints and accessories. There are a
number  of  independent  regional  distributors,  many of  which  are in  direct
competition with us on a regional or local level. Competition in the purchase of
independent  distributors  and  sales  outlets  may occur  between  us and other
automotive  refinishing  distributors  which are also  pursuing  growth  through
acquisitions.

We may also encounter  significant  sales  competition from new market entrants,
automotive paint manufacturers,  buying groups or other large distributors which
may seek to enter such  markets or may seek to  compete  with us for  attractive
acquisition candidates. Although the largest automotive paint manufacturers have
generally not operated their own distributors, or have done so only on a limited
basis,  they may decide to expand  such  activity in the  future.  For  example,
Sherwin-Williams  distributes  its  own  automotive  paints  through  its  sales
outlets. In addition, BASF, one of our principal suppliers,  also distributes in
certain  markets  through  its own  outlets  in North  America.  While we do not
believe  that  current   direct   distribution   efforts  by  automotive   paint
manufacturers have  significantly  affected our sales, there can be no assurance
that we will not  encounter  increased  competition  in the future.  We may also
compete with our  suppliers in selling to certain large volume end users such as
van converters, small manufacturers and large fleet operators.

Employees

As of March 1,  2000,  we  employed  approximately  1,600  persons on a full and
part-time  basis.  None of the employees are covered by a collective  bargaining
agreement, and we consider our relations with our employees to be good.

Governmental and Environmental Regulations

We are subject to various federal,  state and local laws and regulations.  These
regulations  impose  requirements  on us  and  our  customers.  Pursuant  to the
regulations  of  the  U.S.   Department  of  Transportation  and  certain  state
transportation  departments, a license is required to transport our products and
annual permits are required due to the classification of certain of our products
as  "hazardous."  Various  state and federal  regulatory  agencies,  such as the
Occupational   Safety  and   Health   Administration   and  the  United   States
Environmental  Protection  Agency,  have  jurisdiction over the operation of our
distribution centers and sales outlets. These agencies require us to comply with
various  governmental  regulations,  including worker safety laws, community and
employee  "right-to-know"  laws and  laws  regarding  clean  air and  water.  In
addition, state and local fire and environmental regulations extensively control
the design and operation of our  facilities,  the sale of our products,  and the
application of these products by our customers. Such regulations are complex and
subject to change.  Regulatory or legislative changes may cause future increases
in our operating costs or otherwise negatively affect operations.

ITEM 2 - PROPERTIES

The following  table sets forth  certain  information  regarding the  facilities
operated by us as of March 1, 2000.
<TABLE>
<CAPTION>

                                                                                Number        No. of         No. of
                                                                                  Of          Sales       Distribution
     State (by Division)                                                       Offices       Outlets         Centers
   Central/Northeastern Division
<S>                                                                               <C>          <C>           <C>
        Connecticut.....................................................                        3
        Delaware..........................................................                      1
        Illinois..........................................................                      4
        Indiana...........................................................        1             3
        Maryland..........................................................                      3
        Massachusetts.....................................................                      5
        Michigan........................................................          1*           12            1***
        New Jersey........................................................                      8
        Ohio..............................................................                      2
        Oklahoma..........................................................                      1
        Pennsylvania......................................................                      3
        Texas.............................................................                     12
        Virginia..........................................................                      2
        Wisconsin.........................................................                      4
                                                                                ---           ---          ---
                                                                                  2            63            1
   Southeastern Division

        Alabama............................................................                     1
        Florida............................................................       1*           38            2***
        Georgia............................................................                     3
        North Carolina.....................................................                     6            1**
        South Carolina.....................................................                     7
        Virginia...........................................................                     1
                                                                                ---           ---          ---
                                                                                  1            56            3
   Western Division

        Arizona............................................................                     3
        California.........................................................       1            30            1***
        Colorado...........................................................                     6            1**
                                                                                ---           ---          ---
                                                                                  1            39            2
                                                                                ---           ---          ---
                  Total Offices, Sales Outlets and Distribution Centers           4           158            6
                                                                                ===           ===          ===
</TABLE>
--------------
*        Locations where office and distribution center are combined facilities.
         Includes Kentwood, MI and Ft. Lauderdale FL.

**       Locations where store and distribution center are combined  facilities.
         Includes Greensboro, NC and Westminster, CO.

***      Denotes  major  distribution   center.   Includes  Kentwood,   MI;  Ft.
         Lauderdale, FL; and Los Angeles, CA.

<PAGE>

Our sales  outlets  range in size from 1,200 square feet to 13,000  square feet.
Some of the larger sales  outlets are also used as "drop ship" points from which
we supply other sales outlets. Sales outlets consist of inventory storage areas,
mixing  facilities,  display and counter  space and,  in some  instances,  sales
office  space.  Sales  outlets  are  strategically  located in major  markets to
maximize  market  penetration,  transportation  logistics  and overall  customer
service. Our distribution centers range in size from 5,000 square feet to 38,500
square feet.  The  distribution  centers are equipped  with  efficient  material
handling and storage equipment.

We own the  distribution  center and two sales  outlets in  Michigan,  one sales
outlet in Indiana,  and one in Florida.  The  remainder of the sales outlets and
the other distribution centers are leased with terms expiring from 1999 to 2006,
with  options to renew.  We  typically  assume the lease of the former  owner in
acquisitions.  In a number of  instances,  our sales outlets are leased from the
former  owners of  businesses  acquired by us. We believe that all of our leases
were at fair market  rates when  executed,  that  presently  no single  lease is
material to our operations,  and that alternative sites are presently  available
at market rates. We are leasing 15,259 square feet of executive  offices for our
national headquarters located in Indianapolis, Indiana.

ITEM 3 - LEGAL PROCEEDINGS

In January 1999, we were named in an unfair business practices lawsuit in United
States District Court for the Central District of California (C-99-02197 RAP) by
an  automotive  paint  distributor  located  in the  State  of  California.  The
plaintiff in such suit alleges  that we offered,  in a manner which  injured the
plaintiff,  rebates and cash bonuses to  businesses  in the Southern  California
area if those businesses would buy exclusively from us and use our products. The
plaintiff  claimed  damages  in the  amount of $3.8  million,  trebled  to $11.4
million.  We  believe  that the claims are  without  merit and are  aggressively
defending ourselves against all allegations.  Accordingly,  we have not recorded
any loss provision relative to damages sought by the plaintiff in this lawsuit.

We are  subject to various  claims and  contingencies  arising out of the normal
course  of  business,  including  those  relating  to  commercial  transactions,
environmental, product liability, automobile, taxes, discrimination,  employment
and other matters. Our management believes that the ultimate liability,  if any,
in excess of amounts already provided or covered by insurance,  is not likely to
have a material adverse effect on our financial condition, results of operations
or cash flows.

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

None.

ADDITIONAL ITEM - EXECUTIVE OFFICERS OF THE REGISTRANT

The following sets forth certain  information  concerning the executive officers
of the Company who are not also directors:

Thomas E.  Case (age 54) has  served as our  Senior  Vice  President  and as the
manager  of our  Western  Division  since  June 1998.  Mr.  Case  joined us upon
completion of our acquisition of Thompson in November 1997.  Formerly,  Mr. Case
was a Vice President of Thompson and served as the general manager of Thompson's
California Division.

J.A. Lacy (age 35) joined us as Senior Vice  President-Planning and Marketing in
January 1999.  From January 1997 to December  1998, Mr. Lacy served as President
of Tucker Rocky Distributing Canada, Inc., a leading after-market distributor of
motorcycle  components  and  accessories.  Prior  to  this,  Mr.  Lacy  was Vice
President of J. Walter Thompson,  an advertising agency. Over his eight years in
the advertising field, Mr. Lacy managed package-goods  assignments in both North
America and the Asia Pacific region.

Robert  R.  Millard  (age 42)  joined us in  October,  1998 as our  Senior  Vice
President-Finance,  Chief  Financial  Officer,  Secretary  and  Treasurer.  From
February 1996 until  September  1998,  Mr.  Millard  served as Vice President of
Finance,   Chief  Financial  Officer,   Secretary  and  Treasurer  of  Personnel
Management,   Inc.,  a  publicly-held   personnel   staffing  company  based  in
Indianapolis,  Indiana. From July 1991 until January 1996, Mr. Millard served as
the Corporate Controller of Lacy Diversified  Industries,  Ltd., an affiliate of
LDI.

Roger A. Sorokin  (age 59) has served as our Senior Vice  President-Acquisitions
and Development  since November 1998. Prior to such date, Mr. Sorokin had served
as Vice President-Finance for more than the previous five years.

Charles  Stephenson  (age 46) has  served as our  Senior  Vice  President,  with
responsibility  for  sales  and store  operations  for the  Central/Northeastern
Division,  since October 1997.  Mr.  Stephenson  served as our Vice President of
Marketing from August 1997 to October 1997. Prior to joining us, Mr.  Stephenson
served  as  Director  of Sales  of  Sherwin-Williams  Auto  Finishes  Inc.  from
September 1994 to August 1997 and as its Regional Director of the Western Region
from October 1991 to September 1994.

Charles  VanSlaars  (age 50)  serves as our  Senior  Vice  President  and as the
manager of our  Southeastern  Division,  a position he has held since June 1998.
From June 1996 until May 1998, Mr. VanSlaars  served as an executive  officer of
LDI  AutoPaints,  Inc.  From  1994  until  1996,  Mr.  VanSlaars  served as Vice
President of Parts Depot  Company,  L.P., a  Florida-based  distributor  of auto
paints.

                                     PART II

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

Our common stock  trades on The NASDAQ  Stock Market under the symbol FMST.  The
number of  beneficial  owners of our common  stock at  December  31,  1999,  was
approximately 500.

The range of high and low prices reported by NASDAQ for the last twelve quarters
were:

       Year       Quarter Ended                 High             Low
       -------------------------------------------------------------------
       1997       March 31                  $       8.500   $       5.750
       1997       June 30                           8.750           5.250
       1997       September 30                      8.750           5.375
       1997       December 31                      11.750           6.250
       1998       March 31                         11.750           7.750
       1998       June 30                          10.750           8.625
       1998       September 30                     10.000           5.250
       1998       December 31                       7.375           3.500
       1999       March 31                          7.000           5.625
       1999       June 30                           6.000           4.750
       1999       September 30                      7.375           5.688
       1999       December 31                       7.938           5.750


No cash  dividends on common stock have been paid during any period and none are
expected to be paid in the foreseeable  future.  We anticipate that all earnings
and other cash resources will be retained by us for investment in our business.

On June 30, 1998, we completed the acquisition by merger of LDI AutoPaints, Inc.
("AutoPaints")  in exchange for the  issuance of 1,542,416  shares of our common
stock.  Such  shares  were  issued  to Lacy  Distribution,  Inc.,  our  majority

<PAGE>

shareholder  and a wholly  owned  subsidiary  of LDI.  Such  shares  were issued
pursuant to the  exemption  provided in Section  4(2) of the  Securities  Act of
1933, as amended.

ITEM 6 - SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data as of and for the years ended
December 31,  1999,  1998 and 1997,  are derived  from our audited  consolidated
financial   statements  which  are  included   elsewhere  herein.  The  selected
consolidated  financial  data as of and for the nine months  ended  December 31,
1996,  and for the year  ended  March  31,  1996 are  derived  from our  audited
consolidated  financial  statements which are not included herein. The financial
data  should be read in  conjunction  with our  audited  consolidated  financial
statements and notes thereto,  included elsewhere herein, and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>


                                                                                                     Nine Months         Fiscal
                                                                    Year Ended                          Ended          Year Ended
                                                                   December 31,                      December 31,       March 31,
                                                 -----------------------------------------------    ---------------   --------------
(In thousands, except per share data)              1999(2)(3)       1998 (2)(3)        1997 (2)       1996(1)             1996
                                                 ---------------  ----------------  ------------    ---------------   --------------
<S>                                                <C>                <C>             <C>            <C>               <C>
Per Share
      Net income
           Basic                                   $    0.49          $    0.29       $    0.11      $    0.11         $    0.44
           Diluted                                 $    0.49          $    0.29       $    0.11      $    0.11         $    0.44
      Pro forma net income (loss) (4)              $      --          $    0.33       $   (1.01)     $      --         $      --

Statements of Operations Data
      Net sales                                    $ 324,490          $ 309,946       $ 130,175      $  95,822         $ 107,511
      Gross margin                                 $ 117,002          $ 109,678       $  47,107      $  33,891         $  38,012
      Income from operations                       $  18,745          $  15,895       $   3,832      $   2,566         $   5,073
      Net income                                   $   3,711          $   1,988       $     656      $     660         $   2,649
      Pro forma net income (loss) (4)              $      --          $   2,459       $  (7,585)     $      --         $      --
      Weighted average
           shares outstanding                          7,545              6,780           5,994          6,000             6,000
      Pro forma weighted average
           shares outstanding                             --              7,536           7,536             --                --

                                                                            December 31,                                 March 31,
                                                 -------------------------------------------------------------------  --------------
                                                      1999           1998 (3)          1997(2)            1996            1996(1)
                                                 ---------------  ----------------  ---------------  ---------------  --------------
Balance Sheet Data
      Working capital                            $      48,147    $        43,452   $       42,928   $       22,819   $     25,036
      Total assets                               $     214,235    $       226,475   $      215,418   $       66,477   $     66,772
      Long-term debt                             $     111,603    $       119,120   $      134,135   $       17,831   $     19,605
      Shareholders' equity                       $      53,069    $        49,348   $       32,932   $       32,326   $     31,665
</TABLE>


(1)      We changed our fiscal year-end from March 31 to December 31,  effective
         for the period ended December 31, 1996.

(2)      The operating  results for the years ended December 31, 1999,  1998 and
         1997 are affected by the  acquisition of Thompson on November 21, 1997.
         The  operating  results of Thompson  are  included in our  consolidated
         operating results since the acquisition date.

(3)      The operating results for the year ended December 31, 1999 and 1998 are
         affected  by the  acquisition  of  AutoPaints  on June  30,  1998.  The
         operating  results  of  AutoPaints  are  included  in our  consolidated
         operating results since the acquisition date.

(4)      Pro forma  amounts for the years ended  December 31, 1998 and 1997 have
         been  prepared  to give  effect to the  acquisitions  of  Thompson  and
         AutoPaints  as if the  transactions  had  occurred  on January 1, 1997.
         These  amounts  are  unaudited  and  are  presented  for  informational
         purposes only. No pro forma amounts are presented for 1999 acquisitions
         as the impact of such acquisitions are not material.  The unaudited pro
         forma  financial  amounts should be read in  conjunction  with Item 7 -
         "Management's  Discussion  and  Analysis  of  Financial  Condition  and
         Results of Operations."
<PAGE>

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

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

The following  discussion and analysis about the Company's  financial  condition
and results of operations  should be read in conjunction  with the  consolidated
financial statements and related notes presented in this annual report.

Overview

FinishMaster,  Inc. is the leading independent distributor of automotive paints,
coatings and  paint-related  accessories  primarily to the automotive  collision
repair  industry in the United  States.  As of December  31,  1999,  the Company
serves its  customers  through 153 sales  outlets  and three major  distribution
centers  located  in  22  states,   making  it  the  only  national  independent
distributor in the industry.  The Company has over 30,000  customers to which it
provides a  comprehensive  selection  of brand name  products  supplied by BASF,
DuPont, 3M and PPG in addition to its own FinishMaster  PrivateBrand refinishing
accessory products. The Company is typically the primary source of supply to its
customers and offers a broad range of services designed to enhance the operating
efficiencies  and  competitive  positions of its  customers and  suppliers.  The
Company's  operations are currently organized into three divisions and operating
segments:   Southeastern,   Western,  and   Central/Northeastern.   The  Company
aggregates its three operating segments into a single reportable segment.

The  Company  is  the  leading   consolidator  in  the  automotive   refinishing
distribution  industry,  having  successfully  completed  as of March  15,  2000
approximately 33 acquisitions  over the past eight years,  ranging from "add-on"
acquisitions to the strategic acquisitions of Thompson and AutoPaints.

On November 21, 1997, the Company  acquired  Thompson for an aggregate  purchase
price of approximately $73.5 million,  including  acquisition costs. In addition
to the cash purchase price, the Company refinanced  approximately  $34.5 million
of Thompson  indebtedness  in  conjunction  with the  transaction.  The Thompson
acquisition  significantly  expanded the  Company's  geographic  presence in the
Southeastern and Western United States.

On June 30, 1998, the Company  completed the acquisition by merger of AutoPaints
in  exchange  for the  issuance of 1.5 million  shares of the  Company's  common
stock.  Since AutoPaints was acquired from the Company's  majority  shareholder,
the acquisition  constituted a transaction  within a controlled group. Thus, the
acquisition was accounted for using the historical cost basis of AutoPaints' net
assets, which approximated $14.4 million at the date of acquisition.

The Company  intends to continue its strategy of  expanding  through  additional
acquisitions.  During 1999,  the Company  completed six  acquisitions  and as of
March 15, 2000, three additional acquisitions were completed.

Results of Operations

As  a  result  of  the   acquisitions  of  Thompson  and  AutoPaints  and  their
significance  to the  Company's  results  of  operations,  pro forma  results of
operations  are  presented for the years ended  December 31, 1998 and 1997.  The
Company  believes that for purposes of Management's  Discussion and Analysis,  a
more meaningful  understanding  of the Company's  performance can be obtained by
comparing  the pro forma  results for all years.  Pro forma amounts for 1999 are
consistent  with  historical  1999  results as the pro forma  effects of the six
acquisitions made in 1999 are not material.

The unaudited pro forma  consolidated  amounts for the years ended  December 31,
1998 and 1997 have been prepared to give effect to the  acquisitions of Thompson
and  AutoPaints  as if the  transactions  had  occurred  on January 1, 1997.  In
calculating the pro forma amounts, the historical amounts of the Company and the
acquired  entities have been  adjusted for items  directly  attributable  to the
acquisitions  including  interest  expense  related  to  acquisition  financing,
charges for amortization of intangibles,  depreciation of fair value adjustments
to property and equipment,  and the related tax effects. The unaudited pro forma
amounts do not purport to be indicative of the results of operations  that would
have actually been obtained if the transactions had occurred on January 1, 1997,
or the results of operations that may be obtained in the future.

Net Sales
--------------------------------------------------------------------------------
(In thousands)         1999         Change      1998        Change   1997
--------------------------------------------------------------------------------
Historical         $   324,490        4.7%   $  309,946     138.1%  $ 130,175
--------------------------------------------------------------------------------
Pro forma          $   324,490        0.9%   $  321,710       4.8%  $ 337,818
--------------------------------------------------------------------------------

Pro  forma  net  sales  increased  $2.8  million  or 0.9%  from 1998 to 1999 due
primarily to acquisitions.  During 1999, the Company completed six acquisitions.
The  Company  experienced  minimal  "same  outlet  sales"  growth as a result of
competitive market conditions and flat industry demand. Approximately 70% of net
sales  consisted of automotive  paint products  while the remaining  portion was
paint-related accessories.

Pro forma net sales  decreased $16.1 million or 4.8% from 1997 to 1998. With the
acquisition of Thompson and  AutoPaints,  certain  unprofitable  store locations
were  closed  and  store  locations  serving  the same  geographical  area  were
consolidated.  The closure and  consolidation of these sales outlets during this
time  period  decreased  sales  between  1997  and 1998 by  approximately  $10.1
million.  "Same outlet sales" declined  approximately  $7.0 million or 2.1% as a
result of flat industry demand,  the anticipated  customer  attrition related to
the  acquisition  and  integration of Thompson and  AutoPaints,  and competitive
market conditions.

Gross Margin

--------------------------------------------------------------------------------
(In thousands)              1999       Change      1998       Change     1997
--------------------------------------------------------------------------------
Historical                $ 117,002     6.7%    $  109,678    132.8%  $ 47,107
Percentage of net sales       36.1%                   35.4%               36.2%
--------------------------------------------------------------------------------
Pro forma                 $ 117,002     2.5%    $  114,199      2.8%  $117,495
Percentage of net sales        36.1%                  35.5%               34.8%
--------------------------------------------------------------------------------

Pro forma gross margin  increased $2.8 million or 2.5% over 1998 due to improved
margins of $1.8 million and higher sales volume of $1.0 million. Gross margin as
a percentage  of net sales  improved to 36.1% as a result of supplier  incentive
programs and the optimization of early payment discounts.

Pro forma gross margin  decreased $3.3 million or 2.8% between 1997 and 1998 due
primarily  to the  decrease  in pro forma net  sales.  Lower pro forma net sales
volume impacted gross margin in 1998 by  approximately  $5.6 million.  Partially
offsetting  this  amount  was an  improvement  in pro  forma  gross  margin as a
percentage of net sales. With increased  inventory purchase volumes in 1998, the
Company was better  able to take  advantage  of vendor  discounts  and  supplier
incentive programs.

Operating Expenses
--------------------------------------------------------------------------------
(In thousands)            1999        Change      1998      Change      1997
--------------------------------------------------------------------------------
Historical               $47,485       1.6%      $46,746    127.3%      $20,568
Percentage of net sales     14.6%                   15.1%                  15.8%
--------------------------------------------------------------------------------
Pro forma                $47,485       1.3%      $48,099     17.1%      $57,993
Percentage of net sales     14.6%                   15.0%                  17.2%
--------------------------------------------------------------------------------

Operating expenses consist of wages, facility, vehicle and related costs for the
Company's  store  and  distribution  locations.  Pro  forma  operating  expenses
decreased  $0.6 million or 1.3% from 1998 to 1999,  and as a  percentage  of net
sales improved to 14.6% from 15.0%.  The improvement is a result of management's
focus during the year on increased productivity and cost containment.

Pro forma  operating  expenses  decreased $9.9 million or 17.1% between 1997 and
1998.  This  decrease was a direct result of the  Company's  profit  improvement
initiatives  that included  savings from the  consolidation  or closure of sales
outlets following the acquisitions of Thompson and AutoPaints,  reduced spending
programs at store and distribution locations,  and improved bad debt experience.
Also  contributing  to the  decrease is the  inclusion in 1997 of a $3.8 million
Thompson  charge taken prior to the  acquisition to close five sales outlets and
to consolidate five other sites into existing locations. The charge included the
write-off of unamortized  goodwill and future lease costs associated with closed
locations.

Selling, General and Administrative Expenses
--------------------------------------------------------------------------------
(In thousands)               1999     Change       1998       Change     1997
--------------------------------------------------------------------------------
Historical                 $41,553    10.0%       $37,789      104.7%   $18,459
Percentage of net sales       12.8%                  12.2%                 14.2%
--------------------------------------------------------------------------------
Pro forma                  $41,553     5.5%       $39,404       15.4%   $46,603
Percentage of net sales       12.8%                  12.2%                 13.8%
--------------------------------------------------------------------------------

Selling,   general  and  administrative   expenses  ("SG&A")  consist  of  costs
associated  with  the  Company's   corporate  support  staff  and  expenses  for
commissions,  wages,  and  customer  sales  support  activities.  Pro forma SG&A
expenses  increased  $2.1  million or 5.5%  between 1998 and 1999 as a result of
higher  selling  expenses  related to increased  sales volume,  finalization  of
staffing requirements at the Company's corporate  headquarters,  increased costs
associated  with  attracting and retaining  customers,  and higher  professional
fees.

Pro forma SG&A expenses decreased $7.2 million or 15.4% between 1997 and 1998 as
a result of the  consolidation  of four corporate  offices into one, the closure
and  consolidation of certain sales outlets,  reduced  spending  initiatives and
lower selling  expenses  related to the reduced sales  volume.  Effective  March
1998, the Company moved its corporate offices to Indianapolis, Indiana.

Depreciation
--------------------------------------------------------------------------------
(In thousands)               1999    Change        1998     Change        1997
--------------------------------------------------------------------------------
Historical                  $ 2,427   12.4%      $ 2,772    189.4%       $  958
Percentage of net sales         0.7%                 0.9%                   0.7%
--------------------------------------------------------------------------------
Pro forma                   $ 2,427   19.2%      $ 3,004      9.2%       $3,307
Percentage of net sales         0.7%                 0.9%                   1.0%
--------------------------------------------------------------------------------

Pro forma depreciation expense decreased between 1997, 1998 and 1999 as a result
of certain  capital  assets  becoming fully  depreciated in those years.  During
1999, the Company acquired approximately $1.0 million of property and equipment,
consisting  mostly of new  information  technology  equipment  associated with a
continuing upgrade of the Company's management information systems.

Amortization of Intangible Assets
--------------------------------------------------------------------------------
(In thousands)              1999      Change      1998   Change       1997
--------------------------------------------------------------------------------
Historical                 $6,792      4.9%      $6,476   96.8%       $3,290
Percentage of net sales       2.1%                  2.1%                 2.5%
--------------------------------------------------------------------------------
Pro forma                  $6,792      2.9%      $6,996    0.8%       $7,052
Percentage of net sales       2.1%                  2.2%                 2.1%
--------------------------------------------------------------------------------

The decrease in pro forma amortization expense between 1997, 1998 and 1999 was a
result  of  certain  intangible  assets,   principally  non-compete  agreements,
becoming fully amortized in those years.

Interest Expense, net
--------------------------------------------------------------------------------
(In thousands)               1999       Change     1998    Change      1997
--------------------------------------------------------------------------------
Historical                  $10,802      5.9%     $11,475   331.2%   $ 2,661
Percentage of net sales         3.3%                  3.7%               2.0%
--------------------------------------------------------------------------------
Pro forma                   $10,802      6.2%     $11,510    13.1%   $13,240
Percentage of net sales         3.3%                  3.6%               3.9%
--------------------------------------------------------------------------------

The $0.7 million or 6.2% decrease in pro forma interest expense between 1998 and
1999 was due to lower  outstanding  borrowings.  The implied  interest  rates on
these borrowings  remained  relatively  stable between years. The Company repaid
$6.9 million of outstanding borrowings in 1999.

Pro forma interest expense decreased $1.7 million or 13.1% between 1997 and 1998
due to lower outstanding borrowings and interest rates. The Company repaid $14.6
million of  outstanding  borrowings  in 1998 and the implied  interest  rates on
these borrowings fell from 9.2% to 8.6%.

Income Tax Expense (Benefit)
--------------------------------------------------------------------------------
(In thousands)                1999    Change        1998   Change        1997
--------------------------------------------------------------------------------
Historical                  $4,232     74.0%      $2,432   372.2%      $   515
Percentage of net sales        1.3%                  0.8%                  0.4%
Effective tax rate            53.3%                 55.0%                 44.0%
--------------------------------------------------------------------------------
Pro forma                   $4,232     55.2%      $2,727      N/A      $(3,115)
Percentage of net sales        1.3%                  0.8%                 (0.9%)
Effective tax rate            53.3%                 52.6%                 29.1%
--------------------------------------------------------------------------------

The pro forma income tax expense reflected in 1999 and 1998, compared to the tax
benefit in 1997, is directly  attributable to the pro forma income before income
taxes in 1999 and  1998.  The pro forma  effective  tax  rates  varied  from the
federal   statutory   rate  as  a  result  of  certain   expenses,   principally
nondeductible intangible amortization.  The nondeductible amortization increased
the  effective tax rates in 1999 and 1998,  and decreased the effective  rate in
1997 as a result of the losses incurred.

Net Income (Loss) and Income (Loss) Per Share
--------------------------------------------------------------------------------
(In thousands, except             1999   Change     1998    Change       1997
per share data)
--------------------------------------------------------------------------------
Historical net income             $3,711   86.7%     $1,988   203.0%    $   656
Percentage of net sales              1.1%               0.6%                0.5%
Net income per share              $ 0.49   69.0%     $ 0.29   163.6%    $  0.11
--------------------------------------------------------------------------------
Pro forma net income (loss)       $3,711   50.9%     $2,459      N/A    $(7,585)
Percentage of net sales             1.1%               0.8%               (2.2%)
Pro forma net income (loss)
    per share                     $ 0.49   48.5%     $ 0.33      N/A    $ (1.01)
--------------------------------------------------------------------------------

Factors  contributing  to the changes in net income and pro forma net income and
the related per share amounts are discussed in the detail above.

Inflation and Other Economic Factors

Inflation  affects  FinishMaster's  cost of materials  sold,  salaries and other
related  costs  of  distribution.   To  the  extent  permitted  by  competition,
FinishMaster has offset these higher costs of materials  through selective price
increases.

The Company's business may be negatively affected by cyclical economic downturns
in the markets in which it operates. The Company's financial performance is also
dependent on its ability to acquire  businesses  and  profitably  integrate them
into its operations.

Quantitative and Qualitative Disclosure about Market Risk

The  Company  had  no  holdings  of  derivative  financial  or  commodity  based
instruments  at December  31,  1999 and 1998.  A review of the  Company's  other
financial  instruments and risk exposures  indicated the Company had exposure to
interest rate risk.  Based upon the Company's  outstanding  debt at December 31,
1999 and the term for which current  interest rates are fixed, a 10% increase in
interest  rates would  increase  interest  expense for 2000 by an estimated $0.6
million.

Seasonality and Quarterly Fluctuations

The Company's  sales and  operating  results have varied from quarter to quarter
due to various factors and the Company  expects these  fluctuations to continue.
Among these factors are seasonal buying patterns of the Company's  customers and
the timing of acquisitions. Historically, sales have slowed in the late fall and
winter of each year largely due to inclement  weather and the reduced  number of
business days during the holiday season. As a result,  financial performance for
the Company is generally  lower during the December and March quarters  compared
to the June and September quarters. In addition,  the timing of acquisitions may
cause substantial fluctuations of operating results from quarter to quarter. The
Company takes advantage of periodic special  incentive  programs  available from
its  suppliers  that extend the due date of  inventory  purchases  beyond  terms
normally available with large volume purchases. The timing of these programs can
contribute to fluctuations in the Company's  quarterly cash flows.  Although the
Company  continues to investigate  strategies to smooth the seasonal  pattern of
its  quarterly  results  of  operations,  there  can be no  assurance  that  the
Company's net sales,  results of operations  and cash flows will not continue to
display seasonal patterns.

Financial Condition, Liquidity and Capital Resources
--------------------------------------------------------------------------------
(In thousands)                                     1999       1998        1997
--------------------------------------------------------------------------------
Working capital                                  $ 48,147   $ 43,452   $ 42,928
Long-term debt                                   $111,603   $119,120   $134,135
Cash provided by operating activities            $  8,781   $ 16,094   $  1,022
Cash used in investing activities                $ (2,371)  $   (663)  $(74,611)
Cash (used in) provided by financing activities  $ (6,800)  $(14,786)  $ 73,653
--------------------------------------------------------------------------------

The  Company's  primary  sources of funds  over the past  three  years were from
operations and borrowings under its credit facilities.  The Company's  principal
uses of cash were to fund working capital,  capital expenditures,  acquisitions,
and the repayment of outstanding borrowings.

Net cash generated  from operating  activities was $8.8 million in 1999 compared
with $16.1 million in 1998. This decrease was primarily the result of a negative
change in cash flows generated from operating assets and liabilities,  partially
offset by higher earnings and increased  depreciation and amortization  expense.
The  negative  change  in  cash  flows  generated  from  operating   assets  and
liabilities was  attributable to a $9.9 million decrease in accounts payable and
other liabilities which resulted from differences in payment terms between years
on large inventory purchases.

Net cash used in  investing  activities  increased  from $0.7 million in 1998 to
$2.4 million in 1999 as a result of increased acquisition activities,  partially
offset by lower  purchases of capital  expenditures.  During  1999,  the Company
completed  six  acquisitions.  Investing  activities  in 1998 also included $1.8
million  of cash  acquired  through  the merger  with  AutoPaints.  The  Company
estimates  that  capital  expenditures  for 2000,  principally  for  information
technology equipment, will approximate $3.7 million.

Net cash used in financing activities, primarily the repayment of debt, was $6.8
million in 1999,  compared  with $14.8  million in 1998.  The  decrease  in debt
repayments is a result of increased cash  requirements in 1999 related to vendor
accounts payable.

Total  capitalization  at December  31, 1999 was $176.2  million,  comprised  of
$123.1  million of debt and $53.1  million of equity.  Debt as a  percentage  of
total  capitalization  decreased from 72.3% to 69.9% between 1998 and 1999. This
improvement was  attributable  to the increase in equity  resulting from current
year net income, along with the decrease in debt resulting from repayments.

At  December  31,  1999,  the  Company  had term  credit  and  revolving  credit
facilities totaling $95.5 million,  and senior subordinated debt of $30 million.
The Company also  obtained in February  2000, a $7.5  million  revolving  credit
facility to finance future acquisitions.  The Company was in compliance with the
covenants  underlying  its credit  facilities,  and had  availability  under its
revolving credit facility of $11.1 million as of year-end.

Based on current and  projected  operating  results  and giving  effect to total
indebtedness,  the Company  believes  that cash flow from  operations  and funds
available  from  lenders and other  creditors  will provide  adequate  funds for
ongoing operations, debt service and planned capital expenditures.

Year 2000 Date Conversion

Many existing  computer  programs use only two digits to identify  years.  These
programs were designed  without  consideration  for the effects of the change in
the century and could have failed or created erroneous results at the Year 2000.
Essentially  all of the  Company's  technology-based  systems  were  potentially
affected by the Year 2000 issue.

In order to  prepare  for the Year  2000  issue,  the  Company  implemented  the
following remediation plan for technology-based systems:

1.       Identification  of all  applications  and hardware with  potential Year
         2000 issues.

2.       For each item identified,  performance of an assessment to determine an
         appropriate action plan and timetable for remediation of each item.

3.       Implementation of the specific action plan.

4.       Testing each application upon completion.

5.       Placement of the new process into  production  and  conducting  systems
         integration testing.

The Company successfully implemented the above remediation plan for all affected
technology-based  systems.  Following the arrival of the Year 2000,  the Company
has not experienced any problems with its technology-based  systems or materials
supplied by third parties. There was no interruption in the Company's ability to
deliver its products and transact business with its suppliers and customers. The
Company  continues to monitor its systems and  suppliers  for any  unanticipated
issues that may not yet have manifested.

The  total  cost  to  the  Company  of  achieving   Year  2000   compliance  was
approximately $0.1 million.

Other Matters

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." In June 1999, the FASB issued SFAS No. 137,
which delayed the effective  date of SFAS No. 133 to January 1, 2001.  Since the
Company is not routinely involved in derivative and hedging activities, adoption
of this  Statement  is not  expected  to have a  material  impact  on  financial
condition or results of operations.

Forward-Looking Statements

This Report contains  certain  forward-looking  statements  pertaining to, among
other things,  the Company's  future results of operations,  cash flow needs and
liquidity, acquisitions, and other aspects of its business. The Company may make
similar forward-looking statements from time to time. These statements are based
largely on the  Company's  current  expectations  and are subject to a number of
risks and  uncertainties.  Actual  results  could differ  materially  from these
forward-looking  statements.  Important  factors to consider in evaluating  such
forward-looking  statements include changes in external market factors,  changes
in the Company's  business  strategy or an inability to execute its strategy due
to changes in its  industry or the economy in general,  difficulties  associated
with  assimilating  acquisitions,  the emergence of new or growing  competitors,
seasonal and quarterly  fluctuations,  governmental  regulations,  the potential
loss of key suppliers,  and various other competitive factors. In light of these
risks and uncertainties,  there can be no assurance that the future developments
described  in the  forward-looking  statements  contained in this Report will in
fact occur.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements:                                                    Page

       Report of Independent Accountants                                  18

       Consolidated Balance Sheets                                        19

       Consolidated Statements of Operations                              20

       Consolidated Statements of Cash Flows                              21

       Consolidated Statements of Shareholders' Equity                    22

       Notes to Consolidated Financial Statements                         23

       Financial Statement Schedule:

             Schedule II - Valuation and Qualifying Accounts              37

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


<PAGE>




Report of Independent Accountants

To the Board of Directors and Shareholders of FinishMaster, Inc.:

In our opinion, the consolidated financial statements listed in the accompanying
index  present  fairly,  in all material  respects,  the  financial  position of
FinishMaster,  Inc. and its  subsidiaries at December 31, 1999 and 1998, and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 1999, in conformity  with  accounting  principles
generally  accepted in the United  States.  These  financial  statements are the
responsibility of the Company's management;  our responsibility is to express an
opinion on these  financial  statements  based on our audits.  We conducted  our
audits of these  statements in  accordance  with  auditing  standards  generally
accepted in the United States,  which 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,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Indianapolis, Indiana

March 3, 2000



<PAGE>




CONSOLIDATED
BALANCE SHEETS
FinishMaster, Inc.
<TABLE>
<CAPTION>


                                                                                 December 31,         December 31,
(In thousands, except share amounts)                                                     1999                 1998

ASSETS

Current assets
<S>                                                                          <C>                  <C>
      Cash                                                                   $            619     $          1,009
      Accounts receivable, net of allowance for doubtful
           accounts of $1,419 and $1,680, respectively                                 30,135               30,212
      Inventory                                                                        56,830               57,744
      Refundable income taxes                                                             295                1,395
      Deferred income taxes                                                             3,301                3,788
      Prepaid expenses and other current assets                                         3,328                4,423
                                                                             -----------------------------------------
      Total current assets                                                             94,508               98,571

Property and equipment

      Land                                                                                368                  368
      Vehicles                                                                          1,244                1,362
      Buildings and improvements                                                        5,489                5,428
      Machinery, equipment and fixtures                                                 8,845                7,694
                                                                             -----------------------------------------
                                                                                       15,946               14,852
      Accumulated depreciation                                                         (8,226)              (5,860)
                                                                             -----------------------------------------
                                                                                        7,720                8,992

Other assets

      Intangible assets, net                                                          108,115              114,526
      Deferred income taxes                                                             2,250                2,888
      Other                                                                             1,642                1,498
                                                                             -----------------------------------------
                                                                                      112,007              118,912
                                                                             -----------------------------------------
                                                                             $        214,235     $        226,475
                                                                             =========================================
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

      Accounts payable                                                       $         25,856     $         35,449
      Amounts due to LDI                                                                  767                  864
      Accrued compensation and benefits                                                 5,312                4,344
      Other accrued expenses and current liabilities                                    2,908                4,477
      Current maturities of long-term debt                                             11,518                9,985
                                                                             -----------------------------------------
      Total current liabilities                                                        46,361               55,119

Long-term debt, less current maturities                                               111,603              119,120
Other long-term liabilities                                                             3,202                2,888
Commitments and contingencies (Note 8)
Shareholders' equity

      Preferred stock, no par value; 1,000,000 shares authorized;
           no shares issued and outstanding                                                 -                    -
      Common stock, $1 stated value; 25,000,000 shares authorized;
           7,537,636 and 7,535,856 shares issued and outstanding                        7,538                7,536
      Additional paid-in capital                                                       27,359               27,351
      Retained earnings                                                                18,172               14,461
                                                                             -----------------------------------------
                                                                                       53,069               49,348
                                                                             -----------------------------------------
                                                                             $        214,235     $        226,475
                                                                             =========================================
</TABLE>



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


<PAGE>




CONSOLIDATED STATEMENTS
OF OPERATIONS
FinishMaster, Inc.
<TABLE>
<CAPTION>


                                                                      Year                 Year                 Year
                                                                     Ended                Ended                Ended
                                                              December 31,         December 31,          December 31,
(In thousands, except per share data)                                 1999                 1998                 1997

<S>                                                       <C>                  <C>                  <C>
Net sales                                                 $        324,490     $        309,946     $        130,175
Cost of sales                                                      207,488              200,268               83,068
                                                          --------------------------------------------------------------
Gross margin                                                       117,002              109,678               47,107

Expenses

      Operating                                                     47,485               46,746               20,568
      Selling, general and administrative                           41,553               37,789               18,459
      Depreciation                                                   2,427                2,772                  958
      Amortization of intangible assets                              6,792                6,476                3,290
                                                          --------------------------------------------------------------
                                                                    98,257               93,783               43,275
                                                          --------------------------------------------------------------
Income from operations                                              18,745               15,895                3,832


Interest expense, net                                               10,802               11,475                2,661
                                                          --------------------------------------------------------------


Income before income taxes                                           7,943                4,420                1,171
Income tax expense                                                   4,232                2,432                  515
                                                          --------------------------------------------------------------
Net income                                                $          3,711     $          1,988     $            656
                                                          ==============================================================

Net income per share (Note 10):

      Basic                                               $           0.49     $           0.29     $           0.11
                                                          ==============================================================
      Diluted                                             $           0.49     $           0.29     $           0.11
                                                          ==============================================================

Weighted average shares outstanding - Diluted                        7,545                6,780                5,994
                                                          ==============================================================
</TABLE>




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


<PAGE>


CONSOLIDATED STATEMENTS
OF CASH FLOWS
FinishMaster, Inc.

<TABLE>
<CAPTION>

                                                                                  Year             Year             Year
                                                                                 Ended            Ended            Ended
                                                                           December 31,     December 31,     December 31,
(In thousands)                                                                    1999             1998             1997
Operating activities
<S>                                                                           <C>              <C>              <C>
      Net income                                                              $   3,711        $   1,988        $     656
      Adjustments to reconcile net income to net cash
      provided by operating activities:
           Depreciation and amortization                                         11,019           10,464            4,725
           Deferred income taxes                                                  1,125            2,249             (681)
      Changes in operating assets and liabilities (excluding the impact
      of acquisitions):
           Accounts receivable, net                                                 785              758            4,247
           Inventories                                                            1,639              (15)          (1,456)
           Prepaids and other assets                                                440           (1,740)             (58)
           Accounts payable and other liabilities                                (9,938)           2,390           (6,411)
                                                                              ---------------------------------------------
Net cash provided by operating activities                                         8,781           16,094            1,022

Investing activities
      Business acquisitions and payments under
           earn-out provisions for prior acquisitions                            (1,280)            (191)         (74,149)
      Purchases of property and equipment                                          (973)          (1,844)            (462)
      Proceeds from disposal of property and equipment                               20               58               --
      Cash acquired through merger with LDI
           AutoPaints, Inc.                                                          --            1,786               --
      Other                                                                        (138)            (472)              --
                                                                              ---------------------------------------------
Net cash used in investing activities                                            (2,371)            (663)         (74,611)

Financing activities
      Borrowings under note payable, bank                                            --               --           20,603
      Repayments under note payable, bank                                            --               --          (22,444)
      Purchase of common stock                                                       --               --              (50)
      Acquisition financing                                                         291               --           73,819
      Proceeds from the exercise of stock options                                    --                7               --
      Debt issuance costs                                                          (155)            (168)          (1,689)
      Proceeds from long-term debt                                               97,989           43,300           41,951
      Repayment of long-term debt                                              (104,925)         (57,925)         (38,537)
                                                                              ---------------------------------------------
Net cash (used in) provided by financing activities                              (6,800)         (14,786)          73,653
                                                                              ---------------------------------------------

(Decrease)increase in cash                                                         (390)             645               64
Cash at beginning of period                                                       1,009              364              300
                                                                              ---------------------------------------------
Cash at end of period                                                         $     619        $   1,009        $     364
                                                                              =============================================
Supplemental disclosure of cash flow information
      Cash paid (received) during the period for:
           Interest                                                           $  10,998        $  10,360        $   2,192
                                                                              =============================================
           Taxes                                                              $   2,158        $    (291)       $   1,520
                                                                              =============================================

Non-cash activities
      Acquisition of LDI AutoPaints, Inc.:
           Assets acquired                                                                     $  17,667
           Less liabilities assumed                                                                3,246
                                                                                             ------------
           Equity purchased                                                                       14,421
           Less cash acquired in transaction                                                       1,786
                                                                                             ------------
           Net assets acquired, excluding cash                                                 $  12,635
                                                                              =============================================
      Earn-out adjustments for prior acquisitions                             $      --        $     810        $      --
                                                                              =============================================
</TABLE>



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

<PAGE>

CONSOLIDATED STATEMENTS
OF SHAREHOLDERS' EQUITY
FinishMaster, Inc.
<TABLE>
<CAPTION>

                                                                      Additional
                                                      Common             Paid-in            Retained
(In thousands)                                         Stock             Capital            Earnings              Totals

Balances at
<S>                                           <C>                <C>                 <C>                 <C>
December 31, 1996                             $        6,000     $         14,509    $        11,817     $        32,326
Purchase of common stock                                  (7)                 (43)                 -                 (50)
Net income for the year                                    -                   -                 656                 656
                                              -----------------------------------------------------------------------------

Balances at
December 31, 1997                                      5,993               14,466             12,473              32,932
Options exercised                                          1                    6                  -                   7
Issuance of stock related to merger of
      LDI AutoPaints, Inc.                             1,542               12,879                  -              14,421
Net income for the year                                    -                    -              1,988               1,988
                                              -----------------------------------------------------------------------------

Balances at
December 31, 1998                                      7,536               27,351             14,461              49,348
Stock grants issued                                        2                    8                  -                  10
Net income for the year                                    -                   -               3,711               3,711
                                              -----------------------------------------------------------------------------
Balances at

December 31, 1999                             $        7,538     $         27,359   $         18,172    $         53,069
                                              =============================================================================
</TABLE>




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


<PAGE>



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
FinishMaster, Inc.

1.       SIGNIFICANT ACCOUNTING POLICIES

Nature of Business:  FinishMaster, Inc. ("the Company" or "FinishMaster") is the
leading national distributor of automotive paints,  coatings,  and paint-related
accessories  to the automotive  collision  repair  industry.  As of December 31,
1999, the Company operated 153 sales outlets and six distribution  centers in 22
states and is  organized  into three  major  geographic  regions  and  operating
segments - the Southeastern,  Western, and  Central/Northeastern  Divisions. The
Company  aggregates  its  three  operating  segments  into a  single  reportable
segment.  The  Company  has  over  30,000  customers  to  which  it  provides  a
comprehensive  selection of brand name products supplied by BASF, DuPont, 3M and
PPG, in  addition to its own  FinishMaster  PrivateBrand  refinishing  accessory
products.  The Company is highly dependent on the key suppliers  outlined above,
which account for approximately 80% of the Company's purchases.

Principles of Consolidation:  The Company's  consolidated  financial  statements
include the accounts of FinishMaster,  Refinishers  Warehouse,  Inc., as well as
Thompson PBE, Inc. and its subsidiaries  ("Thompson")  and LDI AutoPaints,  Inc.
("AutoPaints"), from the dates of their respective acquisitions. All significant
intercompany  accounts and transactions have been eliminated.  References to the
Company  or  FinishMaster  throughout  this  report  relate to the  consolidated
entity.

Majority  Shareholder:  From July 9, 1996, the date of acquisition,  to June 29,
1998,   AutoPaints  owned  4,045,100   shares  of  FinishMaster   common  stock,
representing  a  67.5%  ownership  interest  in the  Company.  AutoPaints  was a
wholly-owned subsidiary of Lacy Distribution, Inc. ("Distribution"),  an Indiana
corporation, which is an indirect wholly-owned subsidiary of LDI, Ltd., ("LDI"),
an Indiana limited partnership.  Effective June 30, 1998,  AutoPaints was merged
into the Company in exchange for the issuance of an additional  1,542,416 shares
of FinishMaster common stock. Upon completion of this transaction,  Distribution
became the majority  shareholder of the Company with 5,587,516  shares of common
stock,  representing  74.1% of the  outstanding  shares at December 31, 1999 and
1998.  Throughout  the  remainder  of  these  financial   statements,   LDI  and
Distribution are collectively referred to as "LDI."

Transactions with Majority  Shareholder:  The Company obtains certain managerial
services from its majority  shareholder,  LDI.  Expense related to such services
amounted to $158,000,  $538,000,  and $291,000 for the year's ended December 31,
1999,  1998,  and 1997,  respectively.  In  addition,  the  Company  leases  its
corporate  office space,  to which it moved in 1998, from LDI. Lease expense and
payments for repairs and  maintenance  to LDI totaled  $214,000 and $105,000 for
the years ended December 31, 1999 and 1998,  respectively.  The Company also has
subordinated debt payable to LDI (see Note 4, Long-Term Debt).

Use of 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,
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents:  The Company considers all highly liquid  investments
with an original  maturity of three  months or less to be cash  equivalents.  At
December 31, 1999 and 1998,  checks drawn on future  deposits and  borrowings of
$3,300,000 and $15,000,000,  respectively,  were classified as accounts payable.
These amounts represent outstanding checks in excess of funds on deposit.

Receivables:  Trade accounts  receivable  represents  amounts due primarily from
automotive body repair shops and  dealerships.  Trade  receivables are typically
not collateralized.  No single customer exceeds 10% of the Company's receivables
at December 31, 1999.

Inventories:  Inventories are stated at the lower of first-in, first-out cost or
market and  consist  primarily  of  purchased  paint and  refinishing  supplies.
Substantially, all inventories consist of finished goods.


<PAGE>


Properties  and  Depreciation:  Property  and  equipment  is  stated at cost and
includes  expenditures  for new  facilities,  equipment  and  improvements  that
materially extend the useful lives of existing assets.

Expenditures  for  normal  repairs  and  maintenance  are  charged to expense as
incurred.  Depreciation  is computed over a  combination  of  straight-line  and
accelerated methods over the following range of estimated useful lives:

Buildings & improvements......................................  Up to 40 years
Vehicles......................................................         5 years
Leasehold improvements........................................   Life of lease
Machinery, equipment & fixtures...............................   3 to 10 years

Revenue  Recognition:  Revenues from product sales are recognized at the time of
shipment or delivery to the customer.

Income Taxes: Deferred income taxes are recognized for the temporary differences
between the tax basis of assets and liabilities  and their  financial  reporting
amounts in accordance  with the provisions of Statement of Financial  Accounting
Standards  ("SFAS")  No.  109,  "Accounting  for Income  Taxes."  The income tax
provision is the tax payable for the period and the change  during the period in
deferred tax assets and liabilities.

Intangibles:  Intangibles  consist primarily of the excess of cost over the fair
market  value of net  assets of  acquired  businesses  ("goodwill").  Intangible
assets,  including  goodwill  and  non-compete  agreements,  are  amortized on a
straight-line basis over periods ranging from 5 to 30 years. The majority of the
Company's  goodwill  relates to its November 1997 acquisition of Thompson and is
being  amortized over 30 years.  The carrying value of goodwill is  periodically
reviewed to determine if an impairment  has occurred.  The Company  measures for
potential  impairment of recorded  goodwill based on the estimated  undiscounted
cash flows of acquired entities over the remaining  amortization  period. If the
estimated  future  undiscounted  cash flows are less than the carrying amount of
such goodwill,  an impairment  would be deemed to have occurred and a loss would
be recognized. Such loss would be determined based upon expected discounted cash
flows or market  prices.  Debt issuance costs are amortized over the term of the
related debt agreements.

Internal Use Software: Costs incurred to develop or obtain software for internal
use within the business are  capitalized  in accordance  with the  provisions of
Accounting Standards Executive Committee Statement of Position 98-1, "Accounting
for the Costs of Computer  Software  Developed or Obtained  for  Internal  Use."
During 1999, the Company capitalized $0.5 million of costs related to efforts to
migrate to a single  information  technology  platform.  Once placed in service,
software costs incurred will be depreciated over their estimated useful life.

Recent Accounting Pronouncements: During 1998 and 1997, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 130, "Reporting  Comprehensive Income,"
SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information,"  and SFAS No. 133,  "Accounting  for  Derivative  Instruments  and
Hedging  Activities."  The effective date of adoption for SFAS No.'s 130 and 131
was January 1, 1998. In June 1999,  the FASB issued SFAS No. 137,  which delayed
the effective  date of SFAS No. 133 to January 1, 2001.  The Company has none of
the  components  of  comprehensive  income and  aggregates  its three  operating
segments into a single reportable segment. The Company is not routinely involved
in derivative  and hedging  activities  and does not expect the adoption of SFAS
No.  133 to  have a  material  impact  on  financial  condition  or  results  of
operations.

Reclassification:  Certain amounts in the consolidated financial statements have
been reclassified to conform to the current year presentation.

2.       ACQUISITIONS

The following table  summarizes the assets  acquired and liabilities  assumed in
acquisitions  made  by  FinishMaster  in  each  of the  periods  presented.  All
acquisitions,  except for the merger with AutoPaints  discussed below, have been
accounted for as purchases and accordingly,  the acquired assets and liabilities
have been recorded at their  estimated fair values at the dates of  acquisition.
Intangible assets related to goodwill and covenants not to compete were recorded
with each  acquisition,  if appropriate.  Operating results of acquired entities
have been included in FinishMaster's  consolidated financial statements from the
respective date of purchase.
<TABLE>
<CAPTION>


                                                                        Year                Year                Year
                                                                       Ended               Ended               Ended
                                                                 December 31,        December 31,        December 31,
(In thousands)                                                          1999                1998                1997

<S>                                                          <C>                 <C>                 <C>
Accounts receivable                                          $           708     $         2,225     $        20,239
Inventory                                                                725               4,389              27,158
Deferred taxes                                                             -                 535               6,082
Equipment and other                                                      202               3,128               8,029
Intangible assets                                                        650               7,390              91,629
                                                             -----------------------------------------------------------
                                                                       2,285              17,667             153,137

Less liabilities assumed                                                 714               3,246              78,988
                                                             -----------------------------------------------------------

Acquisition price                                                      1,571              14,421              74,149
Acquisition debt                                                         291                   -              73,819
                                                             -----------------------------------------------------------

Net assets of businesses acquired, net of acquisition debt   $         1,280     $        14,421     $           330
                                                             ===========================================================

Number of acquisitions                                                     6                   1                   3
                                                             -----------------------------------------------------------
</TABLE>


During 1999, the Company completed six acquisitions.  The acquisitions  occurred
in Illinois, New Jersey and Texas and were funded with cash and debt.

On June 30, 1998, the Company  completed the acquisition by merger of AutoPaints
pursuant  to which the  Company  merged  with  AutoPaints  and  issued to LDI an
additional 1,542,416 shares of common stock. Since this was a transaction within
a controlled  group,  the  acquisition of AutoPaints was accounted for using its
historical cost basis.  Equity  securities issued to LDI in exchange for the net
assets of  AutoPaints  were  recorded  at the  historical  cost basis of the net
assets acquired as of the effective date of the transaction.

On November 21, 1997, the Company acquired  substantially all of the outstanding
common stock of Thompson for $8.00 per share. Thompson,  like FinishMaster,  was
an aftermarket distributor of automotive paints, coatings, and related supplies.
The total purchase price,  including related acquisition costs, was $73,471,000.
The Company also refinanced  $34,474,000 of Thompson indebtedness in conjunction
with the  transaction.  The Company funded the acquisition with a combination of
bank  financing  and  subordinated  borrowings  from LDI.  The  acquisition  was
accounted for as a purchase and,  accordingly,  the purchase price was allocated
to assets  acquired and  liabilities  assumed  based upon their  estimated  fair
values at the date of  acquisition.  Goodwill  resulting from the acquisition of
Thompson  is  being  amortized  over 30  years.  Goodwill  associated  with  the
acquisition  of  Thompson  increased  $2,152,000  during 1998 as a result of the
recognition of obligations  associated with  pre-acquisition  contingencies  for
which estimates were not available at the time of acquisition.

The following table sets forth the unaudited pro forma results of operations for
1998  and  1997 for  acquisitions  occurring  during  such  periods  and for the
immediately  preceding  period as if the  acquisitions  were  consummated at the
beginning of the immediately  preceding  period.  The acquisitions in 1999 would
not  have  had a  significant  impact  on the  Company's  unaudited  results  of
operations, including sales, net income and earnings per share, for 1999 or 1998
and are therefore not presented in the table. The unaudited pro forma results of
operations  consist of the  historical  results of the Company and the  acquired
entities,  as adjusted to give effect to additional  interest,  depreciation and
amortization  expense arising from the acquisitions.  This pro forma information
does not include reductions to operating expenses resulting from the elimination
of duplicate functions and facilities directly attributable to the acquisitions.
This pro forma  information  does not purport to be  indicative  of the combined
results  of  operations   which  would  have  actually  been  obtained  had  the
acquisitions  been  made as of those  dates,  or which  may be  obtained  in the
future.


<PAGE>
<TABLE>
<CAPTION>

                                                                      Year               Year
                                                                     Ended              Ended
                                                               December 31,       December 31,
(In thousands)                                                        1998               1997

<S>                                                        <C>                 <C>
Pro forma net sales                                        $       321,710     $      337,818
Pro forma net income (loss)                                $         2,459     $       (7,585)
Pro forma net income (loss) per common share:
      Basic                                                $          0.33     $        (1.01)
      Diluted                                              $          0.33     $        (1.01)
Weighted average number of common shares                             7,536              7,536
                                                          ========================================


3.       INTANGIBLE ASSETS

Intangible assets consisted of the following:

                                                               December  31,        December 31,
(In thousands)                                                         1999                1998

Goodwill                                                   $        117,319     $       117,147
Non-compete agreements                                               14,580              14,181
Debt issuance costs                                                   2,012               1,857
                                                           ----------------------------------------
                                                                    133,911             133,185
Less accumulated amortization                                        25,796              18,659
                                                           ----------------------------------------

Intangible assets, net                                     $        108,115     $       114,526
                                                          =========================================


4.       LONG-TERM DEBT

Long-term debt consisted of the following:

                                                                December 31,        December 31,
(In thousands)                                                         1999                1998

Revolving Credit Facility                                  $         48,900     $        44,900
Term Credit Facility                                                 35,495              40,000
Senior Subordinated Debt                                             30,000              30,000
Notes payable to former owners of acquired businesses
      with interest at various rates up to 12%, due at
      various dates through 2007                                      6,905              12,418
Other long-term financing at various rates                            1,821               1,787
                                                           ----------------------------------------
                                                                    123,121             129,105
Less current maturities                                              11,518               9,985
                                                           ----------------------------------------

                                                           $        111,603     $       119,120
                                                           ========================================
</TABLE>


Revolving  Credit  Facility:  The Company has a revolving credit facility with a
syndicate  of banks,  limited to the lesser of (1) $60  million  less  letter of
credit  obligations,  or (2) 80 percent of eligible accounts  receivable plus 65
percent  of  eligible   inventory  plus  $7.5  million  less  letter  of  credit
obligations  and a reserve for three months  facility rent.  Principal is due on
November  19, 2003.  Interest  rates and payment  dates are variable  based upon
interest  rate  and term  options  selected  by  management.  Interest  rates at
December 31, 1999 on outstanding revolving credit borrowings varied from 8.1% to
9.75%.  Revolving  credit  borrowings  are  subject  to  interest  rates,  which
fluctuate  based on the  Company's  Leverage  Ratio,  as  defined  in the Credit
Facility,  of 2.25% over LIBOR or 1.0% over prime in the case of  Floating  Rate
Advances. The Company is charged an annual administrative fee of $50,000, and an
annual commitment fee, payable monthly, that ranges between 0.2% and 0.5% of the
unused  portion of the  revolving  line of credit.  At December  31,  1999,  the
Company had  $11,100,000  of available  borrowings  under its  revolving  credit
facility.

Term  Credit  Facility:  The term loan,  which  expires on  November  19,  2003,
requires quarterly  principal  payments that began on March 31, 1999.  Quarterly
principal  payments in 2000 are $1.5  million  and  increase in amount each year
over the  remaining  term of the  loan.  Interest  rates and  payment  dates are
variable  based upon  interest  rate and term  options  selected by  management.
Interest rates at December 31, 1999 varied from 8.2% to 8.3% on outstanding term
borrowings. Term borrowings are subject to interest rates, which fluctuate based
on the Company's  Leverage  Ratio, as defined in the Credit  Facility,  of 2.25%
over LIBOR.

Combined  Facilities:  Substantially  all  of  the  Company's  assets  serve  as
collateral for the revolving  credit  facility and term credit  facility.  These
credit agreements contain various quarterly and annual covenants  pertaining to,
among other things,  achieving a minimum fixed charge  coverage ratio, a maximum
leverage  ratio,  a  minimum  interest  expense  coverage  ratio  and a  minimum
consolidated  net worth level.  The covenants also limit  purchases and sales of
assets and restrict  payment of  dividends.  On  September  22, 1999 the Company
amended  its credit  agreements.  The  amendment  made  certain  covenants  less
restrictive  and  increased  borrowing  availability  under the  borrowing  base
calculation,  subject to  certain  covenants,  by $7.5  million.  The  quarterly
covenants are effective over the entire term of the facilities, with the various
coverage ratios and net worth levels becoming more stringent  during the life of
the credit  facilities.  As of December 31, 1999,  the Company was in compliance
with its covenants.

Senior  Subordinated Debt: The senior  subordinated debt owed to LDI matures May
19, 2004. During December 1999, LDI sold $10.2 million of the subordinated notes
to two  affiliated  trusts.  Interest  accrues at 9.0%  annually  and is payable
quarterly. The subordinated debt is expressly subordinate in right of payment to
all senior indebtedness.

Senior  Subordinated  Revolving  Credit  Facility:  The  Company  had  a  senior
subordinated  revolving credit facility with LDI for $10 million to fund working
capital and acquisition  needs.  The facility expired on June 29, 1999 and is no
longer available to the Company.  Interest rates and payment dates were variable
based upon  interest  and term  options  selected  by  management.  The  Company
borrowed and repaid $3.8 million under this facility during 1999.

The aggregate  principal payments for the next five years subsequent to December
31, 1999 are as follows:

(In thousands)

2000                                                                 $  11,518
2001                                                                    10,636
2002                                                                    10,646
2003                                                                    59,864
2004                                                                    30,269
Thereafter                                                                 188
                                                                     ----------

                                                                     $ 123,121
                                                                     ==========


The carrying amounts of certain  financial  instruments  such as cash,  accounts
receivable,  accounts payable, and long-term debt approximate their fair values.
The fair value of long-term debt is estimated  using  discounted  cash flows and
the  Company's  current  incremental   borrowing  rates  for  similar  types  of
arrangements.


<PAGE>



5.       EMPLOYEE SAVINGS PLAN

The Company has an Employee Savings Plan ("Plan") which covers substantially all
employees who have met certain  requirements as to date of service.  The Company
currently  contributes up to 25% of each $1.00 contributed by employees up to 6%
of their annual compensation.  In addition,  the Company may contribute,  at the
discretion  of  the  Board  of  Directors,  an  additional  amount  up  to 4% of
employees'  annual  compensation.  Company  contributions  charged to operations
under the Plan were  approximately  $213,000,  $191,000  and  $182,000 for years
ended December 31, 1999, 1998 and 1997, respectively.  Employees of Thompson and
AutoPaints were merged into the plan during 1999 and 1998, respectively.

6.       STOCK OPTIONS

The Company has a stock  option plan that was amended on April 29,  1999,  under
which officers, key employees,  and directors may be granted options to purchase
stock. The amendments  included  increasing the number of shares of common stock
reserved  for  issuance  under the plan from 600,000 to 750,000 and changing the
method for  determining  the exercise price of the options on the date of grant.
All options  granted  under this plan have been granted at a price not less than
the fair market  value of the  Company's  common  stock on the date of grant and
have a maximum life of ten years from the date of the grant. All grants prior to
1998 were fully vested at the date of issue.  Certain stock  options  granted in
1999 and 1998 were also fully  vested at the date of issue,  while  others  vest
over periods ranging from one to four years.

The Company recognizes  compensation expense related to its stock option plan in
accordance with APB Opinion No. 25,  "Accounting for Stock Issued to Employees."
Options  are  granted  at a price  not less  than the fair  market  value of the
Company's common stock on the date of grant,  therefore, no compensation expense
is recognized.  Had  compensation  expense been  determined at the date of grant
based on the fair value of the awards consistent with SFAS No. 123,  "Accounting
for Stock Based Compensation," the Company's net income and net income per share
would have been  reduced to the pro forma  amounts  indicated  in the  following
table:
<TABLE>
<CAPTION>
                                                        Year                Year                Year
                                                       Ended               Ended               Ended
                                                 December 31,        December 31,        December 31,
(In thousands, except per share data)                   1999                1998                1997
<S>                                          <C>                 <C>                 <C>
Net income:
      As reported                            $         3,711     $         1,988     $           656
      Pro forma                              $         3,201     $         1,299     $           523

Net income per share:
      As reported, Basic                     $          0.49     $          0.29     $          0.11
      As reported, Diluted                   $          0.49     $          0.29     $          0.11

      Pro forma, Basic                       $          0.42     $          0.19     $          0.09
      Pro forma, Diluted                     $          0.42     $          0.19     $          0.09
</TABLE>


The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option pricing model with the following  assumptions for the years
ended December 31, 1999, 1998, and 1997,  respectively:  risk free interest rate
of 5.6%, 5.0%, and 5.5%; no dividend yield; expected option lives of nine years;
and stock price volatility of 50.4%, 49.6%, and 46.8%.


<PAGE>
<TABLE>
<CAPTION>

                                           December 31,                 December 31,                 December 31,
                                               1999                         1998                         1997

                                                     Weighted                      Weighted                     Weighted
                                                     -Average                      -Average                     -Average
                                                     Exercise                      Exercise                     Exercise

                                       Options          Price       Options           Price      Options           Price
<S>                                    <C>       <C>                <C>       <C>                <C>       <C>
Outstanding-beginning of year          426,490   $        8.89      210,000   $        9.92      169,310   $       10.71
Granted                                100,024   $        6.03      263,800   $        8.38       45,000   $        7.00
Exercised                                    -   $           -          800   $        8.25            -   $           -
Forfeited                                2,480   $        8.96       46,510   $       10.65        4,310   $       10.50

                                    --------------------------------------------------------------------------------------
Outstanding-end of year                524,034   $        8.35      426,490   $        8.89      210,000   $        9.92
                                    ======================================================================================

Exercisable-end of year                363,034   $        8.61      260,890   $        9.09      210,000   $        9.92
                                    ======================================================================================
</TABLE>


<TABLE>
<CAPTION>

                                                                            Exercise Price Range
                                                        --------------------------------------------------------------
                                                           $5.34-$8.25         $10.25-$11.55             Total
                                                        -------------------  -------------------  --------------------
<S>                                                               <C>                  <C>                   <C>
Options outstanding                                               322,924              201,110               524,034
Weighted average exercise price                         $            6.70    $           10.99    $             8.35
Average remaining contractual life                              8.5 years            6.3 years             7.7 years
Options exercisable                                               205,124              157,910               363,034
Weighted average exercise price                         $            6.90    $           10.83    $             8.61
</TABLE>


The  weighted-average  fair value of  options  granted  during  the years  ended
December  31,  1999,  1998 and 1997 were  $3.84,  $4.62,  and $4.85 per  option,
respectively,  where the exercise price of the options  equaled the market price
on the date of grant.  Certain  options were granted  during 1999 and 1998 where
the exercise price of the options  exceeded the market value of the stock on the
date of grant.  The  weighted-average  fair value of these options was $3.67 and
$6.51 per option at December  31,  1999 and 1998,  respectively.  The  remaining
contractual life of options outstanding at December 31, 1999 is 7.7 years.

7.       INCOME TAXES

The provision for federal and state income taxes consisted of the following:

                              Year                 Year               Year
                             Ended                Ended              Ended
                       December 31,         December 31,       December 31,
(In thousands)                1999                 1998               1997

Current:
      Federal     $          2,383     $             96     $        1,010
      State                    724                   87                186
                  ------------------------------------------------------------
                             3,107                  183              1,196
                  ------------------------------------------------------------
Deferred:
      Federal                  952                 2,082              (616)
      State                    173                   167               (65)
                  ------------------------------------------------------------
                             1,125                 2,249              (681)
                  ------------------------------------------------------------

                  $          4,232     $           2,432    $          515
                  ============================================================



<PAGE>


The reconciliation of income taxes computed at the federal statutory tax rate to
the Company's effective tax rate is as follows:
<TABLE>
<CAPTION>


                                                     Year                 Year                   Year
                                                    Ended                Ended                  Ended
                                              December 31,         December 31,           December 31,
                                                     1999                 1998                   1997
<S>                                                 <C>                  <C>                  <C>
      Federal statutory tax rate                    34.0%                34.0%                34.0%
      State tax provision                            7.5%                 3.8%                 6.8%
      Nondeductible intangible amortization          8.4%                14.7%                 3.9%
      Other                                          3.4%                 2.5%                (0.7%)
                                             ----------------------------------------------------------

Effective tax rate                                  53.3%                55.0%                  44.0%
                                             ==========================================================
</TABLE>


Significant  components of the Company's  deferred tax assets as of December 31,
1999 and 1998 are as follows:

                                           December 31,         December 31,
(In thousands)                                     1999                 1998

Deferred tax assets:
      Depreciation                    $             887    $             915
      Amortization of intangibles                 1,450                1,319
      Allowances                                    838                1,435
      Inventory                                     915                  967
      Accrued expenses and other                  1,461                2,040
                                      -----------------------------------------
                                      $           5,551    $           6,676
                                      =========================================


8.       COMMITMENTS AND CONTINGENCIES

FinishMaster  occupies  facilities  and uses  equipment  under  operating  lease
agreements requiring annual rental payments  approximating the following amounts
for the five years subsequent to December 31, 1999:

(In thousands)

2000                                                    $           8,086
2001                                                                5,297
2002                                                                3,714
2003                                                                2,558
2004                                                                1,642
Thereafter                                                            716
                                                        ------------------
                                                        $          22,013
                                                        ==================

Rent  expense  charged  to  operations,  including  short-term  leases,  totaled
$8,533,000,  $6,306,000,  and  $3,832,000 for the years ended December 31, 1999,
1998 and 1997, respectively.

The Company is dependent on four main  suppliers  for the purchases of the paint
and related  supplies that it  distributes.  A loss of one of the suppliers or a
disruption in the supply of the products  provided could have a material adverse
effect on the Company's  operating results.  The suppliers also provide purchase
discounts,  prompt  payment  discounts,  extended  terms,  and  other  incentive
programs to the Company. To the extent these programs are changed or terminated,
there could be a material adverse impact to the Company.

The Company has three  agreements  with warehouse  suppliers for the purchase of
certain  paint and non-paint  supplies in specified  geographic  locations.  The
agreements provide for aggregate specified minimum purchases of $7.9 million for
2000, and $1.5 million for 2001,  2002, and 2003. The agreements  expire in 2000
and 2003.

In January 1999, the Company was named in an unfair business  practices  lawsuit
by an  automotive  paint  distributor  located in the State of  California.  The
plaintiff  in such suit  alleges  that the Company  offered,  in a manner  which
injured the  plaintiff,  rebates and cash bonuses to  businesses in the Southern
California area if those  businesses  would buy exclusively from the Company and
use its products.  The plaintiff  claims  damages in the amount of $3.8 million,
trebled to $11.4 million. The Company believes that the claims are without merit
and is aggressively  defending itself against all allegations.  Accordingly,  it
has not recorded any loss provision  relative to damages sought by the plaintiff
in this lawsuit.

The Company is subject to various  claims and  contingencies  arising out of the
normal course of business,  including those relating to commercial transactions,
environmental, product liability, automobile, taxes, discrimination,  employment
and other matters.  Management believes that the ultimate liability,  if any, in
excess of amounts  already  provided or covered by  insurance,  is not likely to
have a material adverse effect on the Company's financial condition,  results of
operations or cash flows.

9.       QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following table presents the quarterly results of operations for each period
presented.
<TABLE>
<CAPTION>


                                                                           Three Months ended

                                               ----------------------------------------------------------------------------
                                                   March 31,            June 30,      September 30,         December 31,
(In thousands,  except per share data)                  1999                1999               1999                 1999
                                               ----------------  ----------------   ------------------  -------------------

<S>                                            <C>               <C>                <C>                 <C>
Net sales                                      $      80,106     $      83,212      $       82,460      $         78,712
Gross margin                                   $      28,620     $      29,777      $       29,878      $         28,727
Income from operations                         $       5,073     $       5,270      $        4,728      $          3,674
Income before income taxes                     $       2,326     $       2,609      $        2,076      $            932
Net income                                     $       1,176     $       1,302      $        1,051      $            182
Net income per share - Diluted                 $        0.16     $        0.17      $         0.14      $           0.02

                                                                           Three Months ended

                                               ----------------------------------------------------------------------------
                                                   March 31,          June 30,        September 30,         December 31,
(In thousands,  except per share data)                  1998              1998                 1998                 1998
                                               ----------------  ----------------   ------------------  -------------------

Net sales                                      $      76,024     $      76,758      $       80,338      $         76,826
Gross margin                                   $      26,945     $      27,027      $       28,306      $         27,400
Income from operations                         $       3,881     $       4,156      $        3,884      $          3,974
Income before income taxes                     $       1,007     $       1,329      $          951      $          1,133
Net income                                     $         528     $         699      $           79      $            682
Net income per share - Diluted                 $        0.09     $        0.12      $         0.01      $           0.09
</TABLE>


10.        NET INCOME PER SHARE

In 1997,  the Company  adopted the  provisions  of SFAS No. 128,  "Earnings  Per
Share."  SFAS No. 128  requires  disclosure  of basic and diluted  earnings  per
share.  Basic  earnings  per share is  computed  by  dividing  net income by the
weighted  average number of common shares  outstanding  for the period.  Diluted
earnings per share is computed based upon the weighted  average number of common
shares outstanding,  adjusted for the effect of dilutive stock options.  All net
income per share amounts  reported  herein are in accordance with the provisions
of this Statement.


<PAGE>




The following  table sets forth the  computation of basic and diluted net income
per share:

<TABLE>
<CAPTION>

                                                      Year                Year                Year
                                                     Ended               Ended               Ended
                                               December 31,        December 31,        December 31,
(In thousands, except per share data)                 1999                1998                1997

Numerator:
<S>                                        <C>                 <C>                 <C>
      Net income                           $         3,711     $         1,988     $           656
                                           ----------------------------------------------------------
Denominator:
      Basic-weighted average shares                  7,536               6,775               5,994

      Effect of dilutive stock options                   9                   5                   -
                                           ----------------------------------------------------------
      Diluted-weighted average shares                7,545               6,780               5,994
                                           ----------------------------------------------------------

Basic net income per share                 $          0.49     $          0.29     $          0.11
                                           ----------------------------------------------------------

Diluted net income per share               $          0.49     $          0.29     $          0.11
                                           ==========================================================
</TABLE>


The overall  effect of employee  stock  options on the  calculation  of weighted
average  shares  outstanding  for purposes of determining  diluted  earnings per
share was  antidilutive  for the year ended  December  31,  1997.  For all years
presented,  antidilutive  stock  options were excluded in the  determination  of
dilutive earnings per share.

11.      SUBSEQUENT EVENTS

In February 2000, the Company obtained a $7.5 million  revolving credit facility
with a syndicate of banks to finance future  acquisitions.  This credit facility
expires in February 2002.  Interest rates and payments are based upon one of two
options selected by management, LIBOR plus 3.0% or an alternative base rate that
is prime plus 1%. The Company is charged a commitment fee of 0.5% on the average
daily unused portion of the facility, due quarterly.

The Company  completed three  acquisitions  in the first quarter of 2000.  These
acquisitions were not significant to the Company's  results of operations,  cash
flows or financial position.

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

Item 10 is  incorporated  by reference from the  Registrant's  definitive  proxy
statement to be filed within 120 days of December 31, 1999.

ITEM 11 - EXECUTIVE COMPENSATION

Item 11 is  incorporated  by reference from the  Registrant's  definitive  proxy
statement to be filed within 120 days of December 31, 1999.


<PAGE>




ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Item 12 is  incorporated  by reference from the  Registrant's  definitive  proxy
statement to be filed within 120 days of December 31, 1999.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Item 13 is  incorporated  by reference from the  Registrant's  definitive  proxy
statement to be filed within 120 days of December 31, 1999.

                                     PART IV

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

(a)      The following  documents  have been filed as a part of this report,  or
         where noted, incorporated by reference:

         (1)      Financial Statements: The Consolidated Financial Statements of
                  the Company are included in Item 8 of this report.

         (2)      Financial Statement Schedule: The financial statement schedule
                  filed in  response  to Item 8 and Item  14(d) of Form  10-K is
                  listed  in the  Index  to  Consolidated  Financial  Statements
                  included in Item 8 of this report.

         (3)      The  Exhibits  filed  herewith  or   incorporated   herein  by
                  reference are set forth in the Exhibit Index on page E-1.

(b)      Reports on Form 8-K: None


<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 report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Date    March 28, 2000                      FINISHMASTER, INC.

                                            By: /s/ Robert R. Millard
                                            ----------------------------------
                                                Robert R. Millard
                                                Senior Vice President, Finance
                                                And Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

           Signature                     Date                 Title
--------------------------------------------------------------------------------
(1)    Principal Executive Officer:

/s/ Andre B. Lacy
------------------------------
Andre B.  Lacy                        March 28, 2000      Chairman of the Board

(2)    Principal Financial
       and Accounting Officer:

/s/ Robert R. Millard
--------------------------------
Robert R. Millard                     March 28, 2000      Senior Vice President,
                                                          Finance and Chief
                                                          Financial Officer
(3)    A Majority of the
       Board of Directors:

/s/ Andre B. Lacy
--------------------------------
Andre B.  Lacy                        March 28, 2000      Director

/s/ Thomas U. Young
--------------------------------
Thomas U.  Young                      March 28, 2000      Director

/s/ Margot L. Eccles
--------------------------------
Margot L.  Eccles                     March 28, 2000      Director

/s/ Wes N. Dearbaugh
--------------------------------
Wes N. Dearbaugh                      March 28, 2000      Director

/s/ Peter L. Frechette
--------------------------------
Peter L.  Frechette                   March 28, 2000      Director

/s/ David W. Knall
--------------------------------
David W. Knall                        March 28, 2000      Director

/s/ Michael L. Smith
--------------------------------
Michael L.  Smith                     March 28, 2000      Director

/s/ Walter S. Wiseman
--------------------------------
Walter S.  Wiseman                    March 28, 2000      Director


<PAGE>




                       FINISHMASTER, INC. AND SUBSIDIARIES
                           ANNUAL REPORT ON FORM 10-K

EXHIBITS

                                  EXHIBIT LIST

Exhibit No.           Description of Document

     2.1         Agreement  and Plan of  Merger,  dated as of  October  14,
                 1997, by and among  FinishMaster,  Inc., FMST  Acquisition
                 Corporation  and  Thompson  PBE,  Inc.   (incorporated  by
                 reference to Exhibit (c)(2) of Schedule  14D-1  previously
                 filed  by FMST  Acquisition  Corporation  on  October  21,
                 1997).

     2.2         Agreement and Plan of Merger,  dated February 16, 1998, by
                 and among  FinishMaster,  Inc., LDI  AutoPaints,  Inc. and
                 Lacy Distribution,  Inc.  (previously filed with Form 10-K
                 dated March 31, 1998)

     3.1         Articles  of  Incorporation  of  FinishMaster,   Inc.,  an
                 Indiana corporation,  as amended June 30, 1998 (previously
                 filed with Form 10-Q dated August 14, 1998)

     3.2         Amended and Restated Code of Bylaws of FinishMaster, Inc.,
                 an Indiana corporation  (previously filed with Form 10-K/A
                 dated April 14, 1998)

     10.1        FinishMaster, Inc. Stock Option Plan (Amended and Restated
                 as of April 29, 1999)  (previously filed with Registrant's
                 proxy statement on Schedule 14/A dated April 9, 1999)

     21*         Subsidiaries  of the  Registrant

     23*         Consent of Independent Accountants

     27.1*       Financial Data Schedule

     99(a)*      Amended  and  Restated  Credit  Agreement,   dated  as  of
                 February   1,  2000,   among   FinishMaster,   Inc.,   the
                 Institutions  from Time to Time Parties Thereto as Lenders
                 and Bank One, Indiana, N.A., as Agent

     99(b)       Subordinated  Note  Agreement,  dated as of  November  19,
                 1997,  by and between  FinishMaster,  Inc.  and LDI,  Ltd.
                 (previously filed with Form 8-K dated December 3, 1997)

*  filed herein

<PAGE>


       Schedule II - Valuation and Qualifying Accounts (In thousands)
<TABLE>
<CAPTION>


                                                                   Additions
                                                         -------------------------------
                                                                                                                       Balance
                                         Balance at       Charged to        Charged to                                 at End
                                         Beginning        Costs and         Other                                      of
Description                              of Period        Expenses          Accounts            Deductions             Period
--------------------------------------- ------------- -- ------------ --- -------------- ----- -------------- ----- --------------
<S>                                      <C>              <C>              <C>                   <C>                 <C>
Year ended December 31, 1999:
     Allowance for doubtful accounts     $     1,680      $      433       $          0          $       694  (B)    $     1,419

Year ended December 31, 1998:
     Allowance for doubtful accounts     $     2,247      $      464       $        147  (A)     $     1,178  (B)    $     1,680

Year ended December 31, 1997:
     Allowance for doubtful accounts     $       700      $      859       $      1,758  (A)     $     1,070  (B)    $     2,247
</TABLE>

(A) Represents allowance for doubtful accounts of acquired entities.

(B) Represents uncollectible accounts written off, less recoveries.